Exhibit 10.10


 


EMPLOYMENT
AGREEMENT


 


This EMPLOYMENT AGREEMENT is
entered into as of August 8, 2003 by and among Riverwood International
Corporation, a Delaware corporation (“Employer”), Riverwood Holding, Inc.,
a Delaware corporation (“Holding”) and Michael R. Schmal (“Executive”).


 


W
I T N E S S E T H:


 


WHEREAS, Employer desires to
employ Executive as its Senior Vice President Beverage on the terms and
conditions set forth herein;


 


WHEREAS, Executive desires to
accept such employment on the terms and conditions set forth herein;


 


WHEREAS, each of Employer,
Holding and Executive agrees that Executive will have a prominent role in the
management of the business, and the development of the goodwill, of Employer
and its Affiliates (as defined below) and will establish and develop relations
and contacts with the principal customers and suppliers of Employer and its
Affiliates in the United States and the rest of the world, all of which
constitute valuable goodwill of, and could be used by Executive to compete unfairly
with, Employer and its Affiliates;


 


WHEREAS, (i) in the course of his employment with
Employer, Executive will obtain confidential and proprietary information and
trade secrets concerning the business and operations of Employer and its
Affiliates in the United States and the rest of the world that could be used to
compete unfairly with Employer and its Affiliates; (ii) the covenants and restrictions contained in Sections 8
through 13, inclusive, are intended to protect the legitimate interests of Employer
and its Affiliates in their respective goodwill, trade secrets and other
confidential and proprietary information; and (iii)
Executive desires to be bound by such covenants and restrictions;


 


NOW, THEREFORE, in
consideration of the premises and the mutual covenants and promises contained
herein and for other good and valuable consideration, Employer, Holding and
Executive hereby agree as follows:


 


 1  Agreement to Employ. 
Upon the terms and subject to the conditions of this Agreement, Employer
hereby employs Executive, and Executive hereby accepts employment by Employer.


 


2  Term; Position and
Responsibilities.


 


(a)                                  Term
of Employment. Unless Executive’s employment shall sooner terminate
pursuant to Section 7, Employer shall employ Executive for a term
commencing on the date hereof and ending on the second anniversary of the date
hereof (the “Initial Term”). Effective upon the expiration of the Initial Term
and of each Additional Term (as defined below), Executive’s employment
hereunder shall be deemed to be automatically extended, upon the same terms and
conditions, for an additional period of one year (each, an “Additional Term”),
in each such case, commencing upon the expiration of the Initial Term or the
then current Additional Term, as the case may be, unless Employer, at least
180 days prior to the expiration of the Initial Term or such Additional
Term, shall give written notice (a”Non-Extension Notice”) to Executive of its
intention not to extend the Employment Period (as defined below) hereunder, provided that a Non-Extension Notice shall
not constitute a notice to Executive of the termination of his employment by
Employer unless such notice specifically provides for such termination of
employment and the specific date thereof. The period during which Executive is
employed pursuant to this Agreement, including any extension thereof in
accordance with the preceding sentence, shall be referred to as the “Employment
Period”.


 


(b)                                 Position
and Responsibilities. During the Employment Period, Executive shall serve
as Senior Vice President Beverage of Employer and have such duties and
responsibilities as are customarily assigned to individuals serving in such
position and such other duties consistent with Executive’s title 


 

















 


and position as the Board of Directors of
Employer (“Employer’s Board”) specifies from time to time. Executive shall
report to the Company’s Executive Vice President, Commercial Operations.
Executive shall devote all of his skill, knowledge and working time (except for
(i) vacation time as set forth in
Section 6(c) and absence for sickness or similar disability and (ii) to the extent that it does not
interfere with the performance of Executive’s duties hereunder, (A) such reasonable time as may be devoted
to service on boards of directors of other corporations and entities, subject
to the provisions of Section 9, and the fulfillment of civic
responsibilities and (B) such
reasonable time as may be necessary from time to time for personal financial
matters) to the conscientious performance of the duties and responsibilities of
such position. If so elected or designated by the respective shareholders
thereof, Executive shall serve as a member of the Boards of Directors of
Holding, Employer and their respective Affiliates during the Employment Period
without additional compensation.


