AGREEMENT,
dated as of September 11, 2006 (the “ Agreement
”), between Altivity Packaging, LLC (the “
Company ”), and Donald Sturdivant (the “
Executive ”).
WHEREAS,
the Company desires that the Executive serve the Company as its
Executive Vice President on the terms and conditions set forth
herein.
NOW,
THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the parties
agree as follows:
1.
Employment, Duties and Agreements .
(a) The
Company hereby agrees to employ the Executive as its Executive Vice
President, and the Executive hereby accepts such position and
agrees to serve the Company in such capacity during the employment
period fixed by Section 3 hereof (the “ Employment
Period ”). The Executive shall have such duties and
responsibilities as are consistent with the Executive’s
position and as may be assigned by the Company from time to time.
During the Employment Period, the Executive shall be subject to,
and shall act in accordance with, all reasonable instructions and
directions and all applicable policies and rules of the
Company.
(b) During
the Employment Period, excluding any periods of vacation and sick
leave to which the Executive is entitled, the Executive shall
devote his full working time, energy and attention to the
performance of his duties and responsibilities hereunder and shall
faithfully and diligently endeavor to promote the business and best
interests of the Company.
(c) During
the Employment Period, the Executive may not, without the prior
written consent of the Company, directly or indirectly, operate,
participate in the management, operations or control of, or act as
an executive, officer, consultant, agent or representative of, any
type of business or service (other than as an executive of the
Company), provided that it shall not be a violation of the
foregoing for the Executive to manage his personal, financial and
legal affairs so long as such activities do not interfere with the
performance of his duties and responsibilities to the Company as
provided hereunder.
(a) As
compensation for the agreements made by the Executive herein and
the performance by the Executive of his obligations hereunder,
during the Employment Period, the Company shall pay the Executive,
pursuant to the Company’s normal and customary payroll
procedures, a base salary at the rate of $450,000 per annum, (the
“ Base Salary ”).
(b) In
addition to the Base Salary, during the Employment Period, the
Executive shall be eligible to participate in the annual incentive
plan (the “ AIP ”) established and approved by
the Company’s Board of Directors (the “ Board
”) and, pursuant to the AIP, the Executive may earn an annual
bonus (the “ Annual Bonus ”) in each fiscal year
during the Employment Period, with a target Annual Bonus of 75% of
Base Salary up to a maximum of 150% of Base Salary, based on the
achievement of
annual
performance objectives as set forth in the AIP; provided
that the Annual Bonus with respect to fiscal year 2006 shall be at
least $126,562.50 and the Annual Bonus with respect to fiscal year
2007 shall be at least $168,750.00; and provided ,
further , that the Executive’s entitlement to an
Annual Bonus shall be subject in all cases to the Executive’s
employment with the Company through the applicable payment date for
any such Annual Bonus.
(c) As
soon as practicable after the Effective Date, the Company will pay
the Executive a signing bonus of $125,000 (the “ Signing
Bonus ”); provided that in the event the Executive
terminates his employment with the Company for any reason, or the
Executive’s employment is terminated for Cause (as provided
herein) within the two-year period following the Effective Date,
the Executive agrees to repay, on the date of such termination, the
entire amount of the Signing Bonus in immediately available funds
(“ Clawback ”). The Company reserves the right
to offset the Executive’s obligation to repay all or a
portion of the Signing Bonus as provided in the preceding sentence
against any amounts due to the Executive from the Company;
provided that such offset shall not be the sole remedy of
the Company in enforcing the Clawback.
(d) As
soon as practicable after the Effective Date, the Company will
grant the Executive options (the “ Options ”) to
purchase 315,000 membership units of the Company (the “
Units ”) at an exercise price of $10 per Unit. The
specific terms and conditions governing all aspects of the Options
shall be provided in separate grant agreements and any relevant
plan documents (collectively, the “ Option Agreements
”). The Options shall be comprised of the following two
tranches: (1) 66.67% of the Options (the “ Time-Based
Options ”) will vest and become exercisable in equal
annual installments of 20% over a five-year period, subject to the
Executive’s continued employment with the Company through the
applicable vesting date and (2) 33.33% of the stock options (the
“ Performance-Based Options ”) will vest and
become exercisable only upon the achievement by the Company of the
following performance targets, in each case, subject to the
Executive’s continued employment with the Company through the
applicable vesting date: (A) 50% of the Performance-Based
Options will vest upon the occurrence of any liquidity event in
connection with which TPG Partners IV, L.P. and TPG Partners V,
L.P. (together, “ TPG ”) realize a multiple of
money (“ MoM ”) of at least 2.0x its initial
investment in the Company, as determined by the Board in good faith
against a pre-determined specific measurement, and (B) the
remaining 50% of the Performance-Based Options will vest upon the
occurrence of any liquidity event in connection with which TPG
realizes an MoM of at least 3.0x its initial investment in the
Company, as determined by the Board in good faith against a
pre-determined specific measurement.
