Document:

exv10w1

Exhibit 10.1

SUPPLY AGREEMENT

THIS
SUPPLY AGREEMENT (this “Agreement”) is made and entered into as of June 1, 2009 (the
“Effective Date”), by and between Sun Chemical Corporation, a Delaware corporation, and its
affiliates (“Sun”), and Graphic Packaging International, Inc., a Delaware corporation
(“GPI”).

Background

Sun and GPI have entered into an Asset Purchase Agreement dated May 20, 2009 (the “Asset
Purchase Agreement”) pursuant to which Sun has agreed to buy certain of the assets of certain
of GPI’s subsidiaries engaged in the manufacture, marketing and supply of certain printing inks,
artists inks, coatings, varnishes and alkyds (the “Business”) to internal and third-party
customers (the “Asset Purchase”). In connection with the Asset Purchase, Sun
desires to sell and GPI desires to purchase certain ink and related products (as defined below) on
the terms and conditions set forth in this Agreement.

Agreement

In consideration of the mutual representations, warranties, covenants and agreements contained in
this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:

1.
Product Supply.

A. Subject to the terms and conditions of this Agreement, GPI agrees to purchase, and Sun agrees to
supply the products set forth in Appendix A attached hereto (the
“Products”) for any
combination of GPI’s facilities in North America, for the term of this Agreement. Notwithstanding
the foregoing, GPI shall not be obligated to purchase any particular Product until such product has
been qualified for supply to GPI, which qualification GPI shall determine in accordance with GPI’s
policies and practices (such qualified Product is referred to herein as “Qualified
Product”) provided that such failure to qualify is solely attributable to the fault of Sun. It
is agreed and understood by the parties that GPI shall use reasonable commercial efforts to
facilitate and effect timely and prompt qualification of the Products at each of its facilities
having requirements for such Products and to cooperate with Sun as reasonably required to achieve
such prompt qualification of Products.

B. GPI may
also purchase, and Sun may sell, such other items (“Additional Products”) as may
be mutually agreed upon by the Parties pursuant to mutually satisfactory terms and conditions;
provided that any purchases by GPI of such Additional Products from Sun will be deemed to count
toward the Minimum Aggregate Purchase Amount, the Minimum Annual Purchase Amount, the purchase
thresholds necessary to achieve a specified rebate rate or percentage and the purchase volumes
eligible for rebates.

2. Term.

A. The
term of this Agreement (“Term”) shall begin as of the Effective Date and shall
expire on June 30, 2017 unless earlier terminated automatically or by one of the parties as
provided by the terms of this Agreement. It is the desire of the Parties to make the Agreement
anniversary

 

 

date fall on July 1 of each year of the Term so as to coincide with the start of the third calendar
quarter of each year; thus, the initial year of this Agreement will begin on the Effective Date and
will terminate on June 30, 2010 so that the successive terms thereafter will run from July 1 to
June 30 for the seven years after the initial year, with the period commencing on the Effective
Date and terminating on June 30, 2010, and each of the seven twelve-month periods commencing on
July 1 thereafter during the Term referred to herein as a “Contract Year”.

B. Notwithstanding the foregoing, if GPI has not purchased the Minimum Aggregate Purchase Amount
over the Term, unless terminated early pursuant to Section(s) 20 below, then the Term shall be
extended through and until such time as GPI’s purchases of Qualified Products and Additional
Products equals or exceeds the Minimum Aggregate Purchase Amount. The “Minimum Aggregate
Purchase Amount” means, initially, the aggregate amount paid to Sun by GPI for purchases of
Qualified Products and Additional Products hereunder equal to $[*], exclusive of rebates, taxes,
duties and other charges; provided, however, that the Minimum Aggregate Purchase Amount shall be
updated and adjusted during the Term, as follows: At the time of every price adjustment made
pursuant to Appendix B, the parties shall calculate the “Remaining Minimum Purchase Amount”
by subtracting from the Minimum Aggregate Purchase Amount then in effect the sum of (i) the total
amount of prior sales of Products and Additional Products plus (ii) the total amount of other
credits against the Minimum Aggregate Purchase Amount per Sections 3B and 8B all as of the date of
the price adjustment (all of the foregoing prior sales and credits collectively referred to herein
as “Prior Purchase Credits”). A “Revised
Remaining Purchase Amount” shall be
calculated by multiplying the Remaining Minimum Purchase Amount by the sum of (i) the number one
(1) plus the Weighted Average Price Change (as calculated pursuant to Appendix B) at the time of
such price adjustment. For the avoidance of doubt, if the Weighted Average Price Change represents
an overall price decrease, the Weighted Average Price Change shall be deemed to be a negative
number. The new Minimum Aggregate Purchase Price shall be an amount equal to the Revised Remaining
Purchase Amount plus (ii) the Prior Purchase Credits. At the time of every price
adjustment, Sun shall inform GPI in writing of the new Minimum Aggregate Purchase Amount.

3.
Pricing, Quantity, Rebates and Audit. The consideration for GPI’s execution of this
Agreement in conjunction with the Asset Purchase Agreement shall be [*] ($[*]) in cash (the
“Incentive Payment”). On the date hereof, Sun shall wire to GPI, in immediately available
funds to an account designated in writing by GPI, the Incentive Payment. The Incentive Payment
shall be fully refunded to Sun, without interest, within fifteen (15) business days after any valid
termination of the Asset Purchase Agreement. The Incentive Payment shall become nonrefundable at
the time that the Asset Purchase is completed.

A. Pricing for Products as well as the mechanism for making future price adjustments shall be as
set forth in Appendix B attached hereto and incorporated herein by reference.

 

			
	[*]	 	 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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B. In each of the first seven years of the Term, GPI will purchase from Sun at least 95% of
GPI’s Annual Organic Requirements for Qualified Products and in the eighth year of the Term, GPI
will purchase from Sun at least 75% of GPI’s Annual Organic Requirements for Qualified Products.
Notwithstanding the foregoing, GPI shall purchase no less than the Minimum Aggregate Purchase
Amount during the Term. Sun and GPI agree that GPI may purchase less than 95% of its Annual Organic
Requirements for any Product that is not a Qualified Product as of the first day of the applicable
contract year, provided that failure to qualify such Product is solely attributable to the fault of
Sun; and further agree that, in such instance, the percentage of Annual Organic Requirements of
such Product(s) qualified after the first day of the Contract Year which GPI shall be required to
purchase hereunder shall be prorated based on the date on which qualification is achieved. If Sun
cannot supply Qualified Product after December 31, 2009, for reasons solely attributable to the
fault of Sun, and GPI makes purchases of such Product from a third party, such purchase will be
deemed to count toward the Minimum Aggregate Purchase Amount, the Minimum Annual Purchase Amount,
and the purchase thresholds necessary to achieve a specified rebate rate or percentage, but shall
not be counted toward calculated purchase volumes eligible for rebates. “Annual Organic
Requirements” means the annual requirements for Product that are generated by the businesses
owned by GPI as of the date hereof as the same expand or contract or otherwise may be modified
during the Term; provided, however, for the avoidance of doubt, Annual Organic Requirements shall
not include (i) New Applications for Product in accordance with Section 12 unless such New
Applications become Qualified Products; and (ii) the requirements of any business acquired by GPI
from a third party (an “Acquired Business”).

C. Upon Sun’s request, GPI shall provide an officer’s certificate to Sun within 60 days
of the end of each contract year certifying as to whether the percentage of Qualified Products
purchased from Sun satisfied the requirements of this provision, and Sun shall have the right, no
more frequently than once per contract year and during regular business hours in a manner not
disruptive to GPI’s ordinary course of business, to have a mutually agreeable independent third
party audit GPI’s purchases to determine satisfaction of the requirements of this provision. In
the event that any such audit concludes that GPI has satisfied such purchase requirements, the cost
of such audit will be at Sun’s expense; if not, such cost will be borne by GPI.

D. In the event of a dispute over whether the failure to qualify any Product(s) is solely
attributable to the fault of Sun, or instead attributable to the failure of GPI to use commercially
reasonable efforts to facilitate and effect timely and prompt qualification at any or all of its
facilities, the parties shall endeavor in good faith to resolve the dispute. In the event that
they are unable to do so within thirty (30) days after one party notifies the other in writing of
the existence of such dispute, the parties shall retain a mutually acceptable independent third
party technical advisor (“Technical Advisor”) with recognized experience and expertise in the inks
and printing industry to resolve the dispute. The parties shall afford Technical Advisor such
access as Technical Advisor may reasonably require during regular business hours, in a manner not
disruptive to the parties’ ordinary course of business and under provisions of confidentiality
mutually acceptable to the parties, to their facilities, personnel, processes, products, equipment
and information to the extent necessary to resolve the dispute. In the event that Technical
Advisor determines that a disputed failure to qualify is solely attributable to the fault of Sun,
fees

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and costs of Technical Advisor’s services shall be borne by Sun. In the event that the Technical
Advisor determines that the failure to qualify is solely attributable to the fault of GPI, fees and
costs shall be born by GPI. In the event that the Technical Advisor determines that the failure to
qualify is attributable to both parties, the fees and costs shall be born by the parties in the
proportion of their fault as determined by the Technical Advisor. The decision of the Technical
Advisor shall be final and shall be binding upon the parties.