 


3  Base Salary.  As compensation for the services to be
performed by Executive during the Employment Period, Employer shall pay
Executive a base salary at an annualized rate of $300,000, payable in
installments on Employer’s regular payroll dates, and, in the event that
Executive’s employment hereunder is terminated by death, for the remainder of
the pay period in which death occurs and for one month thereafter. Employer’s
Board shall review Executive’s base salary annually during the period of his
employment hereunder and, in its sole discretion, Employer’s Board may increase
(but may not decrease) such base salary from time to time based upon the
performance of Executive, the financial condition of Employer, prevailing
industry salary levels and such other factors as Employer’s Board shall
consider relevant. (The annual base salary payable to Executive under this
Section 3, as the same may be increased from time to time and without
regard to any reduction therefrom in accordance with the next sentence, shall
hereinafter be referred to as the “Base Salary”.) The Base Salary payable under
this Section 3 shall be reduced to the extent that Executive elects to
defer such Base Salary under the terms of any deferred compensation, savings
plan or other voluntary deferral arrangement that may be maintained or
established by Employer.


 


4  Incentive Compensation
Arrangements.  During the
Employment Period, Executive shall participate in Employer’s incentive
compensation programs for its senior executives existing from time to time, at
a level commensurate with his position and duties with Employer and based on
such performance targets as may be established from time to time by Employer’s
Board or a committee thereof.


 


5  Employee Benefits.  During the Employment Period, employee
benefits, including life, medical, dental, accidental death and dismemberment,
business travel accident, prescription drug and disability insurance, shall be
provided to Executive in accordance with the programs of Employer then
available to its senior executives, as the same may be amended and in effect
from time to time. Executive shall also be entitled to participate in all of
Employer’s profit sharing, pension, retirement, deferred compensation and
savings plans, as the same may be amended and in effect from time to time,
applicable to senior executives of Employer. The benefits referred to in this
Section 5 shall be provided to Executive on a basis that is commensurate
with Executive’s position and duties with Employer hereunder and that is no
less favorable than that of similarly situated employees of Employer.


 


6  Perquisites and Expenses.


 


(a)                                  General.
During the Employment Period, Executive shall be entitled to the perquisites
set forth on Schedule I hereto.


 


(b)                                 Business
Travel, Lodging, etc. Employer shall reimburse Executive for reasonable
travel, lodging, meal and other reasonable expenses incurred by him in
connection with his performance of services hereunder upon submission of
evidence, satisfactory to Employer, of the incurrence and purpose of each such
expense and otherwise in accordance with Employer’s business travel
reimbursement policy applicable to its senior executives as in effect from time
to time.


 


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(c)                                  Vacation.
During the Employment Period, Executive shall be entitled to a number of weeks
of paid vacation on an annualized basis, without carryover accumulation, equal
to the greater of (i) four weeks
and (ii) the number of weeks of
paid vacation per year applicable to senior executives of Employer in
accordance with its vacation policy as in effect from time to time.


 


 7  Termination of Employment.


 


(a)                                  Termination
Due to Death or Disability. In the event that Executive’s employment
hereunder terminates due to death or is terminated by Employer due to
Executive’s Disability (as defined below), no termination benefits shall be
payable to or in respect of Executive except as provided in
Section 7(f)(ii). For purposes of this Agreement, “Disability” shall mean
a physical or mental disability that prevents or would prevent the performance
by Executive of his duties hereunder for a continuous period of six months or
longer. The determination of Executive’s Disability shall (i) be made by an independent physician who
is reasonably acceptable to Employer and Executive (or his representative), (ii) be final and binding on the parties
hereto and (iii) be based on such
competent medical evidence as shall be presented to such independent physician
by Executive and/or Employer or by any physician or group of physicians or
other competent medical experts employed by Executive and/or Employer to advise
such independent physician.


