**Exhibit 10.18**

 

**RESTRICTED UNIT AGREEMENT**

 

This RESTRICTED UNIT AGREEMENT,dated as of August 8, 2003 (the “*RestrictedUnit Agreement*”), is between Graphic Packaging Corporation, aDelaware corporation (formerly Riverwood Holding, Inc.) (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.), Riverwood Holding, Inc. (renamed GraphicPackaging Corporation) and Grantee (the “*EmploymentAgreement*”). Capitalized terms used in this Restricted UnitAgreement and not otherwise defined herein have the meaning given in theEmployment Agreement or in the Plan. If any provision of this Restricted UnitAgreement is inconsistent with any provision of the Plan (as either may beinterpreted from time to time by the Board), the Plan shall control.

 

1.*   Grant of Restricted Units.*   Effective as of the date hereof, theCompany hereby evidences and confirms its award to the Grantee of the number ofRestricted Units set forth on the signature page hereof, which represent theCompany’s contractual obligation to deliver shares of Common Stock (the “*Shares*”) to the Grantee upon the terms setforth herein.

 

2.*   Vesting of Restricted Units.*   The Restricted Units shall vest 33 1/3%on each of the first three anniversaries of the Effective Date, subject to theGrantee’s continuous employment with the Company or one of its affiliates fromthe Effective Date through each such vesting date, *provided* that, if, on or prior to the third anniversary ofthe Effective Date, (x) the Grantee’s employment is terminated by reasonof a Qualifying Termination of Employment or (y) the CD&R Fund and, ifapplicable, its Affiliates effect a sale or other disposition of all of theCommon Stock then held by the CD&R Fund and (ii) thereafter, theGrantee’s employment is terminated by the Company other than for Cause or bythe Grantee for Good Reason or (z) there is a Change in Control, allRestricted Units held by the Grantee as of the effective date of suchQualifying Termination of Employment, termination under the foregoingclause (y)(ii) or Change in Control, whichever is applicable, shallbecome immediately 100% vested and exercisable. If the Grantee’s employmentterminates after the first or second anniversary of the Effective Date forreasons other than provided in clause (x) or (y)(ii) of the precedingsentence, he shall retain the right to any Restricted Units that have becomevested and nonforfeitable, subject to Section 3, which shall be payablepursuant to Section 5.

 

3.*   Forfeiture.*   If the Grantee’s employment is terminatedfor Cause on or before the date on which any Restricted Units have becomepayable pursuant to Section 5, such Restricted Units awarded to theGrantee shall be canceled and the Grantee shall forfeit all rights to the RestrictedUnits and any Shares issuable for such Restricted Units.

 

4.*   Dividend Equivalents.*   If the Company pays any cash dividend onthe Common Stock before the shares underlying the Restricted Units aredelivered to the Grantee pursuant to Section 5, the Grantee will becredited on the record date established for such dividend with a number ofRestricted Units equal to the greatest whole number which may be obtained bydividing (*i*) the value of suchdividend by (*ii*) the Fair MarketValue of a Share on such date. Any such additional Restricted Units shallbecome vested and nonforfeitable, if at all, on the same terms and conditionsas are applicable in respect of the Restricted Units.

 

5.*   Delivery of Shares UnderlyingVested Restricted Units.*  Shares underlying vested Restricted Units shall be delivered on theearlier of (*i*) the thirdanniversary of the Effective Date, (*ii*)a Qualifying Termination of Employment, and (*iii*)the occurrence of a Change of Control.

 

6.*   Representations andWarranties.*

 

(a)*           Investment Intention*.The Grantee represents and warrants that the Restricted Units have been, andany Shares will be, acquired by the Grantee solely for the Grantee’s ownaccount for

 

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investment and not with a view to or for sale in connection with anydistribution thereof. The Grantee further understands, acknowledges and agreesthat none of the Restricted Units may be transferred, sold, pledged,hypothecated or otherwise disposed of except to the extent expressly permittedhereby.

 

(b)*           Ability to Bear Risk*.The Grantee represents and warrants that (*i*)the financial situation of the Grantee is such that the Grantee can afford tobear the economic risk of holding the Restricted Units and Shares for anindefinite period and (*ii*) theGrantee can afford to suffer the complete loss of the Grantee’s investment inthe Restricted Units and Shares.