E. GPI shall be entitled to retain a mutually agreeable independent party to audit Sun’s
determination of the Margin for 2008 under obligations of confidentiality satisfactory to Sun in
accordance with Appendix B. In addition, GPI shall have the right, no more frequently than once
per contract year and during regular business hours in a manner not disruptive to Sun’s ordinary
course of business, to have a mutually agreeable independent third party audit any price
adjustments made by Sun under obligations of confidentiality satisfactory to Sun in accordance with
this Agreement. In the event that any such audit concludes that the actual price increase should
have been an amount greater than [*] or that the actual price decrease should have been an amount
greater than [*] (in either case, a “Significant Overcharge”), the cost of such audit will
be at Sun’s expense; if not, such cost will be borne by GPI. Sun shall promptly, but in no event
more than ten (10) days after the determination of any overcharge, refund to GPI any amounts
overpaid by GPI with respect to any Qualified Product purchased since the date the applicable price
change was implemented by Sun.

F. Except as set forth below, on or before the thirtieth day following the end of each of the first
three quarters during each calendar year during the Term, Sun will pay to GPI a quarterly rebate
amount in cash or credit, at the election of GPI, based on purchase volumes for Qualified Products
and Additional Products during such quarter, calculated as set forth below (a “Quarterly Rebate
Amount”):

	 	 	 
	Total Purchase Volumes for Quarter	 	Quarterly Rebate Rate
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]

 

			
	[*]	 	 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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No later than thirty (30) days following the expiration of each calendar year during the Term,
with the exception of year 2009, Sun will pay to GPI an Annual Rebate Amount in cash or credit, at
the election of GPI, based on purchase volumes for Qualified Products and Additional Products
during such preceding calendar year, in an amount, if any, equal to (A) the Annual Rebate Amount
(as defined below) less (B) the total of the Quarterly Rebate Amounts paid to GPI for the first
three quarters of such preceding calendar year, if a positive number. If the total of the rebates
paid to GPI for the first three quarters of such calendar year exceeds the Annual Rebate Amount
owed to GPI for such calendar year, then GPI shall pay to Sun, within such thirty (30) day period,
the amount by which the sum of the Quarterly Rebate Amounts for the first three quarters exceeds
the Annual Rebate Amount earned for such calendar year or, at Sun’s discretion, this amount will be
deducted from the following quarterly rebate payment(s) until it is fully depleted. The Annual
Rebate Amount shall be calculated as follows:

	 	 	 
	Total Purchase Volumes for Calendar Year	 	Annual Rebate Amount
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]

In calendar year 2017, the regular Quarterly Rebate Amounts shall be paid in the first and second
quarters. If this Agreement terminates as scheduled on June 30, 2017, no Annual Rebate Amount
shall be paid. If this Agreement is required to continue after June 30, 2017 in accordance with
Section 20, the regular quarterly rebates and annual rebates shall continue for the remainder of
the Agreement, and in any partial calendar year the Quarterly Rebate Amounts will be paid but no
Annual Rebate Amount shall be paid.

Notwithstanding anything to the contrary in the foregoing, Quarterly Rebate Amounts for the third
and fourth quarters of calendar year 2009 shall be calculated in accordance with the provisions of
Appendix C attached hereto and incorporated herein by reference.

The sum of any Quarterly Rebate Amounts payable in the third and fourth quarters of calendar years
2009 is referred to herein as the “Initial Rebate Amount.”

 

			
	[*]	 	 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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On or before January 31, 2010, Sun and GPI shall agree to the total volume of Qualified
Product and Additional Products purchased by GPI during the calendar year 2009, whether or not such
Qualified Products or Additional Products were purchased pursuant to this Agreement, and Sun shall
pay to GPI an amount, if any, equal to (A) the 2009 Rebate Amount (as defined below) less (B) the
Initial Rebate Amount. The 2009 Rebate Amount shall be calculated as follows:

	 	 	 
	Total Purchase Volumes for 2009	 	2009 Rebate Amount
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]

G. Unless otherwise specified herein, rebates, payments for purchases hereunder and any other
payments owed by one party to another hereunder may be made by ACH transfer to an account
designated in writing by the party receiving such payment.

4. Payment Terms. Payment terms are net 60 days. Interest at the rate of 1% per month
will be charged on all past due amounts up to thirty (30) days past due, and at the rate of 2% per
month on all amounts past due longer than thirty (30) days. Sun agrees all payment terms are
dependent on accurately invoicing GPI. As such, payment terms begin upon receipt of an accurate
invoice by GPI from Sun. If an invoice is incomplete or inaccurate, GPI will pay all undisputed
amounts within terms according to the original invoice date, but will not be held in default for
non-payment of disputed items until the dispute has been resolved and any inaccurate or incomplete
invoices have been corrected by Sun. Products provided on a consignment basis shall be billed
monthly once the container is opened.

5.
Shipment and Delivery. Subject to Section 16, Sun agrees to deliver Qualified Products
on or prior to the agreed-upon delivery dates and if any shipment or delivery is made which is not
in all material respects in accord with this Agreement (including time of shipment or delivery),
GPI reserves the right to reject such delivery without liability to Sun, and, in the absence of an
event

 

			
	[*]	 	 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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of force majeure such rejected volumes shall be included in calculating GPI’s rebate
percentages, but not purchase volumes eligible for rebates. Sun will ship the Products in a manner
consistent with general industry practice so as to minimize any damage while in transit. GPI is
not responsible for any charge for packing, boxing, storage or cartage.

6. Passage of Title.

A. Unless otherwise specifically agreed to by the parties, all Qualified Product will be purchased
on consignment. With respect to Product sold by consignment, Sun agrees to deliver to GPI’s
facility or facilities and GPI agrees to accept Products. Sun will remain the owner of the
Products until said Products are purchased by GPI pursuant to the terms of this Agreement. Either
the actual use of the Product or its removal from the Storage Area (defined hereinafter), as
applicable, shall be deemed the time of purchase of such Product under this Agreement. GPI shall
receive and accept delivery of the Products, and safely store them as Sun’s property at Buyer’s
applicable place of business (the “Premises”), so as to reasonably protect the Products from loss,
damage or deterioration. All such Products shall prominently bear Sun’s name and shall be
conspicuously marked and identified as being the property of Sun. GPI shall designate a storage
area (“Storage Area”) on the Premises solely for storage of Sun’s Products. The Products in the
Storage Area located at the Premises shall be physically segregated from and not commingled either
with GPI’s inventory or other property or with the property of any other person, and GPI agrees to
execute such financing statements and other documents as Sun may reasonably require to perfect
Sun’s security interest in, and to give notice of and confirm it’s ownership of, the Products to
which Sun retains title.

B. With respect to any Qualified Product not sold by consignment, title to all items sold to GPI
hereunder shall pass to GPI upon delivery of same by Sun to GPI DDU designated GPI converting
facility (Incoterms 2000). All risk of loss or damage to said items prior to such delivery shall
fall upon Sun, and Sun shall defend and hold GPI harmless against any claims asserted against GPI
on account of any personal injury or property damages caused by any transported materials, or by
the transportation thereof, prior to the completion of unloading at GPI’s plant.

7. Material Specifications. All Qualified Products sold by Sun to GPI will comply with the
material specifications attached hereto as Appendix D and incorporated herein by reference
(“Specifications”).

8. Inspection; Non-Conforming Goods.

A. GPI shall have the right, but not the obligation, to inspect at any location and at any time all
Qualified Products, and to reject that which does not conform to Specifications, or if not so
specified, which do not conform to standard industry specifications (“Non-Conforming
Goods”). GPI may make returns of Non-Conforming Goods to Sun at Sun’s expense and may purchase
replacement goods from third parties in accordance with Section 8B. No such inspection by GPI
shall in any manner affect any of the warranties of Sun or constitute a waiver of any of GPI’s
rights hereunder or otherwise, and all items are subject to GPI’s inspection and right to reject
notwithstanding prior payment.

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B. Upon determining that any Qualified Product supplied hereunder constitutes Non-Conforming Goods,
GPI shall notify Sun and may contact third-party suppliers with respect to their ability to supply
replacement Products meeting the Specifications (“Replacement Products”). GPI may obtain
Replacement Products from Sun or a third-party supplier, whichever GPI in its sole discretion
determines is able to deliver such Replacement Products in the shortest amount of time.
Replacement Products supplied by Sun shall be supplied at Sun’s sole cost and expense. For
Replacement Products supplied by a third party, (i) GPI shall receive a credit in the amount paid
to Sun for such Non-Conforming Product, if applicable; and (ii) purchases of Replacement Products
from third parties shall be treated as if purchased from Sun for the purpose of calculating the
Minimum Aggregate Purchase Amount, Minimum Annual Purchase Amount, and Quarterly Rebate threshold.
GPI shall continue to count Replacement Product toward the calculations of the Minimum Aggregate
Purchase Amount, Minimum Annual Purchase Amount and Quarterly Rebate threshold (but not volumes
eligible for rebates) until Sun can produce Qualified Product once again.