 


(b)                                 Termination
by Employer for Cause. Executive may be terminated for Cause (as defined
below) by Employer, provided that
Executive shall be permitted to attend a meeting of Employer’s Board within
30 days after delivery to him of a Notice of Termination (as defined
below) pursuant to this Section 7(b) to explain why he should not be
terminated for Cause and, if following any such explanation by Executive,
Employer’s Board determines that Employer does not have Cause to terminate
Executive’s employment, any such prior Notice of Termination delivered to
Executive shall thereupon be withdrawn and of no further force or effect.
“Cause” shall mean (i) the
willful failure of Executive substantially to perform his duties hereunder
(other than any such failure due to Executive’s physical or mental illness) or
other willful and material breach by Executive of any of his obligations
hereunder or under any option agreement or other incentive award agreement,
after a written demand for substantial performance has been delivered, and a
reasonable opportunity to cure has been given, to Executive by Employer’s
Board, which demand identifies in reasonable detail the manner in which
Employer’s Board believes that Executive has not substantially performed his
duties or has breached his obligations, (ii)
Executive’s engaging in willful and serious misconduct that has caused or is
reasonably expected to result in material injury to Employer or any of its
Affiliates or (iii) Executive’s
conviction of, or entering a plea of guilty or nolo
contendere to, a crime that constitutes a felony.


 


(c)                                  Termination
Without Cause. A termination “Without Cause” shall mean a termination of
employment by Employer other than due to Disability as described in
Section 7(a) or for Cause as described in Section 7(b).


 


(d)                                 Termination
by Executive. Executive may terminate his employment for any reason. A
termination of employment by Executive for “Good Reason” shall mean a
termination by Executive of his employment with Employer within 30 days
following the occurrence, without Executive’s consent, of any of the following
events: (i) the assignment to
Executive of duties that are significantly different from, and that result in a
substantial diminution of, the duties that he is to assume on the date hereof,
(ii) the failure of Employer to
obtain the assumption of this Agreement by any Successor (as defined below) to
Employer as contemplated by Section 14, (iii)
a reduction in the rate of Executive’s Base Salary, (iv) a material breach by Employer of any of its obligations
hereunder or by Holding of any of its obligations under any option agreement or
other incentive award agreement or (v)
delivery to Executive of a Non-Extension Notice, provided that, in the case of any of clauses (i),
(iii) or (iv), within 30 days following the occurrence of any of the
events set forth therein, Executive shall have delivered written notice to
Employer of his intention to terminate his employment for Good Reason, which
notice specifies in reasonable detail the circumstances claimed to give rise to
Executive’s right to 


 


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terminate his employment for Good Reason, and
Employer or Holding, as the case may be, shall not have cured such
circumstances to the reasonable satisfaction of Executive.


 


(e)                                  Notice
of Termination. Any termination by Employer pursuant to Section 7(a),
7(b) or 7(c), or by Executive pursuant to Section 7(d), shall be
communicated by a written Notice of Termination addressed to the other parties
to this Agreement. A”Notice of Termination” shall mean a notice stating that
Executive’s employment with Employer has been or will be terminated.


 


(f)                                    Payments
Upon Certain Terminations.


 


(i)                                     In
the event of a termination of Executive’s employment by Employer Without Cause
or a termination by Executive of his employment for Good Reason during the
Employment Period, Employer shall pay to Executive (or, following his death, to
Executive’s beneficiaries):


 


(A)                              his
Base Salary, which shall be payable in installments on Employer’s regular
payroll dates, for the period (the “Severance Period”) beginning on the Date of
Termination (as defined below) and ending on the first anniversary of the Date
of Termination, and


 


(B)                                the
product of (1) the amount of
incentive compensation that would have been payable to Executive for the
calendar year in which the Date of Termination occurs if Executive had remained
employed for the entire calendar year and assuming that all applicable
performance targets had been achieved, multiplied by (2) a fraction, the numerator of which is
equal to the number of days in such calendar year that precede the Date of
Termination and the denominator of which is equal to 365 (such product, the
“Pro Rata Bonus”), less


 


(C)                                the
amount, if any, paid or payable to Executive under the terms of any severance
plan, policy, program or practice of Holding, Employer or any of their
respective Affiliates applicable to Executive, as in effect on the Date of
Termination;


 


provided that
Employer may, at any time, pay to Executive, in a single lump sum and in
satisfaction of Employer’s obligations under clauses (A) and (B) of
this Section 7(f)(i), an amount equal to (x)
the installments of the Base Salary then remaining to be paid to Executive
pursuant to clause (A) above, and the amount, if any, then remaining to be
paid to Executive pursuant to clause (B) above, less (y) the
amount, if any, remaining to be paid to Executive pursuant to any plan, policy,
program or practice identified under clause (C) above.


