**Exhibit 10.17**

 

**MANAGEMENTSTOCK OPTION AGREEMENT**

 

This MANAGEMENT STOCK OPTION AGREEMENT, dated as of August 8, 2003(the “*Management Stock Option Agreement*”),is between Graphic Packaging Corporation, a Delaware corporation (the “*Company*”), and the Grantee whose nameappears on the signature page hereof (the “*Grantee*”)under the terms of the 2003 Riverwood Holding, Inc. Long-Term IncentivePlan (the “*Plan*”) and the SecondAmended and Restated Employment Agreement dated as of March 24, 2003 amongRiverwood International Corporation (renamed Graphic PackagingInternational, Inc.), the Riverwood Holding, Inc. (renamed GraphicPackaging Corporation) and Grantee (the “*EmploymentAgreement*”). Capitalized terms used in this Management Stock OptionAgreement and not otherwise defined herein have the meaning given in the Planor the Employment Agreement. If any provision of this Management Stock OptionAgreement is inconsistent with any provision of the Plan (as either may beinterpreted from time to time by the Board), the Plan shall control.

 

1.* Confirmation of Grant; Option Price.*  Effective as of the date hereof, the Companyhereby evidences and confirms its award to the Grantee of Options to purchaseShares in the Company, the number of which is set forth on the signature pagehereof, at an option price of $6.57 per share (the “*Option Price*”). The Options are not intended to be incentivestock options under the U.S. Internal Revenue Code of 1986, as amended.

 

2.* Vesting; Exercisability.* The Options shall vest and become exercisable 331/3% on each of thefirst three anniversaries of the Effective Date, subject to the Grantee’scontinuous employment with the Company or one of its affiliates from theEffective Date through each such vesting date and subject to Sections 3(b) and7 hereof, *provided* that, if on orprior to the third anniversary of the Effective Date, (x) the Grantee’semployment is terminated by reason of a Qualifying Termination of Employment or(y) the CD&R Fund and, if applicable, its Affiliates effect a sale orother disposition of all of the Common Stock then held by the CD&R Fund toone or more persons other than any person who is a general or limited partneror Affiliate of the CD&R Fund and (ii) thereafter, either theGrantee’s employment is terminated by the Company other than for Cause or theGrantee’s employment is terminated by the Grantee for Good Reason, all Optionsheld by the Grantee as of the effective date of such Qualifying Termination ofEmployment or termination under the foregoing clause (y)(ii).

 

3.* Termination of Options.*

 

(a)*           NormalTermination Date*. Unless an earlier termination of employment shalloccur as specified in subsection (b), the Options shall terminate and becanceled on the tenth anniversary of the Effective Date (the “*Normal Termination Date*”).

 

(b)*           Terminationof Employment*. Unless otherwise determined by the Committee, in theevent the Grantee’s employment terminates by reason of a Qualifying Terminationof Employment, the Grantee (or the Grantee’s beneficiary or legalrepresentative) may exercise any Options until the earlier of (*a*) the twelve-month anniversary ofthe date of such termination of employment and (*b*) the Normal Termination Date. Unless otherwise determinedby the Committee, in the event a Grantee’s employment terminates for any reasonother than a Qualifying Termination of Employment or Cause, the Grantee mayexercise any Option that is exercisable at the time of such termination ofemployment until the earlier of (*a*)the 30-day anniversary of the date of such termination of employment and (*b*) the date such Options would otherwiseexpire but for the operation of this Section 3(b), and any Option that isnot then exercisable shall be forfeited and cancelled as of the date of suchtermination of employment. In the event that a Grantee’s employment isterminated for Cause or the Committee determines that circumstances exist suchthat the Grantee’s employment could have been terminated for Cause, any Optionsgranted to such Grantee, whether or not then vested, shall be forfeited andcancelled as of the date of such termination of employment.

 

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4.* Restrictions on Exercise; Non-Transferability of Options.*

 

(a)*           Restrictionson Exercise*. The Options may be exercised only with respect to fullshares of Common Stock. No fractional shares of Common Stock shall be issued.Notwithstanding any other provision of this Management Stock Option Agreement,the Options may not be exercised in whole or in part, and no certificatesrepresenting Shares shall be delivered, unless all applicable U.S. federal,state and local and non-U.S. tax withholding requirements shall have beensatisfied. The Company may, if requested by the Grantee, withhold Shares tosatisfy the minimum applicable withholding requirements, subject to the provisionsof the Plan and any rules adopted by the Board regarding compliance withapplicable law.

