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Exhibit 10.02
SEPARATION AND RETIREMENT AGREEMENT
This SEPARATION AND RETIREMENT AGREEMENT ("the Agreement") is
made and entered into as of the 15 th of December, 2008 (the
"Effective Date"), by and between CARAUSTAR INDUSTRIES, INC., a
North Carolina corporation with its principal place of business in
Austell, Georgia ("the Company"), and John R. Foster
("Employee").
STATEMENT OF PURPOSE
Employee has served as a Named Executive Officer of the Company
with responsibilities for Sales and Marketing in support of the
Mill Group. As of the Resignation Date, Employee will be
involuntarily terminated and tender his resignation as an officer
of the Company. The purpose of this Agreement is to set forth the
terms and agreements of the parties under which this involuntary
separation will be accomplished.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable
consideration, the Company and Employee hereby agree as
follows:
1. Definitions . Throughout this Agreement, the following
terms shall have the stated meaning:
(a) Transition Period shall mean that period commencing
with the Effective Date up to and including December 31,
2008.
(b) Resignation Date shall mean December 31,
2008.
(c) S everance Period shall mean that period commencing
January 1, 2009 up to the Retirement Date.
(d) Retirement Date shall be the earlier of (i) the
date on which Employee is entitled to receive a payment under the
Extended CIC Agreement, or (ii) January 1, 2010.
(e) Extended CIC Agreement means the separate Extended
Change in Control Severance Agreement entered into between the
Company and Employee as of the Effective Date.
2. Resignation as Officer . Employee hereby formally
tenders his resignation as an officer and, as applicable, director
of any of the Company’s subsidiaries and/or affiliates, all
such resignations to be effective as of the Resignation Date.
Employee agrees to execute any documents reasonably required by the
Company, and/or its subsidiaries and affiliates, to effect such
resignations.
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3. Transition Period . Subject to
Employee’s full compliance with the terms of this Agreement,
Employee shall continue to be employed by the Company during the
Transition Period. As an employee of the Company during the
Transition Period, Employee shall be entitled to receive the salary
and benefits specified in paragraph 4, below. During the Transition
Period, Employee agrees to use any and all accrued vacation to
which he would otherwise be entitled and remain accessible to
Senior Management of the Company on business related matters as may
be requested of Employee with prior notice.
4. Payments and Benefits to Employee During the Transition
Period .
(a) Salary . During the Transition Period, the Company
shall continue to pay Employee his current annual base salary of
$290,460. All salary payments shall be made at a time and in accord
with the regular payroll practices of the Company with respect to
its executive officers. All such amounts shall be subject to and
reduced by any applicable federal and state withholding taxes or
other deductions authorized by Employee.
(b) Benefits . During the Transition Period, Employee and
his covered dependents shall be entitled to participate in all
health and welfare and pension benefit plans sponsored or provided
by the Company to the same extent and on the same basis as other
executive employees of the Company. Nothing herein shall affect the
Company’s right to modify, change, terminate or amend the
terms of any of its group welfare or pension benefit plans, and
Employee’s entitlement to any benefits under such plans shall
be governed solely and exclusively by the terms of the then
current, actual benefit plan documents.
5. Payment and Benefits During the Severance Period .
(a) Salary . During the Severance Period, the Company
shall continue to pay Employee his current annual base salary of
$290,460. All salary payments shall be made at a time and in accord
with the regular payroll practices of the Company with respect to
its executive officers. All such amounts shall be subject to and
reduced by any applicable federal and state withholding taxes or
other deductions authorized by Employee.
(b) Benefits . During the Severance Period, Employee and
his covered dependents shall be entitled to participate in all
health and welfare and pension benefit plans sponsored or provided
by the Company to the same extent and on the same basis as other
executive employees of the Company, except that: (i) Employee
shall be provided with fully subsidized healthcare coverage up to
eighteen (18) months, which shall be deemed to have been paid
at the COBRA rate and which shall run concurrently with COBRA
coverage; and (ii) Employee shall not be entitled, from and
after the Resignation Date to: (iii) accrue vacation;
(iv) receive any short-term or long-term incentive payments,
except as set forth in subparagraph 5(d) below; (v) be
reimbursed for dues or assessments relating to
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any private club, country club or professional
organization; (vi) participate in or receive the benefits of
the Change in Control Severance Agreement ("CIC Agreement") by and
between Employee and the Company; (vii) receive benefits under
any severance plan, practice or policy maintained or sponsored by
the Company except as set forth in this subparagraph 5(b) and in
subparagraph 5(e), below and the Extended CIC Agreement or
(viii) receive reimbursement for any business, entertainment
or similar expenses incurred by Employee during the Severance
Period unless expressly approved in advance. Nothing herein shall
affect the Company’s right to modify, change, terminate or
amend the terms of any of its group welfare or pension benefit
plans, and Employee’s entitlement to any benefits under such
plans shall be governed solely and exclusively by the terms of the
then current, actual benefit plan documents.