C. Sun acknowledges that it will provide GPI with thirty (30) days notice before making changes in
raw materials or processes used by Sun in the manufacture of any Product or Additional Product to
the extent required by, and pursuant to the terms of, the Management of Change Process attached
hereto as Appendix E. Regardless of whether notice is required under the Management of Change
Process, Sun agrees to maintain a log of all raw material or process changes made by Sun in the
manufacture of any Product or Additional Product, which log may be consulted by GPI upon GPI’s
request.

9. Business and Technical Support/In-Plant Technicians/Testing. In partial consideration
of GPI’s commitment hereunder, Sun shall provide the following services at no additional cost to
GPI:

	 	(a)	 	The services of a dedicated business manager, as more specifically described in
Appendix F, attached hereto.
	 
	 	(b)	 	The services of technical support, Black Belt and Color Manager personnel, as
more specifically described in Appendix G, attached hereto.
	 
	 	(c)	 	Quarterly testing of inks as required by GPI. Original testing will be
performed by Nancy Plowman and Associates. Future testing may be revised upon mutual
consent of both parties.
	 
	 	(d)	 	Additional support services currently provided by the Handschy business as set
forth in Appendix H.

      GPI shall provide, at no charge, a safe and appropriate area close to the pressroom, including
desk, file cabinets, work table, telephone and such other amenities as Sun may reasonably request
to enable it to provide its in-plant services. GPI will also provide, at no charge, heat, light,
power and other services for Sun’s in-plant services.

10. Equipment. In partial consideration of GPI’s commitment hereunder, Sun shall provide
and maintain all in-plant equipment necessary to perform its obligations hereunder, as set forth in
Appendix I. Ownership of such equipment will remain with Sun, and such equipment will be labeled
“property of Sun Chemical.” GPI agrees to execute such financing statements and other

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documents as Sun may reasonably require to perfect Sun’s security interest in, and to give notice
of and confirm it’s ownership of, the Equipment to which Sun retains title.

11. Profit Sharing Productivity Program. GPI and Sun agree that they shall use their
commercially reasonable efforts to implement a profit sharing productivity program and to allocate
the cost-savings realized from such program in the form and as set forth in detail on Appendix J,
attached hereto.

12. New Technology.

A. Sun will, to the extent that it is legally free to do so, provide GPI with prompt notice on any
new developmental breakthroughs developed by Sun and ready for commercial use concerning the
Products (“New Technology”), under such terms of confidentiality as may be required by Sun,
in its sole discretion. In addition, Sun will provide a technology innovation presentation twice a
year during the Term which outlines, on a confidential basis, its ink development programs
concerning the Products. For any New Technology that GPI wishes to pursue with Sun, Sun and GPI
will use reasonable commercial efforts to qualify products embodying New Technology as Qualified
Products to be supplied to GPI pursuant to the terms of this Agreement. In addition, where Sun is
legally free to do so, the parties agree to negotiate in good faith mutually satisfactory
agreements pursuant to which Sun would supply the New Technology exclusively to GPI, and not to any
other customer of Sun, for a period of time to be determined by the parties.

B. GPI will provide to Sun, on a confidential basis, the opportunity to supply all Product
developments for New Applications. A “New Application” means, with respect to any product: (i) an
ink or coating that allows for a new performance enhancement (e.g., gloss, metallic) or application
(e.g., coating that provides barrier) that is not commercial as of the signing of this Agreement;
or (ii) a new ink or coating that allows production of an existing capability with a new process
(e.g., HTL labels run flexo); provided, however, for the avoidance of doubt, New Applications for
Product shall not be considered part of GPI’s Annual Organic Requirements unless such New
Applications are, upon mutual agreement of the parties,, qualified for such New Applications
following which they will be deemed “Qualified Products” with respect to such New Applications. If
not so qualified, they will be deemed “Additional Products”, as defined above. GPI will use Sun as
the vendor of choice for New Applications of Product so long as the pricing and performance of the
Product in the New Application is competitive; if not competitive, GPI shall have the right to
source the Product for the New Application outside of this Agreement without penalty.

13. Indemnity.

A. Sun shall indemnify, defend, protect and hold harmless GPI, its employees, agents, servants,
successors and assigns from and against any and all losses, damages, injuries, claims, demands,
expenses, including legal fees and expenses, of whatever nature, arising out of the performance by
Sun of its obligations hereunder, or arising out of the performance of the services provided by or
on behalf of Sun for GPI hereunder resulting in injuries to or death of any person or persons or
damage to any property occasioned by acts or omissions of Sun, its officers, employees, agents

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or subcontractors, except to the extent due to the negligent or intentional acts of GPI or its
personnel.

B. GPI shall indemnify, defend, protect and hold harmless Sun, its employees, agents, servants,
successors and assigns from and against any and all losses, damages, injuries, claims, demands,
expenses, including legal fees and expenses, of whatever nature, resulting from injuries to or
death of any Sun in-plant personnel at GPI’s facilities or locations resulting from the negligence
or willful misconduct of GPI.

C. Sun shall indemnify, defend, protect and hold harmless GPI, its employees, agents, servants,
successors and assigns from all costs, expenses, including reasonable attorneys’ fees, damages or
claims arising out of infringement or claim of infringement of any patent rights, trademark,
tradename or copyright based on the sale, purchase or use of the items covered by this Agreement.
Sun further agrees that in the event of any such claim, and if required by GPI, Sun shall at its
expense and at no cost to GPI do one of the following:

	 	(i)	 	Procure for GPI the right of license to use and continue to use said items; or
	 
	 	(ii)	 	Replace said items with non-infringing items and/or services of like or
superior kind, productivity, efficiency, quality and value; or
	 
	 	(iii)	 	Modify said items so as to become non-infringing. Should the items be
modified, as provided herein, such modification shall not reduce the usefulness or
productivity of same.

14. Limited Warranty/Limitation on Liability.

A. Sun expressly warrants that title to all items sold to GPI under this Agreement will pass to
GPI free and clear of all liens, claims, security interests or encumbrances and that no materials,
equipment or supplies incorporated into any items sold to GPI hereunder will have been acquired by
Sun subject to an agreement under which any interest therein or any encumbrance thereon is retained
by Sun which will survive delivery to GPI.

B. Sun expressly warrants that the Products sold hereunder shall conform to the Specifications
and shall be free from defects in materials or workmanship. Equipment supplied pursuant to Section
10 of this Agreement is provided subject to the manufacturer’s standard warranty. SUN HEREBY
DISCLAIMS ANY AND ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR USE OR PURPOSE. IN THE EVENT OF FAILURE OF ANY
PRODUCT TO CONFORM TO THE WARRANTY PROVIDED HEREIN, SUN’S SOLE OBLIGATION, AND GPI’S RIGHT, SHALL
BE FOR SUN TO REPLACE SUCH NON-CONFORMING PRODUCT OR REFUND THE PURCHASE PRICE. IN ADDITION, SUN
WILL INDEMNIFY AND HOLD HARMLESS GPI FOR DAMAGES DIRECTLY SUSTAINED OR INCURRED BY GPI RESULTING
FROM A BREACH OF THE WARRANTY PROVIDED HEREUNDER, INCLUDING WITHOUT LIMITATION COSTS OF RE-WORK,
DISPOSAL, RAW MATERIALS AND LABOR. IN NO EVENT SHALL SUN BE LIABLE TO GPI FOR ANY OTHER CLAIMS
(EXCEPT AS SPECIFICALLY PROVIDED IN SECTION 13, ABOVE), REGARDLESS OF THE FORM OF ACTION, OR

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FOR ANY OTHER DAMAGES WHETHER INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL, INCLUDING BUT NOT
LIMITED TO LOST PROFITS, WHETHER FORESEEABLE OR NOT, EVEN IF SUN HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.

15. Independent Contractor. Sun agrees that in the performance of this Agreement, Sun
shall act as an independent Contractor and all of its agents, and employees, and agents and
employees of its subcontractors, shall be subject solely to the control, supervision and authority
of Sun.

16. Force Majeure. Neither party shall be liable for delay in its performance of its
obligations and responsibilities under this Agreement due to causes beyond its control such as, but
not limited to, war, embargo, national emergency, insurrection or riots, acts of the public enemy,
fire, flood or other natural disaster, (a “Period of Disability”) provided that said party
has taken reasonable measures to notify the other, in writing, of the delay or anticipated delay.
Failure of subcontractors and inability to obtain materials shall not be considered a Period of
Disability for purposes of this clause. If, due to a Period of Disability, Sun should be unable to
meet all of its delivery commitments for items ordered hereunder as they become due, Sun shall not
discriminate against GPI or in favor of any other customer in making deliveries of such items. If
GPI believes that the Period of Disability or anticipated Period of Disability as notified in
writing by Sun may impair its ability to meet its production schedules or may otherwise interfere
with its operation, GPI may at its option and without liability to Sun, cancel outstanding
deliveries or future orders hereunder wholly or in part during the Period of Disability; any
purchases made by GPI from alternative providers during any Period of Disability of Sun shall
nevertheless be credited towards GPI’s annual volume purchasing with Sun for the sole purpose of
determining rebate rate (but not sales volume eligible for rebate), with appropriate documentation
of the purchases from GPI. If Sun’s Period of Disability lasts beyond 60 days, or if Sun notifies
GPI that it anticipates the Period of Disability to last beyond 60 days, GPI may, at its option,
cancel all or a portion of this Agreement in writing without liability to Sun.