 


If Executive’s employment shall
terminate and he is entitled to receive continued payments of his Base Salary
under clause (A) of this Section 7(f)(i), Employer shall (x) continue to provide to Executive during
the Severance Period the life, medical, dental and prescription drug benefits
referred to in Section 5 (the “Continued Benefits”) and (y) reimburse Executive for expenses
incurred by him for outplacement and career counseling services provided to
Executive for an aggregate amount not in excess of the lesser of (i) $25,000 and (ii) 20% of Executive’s Base Salary.


 


Executive shall not have a duty
to mitigate the costs to Employer under this Section 7(f)(i), except that
Continued Benefits shall be reduced or canceled to the extent of any comparable
benefit coverage earned by (whether or not paid currently) or offered to
Executive during the Severance Period by a subsequent employer or other Person
(as defined below) for which Executive performs services, including but not
limited to consulting services.


 


(ii)                                  If
Executive’s employment shall terminate upon his death or Disability or if Employer
shall terminate Executive’s employment for Cause or Executive shall terminate
his employment without Good Reason during the Employment Period, Employer shall
pay Executive his full Base Salary through the Date of Termination; plus, in
the case of termination upon Executive’s death or Disability, if, as of the
Date of Termination, Employer has achieved the pro rated performance objectives
for such calendar year (determined as provided in Section 7(f)(i)), the
Pro Rata Bonus for the portion of the calendar year preceding Executive’s Date
of Termination (exclusive of any time between the onset of a 


 


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physical or mental disability that prevents
the performance by Executive of his duties hereunder and the resulting Date of
Termination); plus, in the case of termination upon Executive’s death, his full
Base Salary for the remainder of the pay period in which death occurs and for
one month thereafter, as provided in Section 3.


 


(iii)                               Except
as specifically set forth in this Section 7(f), no benefits payable to
Executive under any otherwise applicable plan, policy, program or practice of
Employer shall be limited by this Section 7(f), provided that (x)
Executive shall not be entitled to receive any payments or benefits under any
such plan, policy, program or practice providing any bonus or incentive
compensation (and the provisions of this Section 7(f) shall supersede the
provisions of any such plan, policy, program or practice), and (y) the amount, if any, paid or payable to
Executive under the terms of any such plan, policy, program or practice
relating to severance shall reduce the amounts payable under
Section 7(f)(i) as provided in clause (C) thereof.


 


(g)                                 Date
of Termination. As used in this Agreement, the term “Date of Termination”
shall mean (i) if Executive’s
employment is terminated by his death, the date of his death, (ii) if Executive’s employment is
terminated by Employer for Cause, the date on which Notice of Termination is
given as contemplated by Section 7(e) or, if later, the date of
termination specified in such Notice, and (iii)
if Executive’s employment is terminated by Employer Without Cause, due to
Executive’s Disability or by Executive for any reason, the date that is
30 days after the date on which Notice of Termination is given as
contemplated by Section 7(e) or, if no such Notice is given, 30 days
after the date of termination of employment.


 


(h)                                 Resignation
upon Termination. Effective as of any Date of Termination under this
Section 7 or otherwise as of the date of Executive’s termination of
employment with Employer, Executive shall resign, in writing, from all Board
memberships and other positions then held by him with Holding, Employer and
their respective Affiliates.


