EXHIBIT 10.15
EXECUTION COPY
This EMPLOYMENT AGREEMENT is an
amendment and restatement of the Employment Agreement dated as of
February 6, 2006 (the “Original Effective Date”),
by and between Rock-Tenn Company, a Georgia corporation
(“Rock-Tenn”), and James A. Rubright
(“Executive”).
WHEREAS, Rock-Tenn and Executive
entered into an Employment Agreement as of the Original Effective
Date (the “2006 Agreement”), and Rock-Tenn and
Executive desire to amend and restate the 2006 Agreement in the
form of this Employment Agreement (this “Agreement”) to
address issues raised under Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”);
and
WHEREAS, the Compensation and
Options Committee of the Board of Directors of Rock-Tenn (the
“Compensation Committee”) has recommended, and the
independent directors of the Board of Directors have approved, that
Rock-Tenn enter into this Agreement with Executive;
NOW, THEREFORE, Rock-Tenn and
Executive agree as follows:
1. Continued
Employment.
(a) Subject to the further terms and
conditions hereof, Rock-Tenn shall continue to employ Executive as
Rock-Tenn’s Chief Executive Officer, and Executive shall
continue to serve in that capacity, with such duties,
responsibilities and powers as Executive has on the date that
Executive signs this Agreement (the “Effective
Date”).
(b) Subject to compliance with the
further terms and conditions hereof, Rock-Tenn may terminate
Executive’s employment hereunder at any time, and Executive
may resign at any time, effective at the date stated in a written
notice of termination or resignation, which date, in the case of
termination by Rock-Tenn without cause or as a result of
Executive’s permanent disability or by Executive voluntarily
and not as a result of the occurrence of any of the events
specified in Section 2(b), may not be earlier than thirty
(30) days after the notice is given.
(c) Executive’s base pay shall
continue as in effect at the Effective Date, payable in accordance
with Rock-Tenn’s standard payroll practices and policies for
salaried employees, and shall be subject to such withholdings as
are required by law and such practices and policies.
Executive’s base pay shall be subject to annual review and
periodic increases (but not decreases) in accordance with
Rock-Tenn’s customary practices for its senior
executives.
(d) Executive shall continue to
participate in all bonus, option, stock, insurance and other
employee benefit and welfare plans, programs and policies
maintained by Rock-Tenn and in which Executive is eligible by their
terms to participate. Such participation shall be based on the
terms and provisions of such plans, programs and policies and shall
not be affected by whether or not, by the terms of this
Agreement,
Executive is contractually entitled
to be provided with the rights and benefits described in
Section 3 hereof upon his separation from service within the
meaning of Code Section 409A (a “Separation from
Service”). Additionally, such participation relative to other
senior officers as a class shall continue to be at a level that is
commensurate with Executive’s position as Chief Executive
Officer and, to the extent that the level of participation is
measured by performance criteria, at such level as reflects both
Executive’s position and achievement of the relevant
performance criteria.
2. Benefits at a
Separation from Service. Except as provided in
Section 4 hereof, Rock-Tenn will provide or cause to be
provided to Executive the rights and benefits described in
Section 3 hereof in the event that Executive has a Separation
from Service prior to Executive’s 65 th birthday as a result
of:
(a) action taken at any time by
Rock-Tenn to terminate his employment other than for
“cause” (as such term is defined in Section 4
hereof) or as a consequence of Executive’s death or
“permanent disability” (as such term is defined in
Section 4 hereof);
(b) action taken by Executive to
terminate his employment following the occurrence of any of the
following events without Executive’s prior specific written
consent:
(i) (A) The assignment of Executive
to any duties or responsibilities that are inconsistent with
Executive’s position, duties, responsibilities, status, or
reporting responsibilities as the Chief Executive Officer of the
Company at the Effective Date, (B) the failure of the Company
to comply with Section 1(c) or Section 1(d) of this
Agreement, or (C) the reduction or alteration to
Executive’s detriment of Executive’s retirement program
or benefit, including without limitation, the SERP III Benefit as
in effect on the Original Effective Date; or
(ii) After a Change in
Control,
(A) Rock-Tenn or the Ultimate Parent
(as defined in subsection (E) below) (x) reduces or
alters to Executive’s detriment Executive’s salary
(including any deferred portions thereof) or Executive’s
retirement program or benefit, including without limitation, the
SERP III Benefit as in effect immediately prior to the Change in
Control, or (y) fails to provide to Executive a bonus or
long-term incentive compensation opportunity (“Bonus or LTI
Opportunity”) that is at least as favorable to Executive as
the average of the three highest Bonus or LTI Opportunities that
were in effect for Executive for the five most recent Rock-Tenn
fiscal years before the fiscal year in which the Change in Control