17.
Compliance with Law. A. GPI hereby notifies Sun that, if covered, Sun has an
obligation to develop and maintain an affirmative action program in compliance with EO 1246, as
amended, the Rehabilitation Act of 1973, as amended, the Vietnam Era Readjustment Act of 1974. Sun
represents to GPI that, if covered, it is in compliance with EO 11246, as amended, the
Rehabilitation Act of 1973, as amended, and the Vietnam Era Readjustment Act of 1974. The
mandatory clauses required under those laws, being set forth in 41 CFR 60-1.4(a), 41 CFR
60-250.4(a). 41 CFR 60-741.4(a) are incorporated herein by reference.

B. Sun (1) is required to meet the filing requirements of 41 CFR 60-1.7(a) and 41 CFR 61-250.11,
if applicable, (2) hereby certifies that it currently observes and will hereafter observe all
requirements pertaining to non-segregated facilities set out in 41 CFR 60-1.8(b), (3) will list, to
the extent legally required, all suitable employment openings with the appropriate state employment
service pursuant to 41 CFR 60-250.5(d), and (4) will make and/or retain all records required by
state and federal laws.

C. Sun currently observes and will continue to observe the requirements of the Drug-Free Workplace
Act of 1988.

11

 

D. Sun will comply with all provisions of the OSHA Hazard Communication Standard (20) CFR
1910.1200, et seq.) including Sun’s obligation to furnish any applicable material safety data
sheets, together with appropriate labels and employee training and instruction materials.

E. Sun will comply with requirements of the Fair Labor Standards Act of 1938, as amended, and all
applicable United States Department of Labor Regulations promulgated thereunder or otherwise
dealing with wages and hours of work, and shall certify at time of delivery said compliance.

F. Sun shall not, under any circumstances, in connection with the work to be performed hereunder,
cause or permit the discharge, emission, release, storage, disposal or transportation of any
pollutant, hazardous contaminant, toxic or other substance in violation of any applicable laws,
rules or regulations which are now or hereafter promulgated by Federal, state, or local
authorities.

G. Sun further agrees to comply with any and all applicable federal, state and local laws, orders
and regulations not specifically referenced herein.

18. Sales and/or Use Taxes. Except as otherwise specifically provided herein, GPI shall
bear the cost of any taxes, levies, or fees of any kind, nature or description whatsoever
applicable to the sale of any Products sold by Sun to GPI, and GPI shall forthwith pay to Sun all
such sums upon demand, unless GPI shall provide Sun, at the time of the submission of its orders to
Sun, with tax exemption certificates or permits acceptable to the appropriate taxing authorities.
Sun, as a contractor, will pay and be solely responsible for any and all sales and/or use taxes on
all materials, supplies and equipment used in the performance of Sun’s obligations under this
Agreement, all in accordance with applicable law.

19.
Insurance. If any of Sun’s employees, subcontractors, or agents will be present on
GPI’s premises at any time in order to perform under this Agreement, Sun shall ensure that it, its
subcontractors and/or agents have procured and maintain insurance as required by GPI. GPI’s
insurance requirements are attached hereto as Appendix K. In exchange for the waiver of
subrogation given by Sun to GPI in Appendix K regarding workers compensation claims, GPI will grant
to Sun an equivalent waiver of subrogation on such claims.

20.
Termination.

A. Either party may terminate this Agreement immediately upon giving written notice in the event
the other party ceases or threatens to cease to carry on its business.

B. In addition, either party may terminate this Agreement by giving written notice of a material
default or breach by the other party in the prompt performance of any obligation undertaken by it
hereunder which is capable of being cured and is not cured within fifteen (15) days of the receipt
of notice thereof; provided that neither the contesting in good faith the quality or the
effectiveness of the Product nor the withholding of amounts claimed to be owed hereunder in
connection with a good faith dispute concerning such Product as provided in Section 4, above, shall
be considered a material default or breach for this purpose.

12

 

C. Graphic may terminate this Agreement at any time by giving written notice to Sun
accompanied by a termination fee in the amount of [*]. No termination fee will be payable upon a
termination by Graphic after the end of the later of the seventh contract year or the purchase by
GPI of the Minimum Aggregate Purchase Amount.

D. Sun may terminate this Agreement at any time prior to thirty (30) days following the end of any
contract year (other than the initial contract year) in which Graphic does not purchase (on a gross
basis prior to any rebates) at least $[*] under this Agreement (the “Minimum Annual Purchase
Amount”). Upon such termination by Sun, Graphic will be required to pay to Sun within sixty
(60) days of receipt of such notice by Graphic a termination fee in the amount corresponding to the
period in which the termination notice is received and the termination fee payable in Section 20C
above.

E. If the Asset Purchase Agreement is terminated by either party or the Asset Purchase does not
close within three (3) months of the date hereof, this Agreement shall automatically terminate and
be of no further force.

F. For avoidance of doubt, no termination fees will be payable if this Agreement is terminated by
GPI pursuant to Sections 20A, 20B or 20E above.

G. Any right of termination hereunder accruing to either party under this Section 20 shall be in
addition to and not in lieu of and without prejudice to any other rights and remedies which such
party may have, including the right to seek damages.

H. Notwithstanding anything to the contrary in the foregoing, at GPI’s request, Sun will continue
to supply GPI with specified Qualified Products in accordance with the terms and conditions of this
Agreement for a period of ninety (90) days following delivery of a notice of termination by Sun
under Sections 20A, or 20D above.

21. Notices. All notices, requests, demands, and other communications hereunder shall be
in writing (which shall include communications by telex and telephonic facsimile) and shall be
delivered (a) in person or by courier or overnight service, (b) mailed by first class registered or
certified mail, postage prepaid, return receipt requested, or (c) by facsimile transmission or pdf,
as follows:

	 	 	 
	If to Sun:
	 	Sun Chemical Corporation

	 	 	North American Inks

	 	 	Attn: Brian Leen

	 	 	35 Waterview Blvd.

	 	 	Parsippany, NJ 07054-1285

	 	 	Telephone: +1 (973) 404-6355

	 	 	Facsimile: +1 (973) 404-6807

	 	 	Email: brian.leen@sunchemical.com

 

			
	[*]	 	 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

13

 

	 	 	 
	 	 	with a copy (which shall not constitute notice) to:

	 	 	 

	 	 	Sun Chemical Corporation

	 	 	35 Waterview Blvd.

	 	 	Parsippany, NJ 07054-1285

	 	 	Attn: Legal Department

	 	 	Telephone: +1 (973) 404-6550

	 	 	Facsimile: +1 (973) 404)-6492

	 	 	Email: eric.finkelman@sunchemical.com

	 	 	 

	If to GPI:
	 	Graphic Packaging International, Inc.

	 	 	Attn: General Counsel

	 	 	814 Livingston Court

	 	 	Marietta, GA 30067

	 	 	Telephone: 770-644-3000

	 	 	Facsimile: 770-644-2929

	 	 	 

	 	 	with a copy (which shall not constitute notice) to:

	 	 	 

	 	 	Alston & Bird LLP

	 	 	1201 West Peachtree Street

	 	 	Atlanta, Georgia 30309

	 	 	Attention: Christopher Rosselli

	 	 	Telephone: (404) 881-4945

	 	 	Facsimile: (404) 881-7777

	 	 	Email: chris.rosselli@alston.com

or to such other address as the parties hereto may designate in writing to the other in accordance
with this Section 21. Any party may change the address to which notices are to be sent by giving
written notice of such change of address to the other parties in the manner above provided for
giving notice. If delivered personally or by courier, the date on which the notice, request,
instruction or document is delivered shall be the date on which such delivery is made and if
delivered by facsimile transmission or mail as aforesaid, the date on which such notice, request,
instruction or document is received shall be the date of delivery.

22. Severability. In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be unenforceable, illegal or otherwise invalid in any
respect with regard to this Agreement, such unenforceability, illegality or invalidity shall not
affect any other provision of this Agreement, and this Agreement shall then be construed as if such
unenforceable, illegal or invalid provisions had never been contained herein.

23. Survivability. The provisions of this Agreement, which by their nature are intended to
survive the termination, cancellation, completion or expiration of the Agreement, including but not
limited to any expressed limitations of or releases from liability, shall continue as valid and
enforceable obligations of the parties notwithstanding any such termination, cancellation,
completion or expiration.

14

 

24. Assignment. Neither GPI nor Sun shall have the right to assign or transfer its
interest or obligations hereunder without the prior written consent of the other party, which
consent shall not be unreasonably withheld or delayed.