 

7.*   Miscellaneous.*

 

(a)*           Tax Withholding*.Whenever Shares or other property are to be distributed in respect to anyRestricted Units awarded hereunder, the Company shall have the power towithhold, or require the Grantee to remit to the Company, an amount sufficientto satisfy United States Federal, state, local and non-U.S. withholding taxrequirements, including but not limited to income, social security andemployment taxes, relating to such issuance, and the Company may defer issuanceof such Shares or other property until such requirements are satisfied. TheBoard may, in its discretion, permit the Grantee to elect, subject to suchconditions as the Board shall impose, to satisfy his withholding obligationhereunder with Shares or any other property issuable hereunder. Notwithstandingthe foregoing, in the event Shares are to be distributed pursuant to (*i*) the Company’s termination of theGrantee’s employment without Cause, due to death or Disability, due toretirement, or (*ii*) the Grantee’stermination of employment for Good Reason or (*iii*)the occurrence of a Change of Control, the Company shall withhold from thenumber of Shares otherwise deliverable enough Shares (based on the Fair MarketValue at the time of distribution) to satisfy income and employment taxwithholding requirements with respect to such distribution and delivery.

 

(b)*           Nonassignability*.The Restricted Units granted hereby are not assignable or transferable, inwhole or in part, and 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.

 

(c)*           No Rights as aStockholder*. Neither the Grantee nor any person or persons to whomthe Grantee’s rights under this Restricted Unit Agreement shall have passed bywill or by the laws of descent and distribution, as the case may be, shall haveany voting, dividend or other rights or privileges as a stockholder of theCompany with respect to any Shares corresponding to the Restricted Unitsgranted hereby unless and until a certificate for Shares is issued in respectthereof.

 

(d)*           No Right to ContinuedEmployment*. Nothing in this Restricted Unit Agreement shallinterfere with or limit in any way the right of the Company or any of itsSubsidiaries to terminate the Grantee’s employment at any time, or confer uponthe Grantee any right to continue in the employ of the Company or any of itsSubsidiaries.

 

(e)*           Interpretation*.The Board shall have full power and discretion to construe and interpret thePlan (and any rules and regulations issued thereunder) and this Restricted UnitAgreement. Any determination or interpretation by the Board under or pursuantto this Restricted Unit Agreement shall be final and binding and conclusive onall persons affected hereby.

 

(f)*            Delegation by theBoard*. All of the powers, duties and responsibilities of the Boardspecified in this Restricted Unit Agreement may, to the full extent permittedby applicable law, be exercised and performed by any duly constituted committeethereof to the extent authorized by the Board to exercise and perform suchpowers, duties and responsibilities.

 

(g)*           Binding Effect;Benefits*. This Restricted Unit Agreement shall be binding upon andinure to the benefit of the Company and the Grantee and their respectivesuccessors and assigns. Nothing in

 

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this Restricted Unit Agreement, express or implied, is intended orshall be construed to give any person other than the Company or the Grantee ortheir respective successors or assigns any legal or equitable right, remedy orclaim under or in respect of any agreement or any provision contained herein.

 

(h)*           Amendment*.This Restricted Unit Agreement may not be altered, modified, or amended exceptby a written instrument signed by the Company and the Grantee.

 

(i)*            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.

 

(j)*            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                |

 

(k)*           Governing Law*.This Restricted Unit Agreement shall be governed by and construed in accordancewith the laws of the State of New York without regard to the principles ofconflict of laws except to the extent the laws of the State of Delawarespecifically and mandatorily apply.

 

(l)*            Sections and OtherHeadings*. The section and other headings contained in thisRestricted Unit Agreement are for reference purposes only and shall not affectthe meaning or interpretation of this Restricted Unit Agreement.

 

(m)*          Counterparts*.This Restricted Unit Agreement may be executed in any number of counterparts,each of which shall be deemed to be an original and all of which together shallconstitute one and the same instrument.

 

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IN WITNESS WHEREOF, the Companyand the Grantee have executed this Restricted Unit Agreement as of the datefirst 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            |
|                               | /s/ Stephen M. Humphrey        |   |
|                               |                           |   |
| Number of Restricted Units 342,225 |                           |

 

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