occurred;
(B) Rock-Tenn or the Ultimate Parent
reduces or diminishes Executive’s duties, responsibilities,
status, chain of persons reporting to him, staff assistance or
office space from those that Executive enjoys and define his
position as Chief Executive Officer of Rock-Tenn immediately prior
to the Change in Control;
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(C) Rock-Tenn or the Ultimate Parent
transfers Executive to a location requiring a change in
Executive’s residence or a material increase in the amount of
travel normally required of Executive in connection with
Executive’s employment;
(D) Rock-Tenn or the Ultimate Parent
fails to continue to provide to Executive health and welfare
benefits, and deferred compensation, that are in the aggregate
comparable to those provided to Executive immediately prior to the
Change in Control; or
(E) If the Change in Control results
in Rock-Tenn not being and thereafter continuing as the ultimate
surviving parent (“Ultimate Parent”) entity resulting
from the Change in Control transaction, the failure of Executive to
be named as and become (upon or promptly following the consummation
of such transaction) the Chief Executive Officer of Ultimate Parent
with duties and responsibilities the same as or substantially
equivalent to those he enjoys and that define his position and
status with Rock-Tenn immediately prior to the Change in
Control;
but only if, with respect to any act
or omission in subsection 2(b)(i) prior to a Change in Control,
(x) Executive delivers to the Compensation Committee a
detailed, written statement of the basis for Executive’s
belief that one of the applicable acts or omissions has occurred
within 90 days after the act or omission occurred,
(y) Executive gives the Compensation Committee a sixty
(60) day period after the delivery of such statement to cure
the basis for such belief, and (z) Executive actually submits
Executive’s written resignation to the Compensation Committee
during the sixty (60) day period that begins immediately after
the end of such sixty (60) day period if Executive reasonably
and in good faith determines that the basis for such belief has not
been cured during such sixty (60) day period.
The term “Change in
Control” for purposes of this Section 2(b) shall mean
the consummation of a change in control of Rock-Tenn of a nature
that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Exchange
Act as in effect at the time of such “change in
control”, provided that such a change in control shall be
deemed to have occurred at such time as (i) any
“person” (as that term is used in Sections 13(d) and
14(d)(2) of the Exchange Act), is or becomes the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act) directly or
indirectly of securities representing 50% or more of the combined
voting power for election of directors of the then outstanding
securities of Rock-Tenn or any successor of Rock-Tenn;
(ii) during any period of two consecutive years or less,
individuals who at the beginning of such period constitute the
Board of Directors of Rock-Tenn (the “Board”) cease,
for any reason, to constitute at least a majority of the
Board,
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unless the election or nomination
for election of each new director was approved in advance by a vote
of at least two-thirds of the directors then still in office who
were directors at the beginning of the period; (iii) the
shareholders of Rock-Tenn approve any reorganization, merger,
consolidation or share exchange as a result of which the common
stock of Rock-Tenn shall be changed, converted or exchanged into or
for securities of another corporation (other than a merger with a
wholly-owned subsidiary of Rock-Tenn) or any dissolution or
liquidation of Rock-Tenn or any sale or other disposition of 50% or
more of the assets or business of Rock-Tenn; or (iv) the
shareholders of Rock-Tenn approve any reorganization, merger,
consolidation or share exchange unless (A) the persons who
were the beneficial owners of the outstanding shares of the common
stock of Rock-Tenn immediately before the consummation of such
transaction beneficially own more than 50% of the outstanding
shares of the common stock of the successor or survivor corporation
in such transaction immediately following the consummation of such
transaction and (B) the number of shares of the common stock
of such successor or survivor corporation beneficially owned by the
persons described in clause (A) immediately following the
consummation of such transaction is beneficially owned by each such
person in substantially the same proportion that each such person
had beneficially owned shares of Rock-Tenn common stock immediately
before the consummation of such transaction, provided (C) the
percentage described in clause (A) of the beneficially owned
shares of the successor or survivor corporation and the number
described in clause (B) of the beneficially owned shares of
the successor or survivor corporation shall be determined
exclusively by reference to the shares of the successor or survivor
corporation that result from the beneficial ownership of shares of
common stock of Rock-Tenn by the persons described in clause
(A) immediately before the consummation of such
transaction.
