Exhibit 10.32
SEPARATION AGREEMENT
This
Separation Agreement (the “ Agreement ”),
dated August 27, 2007, is entered into by and among Timothy J.
Cunningham (“ Mr. Cunningham ”),
Pregis Holding I Corporation, a Delaware corporation (“
Holding I ”), and its wholly owned
subsidiaries, Pregis Holding II Corporation, a Delaware corporation
(“ Holding II ”), and Pregis Corporation,
a Delaware Corporation (the “ Company ”
and together with Holding I and Holding II, the “
Companies ”).
WHEREAS,
Mr. Cunningham is employed by the Companies pursuant to an
Employment Agreement among Mr. Cunningham and the Companies,
dated as of April 12, 2006 (the “ Employment
Agreement ”);
WHEREAS,
Mr. Cunningham and Holding I are parties to a Noncompetition
Agreement dated as of April 12, 2006 (the “
Noncompetition Agreement ”) and a Subscription
Agreement (the “ Subscription Agreement
”) dated as of May 1, 2006;
WHEREAS,
Mr. Cunningham and the Company’s Board of Directors have
mutually agreed that a separation is in the best interests of
Mr. Cunningham and the Company;
WHEREAS,
Mr. Cunningham’s employment with the Companies shall
conclude on the Separation Date (as defined below); and
WHEREAS,
as a condition precedent and a material inducement for the
Companies to provide to Mr. Cunningham the Separation Benefits
(as defined below), Mr. Cunningham has agreed to execute this
Agreement and the Waiver and Release of Claims attached as
Exhibit A hereto and be bound by the provisions herein and
therein.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for the monetary and other consideration set
forth below, the parties agree as follows:
1. Interim Position . As
of August 27, 2007, Mr. Cunningham shall cease to hold
the position of Chief Financial Officer. Mr. Cunningham shall
be appointed to the position of Interim Chief Financial Officer as
of August 27, 2007, and shall continue to hold this position
until the earlier to occur of (i) December 31, 2007 and
(ii) any such earlier date determined by mutual agreement of
Mr. Cunningham and the Company (the “ Separation
Date ”); provided, however, that the Company may
change Mr. Cunningham’s position from Interim Chief
Financial Officer to consultant during this time. While serving as
Interim Chief Financial Officer or consultant, Mr. Cunningham
shall (i) receive his base salary of $350,000 per year,
payable bi-weekly and prorated for any partial employment period
and (ii) be eligible to participate in the Companies’
benefit programs to the extent of his participation prior to his
change of position. The parties agree that effective upon the
Separation Date, Mr. Cunningham shall be deemed to have
resigned from any directorship, position or office with or in the
Companies or their affiliates. For the avoidance of doubt, the date
of Mr. Cunningham’s
termination of employment for purposes of application of the
Noncompetition Agreement shall be the Separation Date.
2. Separation Benefits .
In consideration for acceptance of the terms contained in this
Agreement and the Waiver and Release of Claims attached as
Exhibit A, the Company shall (i) pay to Mr. Cunningham an
amount equal to his base salary as of the Separation Date (the
“ Termination Payment ”); (ii) pay
to Mr. Cunningham all accrued but unpaid amounts payable to
him under any employee benefit plan, including four (4) weeks
of weekly base salary in settlement of accrued vacation benefits,
and reimbursements for any unreimbursed expenses incurred in
accordance with the Companies’ policies prior to the
Separation Date (the “ Accrued Payment
”); and (iii) continue to provide Mr. Cunningham with
medical benefits on the same terms that would have otherwise
applied to him had he remained an active employee until the earlier
of (a) December 31, 2008 or (b) the date
Mr. Cunningham becomes eligible for medical benefits from a
subsequent employer (the “ Continued Medical
Benefits ”). In addition, the Company shall pay
Mr. Cunningham an incentive bonus for the fiscal year 2007,
based on the Companies’ actual performance through the end of
such fiscal year (pro rata if the Separation Date occurs before
December 31, 2007) (the “ Incentive
Payment ,” collectively with the Termination Payment,
Accrued Payment and Continued Medical Benefits, the “
Separation Benefits ”). The Company’s
obligation to pay Mr. Cunningham the Termination Payment and
Incentive Payment, to provide him Continued Medical Benefits and to
provide the benefits set forth in Section 3 below shall, in
each case, be conditioned upon: (i) Mr. Cunningham’s
continued compliance with his obligations under the Noncompetition
Agreement, (ii) Mr. Cunningham’s execution, delivery and
non-revocation of the Waiver and Release of Claims and (iii)
Mr. Cunningham’s continued compliance with his
obligations under this Agreement. The Separation Benefits shall be
subject to any and all applicable withholding taxes or other
amounts required by law to be withheld. The Termination Payment
shall be paid in installments on the Companies’ regular
payroll dates occurring during the twelve (12) month period
immediately following the effectiveness of the Waiver and Release
of Claims. The Incentive Payment shall be paid in 2008 at the time
Companies ordinarily pay incentive bonuses to its executives with
respect to the fiscal year in which the Separation Date occurs. The
Accrued Payment shall be paid within thirty (30) days following the
Separation Date. The Separation Benefits shall continue to be paid
and provided until the dates provided herein if Cunningham dies
prior thereto.
3. Stock Options .
Subject to Section 2 hereof, on January 1, 2008
Mr. Cunningham shall vest with respect to 3.026 of the shares
subject to the Nonqualified Stock Option Agreement, dated as of
February 27, 2007, between Holding I and Mr. Cunningham
(the “ 2007 Option Grant ”) if the EBITDA
vesting conditions with respect to such shares are satisfied. With
respect to the portion, if any, of the 2007 Option Grant which
becomes vested, and the portion of the options which are vested
pursuant to the Nonqualified Option Agreement for Employees, dated
as of May 1, 2006, between Holding I and Mr. Cunningham
(the “ 2006 Option Grant ”),
Mr. Cunningham may exercise such vested portion until the date
six (6) months following the Separation Date.
4. Release of Claims .
Mr. Cunningham shall sign the Waiver and Release of Claims
attached hereto as Exhibit A on the Separation Date.
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