Document:

Exhibit
10.8

 

FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This
FIRST AMENDED AND RESTATED 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 to be renamed Graphic Packaging Corporation (“Holding”) and Daniel
J. Blount (“Executive”).

 

W I T N E S S E T H :

 

WHEREAS,
Employer currently employs Executive pursuant to an Employment Agreement dated
as of September 1, 1998 (the “Prior Agreement”);

 

WHERAS,
Holding entered into an Agreement and Plan of Merger (the “Merger Agreement”)
dated as of March 25, 2003 with Graphic Packaging International
Corporation (“GPIC”) pursuant to which GPIC will become a wholly owned subsidiary
of Holding (such transaction, the “Merger”) on the Effective Date (as such term
is defined in the Merger Agreement);

 

WHEREAS,
Holding, Employer and Executive desire to amend the Prior Agreement to become
effective on the Effective Date.

 

NOW,
THEREFORE, in consideration of the promises and mutual covenants contained
herein and for other good and valuable consideration, Employer and Executive
hereby agree and the Prior Agreement is hereby amended and restated in its
entirety, 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 Effective Date and ending on the third
anniversary of that date (the “Employment Period”).

 

(b)           Position and Responsibilities.  During the Employment Period, Executive
shall serve as Senior Vice President, Integration of Employer and shall have
(i) responsibility for the achievement of synergies in connection with the
combination of Employer’s business with GPIC’s business following the Merger, (ii)
responsibility for the operational aspects of Employer’s information technology
function, (iii) responsibility for the management of the integration staff of
Employer and (iv) 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 President and Chief Executive Officer.  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 $325,000, 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.

 

4              Incentive Compensation Arrangements. 
During the Employment Period, Executive shall be entitled to the
following incentive compensation.

 

(a)           Synergy Achievement Award.  For each of the first three years, measured
as provided in Section 4(a)(ii) below, following the Effective Date (each,
an “Award Year”), the Executive shall be eligible to receive a cash bonus (the
“Synergy Achievement Award”) determined in accordance with this
Section 4(a).

 

(i)            The Synergy Achievement Award will
be administered by a committee initially consisting of B. Charles Ames, Kevin
Conway and Stephen M. Humphrey (the “Synergy Review Committee”).  Replacements for any member of the Synergy
Review Committee shall be named by the Chief Executive Officer of Employer.  For each Award Year in the Employment Period
the Synergy Review Committee shall, in its discretion, determine the value of
the synergies achieved.

 

(ii)           The first Award Year shall begin on
the first day of the calendar month in which the Effective Date occurs.  The second and third Award Years shall begin
on the first and second anniversaries, respectively, of the first day of the
first Award Year.

 

(iii)          The Synergy Achievement Award (if any)
for a given Award Year shall be calculated in accordance with Schedule I.

 

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(iv)          Unless otherwise determined by the
Synergy Review Committee and the compensation committee of Employer (the
“Compensation Committee”), the Synergy Achievement Award (if any) earned in
respect of an Award Year shall be paid to the Executive on the earlier of sixty
(60) days following (i) the last day of the Award Year in which the total
synergies achieved since the Effective Date reaches $59.1 million and (ii) the
last day of the third Award Year.

 

(v)           The Synergy Achievement Award is
subject to such conditions as the Compensation Committee reasonably determines
necessary to prevent the treatment of the Synergy Achievement Award as other
than “performance based compensation” within the meaning of
Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended (the
“Code”).

 

(b)           Equity Awards

 

(i)            Option Exchange.  Executive shall surrender 1,200 unvested
service options to purchase Class A Common Stock of Employer (“Service
Options”) and 3,000 unvested performance options to purchase Class A Common Stock
of Employer (“Performance Options”) granted to Executive pursuant to the
Riverwood Holding, Inc. Stock Incentive Plan (the “1996 Stock Incentive Plan”),
3,277 unvested Performance Options granted to Executive pursuant to the
Riverwood Holding, Inc. Supplemental Long Term Incentive Plan (the “1999 LTIP”)
and 17,136 unvested Service Options granted to Executive pursuant to the
Riverwood Holding, Inc. 2002 Stock Incentive Plan (the “2002 Stock Plan”) (all
such unvested Service Options and Performance Options, the “Unvested Options”)
and Executive shall receive (i) 4,923 Service Options (the “New Options”)
pursuant to the 2003 Riverwood Holding, Inc. Long Term Incentive Plan (the
“2003 LTIP”), on terms substantially similar to those provided to other senior
executives of Employer and (ii) 7,384 Restricted Stock Units (the “2003
Exchange Restricted Units”) pursuant to the 2003 LTIP on terms substantially
similar to those provided to other senior executives of Employer.