Any prior written consent given by
Executive pursuant to this Section 2(b) shall relate only to
the item or items so specifically consented to and shall serve to
re-establish as the status quo for purposes of this
Section 2(b) against which any future events are thereafter
measured, as altered only by the change(s) thereto so specifically
consented to and, if applicable, so previously specifically
consented to by Executive.
3. Rights and
Benefits upon Termination. In the event of
Executive’s Separation from Service prior to
Executive’s 65 th birthday, under any of the
circumstances set forth in Section 2 hereof
(“Termination”), Rock-Tenn agrees to provide or cause
to be provided to Executive the following rights and
benefits:
(a) Lump Sum
Payment at Termination. Executive shall (subject to
Section 3(h)) be entitled to receive within 30 days of
Termination a lump-sum payment in cash in the amount of three times
Executive’s Earnings (as such term is defined in this
Section 3(a)); provided , however, that if there
are fewer than 36 months remaining from the date of Termination to
Executive’s 65 th birthday, the amount calculated
pursuant to this paragraph will be reduced by multiplying such
amount by a fraction, the numerator of which is the number of
months (including any fraction of a month) so remaining to
Executive’s 65 th birthday, and the denominator of
which is 36.
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For purposes of this Agreement,
“Earnings” shall mean the sum of
(1) Executive’s Annual Base Pay (as defined below),
(2) Executive’s Recent Cash Bonus (as defined below),
and (3) Executive’s Recent Long-Term Compensation (as
defined below).
“Annual Base Pay” shall
mean the annualized amount of Executive’s rate of base pay
(as shown in Rock-Tenn’s payroll records) measured at its
highest level existing at any time following the Original Effective
Date.
“Recent Cash Bonus”
shall mean the product of Executive’s Annual Base Pay
multiplied by the average of the three highest quotients
determined, for each of the five most recent Rock-Tenn fiscal years
before the fiscal year in which the Termination occurred, by
dividing (a) the sum of all cash bonuses and amounts paid to
Executive, under all Rock-Tenn short-term incentive plans in which
Executive participated (other than Rock-Tenn’s 2005
Shareholder Value Creation Plan) with respect to such fiscal year
(including for this purpose any such amount receipt of which was
deferred by Rock-Tenn or Executive pursuant to the terms of any
applicable Rock-Tenn plan), by (b) the base pay (as shown in
Rock-Tenn’s payroll records) paid to Executive with respect
to such fiscal year. Notwithstanding the foregoing, if the
Termination occurs after the conclusion of the payment of cash
bonuses and other amounts as short-term incentive compensation for
a fiscal year, the quotients calculated as described above shall be
determined for such fiscal year and for the four preceding fiscal
years.
“Recent Long-Term
Compensation” shall mean the product of Executive’s
Annual Base Pay multiplied by the average of the three highest
quotients determined, for each of the five most recent Rock-Tenn
fiscal years before the fiscal year in which the Termination
occurred, by dividing (a) the Grant Value (as defined below)
for all grants of stock options and/or restricted stock and other
long-term incentive compensation made under Rock-Tenn’s 2004
Incentive Stock Plan (and any successor plans or additional
long-term incentive plan or plans) during such fiscal year by
(b) the annualized amount of Executive’s rate of base
pay (as shown in Rock-Tenn’s payroll records) on the date of
such grant. “Grant Value” shall mean, with respect to
any such grant, the sum of (1) the product of the number of
stock options granted to Executive multiplied by the value of each
such stock option at the date of grant (as reasonably determined or
approved by the Compensation Committee as of the date of grant),
plus (2) the product of the number of shares of restricted
stock granted to Executive multiplied by the value of a share of
restricted stock at the date of grant (as reasonably determined or
approved by the Compensation Committee as of the date of grant),
plus (3) the aggregate value of any other long-term incentive
compensation, however manifested, at the date of grant (as
reasonably determined or approved by the Compensation Committee as
of the date of grant). Notwithstanding the foregoing, if the
Termination occurs after the conclusion of the grant of stock
options and/or restricted stock and other long-term incentive
compensation for a fiscal year, the quotients calculated as
described above shall be determined for such fiscal year and for
the four preceding fiscal years.