Notwithstanding
the foregoing, in the event the Company terminates the
Executive’s employment without Cause (as defined in
Section 3 below) within the two-year period following a Change
of Control (as defined in the applicable Option Agreement) the
unvested portion of the Time-Based Options shall become immediately
exercisable. Upon any termination of the Executive’s
employment, any Options that are not vested and exercisable as of
such termination and that do not become vested and exercisable as a
result of such termination shall automatically expire on the Date
of Termination (as defined in Section 4 below). Any Options
that have become vested and exercisable as of (or that become
exercisable as a result of) the Date of Termination shall expire on
the earlier of (i) ninety (90) days after the date the
Executive’s employment is terminated for any reason other
than Cause, death or Disability; (ii) one year after the date
the Executive’s employment is terminated by reason of death
or Disability; (iii) the commencement of business on the date
the Executive’s employment is terminated for Cause; or
(iv) the seventh anniversary of the grant date. All Options
that are outstanding as of the seventh anniversary of the grant
date will expire on such date.
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(e) On
or before January 31, 2007 the Executive will be permitted to
invest up to four hundred and fifty thousand ($450,000) to purchase
Units of the Company at a price of $10 per Unit.
(f) The
purchase of any Units upon the exercise of the Options, or any
other purchase or issuance of Units contemplated by this Agreement,
will be subject to the Executive’s execution of a Management
Stockholders’ Agreement for the Company in such form as
provided by the Company (the “ Management
Stockholders’ Agreement ” and, together with the
Option Agreements, the “ Equity Agreements ”)
for the Company, which will include, among other things, (1)
restrictions on transfer of the Units and call rights by the
Company, (2) certain drag-along and tag-along rights and
obligations, (3) certain lock-up rights in connection with any
underwritten public offering of equity securities of the Company or
any affiliate and (4) that Executive make such representations
and execute such documents as the Company determines are reasonably
necessary or appropriate to comply with any applicable securities
or tax law requirements, to qualify for any exemption from any
applicable securities laws or to ensure Executive’s
compliance with his obligations under the Management
Stockholders’ Agreement.
(g) During
the Employment Period: (i) except as specifically provided
herein, the Executive shall be entitled to participate in all
savings and retirement plans, practices, policies and programs of
the Company which are made available generally to other executive
officers of the Company, and (ii) except as specifically
provided herein, the Executive and/or the Executive’s family,
as the case may be, shall be eligible for participation in, and
shall receive all benefits under, all welfare benefit plans,
practices, policies and programs (including the Company’s
disability plan) provided by the Company which are made available
generally to other executive officers of the Company (for the
avoidance of doubt, such plans, practices, policies or programs
shall not include any plan, practice, policy or program which
provides benefits in the nature of severance or continuation
pay).
(h) The
Company shall reimburse the Executive for all reasonable business
expenses upon the presentation of statements of such expenses in
accordance with the Company’s policies and procedures now in
force or as such policies and procedures may be modified with
respect to all senior executive officers of the Company.
(i) The
Company shall, within 30 days after the Effective Date,
reimburse the Executive for the Executive’s reasonable moving
expenses and other miscellaneous costs in relocating his primary
residence to the Chicago, Illinois area. In addition, the Company
shall reimburse the Executive for reasonable travel expenses
incurred in moving himself and his immediate family to the Chicago,
Illinois area. The Company shall not, unless the Executive receives
the Company’s prior written approval, be obligated to
reimburse the Executive for relocation and related expenses in
excess of $7,500 in the aggregate.
The
Employment Period shall commence on August 16, 2006 (the
“ Effective Date ”) and shall terminate on the
first anniversary of the Effective Date, provided that on the first
anniversary of the Effective Date and on each anniversary
thereafter, the Employment Period shall automatically be extended
for additional one-year periods unless either party provides the
other party with notice of non-renewal at least sixty days before
any such anniversary (the anniversary date on which the Employment
Period terminates shall be referred to herein as the “
Scheduled Termination Date ”). Notwithstanding the
foregoing, the Executive’s employment hereunder may be
terminated during the Employment Period
3
prior to the
Scheduled Termination Date upon the earliest to occur of any one of
the following events (at which time the Employment Period shall be
terminated):
(a) Death.
The Executive’s employment hereunder shall terminate upon his
death.
(b) Disability.
The Company shall be entitled to terminate the Executive’s
employment hereunder for “ Disability ” if, as a
result of the Executive’s incapacity due to physical or
mental illness or injury, the Executive (i) shall become
eligible to receive a benefit under the Company’s long-term
disability plan applicable to the Executive, or (ii) if no
such long-term disability plan is applicable to the Executive, the
Executive shall have been unable to perform his duties hereunder
for a period of ninety (90) consecutive days or a period of
ninety (90) days in any one hundred eighty (180) day
period.
(c) Cause.
The Company may terminate the Executive’s employment
hereunder for Cause. For purposes of this Agreement, the term
“ Cause ” shall mean: (i) a material breach
by the Executive of this Agreement; (ii) the failure by the
Executive to reasonably and substantially perform his duties
hereunder (other than as a result of physical or mental illness or
injury); (iii) the Executive’s willful misconduct or
gross negligence which is materially injurious to the Company or an
affiliate of the Company; or (iv) the commission by the
Executive of a felony or other serious crime involving moral
turpitude. In the case of clauses (i) and (ii) above, the
Company shall provide notice to the Executive indicating in
reasonable detail the events or circumstances that it believes
constitute Cause hereunder and, if such breach or failure is
reasonably susceptible to cure, provide the Executive with a
reasonable period of time (not to exceed thirty
(30) days
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