 


8  Unauthorized Disclosure.  During the period of Executive’s employment
with Employer and the ten-year period following any termination of such
employment, without the prior written consent of Employer’s Board or its
authorized representative, except to the extent required by an order of a court
having jurisdiction or under subpoena from an appropriate government agency, in
which event, Executive shall use his best efforts to consult with Employer’s
Board prior to responding to any such order or subpoena, and except as required
in the performance of his duties hereunder, Executive shall not disclose any
confidential or proprietary trade secrets, customer lists, drawings, designs,
information regarding product development, marketing plans, sales plans,
manufacturing plans, management organization information (including but not
limited to data and other information relating to members of the Board of
Directors of Holding, Employer or any of their respective Affiliates or to
management of Holding, Employer or any of their respective Affiliates),
operating policies or manuals, business plans, financial records, packaging
design or other financial, commercial, business or technical information (a) relating to Holding, Employer or any of
their respective Affiliates or (b)
that Holding, Employer or any of their respective Affiliates may receive
belonging to suppliers, customers or others who do business with Holding,
Employer or any of their respective Affiliates (collectively, “Confidential
Information”) to any third person unless such Confidential Information has been
previously disclosed to the public or is in the public domain (other than by
reason of Executive’s breach of this Section 8).


 


9  Non-Competition.  During the period of Executive’s employment
with Employer and, following any termination thereof, the period ending on the
later of (a) the first
anniversary of the Date of Termination and (b)
the last day of the Severance Period, Executive shall not, directly or
indirectly, become employed in a similar executive capacity by, engage in
business with, serve as an agent or consultant to, or become a partner, member,
principal or stockholder (other than a holder of less than 1% of the
outstanding voting shares of any publicly held company) of, The Mead
Corporation, any of its subsidiaries or any other current or future direct
competitor (or any of such direct 
competitor’s 


 


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subsidiaries or affiliates) in the paperboard
and paperboard packaging business of Holding, Employer or any of their
respective subsidiaries, as determined in good faith by Employer’s Board. For
purposes of this Section 9, the phrase employment “in a similar executive
capacity” shall mean employment in any position in connection with which
Executive has or reasonably would be viewed as having powers and authorities
with respect to any other Person or any part of the business thereof that are
substantially similar, with respect thereto, to the powers and authorities
assigned to the Senior Vice President, Beverage or any superior executive
officer of Employer in the By-Laws of Employer as in effect on the date hereof,
a copy of the relevant portions of which has been delivered to Executive on or
before the date hereof, and which Executive hereby confirms that he has
reviewed.


 


10  Non-Solicitation of Employees.  During the period of Executive’s employment
with Employer and, following any termination thereof, the period ending on the
last day of the Severance Period (such periods collectively, the “Restriction
Period”), Executive shall not, directly or indirectly, for his own account or
for the account of any other Person anywhere in the United States or Europe, (i) solicit for employment, employ or
otherwise interfere with the relationship of Holding, Employer or any of their
respective subsidiaries with, any person who at any time during the six months
preceding such solicitation, employment or interference is or was employed by
or otherwise engaged to perform services for Holding, Employer or any of their
respective subsidiaries, other than any such solicitation or employment during
Executive’s employment with Holding and Employer on behalf of Holding, and
Employer, or (ii) induce any
employee of Holding, Employer or any of their respective Affiliates who is a
member of management to engage in any activity which Executive is prohibited
from engaging in under any of Sections 8, 9, 10 or 11 or to terminate his
employment with Employer.


 


11  Non-Solicitation of Customers.  During the Restriction Period, Executive
shall not, directly or indirectly, for his own account or for the account of
any other Person anywhere in the United States or Europe, solicit or otherwise
attempt to establish any business relationship of a nature that is competitive
with the paperboard and paperboard packaging business of Holding, Employer or
any of their respective subsidiaries, as determined in good faith by Employer’s
Board with any Person who is or was a customer, client or distributor of
Holding, Employer or any of their respective Affiliates at any time during
which Executive was employed by Employer (in the case of any such activity
during such time) or during the twelve-month period preceding the Date of
Termination (in the case of any such activity after the Date of Termination),
other than any such solicitation on behalf of Holding, Employer or any of their
respective Affiliates during Executive’s employment with Employer.