(b) Retirement Benefit.
Subject to Section 3(h), within 30 days of Termination,
Rock-Tenn shall pay to Executive, in the form of a cash lump sum,
an amount equal to the excess of (A) the amount that would be
required to be paid to
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Executive as a SERP III Benefit
under the Rock-Tenn Company Supplemental Executive Retirement Plan,
as in effect on the Effective Date and as it may be amended in any
way thereafter that may be beneficial to Executive (the
“SERP”), if (i) the date of Termination were
Executive’s Employment Termination Date under the SERP, and
(ii) a Change of Control (within the meaning of the SERP) had
occurred and the related Change of Control Date was the date of
Termination, over (B) the amount that is required to be paid
to Executive as a SERP III Benefit under the SERP as of
Executive’s Termination.
(c) Insurance and
Other Special Benefits. To the extent Executive and his
dependents are eligible thereunder, until Executive’s
65 th birthday Executive and his
dependents shall continue to be covered by the life and dependent
life insurance and medical and dental insurance plans of Rock-Tenn
or any successor plan or program in effect on the date of
Termination for employees in the same class or category as
Executive, subject to the terms of such plans and to
Executive’s making any required contributions thereto. In the
event Executive and his dependents are ineligible to continue to be
so covered under the terms of any such benefit, plan or program, or
in the event Executive and his dependents are eligible but the
benefits applicable to them are not substantially equivalent to the
benefits applicable to them immediately prior to Termination, then,
for a period of 36 months following Termination (or until
Executive’s 65 th birthday, whichever is sooner),
Rock-Tenn shall provide such substantially equivalent benefits, or
such additional benefits as may be necessary to make the benefits
applicable to Executive and his dependents substantially equivalent
to those in effect before Termination, through other sources,
subject to Executive’s making dollar amount contributions no
greater than those he would have made under Rock-Tenn’s
plans; provided , however , that if during such
period Executive should enter into the employ of another company or
firm which provides substantially similar benefit coverage and at
no greater cost, Executive’s and his dependents’
participation in the comparable benefit provided by Rock-Tenn
either directly or through such other sources shall cease. Nothing
contained in this paragraph shall be deemed to require or permit
termination or restriction of Executive’s coverage under any
plan or program of Rock-Tenn or any successor plan or program
thereto to which Executive is entitled under the terms of such plan
or program, whether at the end of the aforementioned 36-month
period or at any other time. Executive shall be entitled to
continuation (“COBRA”) coverage under Code
Section 4980B upon the termination of the coverage provided
under this Section 3(c) to the same extent as if such coverage
had not been provided. Upon the termination of the medical coverage
(including any COBRA coverage elected by Executive) provided under
this Section 3(c), Executive shall be entitled to such retiree
medical coverage as may be available generally to early or normal
retirees of Rock-Tenn, or to former employees in the same class or
category as Executive, subject to the terms of such coverage and to
Executive’s making any required contributions thereto. The
provisions of this Section 3(c) are subject to the provisions
of Section 3(h).
(d) Vesting. At the date of
Termination, all of Executive’s then unvested rights under
Rock-Tenn’s 2004 Incentive Stock Plan shall vest.
(e) Other Benefit Plans. The
specific arrangements referred to in this Section 3 are not
intended to exclude Executive’s participation in other
benefit plans in
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which Executive currently
participates or which are available to executive personnel
generally in the class or category of Executive or to preclude
other compensation or benefits as may be authorized by the Board of
Directors from time to time.
(f) No Duty to Mitigate.
Executive’s entitlement to benefits hereunder shall not be
governed by any duty to mitigate damages by seeking further
employment nor offset by any compensation which Executive may
receive from future employment.
(g) Payment Obligations
Absolute. Rock-Tenn’s obligation to pay or cause to be
paid to Executive the benefits and to make the arrangements
provided in this Section 3 shall be absolute and unconditional
and shall n
