**Exhibit 10.10**

 

**EMPLOYMENTAGREEMENT**

 

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

 

**WI T N E S S E T H:**

 

WHEREAS, Employer desires toemploy Executive as its Senior Vice President Beverage on the terms andconditions set forth herein;

 

WHEREAS, Executive desires toaccept 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 themanagement of the business, and the development of the goodwill, of Employerand its Affiliates (as defined below) and will establish and develop relationsand contacts with the principal customers and suppliers of Employer and itsAffiliates in the United States and the rest of the world, all of whichconstitute valuable goodwill of, and could be used by Executive to compete unfairlywith, Employer and its Affiliates;

 

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

 

NOW, THEREFORE, inconsideration of the premises and the mutual covenants and promises containedherein and for other good and valuable consideration, Employer, Holding andExecutive hereby agree as follows:

 

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

 

2*  Term; Position andResponsibilities.*

 

(a)*                                  Termof Employment*. Unless Executive’s employment shall sooner terminatepursuant to Section 7, Employer shall employ Executive for a termcommencing on the date hereof and ending on the second anniversary of the datehereof (the “Initial Term”). Effective upon the expiration of the Initial Termand of each Additional Term (as defined below), Executive’s employmenthereunder shall be deemed to be automatically extended, upon the same terms andconditions, for an additional period of one year (each, an “Additional Term”),in each such case, commencing upon the expiration of the Initial Term or thethen current Additional Term, as the case may be, unless Employer, at least180 days prior to the expiration of the Initial Term or such AdditionalTerm, shall give written notice (a”Non-Extension Notice”) to Executive of itsintention not to extend the Employment Period (as defined below) hereunder, *provided* that a Non-Extension Notice shallnot constitute a notice to Executive of the termination of his employment byEmployer unless such notice specifically provides for such termination ofemployment and the specific date thereof. The period during which Executive isemployed pursuant to this Agreement, including any extension thereof inaccordance with the preceding sentence, shall be referred to as the “EmploymentPeriod”.

 

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

 

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and position as the Board of Directors ofEmployer (“Employer’s Board”) specifies from time to time. Executive shallreport 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 inSection 6(c) and absence for sickness or similar disability and (*ii*) to the extent that it does notinterfere with the performance of Executive’s duties hereunder, (*A*) such reasonable time as may be devotedto service on boards of directors of other corporations and entities, subjectto the provisions of Section 9, and the fulfillment of civicresponsibilities and (*B*) suchreasonable time as may be necessary from time to time for personal financialmatters) to the conscientious performance of the duties and responsibilities ofsuch position. If so elected or designated by the respective shareholdersthereof, Executive shall serve as a member of the Boards of Directors ofHolding, Employer and their respective Affiliates during the Employment Periodwithout additional compensation.

 

3*  Base Salary.*  As compensation for the services to beperformed by Executive during the Employment Period, Employer shall payExecutive a base salary at an annualized rate of $300,000, payable ininstallments on Employer’s regular payroll dates, and, in the event thatExecutive’s employment hereunder is terminated by death, for the remainder ofthe pay period in which death occurs and for one month thereafter. Employer’sBoard shall review Executive’s base salary annually during the period of hisemployment hereunder and, in its sole discretion, Employer’s Board may increase(but may not decrease) such base salary from time to time based upon theperformance of Executive, the financial condition of Employer, prevailingindustry salary levels and such other factors as Employer’s Board shallconsider relevant. (The annual base salary payable to Executive under thisSection 3, as the same may be increased from time to time and withoutregard to any reduction therefrom in accordance with the next sentence, shallhereinafter be referred to as the “Base Salary”.) The Base Salary payable underthis Section 3 shall be reduced to the extent that Executive elects todefer such Base Salary under the terms of any deferred compensation, savingsplan or other voluntary deferral arrangement that may be maintained orestablished by Employer.

 

4*  Incentive CompensationArrangements.*  During theEmployment Period, Executive shall participate in Employer’s incentivecompensation programs for its senior executives existing from time to time, ata level commensurate with his position and duties with Employer and based onsuch performance targets as may be established from time to time by Employer’sBoard or a committee thereof.