 

(ii)           Unit Exchange.  Executive shall surrender 1,500 incentive
stock units granted to Executive pursuant to the 1999 LTIP and 1,800 Restricted
Stock Units granted to Executive pursuant to the 2002 Stock Plan and Executive
shall receive 3,300 restricted stock units pursuant to the 2003 LTIP (the “2003
Replacement Restricted Units” and, together with the 2003 Exchange Restricted
Units, the “New Restricted Units”) on terms substantially similar to those
provided to other senior executives of Employer.

 

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

 

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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 II hereto.

 

(b)           Professional Development.  Employer shall reimburse Executive for
reasonable expenses incurred in connection with (i) continuing education for
the maintenance of Executive’s license as a Certified Public Accountant, (ii)
Executive’s participation in the “World Class” Chief Financial Officer
Education Program and (iii) Executive’s participation in educational programs
relevant to his responsibilities for the Employer’s information technology
function.

 

(c)           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.

 

(d)           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 

 

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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 or (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, 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

 

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circumstances claimed to give rise to Executive’s
right to 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 or a
termination of Executive’s employment as a result of the expiration of 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
eighteen month anniversary of the Date of Termination, and

 

(B)           any earned but unpaid Synergy
Achievement Awards, payable promptly following such termination of employment
and a pro rata portion of the Synergy Achievement Award (the “Pro Rata Synergy
Award”) that would have been payable to Executive for the Award Year that
includes the Date of Termination, payable promptly following the calculation
thereof, 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 

 

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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, (i) any earned but unpaid
Synergy Achievement Award and (ii) the Pro Rata Synergy Award (determined as
provided in Section 7(f)(i)) for the portion of the Award Year preceding
Executive’s Date of Termination (exclusive of any time between the onset of
a 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

 

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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 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

 

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substantially similar, with respect thereto, to the
powers and authorities assigned to the Senior Vice President, Finance  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

 

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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 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).

 

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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 Exhibits
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.

 

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

 

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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.

 

12

 

(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,
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.

 

13

 

(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.

 

“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.

 

14

 

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/ Wayne E. Juby

  	
   

  
	
   

  	
   

  	
  Name:  Wayne E. Juby

  
	
   

  	
   

  	
  Title: Senior Vice President, Human Resources

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RIVERWOOD HOLDING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Wayne E. Juby

  	
   

  
	
   

  	
   

  	
  Name:  Wayne E. Juby

  
	
   

  	
   

  	
  Title:  Senior Vice President,
  Human Resources

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Executive:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Daniel J. Blount

  	
   

  

 

15

 

Schedule I

 

Annual Synergy Achievement Award

(all $ are
millions)

 

Synergy Award Schedule

 

	
  Amount

  	
   

  	
  Percent

  	
   

  	
  Bonus

  	
   

  
	
  $

  	
  51.6

  	
   

  	
  100

  	
  %

  	
  $

  	
  2.0

  	
   

  
	
  $

  	
  46.4

  	
   

  	
  90

  	
  %

  	
  $

  	
  1.8

  	
   

  
	
  $

  	
  41.3

  	
   

  	
  80

  	
  %

  	
  $

  	
  1.6

  	
   

  
	
  $

  	
  28.4

  	
   

  	
  55

  	
  %

  	
  $

  	
  1.1

  	
   

  
	
  $

  	
  25.8

  	
   

  	
  50

  	
  %

  	
  $

  	
  1.0

  	
   

  

 

Synergy achievement over
$51.6 earns additional bonus accruing at the rate of 5 cents per dollar for
synergies between $51.6 and $54.1; 10 cents per dollar for synergies achieved
between $54.1 and $56.6; and 20 cents per dollar for synergies achieved between
$56.6 and $59.1.  For the achievement of
synergies over $59.1, the Synergy Award Committee may, in its discretion, grant
additional awards.

 

For the first 10%
increase in the first two years in synergy achieved, an additional 10% bonus on
the $2.0 target bonus will be earned.

 

	
  Year 1

  	
   

  	
  Year 2

  	
   

  	
  Year 3

  	
   

  	
  Total

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  18.1

  	
   

  	
  $

  	
  20.0

  	
   

  	
  $

  	
  13.5

  	
   

  	
  $

  	
  51.6

  	
   

  
												

 

•      Year 1 – Synergies achieved at $19.9; an
additional $0.2 is earned.

•      Year 2 – Synergies achieved at $22.0; an
additional $0.2 is earned.

 

16

 

Schedule II

 

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.

 

17Exhibit 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.

 

2

 

(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 

 

3

 

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 

 

4

 

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 

 

5

 

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 

 

6

 

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.

 

7

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

  	
   

  
						

 

11

 

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.

 

12

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