 


12  Return of Documents.  In the event of the termination of
Executive’s employment for any reason, Executive shall deliver to Employer all
of (a) the property of each of
Holding, Employer and their respective Affiliates and (b) the non-personal documents and data of
any nature and in whatever medium of each of Holding, Employer and their
respective Affiliates, and he shall not take with him any such property,
documents or data or any reproduction thereof, or any documents containing or
pertaining to any Confidential Information. Whether documents or data are
“personal” or “non-personal” shall be determined as follows: Executive shall
present any documents or data that he wishes to take with him to the chief
legal officer of Employer for his review. The chief legal officer shall make an
initial determination whether any such documents or data are personal or
non-personal, and with respect to such documents or data that he determines to
be non-personal, shall notify Executive either that such documents or data must
be retained by Employer or that Employer must make and retain a copy thereof
before Executive may take such documents or data with him. Any disputes as to
the personal or non-personal nature of any such documents or data shall first
be presented to the Chairman of Employer’s Board or to another representative
designated by Employer’s Board, and if such disputes are not promptly resolved
by Executive and the Chairman or such representative, such disputes shall be
resolved through arbitration pursuant to Section 17(b).


 


13  Injunctive Relief with Respect
to Covenants; Forum, Venue and Jurisdiction.  Executive acknowledges and agrees that the
covenants, obligations and agreements of Executive contained in 


 


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Sections 8, 9, 10, 11, 12 and 13 relate to special, unique and
extraordinary matters and that a violation of any of the terms of such
covenants, obligations or agreements will cause Employer irreparable injury for
which adequate remedies are not available at law. Therefore, Executive agrees
that Employer shall be entitled to an injunction, restraining order or such
other equitable relief (without the requirement to post bond) as a court of
competent jurisdiction may deem necessary or appropriate to restrain Executive
from committing any violation of such covenants, obligations or agreements.
These injunctive remedies are cumulative and in addition to any other rights
and remedies Employer may have. Employer, Holding and Executive hereby
irrevocably submit to the exclusive jurisdiction of the courts of the State of
New York and the Federal courts of the United States of America, in each case
located in New York City, in respect of the injunctive remedies set forth in
this Section 13 and the interpretation and enforcement of Sections 8, 9,
10, 11, 12 and 13 insofar as such interpretation and enforcement relate to any
request or application for injunctive relief in accordance with the provisions
of this Section 13, and the parties hereto hereby irrevocably agree that (a) the sole and exclusive appropriate
venue for any suit or proceeding relating solely to such injunctive relief
shall be in such a court, (b) all
claims with respect to any request or application for such injunctive relief
shall be heard and determined exclusively in such a court, (c) any such court shall have exclusive
jurisdiction over the person of such parties and over the subject matter of any
dispute relating to any request or application for such injunctive relief, and
(d) each hereby waives any and
all objections and defenses based on forum, venue or personal or subject matter
jurisdiction as they may relate to an application for such injunctive relief in
a suit or proceeding brought before such a court in accordance with the
provisions of this Section 13. All disputes not relating to any request or
application for injunctive relief in accordance with this Section 13 shall
be resolved by arbitration in accordance with Section 17(b).


 


14  Assumption of Agreement.  Employer shall require any Successor
thereto, by agreement in form and substance reasonably satisfactory to
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Employer would be required to perform it if
no such succession had taken place. Failure of Employer to obtain such
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle Executive to compensation from Employer in
the same amount and on the same terms as Executive would be entitled hereunder
if Employer had terminated Executive’s employment Without Cause as described in
Section 7, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the Date of
Termination.


 


15  Entire Agreement.  This Agreement (including the Exhibit
hereto) constitutes the entire agreement among the parties hereto with respect
to the subject matter hereof. All prior correspondence and proposals (including
but not limited to summaries of proposed terms) and all prior promises,
representations, understandings, arrangements and agreements relating to such
subject matter (including but not limited to those made to or with Executive by
any other Person and those contained in any prior employment, consulting or
similar agreement entered into by Executive and Employer or any predecessor thereto
or Affiliate thereof) are merged herein and superseded hereby.