25. Waiver. Neither this Agreement, nor any provision hereof, may be amended, changed,
waived, discharged, supplemented, or terminated orally, but only by an agreement in writing signed
by the party against which the enforcement of such amendment, change, waiver, discharge or
termination is sought. The failure or delay of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect its right to enforce that
provision. No single or partial waiver by any party of any condition of this Agreement, or the
breach of any term of this Agreement or the inaccuracy or warranty of this Agreement, whether by
conduct or otherwise, in any one or more instances shall be construed or deemed to be a further or
continuing waiver of any such condition, breach or inaccuracy or a waiver of any other condition,
breach or inaccuracy.

26. Complete Agreement. This Agreement, including the general terms and conditions hereof,
represents the entire agreement between Sun and GPI with respect to the items sold to GPI. All
prior agreements, representations, statements, negotiations, and undertakings, whether oral or
written, are superseded hereby.

27. Governing Law. Regardless of any conflict of law or choice of law principles that
might otherwise apply, the parties agree that this Agreement shall be governed by and construed in
all respects in accordance with the laws of the State of Delaware. As to any dispute, claim, or
litigation arising out of or relating in any way to this Agreement or the transaction at issue in
this Agreement, the parties hereby agree and consent to be subject to the jurisdiction of the state
or federal courts located in the State of Delaware. Each party hereby irrevocably waives, to the
fullest extent permitted by law, (a) any objection that it may now or hereafter have to laying
venue of any suit, action or proceeding brought in such court, (b) any claim that any suit, action
or proceeding brought in such court has been brought in an inconvenient forum, and (c) any defense
that it may now or hereafter have based on lack of personal jurisdiction in such forum.

28. Fees and Expenses. Regardless of whether the transactions contemplated by this
Agreement are consummated, Sun and GPI each shall pay their respective fees and expenses in
connection with the transactions contemplated by this Agreement.

29. No Third Party Beneficiaries. The terms of this Agreement are for the sole benefit of
the parties hereto and their respective heirs, executors, administrators, legal representatives,
successors and assigns, and they shall not be construed as conferring any third-party beneficiary
or any other rights on any other persons.

30. United Nations Convention Not Applicable. It is specifically agreed that this
Agreement will not be covered by nor construed in accordance with the terms of the United Nations
Convention on Contracts for the International Sales of Goods.

31. Confidential Agreement. Each of the parties agrees that the terms and conditions of
this Agreement and the information related to each party exchanged in connection with the
performance of this Agreement (collectively, the “Confidential Information”) shall be
treated as

15

 

confidential and proprietary to each party, respectively. Accordingly, neither party
shall disclose any Confidential Information to any person without the express written consent of
the other party, except that each party shall be permitted to disclose Confidential Information to
those of its legal counsel, advisors, representatives and employees that need to be familiar with
such information in connection with such party’s performance of the Agreement and who are informed
of such information’s confidential nature. Notwithstanding the foregoing, a party may disclose
Confidential Information, if (i) in the reasonable opinion of its legal counsel the party is
compelled to do so by any applicable legal requirement, including without limitation the Securities
Act of 1934, as amended, and the rules and regulations promulgated thereunder; provided that such
party will have afforded the other party reasonable opportunity to obtain an appropriate protective
order or other satisfactory assurance of confidential treatment at such other party’s expense and
(ii) such party may not disclose any Confidential Information other that which it is legally
compelled to disclose.

[Signatures appear on following page.]

16

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be effective as of the date
above first written.

Graphic Packaging International, Inc.

	 	 	 
	/s/ David W. Scheible
 

Authorized Signature

	 	 
	 
	 	 
	David W. Scheible
 

Name (Printed)

	 	 
	 
	 	 
	President and Chief Executive Officer
 

Title

	 	 
	 
	 	 
	June 1, 2009
 

	 	 
	Date
	 	 
	 
	 	 
	 
	 	 
	Sun Chemical Corporation
	 	 
	 
	 	 
	/s/ Brian Leen
 

Authorized Signature

	 	 
	 
	 	 
	Brian Leen
 

Name (Printed)

	 	 
	 
	 	 
	President, North American Inks
 

	 	 
	Title
	 	 
	 
	 	 
	June 1, 2009
 

	 	 
	Date
	 	 

[Signature Page – Supply Agreement]

17

 

APPENDIX A

PRODUCTS

	 	1.	 	Energy Curable Inks & Coatings
	 
	 	2.	 	Solvent Gravure Inks
	 
	 	3.	 	Solvent Flexo Inks
	 
	 	4.	 	Conventional Sheet Fed Inks

GPI will provide Sun an opportunity to bid on any business outside the scope of the Supply
Agreement where GPI determines in its sole discretion that Sun has products of acceptable quality
and competitive pricing. This can include, but is not limited to, water based inks or press room
consumables.

18

 

APPENDIX B

PRICING

	•	 	Pricing at the inception of the Supply Agreement will be, in the aggregate, at levels of
Sun pricing to GPI as of May 1, 2009.

	 	•	 	Pricing will be based on [*]. It is the intention of the parties that pricing be
adjusted periodically, as set forth below, [*].
	 
	 	•	 	[*]
	 
	 	•	 	Pricing will be reviewed and adjusted biannually on January 1 and July 1 of each year
during the Term on a weighted average basis (a “Weighted Average Price Change”), based on
[*].
	 
	 	•	 	Sun will provide monthly reporting to GPI of both the Index level as of the reporting
month and of the rolling average since the previous pricing.
	 
	 	•	 	For sheet fed inks, cost improvements to be achieved through the implementation of [*]
have already been considered in the development of this Supply Agreement, [*].
	 
	 	•	 	GPI may audit Sun’s costs via a mutually acceptable independent third party audit no
more frequently than once per contract year as provided in Section 3.f. of the Supply
Agreement.
	 
	 	•	 	Sun will use commercially reasonable efforts to increase productivity each year to
offset inflation. In addition to the monthly reporting of the Index, Sun agrees to
discuss and propose productivity initiatives aimed at reducing overall raw material costs.
This productivity will be passed through to GPI by [*] and all such contributions to
productivity made thereby will be credited toward the Profit Sharing Productivity Program
set forth in Appendix J.

 

			
	[*]	 	 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

19

 

APPENDIX C

QUARTERLY REBATE SCHEDULE FOR FIRST AND SECOND QUARTERS

OF FIRST CALENDAR YEAR

[*]

 

			
	[*]	 	 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

20

 

APPENDIX D

MATERIAL SPECIFICATIONS

EB/EC Ink Specifications

     1. Max D UV Flexo Inks

     Viscosity
= Target +/- 20% (Range of inks is [*] cps)

     Color
Spec = Target +/- 2 DE cmc

     Strength
= 100% +/- 5%

     Cure = Pass/Fail compared to Standard

     Grind = 3/2 on a NPIRI grind gage

     2. Hybryte Pro (hybrid UV curing inks)

     Color Spec = Target +/- 2 DE cmc

     Strength = 100% +/- 5%

     Tack = Target +/- .5 Points

     Viscosity = Target +/- 20%

     Cure = Pass/Fail compared to Standard

     Grind = 3/2 on a NPIRI grind gage

     3. SuncureTM Carton UV litho inks

     Color Spec = Target +/- 2 DE cmc

     Strength = 100% +/- 5%

     Tack = Target +/- .5 Points

     Viscosity = Target +/- 20%

     Cure = Pass/Fail compared to Standard

     Grind = 3/2 on a NPIRI grind gage

 

			
	[*]	 	CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

21

 

     4. SuncureTM MT UV litho inks

     Color Spec = Target +/- 2 DE cmc

     Strength = 100% +/- 5%

     Tack = Target +/- .5 Points

     Viscosity = Target +/- 20%

     Cure = Pass/Fail compared to Standard

     Grind = 3/2 on a NPIRI grind gage

     5. SunbeamTM LT EB litho inks

     Color Spec = Target +/- 2 DE cmc

     Strength = 100% +/- 5%

     Tack = Target +/- .5 Points

     Viscosity = Target +/- 20%

     Cure = Pass/Fail compared to Standard

     Grind = 3/2 on a NPIRI grind gage

     6. DPQ176 EB litho inks

     Color Spec = Target +/- 2 DE cmc

     Strength = 100% +/- 5%

     Tack = Target +/- .5 Points

     Viscosity = Target +/- 20%

     Cure = Pass/Fail compared to Standard

     Grind = 3/2 on a NPIRI grind gage

     7. Coating

     Viscosity
– range of coatings is [*] cps at room temperature. Each product is
controlled against a specific number

 

			
	[*]	 	CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

22

 

     Cure
– Each coating is checked against the control for Pass or Fail

     Gloss
– controlled at 60 degree gloss target +/- 5% on known standard substrate

     Appearance
– each product is checked for Pass or Fail against a standard.

     Coefficient
of Friction (Static and Kinetic)/Slide Angle – attribute controlled at target +/-
10% on known standard substrate and using known standard cure conditions

     Ratings for QC are to check the wet samples if they are suppose to be clear, cloudy, and
yellowish.

