Exhibit 10.20
Execution Copy
EMPLOYMENT
AGREEMENT
THIS AGREEMENT is made effective as
of October 12, 2005, by and among Pregis Holding I
Corporation, a Delaware Corporation ( “Pregis
I” ), and its wholly owned subsidiaries, Pregis
Holding II Corporation, a Delaware corporation (
“Pregis II” ), and Pregis Corporation, a
Delaware corporation ( “Pregis” )
(Pregis I, Pregis II and Pregis, collectively, the
“Employers” and individually an
“Employer” ), and C. William McBee (
“Executive” ).
RECITALS
WHEREAS, Executive desires to be
employed by Employers; and
WHEREAS, Employers desire to employ
the Executive and to utilize his management services as indicated
herein, and Executive has agreed to provide such management
services to Employers; and
WHEREAS, as a condition precedent
and a material inducement for Employers to employ and pay
Executive, Executive has agreed to execute this Agreement and the
Noncompetition Agreement, dated as of October 12, 2005,
between Pregis I and Executive (the “Noncompetition
Agreement” ), and be bound by the provisions herein
and therein.
NOW, THEREFORE, in consideration of
the mutual covenants contained herein, the parties hereto agree as
follows:
PROVISIONS
1. Term and Duties .
Employers hereby agree to employ Executive as President, Hexacomb,
commencing on October 12, 2005 (the “Start
Date” ) and continuing for a period of three
(3) years (the “Initial Term” ) or
until terminated in accordance with this Section 1 or
Section 4. Unless terminated by either Executive or Employers
by written notice delivered at least thirty (30) days prior to
the expiration of the Initial Term, Executive’s employment
shall continue for successive one (1) year terms (each one
(1) year term hereinafter referred to as a
“Subsequent Term” and, together with the
Initial Term, the “Term” ) until
terminated by written notice delivered at least thirty
(30) days prior to the expiration of the Subsequent Term.
Subject to the provisions of this Agreement, during the Term,
Executive shall devote his best efforts and abilities to the
performance of Executive’s duties on behalf of Employers, and
to the promotion of their interests consistent with and subject to
the direction and control of the Board of Directors of each
Employer (the “Board” ). Executive shall
devote substantially all of his business time, energies, attention
and abilities to the operation of the business of Employers and
shall not be actively involved in any other trade or business or as
an employee of any other trade or business.
2. Compensation During Term
.
(a) Base Compensation . In
consideration of the services to be rendered by Executive during
the Term, Employers shall pay to Executive as base salary $200,000
per year ( “Base Compensation” ), payable
bi-weekly and prorated for any partial employment
period.
(b) Bonus . Subject to the
limitations set forth in this Agreement, commencing with the fiscal
year beginning January 1, 2006, Executive shall be entitled to
receive an annual incentive bonus (the “Incentive
Bonus” ) based upon the achievement of one or more
performance goals as determined by the Board in its sole
discretion.
3. Benefits .
(a) Executive shall be eligible to
participate in such benefit programs offered by each Employer
(other than bonus plans), such as health, dental, life insurance,
vision, vacations and pension, as are offered to similarly-situated
employees (except in the case of equity-based incentive plans where
awards are subject to Board (or committee thereof) approval) and in
each case no more favorable than the terms of benefits generally
available to the employees of Employers (based on seniority and
salary level), subject in each case to the generally applicable
terms and conditions of the plan, benefit or program in
question.
(b) Employers shall reimburse
Executive for all reasonable expenses incurred by him in the course
of performing his duties under this Agreement which are consistent
with the Employers’ policies in effect from time to time with
respect to travel, entertainment and other business expenses,
subject to the Employers’ requirements with respect to
reporting, documentation and approval of such expenses.
4. Termination .
Executive’s employment shall terminate upon the first to
occur of the following (each, a “Termination
Date” ):
(a) The expiration of the
Term;
(b) Executive’s death or
disability (mentally, physically or emotionally), so that Executive
cannot substantially perform his duties hereunder for a period of
ninety (90) consecutive days or for one hundred eighty
(180) days during any 365 day period during the
Term;
(c) Executive’s voluntary
termination of his employment for any reason, upon not less than
ten (10) business days’ written notice to Employers;
or
2
(d) Employers’ termination of
Executive’s employment for Cause (as hereinafter
defined).
5. Termination Payments
.
(a) Except as otherwise provided
herein, if Executive’s employment is terminated pursuant to
Section 1 by thirty (30) days’ prior written notice
or pursuant to Section 4, Executive’s Base Compensation
and other benefits, if any, shall terminate at the end of the month
during which such termination occurs.
(b) Upon termination of
Executive’s employment without Cause, Employers shall be
obligated, in lieu of any other remedies available to Executive, to
pay Executive (A) an amount equal to his then current Base
Compensation (the “Termination Payment”
); (B) (i) if the Termination Date occurs during the
months of January-June of the fiscal year, a pro rata Incentive
Bonus for the fiscal year in which the termination occurs (the
“Target Pro Rata Incentive Payment” ),
based on Executive’s target Incentive Bonus for such fiscal
year; or (ii) if the Termination Date occurs during the months
of July-December of the fiscal year, a pro rata Incentive Bonus for
the fiscal year in which the termination occurs (the
“Actual Pro Rata Incentive Payment” ),
based on Employers’ actual performance through the end of
such fiscal year; and (C) all accrued but unpaid amounts
payable to Executive under this Agreement and under any employee
benefit plan (the “Accrued Payment” ).
The Target Pro Rata Incentive Payment and the Actual Pro Rata
Incentive Payment shall, in each case, be determined based on the
number of days elapsed from the beginning of the fiscal year in
which the termination occurs through and inclu