 

5*  Employee Benefits.*  During the Employment Period, employeebenefits, including life, medical, dental, accidental death and dismemberment,business travel accident, prescription drug and disability insurance, shall beprovided to Executive in accordance with the programs of Employer thenavailable to its senior executives, as the same may be amended and in effectfrom time to time. Executive shall also be entitled to participate in all ofEmployer’s profit sharing, pension, retirement, deferred compensation andsavings 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 thisSection 5 shall be provided to Executive on a basis that is commensuratewith Executive’s position and duties with Employer hereunder and that is noless 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 perquisitesset forth on Schedule I hereto.

 

(b)*                                 BusinessTravel, Lodging, etc.* Employer shall reimburse Executive for reasonabletravel, lodging, meal and other reasonable expenses incurred by him inconnection with his performance of services hereunder upon submission ofevidence, satisfactory to Employer, of the incurrence and purpose of each suchexpense and otherwise in accordance with Employer’s business travelreimbursement policy applicable to its senior executives as in effect from timeto time.

 

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

 

 7*  Termination of Employment.*

 

(a)*                                  TerminationDue to Death or Disability*. In the event that Executive’s employmenthereunder terminates due to death or is terminated by Employer due toExecutive’s Disability (as defined below), no termination benefits shall bepayable to or in respect of Executive except as provided inSection 7(f)(ii). For purposes of this Agreement, “Disability” shall meana physical or mental disability that prevents or would prevent the performanceby Executive of his duties hereunder for a continuous period of six months orlonger. The determination of Executive’s Disability shall (*i*) be made by an independent physician whois reasonably acceptable to Employer and Executive (or his representative), (*ii*) be final and binding on the partieshereto and (*iii*) be based on suchcompetent medical evidence as shall be presented to such independent physicianby Executive and/or Employer or by any physician or group of physicians orother competent medical experts employed by Executive and/or Employer to advisesuch independent physician.

 

(b)*                                 Terminationby Employer for Cause*. Executive may be terminated for Cause (as definedbelow) by Employer, *provided* thatExecutive shall be permitted to attend a meeting of Employer’s Board within30 days after delivery to him of a Notice of Termination (as definedbelow) pursuant to this Section 7(b) to explain why he should not beterminated for Cause and, if following any such explanation by Executive,Employer’s Board determines that Employer does not have Cause to terminateExecutive’s employment, any such prior Notice of Termination delivered toExecutive shall thereupon be withdrawn and of no further force or effect.“Cause” shall mean (*i*) thewillful failure of Executive substantially to perform his duties hereunder(other than any such failure due to Executive’s physical or mental illness) orother willful and material breach by Executive of any of his obligationshereunder or under any option agreement or other incentive award agreement,after a written demand for substantial performance has been delivered, and areasonable opportunity to cure has been given, to Executive by Employer’sBoard, which demand identifies in reasonable detail the manner in whichEmployer’s Board believes that Executive has not substantially performed hisduties or has breached his obligations, (*ii*)Executive’s engaging in willful and serious misconduct that has caused or isreasonably expected to result in material injury to Employer or any of itsAffiliates or (*iii*) Executive’sconviction of, or entering a plea of guilty or *nolocontendere* to, a crime that constitutes a felony.

 

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

 

(d)*                                 Terminationby Executive*. Executive may terminate his employment for any reason. Atermination of employment by Executive for “Good Reason” shall mean atermination by Executive of his employment with Employer within 30 daysfollowing the occurrence, without Executive’s consent, of any of the followingevents: (*i*) the assignment toExecutive of duties that are significantly different from, and that result in asubstantial diminution of, the duties that he is to assume on the date hereof,(*ii*) the failure of Employer toobtain the assumption of this Agreement by any Successor (as defined below) toEmployer 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 obligationshereunder or by Holding of any of its obligations under any option agreement orother 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 theevents set forth therein, Executive shall have delivered written notice toEmployer of his intention to terminate his employment for Good Reason, whichnotice specifies in reasonable detail the circumstances claimed to give rise toExecutive’s right to 

 

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

 

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

 

(f)*                                    PaymentsUpon Certain Terminations*.