OS/SF Ink Specifications

[*]

Liquid Ink/Coating Specifications

[*]

Fitness for Use

All fitness for use specification requests, regardless of product range, must be submitted in
writing and reviewed by SunChemical Technical and Product Management.

 

			
	[*]	 	CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

23

 

APPENDIX E

MANAGEMENT OF CHANGE PROCESS

Sun assures the consistency of our products and services to minimize risk to our customers’
products and processes. Changes in product formula composition and manufacturing processes may be
desired to improve product performance or value. Changes may also be necessary to respond to
variation, disruptions and catastrophic events in the manufacturing process or suppliers. To
accomplish these goals we conduct formula management and process control.

A Change Management Policy and guidelines for determining when changes need to be communicated to
the customer are detailed in this procedure. This procedure provides the standard approach. If
existing contract requirements apply, customers will be notified according to the appropriate level
III documentation. It is the Sales responsibility to notify any manufacturing plant of existing
contracture requirements.

Change Management Policy

Sun is committed to minimize product risk and liability for our customers by managing processes at
all it’s sites, to deliver products and services that consistently meet customer expectations and
specifications.

Sun is committed to maximize product value for our customers by continuously improving and
developing innovative new products.

Consistent quality is a key component in reducing excess costs and minimizing risk throughout the
supply chain.

As an ISO certified supplier to GPI, we require that any significant changes in materials,
components, process or service that could materially impact product quality or delivery are
communicated and approved by GPI in advance. Such changes are to be communicated and approved by a
Management representative or designated Site personnel at GPI. Please note, changes that are not
approved by one of these personnel will not be considered as approved by GPI.

To achieve these objectives, we adhere to the following change management principles:

	•	 	Assign formulation numbers to identify, track and communicate information about existing
and new products we sell.
	 
	•	 	Apply appropriate measurements, analytical methods, statistical tools and process controls
to manage process variation.
	 
	•	 	Manage suppliers to ensure consistent raw material quality and availability.
	 
	•	 	Respond quickly to unexpected changes with root cause analysis and corrective action.
	 
	•	 	Apply Information Technology to support product identification and traceability
	 
	•	 	In the event of a significant product, component or process change, Sun will work to
re-qualify the new product in a reasonable timeframe.

24

 

	•	 	GPI will provide support in conjunction with Sun personnel to achieve the re-qualification.
	 
	•	 	In the event of changes Sun deems insignificant, GPI will not be notified however; Sun will
insure the same quality and meet all the original specifications established.
	 
	•	 	Sun will utilize the appropriate resources to mitigate product performance issues and
follow all of the above guidelines consistently.

               Guidelines for Customer Change Notification

                    Formula
Change – Not Significant

The appropriate technical personnel will determine the potential impacts of a change in the
formula composition to product performance. Some formula changes are simple and transparent to the
customers. Some examples of this type of change include:

	•	 	The major ingredients of the formula remain chemically equal to the original formulas
(i.e., multiple raw material sources or commodity chemicals such as solvents and additives).
	 
	•	 	Changes in physical make-up of an ingredient such as switching from a flaked to a pellet
version of the same resin.
	 
	•	 	Pigment changes within a given color index (C.I.) number
	 
	•	 	Use of substitution of minor amounts of chemically similar materials, not affecting the
customers finished ink specifications. The lab manager or delegate at each site will have the
primary responsibility for approval of substitutions. Refer to site specific level III work
instructions for process of making substitutions.
	 
	•	 	During the scale-up process of a formula.

     Under these conditions, changes will not be communicated to the customer, however, appropriate
quality control and records will be maintained. These changes are tracked internally through
versioning of the formula number.

               Formula
Change – Significant

When an ingredient is changed that is a major component of the formula (either on a percentage
basis or as a key ingredient) the formula number must be changed. Examples of this type of change
include:

	•	 	New resin
	 
	•	 	Raw material discontinuation, shortage or change in feed stock
	 
	•	 	Any necessary formula modifications due to specification or performance change directed by
the customer or Sun.

Under these conditions, changes and the new formula number will be communicated to the customer.
Customers requiring approval of major formula changes will be contacted to grant approval prior to
shipment of new formulas.

25

 

               Manufacturing
Process Change – Not Significant

Once a formula is established and specifications are determined, it is the responsibility of
manufacturing and quality control to ensure that changes under these conditions maintain formula
integrity and product is within customer specifications. Examples of this type of change include:

	•	 	Equipment change within the same manufacturing equipment class
	 
	•	 	Batch size adjustments within technical guidelines

Under these conditions, the formula number will not be changed and it will not be communicated to
the customer. These changes are tracked by manufacturing or quality control.

               Manufacturing
Process Change – Significant

The appropriate technical or manufacturing personnel will determine when a manufacturing
process change is significant. Examples of this type of change include:

	•	 	Equipment change to a different technology that will modify the physical properties or
functionality of the product.
	 
	•	 	Equipment breakdown where equivalent equipment is not available.
	 
	•	 	Any process changes that result in a different or improved product that requires a change
in specifications.
	 
	•	 	Manufacturing site with equal or better capabilities, if required by customer contract or
other customer agreements.

Under these conditions, changes and the new formula number will be communicated to the customer.
Customers may wish to monitor performance of material produced under these new conditions and
provide feedback.

Sun warrants that it will provide advance notification to GPI of any changes, whether deemed by Sun
to be significant or not, that will adversely affect the below-listed satisfactory ink performance
criteria:

	 	o	 	Consistent (or increasing) ink mileage
	 
	 	o	 	No piling due to ink performance
	 
	 	o	 	No scum due to ink performance
	 
	 	o	 	No ink misting
	 
	 	o	 	Curability – both back-print and face colors should cure @ 1,250 fpm
	 
	 	o	 	Stable dot gain

In the event that changes are made by Sun which do adversely affect any of the above measures of
performance and GPI did not receive advance notice thereof, the respective product will be deemed
to be out of spec.

26

 

          Guidelines for Internal Change Notification

For formula composition and manufacturing process changes listed in section 5.3 of this
document, the responsible party that authorizes the change will communicate to the appropriate
internal personnel based on the impact of the change. The Lab/Tech/Product manager or delegate of
site authorizing change is responsible for notifying applicable sites of the change. (Applicable
sites are defined as a site that receives product from the affected ink system). For example,
changes in formulation may result in changes to product labeling, packaging, shipping, Material
Safety Data Sheets (MSDS) or regulatory compliance documents.

The
appropriate persons to receive change notification at any affected
GPI location are as follows:

-In-plant personnel, if applicable;

-Plant manager;

-Printing manager;

And Jeff Kobin or his designee.

RECORDS

	 	 	 	All appropriate records are maintained and filed by the appropriate Department/Product
Manager, Director, KAM or designee.

27

 

BUSINESS MANAGER

APPENDIX F

Dedicated Business Manager

Sun will appoint an Executive Sales Manager or designee as the dedicated Business Manager for GPI.
Their responsibilities will include the following:

	 	•	 	Administration of the Agreement
	 
	 	•	 	Preparation and administration of Pricing Program
	 
	 	•	 	Preparation of monthly in-plant updates
	 
	 	•	 	Scheduling of quarterly technical meetings
	 
	 	•	 	Provision to branch and GPI locations of a technical liaison with all major national
labs
	 
	 	•	 	Assistance in color management program
	 
	 	•	 	Oversight of Profit Sharing Productivity program
	 
	 	•	 	Documentation of specifications required by GPI
	 
	 	•	 	Insurance of the resolution of issues and problems
	 
	 	•	 	Insurance of latest technology updates
	 
	 	•	 	Insurance of proper benchmarking techniques are done at all locations
	 
	 	•	 	Insurance that best practices are adopted by all facilities

28

 

APPENDIX G

BLACK BELT AND COLOR MANAGER

Black Belt

Sun will assign a Black Belt to GPI who will be responsible for coordination, identification and
tracking of Profit Sharing Productivity program initiatives.

Color Manager

Sun will continue providing a color manager in Concord. The manager will be responsible to control
color matches across all GPI facilities to ensure they meet the standards of key end users. The
manager will coordinate efforts with various in-plant resources to ensure the colors submitted to
these end users match exactly to what is being supplied at each facility.

29

 

APPENDIX H

ADDITIONAL SUPPORT SERVICES

	1.)	 	SERVICES

Sun will staff agreed upon GPI sites with competent ink technicians who will be responsible
for the following job functions:

	 	•	 	Manufacture of small batch production special colors
	 
	 	•	 	Provide QC testing on all in-house manufactured blends and maintain QC
documentation
	 
	 	•	 	Color matching and proofing when required
	 
	 	•	 	Maintain color standards and formulation masters
	 
	 	•	 	Inventory management of blend materials and finished inks shipped from Sun sites
	 
	 	•	 	Maintenance of production and lab equipment, and in-plant facility at a mutually
agreed upon standard
	 
	 	•	 	Equip facility with supplies and incidental materials required to run an
efficient operation
	 
	 	•	 	Provide press-side technical support for Sun products
	 
	 	•	 	Documented service reports for all major press situations
	 
	 	•	 	Basic work-off program of ink materials into same or like formulations
	 
	 	•	 	Monthly safety inspection and training
	 
	 	•	 	Monthly reporting on number of batches, number of color matches, pounds
produced, work-off used and overtime hours worked
	 
	 	•	 	Used tote disposal

Additional services may carry additional costs, but GPI requirements above and beyond those
referenced above will be discussed and mutually agreed upon for both type of service and
applicable fees.