 

(b)*           Non-Transferabilityof Options*. The Options may be exercised only by the Grantee or bythe Grantee’s estate. The Options are not assignable or transferable, in wholeor in part, and they may not, directly or indirectly, be offered, transferred,sold, pledged, assigned, alienated, hypothecated or otherwise disposed of orencumbered (including without limitation by gift, operation of law orotherwise) other than by will or by the laws of descent and distribution to theestate of the Grantee upon the Grantee’s death, *provided* that the deceased Grantee’s beneficiary or therepresentative of the Grantee’s estate shall acknowledge and agree in writing,in a form reasonably acceptable to the Company, to be bound by the provisionsof this Management Stock Option Agreement and the Plan as if such beneficiaryor the estate were the Grantee.

 

5.* Manner of Exercise.* To the extent that any of the Options shall have become and remainvested and exercisable as provided in Section 2, such Options may beexercised in accordance with the terms of the Plan and any rules adopted by theCommittee from time to time.

 

6.* Grantee’s Representations, Warranties and Covenants.*

 

(a)*           InvestmentIntention*. The Grantee represents and warrants that the Options havebeen, and any Exercise Shares will be, acquired by the Grantee solely for theGrantee’s own account for investment and not with a view to or for sale inconnection with any distribution thereof. The Grantee agrees that the Granteewill not, directly or indirectly, offer, transfer, sell, pledge, hypothecate orotherwise dispose of all or any of the Options or any of the Exercise Shares(or solicit any offers to buy, purchase or otherwise acquire or take a pledgeof all or any of the Options or any of the Exercise Shares), except incompliance with the Securities Act and the rules and regulations of theCommission thereunder, and in compliance with applicable state securities or “bluesky” laws and non-U.S. securities laws.

 

(b)*           Abilityto Bear Risk*. The Grantee covenants that the Grantee will notexercise all or any of the Options unless (*i*)the financial situation of the Grantee is such that the Grantee can afford tobear the economic risk of holding the Exercise Shares for an indefinite periodand (*ii*) the Grantee can affordto suffer the complete loss of the Grantee’s investment in the Exercise Shares.

 

7.* Change in Control.*

 

(a)*           AcceleratedVesting and Payment*. Subject to the provisions of Sections 7(b)below, in the event of a Change in Control, each Option shall be canceled inexchange for a payment in cash of an amount equal to the excess, if any, of theChange in Control Price over the Exercise Price.

 

(b)*           Timingof Option Cancellation Payments; Discretionary Acceleration*.Notwithstanding the provisions of the preceding paragraph (a), the Board(as constituted immediately prior to the Change in Control) may determine, inits discretion, to accelerate the exercisability or cause the cancellation andpayment, calculated as provided in Section 7(a), in respect of all or anyOptions prior to a Change in Control that occurs after the third anniversary ofthe Effective Date. The cash payments described in paragraph (a) aboveshall be payable in full, as soon as reasonably practicable, but in no eventlater than, 30 days following the Change in Control.

 

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8.* Miscellaneous.*

 

(a)*           Waiver;Amendment*.

 

(i)*            Waiver*. Any party heretoor beneficiary hereof may by written notice to the other parties (*A*) extend the time for the performance ofany of the obligations or other actions of the other parties under thisManagement Stock Option Agreement, (*B*)waive compliance with any of the conditions or covenants of the other partiescontained in this Management Stock Option Agreement and (*C*) waive or modify performance of any ofthe obligations of the other parties under this Management Stock OptionAgreement. Except as provided in the preceding sentence, no action takenpursuant to this Management Stock Option Agreement, including, withoutlimitation, any investigation by or on behalf of any party or beneficiary,shall be deemed to constitute a waiver by the party or beneficiary taking suchaction of compliance with any representations, warranties, covenants oragreements contained herein. The waiver by any party hereto or beneficiaryhereof of a breach of any provision of this Management Stock Option Agreementshall not operate or be construed as a waiver of any preceding or succeedingbreach and no failure by a party or beneficiary to exercise any right orprivilege hereunder shall be deemed a waiver of such party’s or beneficiary’srights or privileges hereunder or shall be deemed a waiver of such party’s orbeneficiary’s rights to exercise the same at any subsequent time or timeshereunder.

 

(ii)*           Amendment*. This ManagementStock Option Agreement may not be altered, modified, or amended except by awritten instrument signed by the Company and the Grantee.

 

(b)*           Nonassignability*.Neither this Management Stock Option Agreement nor any right, remedy,obligation or liability arising hereunder or by reason hereof shall beassignable by the Company or the Grantee without the prior written consent ofthe other parties.