 


16  Indemnification.  Employer hereby agrees that it shall
indemnify and hold harmless Executive to the fullest extent permitted by
Delaware law from and against any and all liabilities, costs, claims and
expenses, including all costs and expenses incurred in defense of litigation
(including attorneys’ fees), arising out of the employment of Executive
hereunder, except to the extent arising out of or based upon the gross
negligence or willful misconduct of Executive. Costs and expenses incurred by
Executive in defense of such litigation (including attorneys’ fees) shall be
paid by Employer in advance of the final disposition of such litigation upon
receipt by Employer of (a) a
written request for payment, (b)
appropriate documentation evidencing the incurrence, amount and nature of the
costs and expenses for which payment is being sought, and (c) an undertaking adequate under Delaware
law made by or on behalf of Executive to repay the amounts so paid if it shall
ultimately be determined that Executive is not entitled to be indemnified by
Employer under this Agreement, including but not limited to as a result of such
exception.


 


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17  Miscellaneous.


 


(a)                                  Binding
Effect; Assignment. This Agreement shall be binding on and inure to the
benefit of Employer, Holding and their respective successors and permitted
assigns. This Agreement shall also be binding on and inure to the benefit of
Executive and his heirs, executors, administrators and legal representatives.
This Agreement shall not be assignable by any party hereto without the prior
written consent of the other parties hereto, except as provided pursuant to
this Section 17(a). Each of Holding and Employer may effect such an
assignment without prior written approval of Executive upon the transfer of all
or substantially all of its business and/or assets (by whatever means), provided that the Successor to Employer
shall expressly assume and agree to perform this Agreement in accordance with
the provisions of Section 14.


 


(b)                                 Arbitration.
Any dispute or controversy arising under or in connection with this Agreement
(except in connection with any request or application for injunctive relief in
accordance with Section 13) shall be resolved by binding arbitration. The
arbitration shall be held in the city of Atlanta, Georgia and except to the
extent inconsistent with this Agreement, shall be conducted in accordance with
the Commercial Arbitration Rules of the American Arbitration Association then
in effect at the time of the arbitration, and otherwise in accordance with
principles which would be applied by a court of law or equity. The arbitrator
shall be acceptable to both Employer and Executive. If the parties cannot agree
on an acceptable arbitrator, the dispute shall be heard by a panel of three
arbitrators, one appointed by Employer, one appointed by Executive, and the
third appointed by the other two arbitrators. All expenses of arbitration shall
be borne by the party who incurs the expense, or, in the case of joint
expenses, by both parties in equal portions, except that, in the event
Executive prevails on the principal issues of such dispute or controversy, all
such expenses shall be borne by Employer.


 


(c)                                  Governing
Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without reference to principles of conflicts
of laws, provided that the
indemnification provisions contained in Section 16 shall be governed by
and construed in accordance with the laws of the State of Delaware.


 


(d)                                 Taxes.
Employer may withhold from any payments made under this Agreement all
applicable taxes, including but not limited to income, employment and social
insurance taxes, as shall be required by law.


 


(e)                                  Amendments.
No provision of this Agreement may be modified, waived or discharged unless
such modification, waiver or discharge is approved by Employer’s Board or a
Person authorized thereby and is agreed to in writing by Executive and, in the
case of any such modification, waiver or discharge affecting the rights or
obligations of Holding, is approved by the Board of Directors of Holding or a
Person authorized thereby. No waiver by any party hereto at any time of any breach
by any other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No waiver of any provision of this Agreement shall be implied
from any course of dealing between or among the parties hereto or from any
failure by any party hereto to assert its rights hereunder on any occasion or
series of occasions.


 


(f)                                    Severability.
In the event that any one or more of the provisions of this Agreement shall be
or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.


 


(g)                                 Notices.
Any notice or other communication required or permitted to be delivered under
this Agreement shall be (i) in
writing, (ii) delivered
personally, by courier service or by certified or registered mail, first-class
postage prepaid and return receipt requested, (iii)
deemed to have been received on the date of delivery or, if so mailed, on the
third business day after the mailing thereof, 


 


8

















 


and (iv)
addressed as follows (or to such other address as the party entitled to notice
shall hereafter designate in accordance with the terms hereof):


 


(A)                              If
to Employer, to it at:


 


Riverwood
International Corporation


814 Livingston
Court


Marietta,
Georgia 30067


Attention: General Counsel


 


(B)           if to Holding, to it at:


 


c/o Riverwood
International Corporation


814 Livingston
Court


Marietta,
Georgia 30067


Attention: General Counsel


 


(C)                                if
to Executive, to him at his residential address as currently on file with
Employer.