 

(i)                                     Inthe event of a termination of Executive’s employment by Employer Without Causeor a termination by Executive of his employment for Good Reason during theEmployment Period, Employer shall pay to Executive (or, following his death, toExecutive’s beneficiaries):

 

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

 

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

 

(C)                                theamount, if any, paid or payable to Executive under the terms of any severanceplan, policy, program or practice of Holding, Employer or any of theirrespective Affiliates applicable to Executive, as in effect on the Date ofTermination;

 

*provided* thatEmployer may, at any time, pay to Executive, in a single lump sum and insatisfaction of Employer’s obligations under clauses (A) and (B) ofthis Section 7(f)(i), an amount equal to (*x*)the installments of the Base Salary then remaining to be paid to Executivepursuant to clause (A) above, and the amount, if any, then remaining to bepaid to Executive pursuant to clause (B) above, *less* (*y*) theamount, 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 shallterminate and he is entitled to receive continued payments of his Base Salaryunder clause (A) of this Section 7(f)(i), Employer shall (*x*) continue to provide to Executive duringthe Severance Period the life, medical, dental and prescription drug benefitsreferred to in Section 5 (the “Continued Benefits”) and (*y*) reimburse Executive for expensesincurred by him for outplacement and career counseling services provided toExecutive 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 dutyto mitigate the costs to Employer under this Section 7(f)(i), except thatContinued Benefits shall be reduced or canceled to the extent of any comparablebenefit coverage earned by (whether or not paid currently) or offered toExecutive during the Severance Period by a subsequent employer or other Person(as defined below) for which Executive performs services, including but notlimited to consulting services.

 

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

 

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

 

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

 

(g)*                                 Dateof Termination*. As used in this Agreement, the term “Date of Termination”shall mean (*i*) if Executive’semployment is terminated by his death, the date of his death, (*ii*) if Executive’s employment isterminated by Employer for Cause, the date on which Notice of Termination isgiven as contemplated by Section 7(e) or, if later, the date oftermination specified in such Notice, and (*iii*)if Executive’s employment is terminated by Employer Without Cause, due toExecutive’s Disability or by Executive for any reason, the date that is30 days after the date on which Notice of Termination is given ascontemplated by Section 7(e) or, if no such Notice is given, 30 daysafter the date of termination of employment.

 

(h)*                                 Resignationupon Termination*. Effective as of any Date of Termination under thisSection 7 or otherwise as of the date of Executive’s termination ofemployment with Employer, Executive shall resign, in writing, from all Boardmemberships and other positions then held by him with Holding, Employer andtheir respective Affiliates.

 

8*  Unauthorized Disclosure.*  During the period of Executive’s employmentwith Employer and the ten-year period following any termination of suchemployment, without the prior written consent of Employer’s Board or itsauthorized representative, except to the extent required by an order of a courthaving jurisdiction or under subpoena from an appropriate government agency, inwhich event, Executive shall use his best efforts to consult with Employer’sBoard prior to responding to any such order or subpoena, and except as requiredin the performance of his duties hereunder, Executive shall not disclose anyconfidential or proprietary trade secrets, customer lists, drawings, designs,information regarding product development, marketing plans, sales plans,manufacturing plans, management organization information (including but notlimited to data and other information relating to members of the Board ofDirectors of Holding, Employer or any of their respective Affiliates or tomanagement of Holding, Employer or any of their respective Affiliates),operating policies or manuals, business plans, financial records, packagingdesign or other financial, commercial, business or technical information (*a*) relating to Holding, Employer or any oftheir respective Affiliates or (*b*)that Holding, Employer or any of their respective Affiliates may receivebelonging to suppliers, customers or others who do business with Holding,Employer or any of their respective Affiliates (collectively, “ConfidentialInformation”) to any third person unless such Confidential Information has beenpreviously disclosed to the public or is in the public domain (other than byreason of Executive’s breach of this Section 8).