(c) Conditions to Benefits . All group health care
benefits provided to Employee during the Severance Period, as set
forth in subparagraph 5(b) above, shall terminate immediately upon
Employee becoming covered under any group benefit plan sponsored by
any employer other than the Company. Provided that Employee (and
his covered dependents, if applicable) shall continue to be
eligible for and to receive benefits to which Employee is entitled
under any other welfare benefit plan of the Company, the Caraustar
Industries, Inc. Retirement Plan, the Caraustar Industries, Inc.
Employees’ Savings Plan, the Caraustar Industries, Inc.
Restoration Plan (the "SERP") and the Extended CIC Agreement.
(d) Incentive Plan . Employee shall be eligible to
participate in the Company’s Key Leaders and Senior Managers
Incentive Plan (the "Incentive Plan") for the 2008 calendar year
and may be eligible for an Incentive Plan payment, provided that
the Compensation Committee of the Board of Directors (the
"Committee") approves Incentive Plan payments to executive
officers.
(e) Outplacement Services . The Company will provide
Employee, at no expense to him, outplacement services at the
executive level. Said services will be provided by a mutually
agreed upon resource.
6. Forfeiture of Benefits Upon Change in Control .
Concurrent with the execution of this Agreement, the parties have
entered into the Extended CIC Agreement. The Extended CIC Agreement
terminates the prior CIC Agreement between the parties, and
provides certain severance benefits in the event that a change in
control of the Company occurs within a specified period following
the Resignation Date. In the event that Employee becomes entitled
to severance benefits under the Extended CIC Agreement as a result
of a change in control following the Resignation Date, then
notwithstanding anything in this Agreement to the contrary, all of
the severance benefits described in paragraphs 4 and 5 of this
Agreement that have not been paid to the Employee shall be
forfeited as of the date that severance benefits become payable
under the Extended CIC Agreement, and any further benefits, if any,
shall be provided by the Company to Employee under the Extended CIC
Agreement or the SERP, provided, however that neither this
Agreement, the Extended CIC Agreement or the SERP shall affect
Employee’s rights to benefits related to Employee’s
vested, accrued rights.under the tax –qualified pension
benefit plans or defined contribution pension plans of which
Employee is a participant or beneficiary.
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7. Stock Options and PARS . Equity grants
of restricted stock in the form of, performance accelerated
restricted stock (PARS), performance shares and service based
restricted stock that have been granted to Employee prior to the
date hereof shall continue to vest in accordance with the
provisions applicable to such grants, and shall be exercisable
according to the terms and conditions set forth in the Long Term
Equity Incentive Plan and the option agreements entered into
pursuant thereto. Employee acknowledges that he has voluntarily
forfeited his non qualified stock options granted by the Company in
the years 2003, 2004 and 2006.
8. Return of Company Property . All records, files,
lists, including computer-generated and electronic files, drawings,
notes, notebooks, letters, handbooks, blueprints, manuals,
sketches, specifications, formulas, financial documents, sales and
business plans, customer lists, lists of customer contacts, pricing
information, software, cellular phones, credit cards, keys,
equipment and similar items relating to the Company’s
business, together with any other property of the Company or
property which the Employee received in the course of
Employee’s employment with the Company, shall be returned to
the Company no later than the Resignation Date. Employee will be
allowed to keep the company-owned laptop following the removal of
any unlicensed software as well as the company-sponsored cell phone
and blackberry device. Employee further represents that he will not
copy or cause to be copied, download, print out or cause to be
printed out or downloaded or transferred any software, documents,
electronic data or files or other materials originating with or
belonging to the Company.
9. Confidentiality and Nondisparagement . Employee agrees
to keep confidential and not to make any statement, written or oral
(including but not limited to any media source or to any other
party) regarding the terms of this Agreement. Provided, however, it
shall not constitute a breach of this paragraph for Emplo
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