 

(c)*           NoRights as a Stockholder*. The Grantee shall have no voting or otherrights as a stockholder of the Company with respect to any Shares covered bythe Options until the exercise of the Options and the issuance of a certificateor certificates to the Grantee for such Shares. No adjustment shall be made fordividends or other rights for which the record date is prior to the issuance ofsuch certificate or certificates.

 

(d)*           NoRight to Continued Employment*. Nothing in this Management StockOption Agreement shall interfere with or limit in any way the right of theCompany or any of its Subsidiaries to terminate the Grantee’s employment at anytime, or confer upon the Grantee any right to continue in the employ of theCompany or any of its Subsidiaries.

 

(e)*           Interpretation*.The Board shall have full power and discretion to construe and interpret thePlan (and any rules and regulations issued thereunder) and this ManagementStock Option Agreement. Any determination or interpretation by the Board underor pursuant to this Management Stock Option Agreement shall be final andbinding and conclusive on all persons affected hereby.

 

(f)*            Delegationby the Board*. All of the powers, duties and responsibilities of theBoard specified in this Management Stock Option Agreement may, to the fullextent permitted by applicable law, be exercised and performed by any dulyconstituted committee thereof to the extent authorized by the Board to exerciseand perform such powers, duties and responsibilities.

 

(g)*           BindingEffect; Benefits*. This Management Stock Option Agreement shall bebinding upon and inure to the benefit of the parties to this Management StockOption Agreement and their respective successors and assigns. Nothing in thisManagement Stock Option Agreement, express or implied, is intended or shall beconstrued to give any person other than the Company or the Grantee or theirrespective successors or assigns any legal or equitable right, remedy or claimunder or in respect of any agreement or any provision contained herein.

 

 

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(h)*           Severability*.In the event that any one or more of the provisions of this Restricted UnitAgreement shall be or become invalid, illegal or unenforceable in any respect,the validity, legality and enforceability of the remaining provisions containedherein shall not be affected thereby.

 

(i)*            Notices*.All notices and other communications required or permitted hereunder shall bein writing and shall be deemed given when (*a*)delivered personally, (*b*) sent bycertified or registered mail, postage prepaid, return receipt requested or (*c*) delivered by overnight courier(provided that a written acknowledgment of receipt is obtained by the overnightcourier) to the party concerned at the address indicated below or to suchchanged address as such party may subsequently give notice of:

 
| If to the Company: | Graphic Packaging Corporation  814 Livingston Court  Marietta, Georgia 30067 |
|--------------------|------------------------------------------------------------------------------|
|               |                                                                         |
| Attention:         | General Counsel;  Chairman, Compensation Committee                           |
|               |                                                                         |
| If to Grantee:     | at the home address of Grantee on the  records of the Company                |

 

(j)*            GoverningLaw*. This Management Stock Option Agreement shall be governed by andconstrued in accordance with the laws of the State of New York without regardto the principles of conflict of laws except to the extent the laws of theState of Delaware specifically and mandatorily apply.

 

(k)*           Sectionand Other Headings, etc*. The section and other headings contained inthis Management Stock Option Agreement are for reference purposes only andshall not affect the meaning or interpretation of this Management Stock OptionAgreement.

 

(l)*            Counterparts*.This Management Stock Option Agreement may be executed in any number ofcounterparts, each of which shall be deemed to be an original and all of whichtogether shall constitute one and the same instrument.

 

(m)*          CapitalAdjustments*. The number and price of the Shares covered by theOptions shall be proportionately adjusted by the Board to reflect any stockdividend, stock split or share combination of the Common Stock or anyrecapitalization of the Company. Subject to any required action by thestockholders of the Company and Section 7 hereof, in any merger,consolidation, reorganization, exchange of shares, liquidation or dissolution,the Options shall pertain to the securities and other property, if any, that aholder of the number of shares of Common Stock covered by the Options wouldhave been entitled to receive in connection with such event.

 

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IN WITNESS WHEREOF, the Company and the Grantee have executed thisManagement Stock Option Agreement as of the date first above written.

 

 
|   | Graphic Packaging Corporation |
|--------|-------------------------------|
|   |                          |
|   | By:                           | /s/ Wayne E. Juby |   |
|   |                          | Name: Wayne E. Juby |   |
|   |                          | Title: Senior Vice President, Human Resources |
|   |                          |   |
|   | THE GRANTEE:                  |   |
|   |                          |   |
|   | Stephen M. Humphrey           |   |
|   |                          |   |
|   | By:                           | /s/ Stephen M. Humphrey |   |
|   |                          | Name: Stephen M. Humphrey |   |

 
| Total Number of Shares of Common Stock for the Purchase of Which  Options Have Been Granted: |   | 228,150 |
|----------------------------------------------------------------------------------------------|--------|---------|

 

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