 

9*  Non-Competition.*  During the period of Executive’s employmentwith Employer and, following any termination thereof, the period ending on thelater of (*a*) the firstanniversary of the Date of Termination and (*b*)the last day of the Severance Period, Executive shall not, directly orindirectly, become employed in a similar executive capacity by, engage inbusiness 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 theoutstanding voting shares of any publicly held company) of, The MeadCorporation, any of its subsidiaries or any other current or future directcompetitor (or any of such direct competitor’s 

 

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subsidiaries or affiliates) in the paperboardand paperboard packaging business of Holding, Employer or any of theirrespective subsidiaries, as determined in good faith by Employer’s Board. Forpurposes of this Section 9, the phrase employment “in a similar executivecapacity” shall mean employment in any position in connection with whichExecutive has or reasonably would be viewed as having powers and authoritieswith respect to any other Person or any part of the business thereof that aresubstantially similar, with respect thereto, to the powers and authoritiesassigned to the Senior Vice President, Beverage or any superior executiveofficer 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 orbefore the date hereof, and which Executive hereby confirms that he hasreviewed.

 

10*  Non-Solicitation of Employees.*  During the period of Executive’s employmentwith Employer and, following any termination thereof, the period ending on thelast day of the Severance Period (such periods collectively, the “RestrictionPeriod”), Executive shall not, directly or indirectly, for his own account orfor the account of any other Person anywhere in the United States or Europe, (*i*) solicit for employment, employ orotherwise interfere with the relationship of Holding, Employer or any of theirrespective subsidiaries with, any person who at any time during the six monthspreceding such solicitation, employment or interference is or was employed byor otherwise engaged to perform services for Holding, Employer or any of theirrespective subsidiaries, other than any such solicitation or employment duringExecutive’s employment with Holding and Employer on behalf of Holding, andEmployer, or (*ii*) induce anyemployee of Holding, Employer or any of their respective Affiliates who is amember of management to engage in any activity which Executive is prohibitedfrom engaging in under any of Sections 8, 9, 10 or 11 or to terminate hisemployment with Employer.

 

11*  Non-Solicitation of Customers.*  During the Restriction Period, Executiveshall not, directly or indirectly, for his own account or for the account ofany other Person anywhere in the United States or Europe, solicit or otherwiseattempt to establish any business relationship of a nature that is competitivewith the paperboard and paperboard packaging business of Holding, Employer orany of their respective subsidiaries, as determined in good faith by Employer’sBoard with any Person who is or was a customer, client or distributor ofHolding, Employer or any of their respective Affiliates at any time duringwhich Executive was employed by Employer (in the case of any such activityduring such time) or during the twelve-month period preceding the Date ofTermination (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 theirrespective Affiliates during Executive’s employment with Employer.

 

12*  Return of Documents.*  In the event of the termination ofExecutive’s employment for any reason, Executive shall deliver to Employer allof (*a*) the property of each ofHolding, Employer and their respective Affiliates and (*b*) the non-personal documents and data ofany nature and in whatever medium of each of Holding, Employer and theirrespective Affiliates, and he shall not take with him any such property,documents or data or any reproduction thereof, or any documents containing orpertaining to any Confidential Information. Whether documents or data are“personal” or “non-personal” shall be determined as follows: Executive shallpresent any documents or data that he wishes to take with him to the chieflegal officer of Employer for his review. The chief legal officer shall make aninitial determination whether any such documents or data are personal ornon-personal, and with respect to such documents or data that he determines tobe non-personal, shall notify Executive either that such documents or data mustbe retained by Employer or that Employer must make and retain a copy thereofbefore Executive may take such documents or data with him. Any disputes as tothe personal or non-personal nature of any such documents or data shall firstbe presented to the Chairman of Employer’s Board or to another representativedesignated by Employer’s Board, and if such disputes are not promptly resolvedby Executive and the Chairman or such representative, such disputes shall beresolved through arbitration pursuant to Section 17(b).

 

13*  Injunctive Relief with Respectto Covenants; Forum, Venue and Jurisdiction.*  Executive acknowledges and agrees that thecovenants, obligations and agreements of Executive contained in 

 