30

 

	2.)	 	MANNING

Sun is prepared to staff the various in-plants with forty-one (41) personnel. Included in
this commitment is an expectation that Sun personnel work no greater than 25% overtime in a
given week; and average no more than 10% overtime over a course of a year. It is also
expected that they work a “normal” week; given the shift they are assigned.

If pressroom schedule dictates a higher level of service, either requiring higher overtime
or additional personnel, discussion on services required and associated costs will be agreed
upon prior to implementation.

If the manning requirement exceeds 41 people the additional cost will be borne by GPI.

	3.)	 	IN-PLANT FACILITY

Sun will invest up to [*] towards the upgrade, rebuild or build-out of in-plant structures
within GPI sites (each, an “In-Plant Structure Investment”). Each existing facility will be
reviewed by Sun and GPI for appropriateness, functionality, safety and effectiveness to
determine if any mutually agreeable upgrades are necessary. Ownership of facility will pass
to GPI at end of this Agreement. [*]

 

			
	[*]	 	 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

31

 

APPENDIX I

IN PLANT EQUIPMENT

Sun will equip, at its expense, an in-plant operation at mutually agreed to sites.
Installation of equipment will be at Sun’s expense and it is intended that the installation
will not interfere with GPI’s ability to conduct business at the site. The in-plant
operation will typically include the equipment listed below, and, as noted, different
equipment will be utilized depending upon type of ink materials needed at the Graphic site.
The equipment list will be amended from time to time to ensure Sun services the requirements
of each specific plant. Any changes to equipment will be mutually agreed upon.

All equipment will remain the sole property of Sun and will be removed by Sun at the
expiration or termination of this agreement. Sun has the right to display reasonable notice
of its ownership on and around the equipment and GPI agrees not to alter, deface or remove
such notice.

There may be specific situations that call for equipment not on the below equipment lists,
e.g., dispensing equipment, storage tanks, etc. Given the cost and space requirements of
this category of equipment, where this type of equipment is needed, separate agreements will
be drawn up that incorporate both parties’ understanding and commitment.

	 
	PASTE IN-PLANT

	 

	Equipment Description

 

	 

	[*]

	 

	LIQUID IN-PLANT

 

	Equipment Description

 

	 

	[*]

 

			
	[*]	 	 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

32

 

APPENDIX J

PROFIT SHARING PRODUCTIVITY PROGRAM

Sun will provide a profit sharing productivity program to GPI. This will apply to GPI productivity
improvements, and can include lower in-plant manning, production efficiency, reduction in waste,
etc. At the beginning of each year Sun and GPI will mutually identify key projects to be included
as part of the productivity program. This program will outline the value creation concept,
resource dedication and estimate value of the initiative.

Sun will guarantee cumulative annual savings from this program to accrue to GPI of [*]. Savings
must be documented and agreed upon by both parties, and savings above the guaranteed thresholds
outlined above will be shared 50/50 by Sun and GPI. Any credit due to Sun as a result of this
program will be netted against rebate payments due in that year. For each productivity program
project initiated, a baseline by product will be established jointly and audited to assess
achievement of savings. Joe Yost or his designee shall be the GPI representative with authority to
approve productivity program projects. For purposes of clarification, examples of projects that
would count towards the cumulative annual savings include [*].

Sun will ensure that intrinsic value of the inks sold does not degrade or change without mutual
agreement.

 

			
	[*]	 	 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

33

 

APPENDIX K

INSURANCE REQUIREMENTS OF GPI

If any of Sun’s employees, subcontractors, or agents will be present on GPI’s premises at any time
in order to perform under this Agreement, Sun shall ensure that it, its subcontractors and/or
agents have procured and maintain insurance as follows:

     a) Workers’ Compensation - Statutory, and Employer’s Liability with limits not less than
$500,000 per accident and each employee disease.

     b) Commercial General Liability (Occurrence Form), including contractual liability in a
Combined Single Limit for Bodily Injury and Property damage with limits not less than $250,000 per
occurrence.

     c) Commercial Automotive Liability, in a Combined Single Limit for Bodily Injury and Property
Damage with limits not less than $100,000 per occurrence

     d) Excess Liability - Umbrella form, in the amount of $1 Million excess over Employers
Liability, Commercial General Liability, and Commercial Automobile Liability.

Sun shall name GPI as an additional insured as its interest may arise under policies b), c) and d)
above; and Sun shall agree to waive its rights of subrogation under a) above.

If any policies are written on a “claims-made” basis, Sun shall ensure that continuous coverage is
maintained or an extended coverage period will be exercised for a period of not less than
twenty-four (24) months after the termination or expiration of this Agreement.

Sun will at all times maintain the required policies with insurers that maintain a rating of A-
(VIII) or better from A. M. Best.

All policies for insurance required hereunder will be procured from insurers authorized to do
business in the jurisdiction where operations are to be performed.

All policies for insurance required herein shall provide that GPI will be given no less than thirty
(30) days prior Notice in the event coverage is cancelled; ten (10) days notice for non-payment.

The insurance required herein establishes minimum limits. The types and amounts of such coverage
shall in no way limit the liability of Sun arising under this Agreement.

All coverages shall be primary and not contributing with any coverage maintained by GPI.

Sun shall automatically provide GPI with a certificate of insurance evidencing the coverage
required herein prior to the commencement of performance under this Agreement and upon renewal of
any policies required herein for the duration of this Agreement.

34exv10w25

Exhibit 10.25

DMC

stratex

NETWORKS

Shaun McFall

170 Rose Orchard Way

San Jose, CA 95134

			
	     Re:	 	Employment Agreement

Dear Shaun:

     This letter sets forth the terms of your continued employment with DMC Stratex Networks, Inc.
(the “Company”) as well as our understanding with respect to any termination of that employment
relationship. This Agreement is effective as of May 14, 2002.

     1. Position and Duties. You are employed by the Company as its Vice President,
Product Marketing reporting to Ryan Panos, Vice President of Global Sales. You accept continued
employment with the Company on the terms and conditions set forth in this Agreement, and you agree
to devote your full business time, energy and skill to your duties at the Company.

     2. Term of Employment. Your employment with the Company is for no specified term, and
may be terminated by you or the Company at any time, with or without cause, subject to the
provisions of Paragraphs 4 and 5 below.

     3. Compensation. You will be compensated by the Company for your services as follows:

          (a) Salary: Effective July 1, 2002, you will be paid a monthly base salary of
$17,333.34, less applicable withholding, in accordance with the Company’s normal payroll
procedures. Your salary may be reviewed from time to time, and may be subject to adjustment based
upon various factors including, but not limited to, your performance and the Company’s
profitability. Any adjustment to your salary shall be made at the sole discretion of the Company.
Your base salary will not be reduced except as part of a salary reduction program that similarly
affects all members of the executive staff reporting to the Chief Executive Officer of the Company.

          (b) Bonus: To the extent that the Company has one, you will be eligible to
participate in any Company executive incentive bonus plan.

          (c) Benefits: You will have the right, on the same basis as other employees of the
Company, to participate in and to receive benefits under any Company medical, disability or other
group insurance plans, as well as under the Company’s business expense reimbursement and other
policies. You will accrue paid vacation in

 

 

McFall Employment Agreement

accordance with the Company’s vacation policy or other arrangements made by the Company.

     4. Voluntary Termination. In the event that you voluntarily resign from your
employment with the Company, or in the event that your employment terminates as a result of your
death, you will be entitled to no compensation or benefits from the Company other than those earned
under Paragraph 3 through the date of your termination. You agree that if you voluntarily terminate
your employment with the Company for any reason, you will provide the Company with at least 10 days
written notice of your resignation. The Company shall have the option, in its sole discretion, to
make your resignation effective at any time prior to the end of such notice period, provided the
Company pays you an amount equal to the base salary you would have earned through the end of the
notice period.

     5. Other Termination. Your employment may be terminated under the circumstances set
forth below.

          (a) Termination by Disability: If, by reason of any physical or mental incapacity,
you have been or will be prevented from performing your then-current duties under this Agreement
for more than three consecutive months, then, to the extent permitted by law, the Company may
terminate your employment without any advance notice. Upon such termination, if you sign a general
release of known and unknown claims in a form satisfactory to the Company, the Company will provide
you with the severance payments and benefits described in Paragraph 5(c). Nothing in this paragraph
shall affect your rights under any applicable Company disability plan; provided, however, that your
severance payments will be offset by any disability income payments received by you so that the
total monthly severance and disability income payments during your severance period shall not
exceed your then-current base salary.