 


Copies of any
notices or other communications given under this Agreement shall also be given
to:


 


Clayton,
Dubilier & Rice, Inc.


375 Park
Avenue


New York, New
York 10152


Attention: Mr. Kevin J. Conway


 


and


 


Debevoise &
Plimpton


875 Third
Avenue


New York, New
York 10022


Attention: Franci J. Blassberg, Esq.


 


(h)                                 Voluntary
Agreement; No Conflicts. Executive, Employer and Holding each represent
that they are entering into this Agreement voluntarily and that Executive’s
employment hereunder and each party’s compliance with the terms and conditions of
this Agreement will not conflict with or result in the breach by such party of
any agreement to which he or it is a party or by which he or it or his or its
properties or assets may be bound.


 


(i)                                     Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed
an original and all of which together shall constitute one and the same
instrument.


 


(j)                                     Headings.
The section and other headings contained in this Agreement are for the
convenience of the parties only and are not intended to be a part hereof or to
affect the meaning or interpretation hereof.


 


(k)                                  Certain
Definitions.


 


“Affiliate”: with respect to any Person, means any other
Person that, directly or indirectly through one or more intermediaries,
Controls, is Controlled by, or is under common Control with the first Person,
including but not limited to a Subsidiary of the first Person, a Person of
which the first Person is a Subsidiary, or another Subsidiary of a Person of
which the first Person is also a Subsidiary.


 


“Control”: with respect to any Person, means the possession,
directly or indirectly, severally or jointly, of the power to direct or cause
the direction of the management policies of such Person, whether through the
ownership of voting securities, by contract or credit arrangement, as trustee
or executor, or otherwise.


 


9

















 


“Person”: any natural person, firm, partnership, limited
liability company, association, corporation, company, trust, business trust,
governmental authority or other entity.


 


“Subsidiary”: with respect to any Person, each corporation or
other Person in which the first Person owns or Controls, directly or
indirectly, capital stock or other ownership interests representing 50% or more
of the combined voting power of the outstanding voting stock or other ownership
interests of such corporation or other Person.


 


“Successor”: of a Person means a Person that succeeds to the
first Person’s assets and liabilities by merger, liquidation, dissolution or
otherwise by operation of law, or a Person to which all or substantially all
the assets and/or business of the first Person are transferred.


 


 


10

















 


IN WITNESS WHEREOF, Employer
and Holding have duly executed this Agreement by their authorized
representatives, and Executive has hereunto set his hand, in each case
effective as of the date first above written.


 


	
   

  	
  RIVERWOOD INTERNATIONAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen M. Humphrey

  	
   

  
	
   

  	
   

  	
  Name: Stephen M. Humphrey

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer 

  
	
   

  	
   

  
	
   

  	
  RIVERWOOD HOLDING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen M. Humphrey

  	
   

  
	
   

  	
   

  	
  Name: Stephen M. Humphrey

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Executive:

  
	
   

  	
  /s/ Michael R. Schmal

  	
   

  
						



 


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Schedule I


 


Perquisites


 


1                                          Annual
executive physical.


 


2                                          Reimbursement
up to $1,000 annually for expenses relating to income tax preparation plus
additional fees if incurred on account of job-related circumstances and the
cost of representation by return preparer during any audit.


 


3                                          Reimbursement
for expenses incurred for financial and estate planning services of up to
$5,000 for expenses incurred in the first calendar year services are utilized
and up to $2,500 for expenses incurred in calendar years thereafter.


 


4                                          Subject
to the advance approval of the CEO, reimbursement for initiation fees (“grossed
up” for federal and state income taxes) and dues for one country club and one
luncheon or city club.


 


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