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Sections 8, 9, 10, 11, 12 and 13 relate to special, unique andextraordinary matters and that a violation of any of the terms of suchcovenants, obligations or agreements will cause Employer irreparable injury forwhich adequate remedies are not available at law. Therefore, Executive agreesthat Employer shall be entitled to an injunction, restraining order or suchother equitable relief (without the requirement to post bond) as a court ofcompetent jurisdiction may deem necessary or appropriate to restrain Executivefrom committing any violation of such covenants, obligations or agreements.These injunctive remedies are cumulative and in addition to any other rightsand remedies Employer may have. Employer, Holding and Executive herebyirrevocably submit to the exclusive jurisdiction of the courts of the State ofNew York and the Federal courts of the United States of America, in each caselocated in New York City, in respect of the injunctive remedies set forth inthis Section 13 and the interpretation and enforcement of Sections 8, 9,10, 11, 12 and 13 insofar as such interpretation and enforcement relate to anyrequest or application for injunctive relief in accordance with the provisionsof this Section 13, and the parties hereto hereby irrevocably agree that (*a*) the sole and exclusive appropriatevenue for any suit or proceeding relating solely to such injunctive reliefshall be in such a court, (*b*) allclaims with respect to any request or application for such injunctive reliefshall be heard and determined exclusively in such a court, (*c*) any such court shall have exclusivejurisdiction over the person of such parties and over the subject matter of anydispute relating to any request or application for such injunctive relief, and(*d*) each hereby waives any andall objections and defenses based on forum, venue or personal or subject matterjurisdiction as they may relate to an application for such injunctive relief ina suit or proceeding brought before such a court in accordance with theprovisions of this Section 13. All disputes not relating to any request orapplication for injunctive relief in accordance with this Section 13 shallbe resolved by arbitration in accordance with Section 17(b).

 

14*  Assumption of Agreement.*  Employer shall require any Successorthereto, by agreement in form and substance reasonably satisfactory toExecutive, to expressly assume and agree to perform this Agreement in the samemanner and to the same extent that Employer would be required to perform it ifno such succession had taken place. Failure of Employer to obtain suchagreement prior to the effectiveness of any such succession shall be a breachof this Agreement and shall entitle Executive to compensation from Employer inthe same amount and on the same terms as Executive would be entitled hereunderif Employer had terminated Executive’s employment Without Cause as described inSection 7, except that for purposes of implementing the foregoing, thedate on which any such succession becomes effective shall be deemed the Date ofTermination.

 

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

 

16*  Indemnification.*  Employer hereby agrees that it shallindemnify and hold harmless Executive to the fullest extent permitted byDelaware law from and against any and all liabilities, costs, claims andexpenses, including all costs and expenses incurred in defense of litigation(including attorneys’ fees), arising out of the employment of Executivehereunder, except to the extent arising out of or based upon the grossnegligence or willful misconduct of Executive. Costs and expenses incurred byExecutive in defense of such litigation (including attorneys’ fees) shall bepaid by Employer in advance of the final disposition of such litigation uponreceipt by Employer of (*a*) awritten request for payment, (*b*)appropriate documentation evidencing the incurrence, amount and nature of thecosts and expenses for which payment is being sought, and (*c*) an undertaking adequate under Delawarelaw made by or on behalf of Executive to repay the amounts so paid if it shallultimately be determined that Executive is not entitled to be indemnified byEmployer under this Agreement, including but not limited to as a result of suchexception.

 

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17*  Miscellaneous.*

 

(a)*                                  BindingEffect; Assignment*. This Agreement shall be binding on and inure to thebenefit of Employer, Holding and their respective successors and permittedassigns. This Agreement shall also be binding on and inure to the benefit ofExecutive and his heirs, executors, administrators and legal representatives.This Agreement shall not be assignable by any party hereto without the priorwritten consent of the other parties hereto, except as provided pursuant tothis Section 17(a). Each of Holding and Employer may effect such anassignment without prior written approval of Executive upon the transfer of allor substantially all of its business and/or assets (by whatever means), *provided* that the Successor to Employershall expressly assume and agree to perform this Agreement in accordance withthe 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 inaccordance with Section 13) shall be resolved by binding arbitration. Thearbitration shall be held in the city of Atlanta, Georgia and except to theextent inconsistent with this Agreement, shall be conducted in accordance withthe Commercial Arbitration Rules of the American Arbitration Association thenin effect at the time of the arbitration, and otherwise in accordance withprinciples which would be applied by a court of law or equity. The arbitratorshall be acceptable to both Employer and Executive. If the parties cannot agreeon an acceptable arbitrator, the dispute shall be heard by a panel of threearbitrators, one appointed by Employer, one appointed by Executive, and thethird appointed by the other two arbitrators. All expenses of arbitration shallbe borne by the party who incurs the expense, or, in the case of jointexpenses, by both parties in equal portions, except that, in the eventExecutive prevails on the principal issues of such dispute or controversy, allsuch expenses shall be borne by Employer.

