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Exhibit 10(r)
SERVICE AGREEMENT
between
S & H
Verwaltungsgesellschaft mbH, Hoerdener Strasse 3-7, 76593
Gernsbach
represented by its sole shareholder, PHG Tea Leaves, Inc.
- hereinafter referred to as the "Company" -
and
Mr. Martin Rapp, Simrockallee 8c, 53173 Bonn
Mr. Rapp will he appointed Vice President & General Manager of
the Composite
Fibers Business Unit ("CFBU") of P.H. Glatfelter Company
("Glatfelter") and
managing director of the Company. In connection with such
appointments the
Company and Mr. Rapp enter into the following service agreement
ART. 1
DUTIES AND RESPONSIBILITIES
1. This
Agreement shall commence on 1 August 2006, subject to any agreement
by
the
parties to determine an earlier commencement date. On the
commencement
date
Mr. Rapp shall commence his activities as Vice President &
General
Manager of the CFBU of Glatfelter and as regular managing director
of the
Company. Notice to terminate must not be given prior to the
commencement
date.
2. Mr. Rapp
shall be responsible for the management of the Company,
Schoeller
& Hoesch GmbH & Co. KG (the "KG") and the CFBU with overall
P&L
responsibility for the CEBU. Mr. Rapp shall report to the Executive
Vice
President & Chief Operating Officer of Glatfelter. The
shareholders'
meeting shall be entitled at any time to determine Mr. Rapp's areas
of
responsibility and reporting line differently. Mr. Rapp's status as
Vice
President & General Manager of the CFBU of Glatfelter and as
managing
director of the Company shall remain unaffected thereby.
3. Mr. Rapp
shall represent the Company jointly with another managing
director
or
an officer having commercial power of attorney (Prokurist). The
Company
may
grant Mr. Rapp sole power of representation and may release him
from
the
restrictions under sec. 181 Civil Code (Burgerliches
Gesetzbuch).
4. Mr. Rapp
shall perform his duties and responsibilities with the care of
a
prudent businessman in accordance with the statutory provisions,
the
Articles of Association of the Company and the KG, any by-laws of
the
Company or the KG and any general or spe-
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cific instructions by the Executive Vice President and Chief
Operating
Officer or the Chief Executive Officer of Glatfelter. During the
term of
this
Agreement Mr. Rapp shall devote all of his efforts and his
entire
professional know-how and experience to the Company, the KG and the
CFBU.
ART. 2
TERM
1. This
Agreement is entered into for an indefinite term. It may be
ordinarily
terminated with a notice period of six (6) months to the end of a
calendar
quarter.
2. The right to
give notice for cause shall remain unaffected.
3. Notice to
terminate must be given in writing. The original of the
shareholder resolution on the termination shall accompany the
notice.
4. This
Agreement ends, without notice to terminate being required, upon
the
end
of the month in which Mr. Rapp reaches the age of 65 years, i.e. on
30
September 2024.
5. The Company
shall be entitled at any time, in particular but without
limitation if notice has been given, irrespective by whom and for
which
reason, to release Mr. Rapp from his duty to work with immediate
effect
provided that the Company shall continue to pay the agreed
remuneration and
subject to taking into account any vacation Mr. Rapp is entitled
to.
ART. 3
SIDE ACTIVITIES
1. Upon the
request of the Executive Vice President and Chief Operating
Officer of Glatfelter or the shareholders' meeting, Mr. Rapp, in
addition
to
his position as Vice President & General Manager of the CFBU
of
Glatfelter, shall assume supervisory board and similar offices
in
affiliated companies as well as in industry or similar associations
in
which the Company or any of its affiliated companies is a member.
Mr. Rapp
shall be obliged to resign from such offices without undue delay as
soon as
this
Agreement ends or the Executive Vice President and Chief
Operating
Officer or the Chief Executive Officer of Glatfelter so
requests.
2. Side
activities other than those mentioned in para. 1, prior to
their
assumption, require the written consent of the Executive Vice
President and
Chief Operating Officer or the Chief Executive Officer of
Glatfelter.
Consent will be granted if the Company and the KG and Glatfelter
overall do
not
have any legitimate interest in Mr. Rapp refraining from such
side
activity.
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3. The above
consent requirement applies also to shareholdings in other
undertakings who are competitors, customers or suppliers of the
Company if
Mr.
Rapp can exert direct influence on the business relationship
between
the
Company and the relevant other undertaking due to his position
or
activities.
4. Publications
and lectures which affect the Company's, the KG's or
Glatfelter's interests or allow any conclusions regarding the
Company, the
KG
or Glatfelter require the prior written consent of the Executive
Vice
President and Chief Operating Officer of Glatfelter.
ART. 4
BASE SALARY
1. Mr. Rapp
shall receive an annual base salary in the amount of EUR238,095
gross for all of his activities under and in connection with this
Agreement
The
base salary shall be payable in twelve equal monthly installments
of
EUR19,841.25 gross each at the end of each month.
2. The
Compensation Committee of the Glatfelter Board will review Mr.
Rapp's
base
salary annually. Mr. Rapp is eligible for a merit increase
effective 1
February 2007. Factors impacting the value of the merit increase
include in
particular but without limitation budget business conditions,
the
performance of the Company, the KG and Glatfelter overall as well
as Mr.
Rapp's personal performance.
3. The base
salary and the management bonus (Art. 6) shall each be payable
pro
rata
temporis in the calendar year in which this Agreement commences
or
ends.
4. Any
activities under Art. 3 pan. 1 as well as any activities outside
the
usual working hours are compensated for by the base salary and
the
management bonus (Art 6). Should Mr. Rapp, due to activities under
Art 3
para. 1, be entitled to a compensation or expense allowance he
shall
forward such compensation or expense allowance to the Company.
5. Mr. Rapp is
obliged to keep strictly confidential the contents of this
Agreement within the Company as well as externally.
6. Mr. Rapp
shall return to the Company any overpayments of any kind,
including receivables from incorrect calculation of taxes, social
security
contributions and the like. The defense of loss of enrichment under
sec.
818
para. 3 Civil Code (Burgerliches Gesetzbuch) is excluded.
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ART. 5
SIGNING BONUS
Mr.
Rapp will receive a signing bonus in the amount of (EUR)40,000
gross
which will become due 60 days after the effective commencement
date.
ART. 6
MANAGEMENT BONUS
1. Mr. Rapp will
participate in the management bonus incentive program. Mr.
Rapp's annual target management bonus under this program shall be
45% of
his
base salary, i.e. EUR107,142. Mr. Rapp's maximum management bonus
under
this
program will be 90% of his base salary