 

(c)*                                  GoverningLaw*. This Agreement shall be governed by and construed in accordance withthe laws of the State of New York without reference to principles of conflictsof laws, *provided* that theindemnification provisions contained in Section 16 shall be governed byand construed in accordance with the laws of the State of Delaware.

 

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

 

(e)*                                  Amendments*.No provision of this Agreement may be modified, waived or discharged unlesssuch modification, waiver or discharge is approved by Employer’s Board or aPerson authorized thereby and is agreed to in writing by Executive and, in thecase of any such modification, waiver or discharge affecting the rights orobligations of Holding, is approved by the Board of Directors of Holding or aPerson authorized thereby. No waiver by any party hereto at any time of any breachby any other party hereto of, or compliance with, any condition or provision ofthis Agreement to be performed by such other party shall be deemed a waiver ofsimilar or dissimilar provisions or conditions at the same or at any prior orsubsequent time. No waiver of any provision of this Agreement shall be impliedfrom any course of dealing between or among the parties hereto or from anyfailure by any party hereto to assert its rights hereunder on any occasion orseries of occasions.

 

(f)*                                    Severability*.In the event that any one or more of the provisions of this Agreement shall beor become invalid, illegal or unenforceable in any respect, the validity,legality and enforceability of the remaining provisions contained herein shallnot be affected thereby.

 

(g)*                                 Notices*.Any notice or other communication required or permitted to be delivered underthis Agreement shall be (*i*) inwriting, (*ii*) deliveredpersonally, by courier service or by certified or registered mail, first-classpostage prepaid and return receipt requested, (*iii*)deemed to have been received on the date of delivery or, if so mailed, on thethird business day after the mailing thereof, 

 

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

 

(A)                              Ifto Employer, to it at:

 

RiverwoodInternational Corporation

814 LivingstonCourt

Marietta,Georgia 30067

*Attention:* General Counsel

 

(B)           if to Holding, to it at:

 

c/o RiverwoodInternational Corporation

814 LivingstonCourt

Marietta,Georgia 30067

*Attention:* General Counsel

 

(C)                                ifto Executive, to him at his residential address as currently on file withEmployer.

 

Copies of anynotices or other communications given under this Agreement shall also be givento:

 

Clayton,Dubilier & Rice, Inc.

375 ParkAvenue

New York, NewYork 10152

*Attention:* Mr. Kevin J. Conway

 

and

 

Debevoise &Plimpton

875 ThirdAvenue

New York, NewYork 10022

*Attention:* Franci J. Blassberg, Esq.

 

(h)*                                 VoluntaryAgreement; No Conflicts*. Executive, Employer and Holding each representthat they are entering into this Agreement voluntarily and that Executive’semployment hereunder and each party’s compliance with the terms and conditions ofthis Agreement will not conflict with or result in the breach by such party ofany agreement to which he or it is a party or by which he or it or his or itsproperties or assets may be bound.

 

(i)*                                     Counterparts*.This Agreement may be executed in counterparts, each of which shall be deemedan original and all of which together shall constitute one and the sameinstrument.

 

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

 

(k)*                                  CertainDefinitions*.

 

“*Affiliate*”: with respect to any Person, means any otherPerson 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 ofwhich the first Person is a Subsidiary, or another Subsidiary of a Person ofwhich 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 causethe direction of the management policies of such Person, whether through theownership of voting securities, by contract or credit arrangement, as trusteeor executor, or otherwise.

 

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

 

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

 

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

 

 

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IN WITNESS WHEREOF, Employerand Holding have duly executed this Agreement by their authorizedrepresentatives, and Executive has hereunto set his hand, in each caseeffective 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                                          Annualexecutive physical.

 

2                                          Reimbursementup to $1,000 annually for expenses relating to income tax preparation plusadditional fees if incurred on account of job-related circumstances and thecost of representation by return preparer during any audit.

 

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

 

4                                          Subjectto the advance approval of the CEO, reimbursement for initiation fees (“grossedup” for federal and state income taxes) and dues for one country club and oneluncheon or city club.

 

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