          (b) Termination for Cause or Death: The Company may terminate your employment at any
time for cause (as described below). If your employment is terminated by the Company for cause, or
if your employment terminates as a result of your death, you shall be entitled to no compensation
or benefits from the Company other than those earned under Paragraph 3 through the date of your
termination for cause. Provided, however, that if your employment terminates as a result of your
death, the Company will also pay your estate the prorated portion of any incentive bonus that you
would have earned during the incentive bonus period in which your employment terminates; such
prorated bonus will be paid at the time that incentive bonus is paid to other Company employees.

     For purposes of this Agreement a termination “for cause” occurs if you are terminated for any
of the following reasons: (i) theft, dishonesty, misconduct or falsification of any employment or
Company records; (ii) improper disclosure of the Company’s confidential or proprietary information;
(iii) any action by you which has a
material detrimental effect on the Company’s reputation or business; (iv) your refusal or
inability to perform any assigned duties (other than as a result of a disability) after

 

 

McFall Employment Agreement

written
notice from the Company to you of, and a reasonable opportunity to cure, such failure or inability;
or (v) your conviction (including any plea of guilty or no contest) for any criminal act that
impairs your ability to perform your duties under this Agreement.

          (c) Termination Without Cause: The Company may terminate your employment without
cause at any time. If your employment is terminated by the Company without cause, and you sign a
general release of known and unknown claims in a form satisfactory to the Company, you will receive
the following severance benefits:

               (i) severance payments at your final base salary rate for a period of twelve (12) months
following your termination; such payments will be made in accordance with the Company’s normal
payroll practices;

               (ii) payment of the premiums necessary to continue your group health insurance under COBRA (or
to purchase other comparable health insurance coverage on an individual basis if you are no longer
eligible for COBRA coverage) until the earlier of (x) twelve (12) months following your termination
date; or (y) the date you first became eligible to participate in another employer’s group health
insurance plan;

               (iii) the Company will pay you the prorated portion of any incentive bonus that you would have
earned during the incentive bonus period in which your employment terminates, such prorated bonus
will be paid to you at the time that incentive bonus is paid to other Company employees;

               (iv) with respect to any stock options granted to you by the Company, you will cease vesting
upon your termination date; however, you will be entitled to purchase any vested shares o:f stock
that are subject to those options ,until the earlier of (x) twelve (12) months following your
termination date, or (y) the date on which the applicable option(s) expires; except as set forth in
this subparagraph, your Company stock options will continue to be subject to and governed by the
applicable stock option agreements between you and the Company;

               (v) payment of your then-provided Company car allowance for the period described in
subparagraph 5(c)(i); and

               (vi) outplacement assistance selected and paid for by the Company.

          (d) Resignation for Good Reason: If you resign from your employment with the Company
for Good Reason (as defined in this paragraph), and such resignation does not qualify as a
Resignation for Good Reason Following a Change of Control as
set forth in subparagraph (e) below, and you sign a general release of known and unknown
claims in a form satisfactory to the Company, you shall receive the severance

 

 

McFall Employment Agreement

benefits described in
Paragraph 5(c). For purposes of this paragraph, “Good Reason” means any of the following
conditions, which condition(s) remain in effect 60 days after written notice from you to the
Company’s Chief Executive Officer of said condition(s):

               (i) a reduction in your base salary of 20% or more, other than a reduction that is similarly
applicable to all members of the executive staff reporting to the Chief Executive Officer of the
Company; or

               (ii) a material reduction in your employee benefits, other than a reduction that is similarly
applicable to all members of the executive staff reporting to the Chief Executive Officer of the
Company; or

               (iii) the relocation of the Company’s workplace at which you are offered to a location that is
more than 75 miles from the Company’s workplace prior to such relocation.

     The foregoing condition(s) shall not constitute “Good Reason” if you do not provide the Chief
Executive Officer with the notice described above within 45 days after you first become aware of
the condition(s).

     (e) Termination or Resignation For Good Reason Following a Change of Control:

If, within 18 months following any Change of Control (as defined below), your employment is
terminated by the Company without cause, or if you resign from your employment with the Company for
Good Reason Following a Change of Control (as defined below), and you sign a general release of
known and unknown claims in a form satisfactory to the Company, you shall receive the severance
benefits described in Paragraph 5(c); provided that the time period set forth in subparagraph
5(c)(i), (ii), (iv), (x), and (v) shall be increased by an additional twelve (12) months. In
addition, you shall receive a payment equal to the greater of (i) the average of the annual
incentive bonus payments received by you, if any, for the previous three years, or (ii) your target
incentive bonus for the year in which your employment terminates. Such payment will be made to you
within 15 days following your execution of the general release of claims described above. The
Company will also accelerate the vesting of all unvested stock options granted to you by the
Company such that all of your Company stock options will be fully vested as of the date of your
termination/resignation.

     6. Change of Control/Good Reason.

     (a) For purposes of this Agreement, a “Change of Control’ of the Company shall mean:

               (i) The direct or indirect acquisition by any person or related group of persons (other than
an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is
controlled by, or is under common control with the Company) of beneficial ownership

 

 

McFall Employment Agreement

(within the
meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%)
of the total combined voting power of the Company’s outstanding securities pursuant to a tender or
exchange offer made directly to the Company’s stockholders which a majority of the Continuing
Directors who are not Affiliates or Associates of the offeror do not recommend such stockholders
accept;

               (ii) a change in the composition of the Board over a period of thirty-six (36) months or less
such that a majority of the Board members (rounded up to the next whole number) ceases, by reason
of one or more contested elections for Board membership, to be comprised of individuals who are
Continuing Directors;

               (iii) a merger or consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the Company is
incorporated;

               (iv) the sale, transfer or other disposition of all or substantially all of the assets of the
Company (including the capital stock of the Company’s subsidiary corporations);

               (v) the complete liquidation or dissolution of the Company;

               (vi) any reverse merger in which the Company is the surviving entity but in which securities
possessing more than [forty percent (40%)] of the total combined voting power of the Company’s
outstanding securities are transferred to a person or persons different from those who held such
securities immediately prior to such merger; or

               (vii) the acquisition in a single or series of related transactions by any person or related
group of persons (other than the Company or by a Company-sponsored employee benefit plan) of
beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than [forty percent (40%)] of the total combined voting power of the Company’s
outstanding securities but excluding any such transaction or series of related transactions that
the Administrator of the Company Stock Option Plan determines shall not be a Corporate Transaction.

For the purposes of this Agreement, the terms “Continuing Directors,” “Corporate Transaction”,
“Affiliate” and “Associate” shall have the meanings ascribed to such terms in the Company’s Stock
Option Plan.

          (b) For purposes of this Agreement, “Good Reason Following a Change of Control” means any of
the following conditions, which condition(s) remain in effect 60 days after written notice from you
to the Company’s Chief Executive Officer of said condition(s):

               (i) a material and adverse change in your position, duties or responsibilities for the
Company, as measured against your position, duties or responsibilities immediately prior to the
Change of Control; or

 

 

McFall Employment Agreement

               (ii) a reduction in your base salary as measured against your base salary immediately prior to
the Change in Control; or

               (iii) a material reduction in your employee benefits, other than a reduction that is similarly
applicable to all members of the executive staff reporting to the Chief Executive Officer of the
Company; or

               (iv) the relocation of the Company’s workplace at which you are officed to a location that is
more than 75 miles from the Company’s workplace prior to such relocation for the Company.

The foregoing condition(s) shall not constitute “Good Reason Following a Change of Control” if you
do not provide the Chief Executive Officer with the notice described above within 45 days after you
first become aware of the condition(s).

     7. Confidential and Emprietaor Information: As a condition of your continued
employment, and to the extent that you have not done so already, you agree to sign and abide by the
Company’s standard form of employee proprietary information/confidentiality/assignment of
inventions agreement.

     8. Termination Obligations.

          (a) You agree that all property, including, without limitation, all equipment, proprietary
information, documents, books, records, reports, notes, contracts, lists, computer disks (and other
computer-generated files and data), and copies thereof, created on any medium and furnished to,
obtained by, or prepared by you in the course of or incident to your employment, belongs to the
Company and shall be returned to the Company promptly upon any termination of your employment.

          (b) Upon your termination for any reason, and as a condition of your receipt of any severance
benefits hereunder, you will promptly resign in writing from all offices and directorships then
held with the Company or any affiliate of the Company.

          (c) Following the termination of your employment with the Company for any reason, you shall
fully cooperate with the Company in all matters relating to the winding up of pending work on
behalf of the Company and the orderly transfer of work to other employees of the Company. You shall
also cooperate in the defense of any action brought by any third party against the Company.

     9. Limitation of Payments and Benefits.

          To the extent that any of the payments and benefits provided for in this Agreement or
otherwise payable to you (the “Payments”) constitute “parachute payments” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the amount of such
Payments shall be either:

 

 

McFall Employment Agreement

                    the full amount of the Payments, or

                    a reduced amount which would result in no portion of the Payments being subject to the excise
tax imposed pursuant to Section 4999 of the Code (the “Excise Tax”),

whichever of the foregoing amounts, taking into account the applicable federal, state and local
income taxes and the Excise Tax, results in the receipt by you, on an after-tax basis, of the
greatest amount of benefit. In the event that any Excise Tax is imposed on the Payments, you will
be fully responsible for the payment of any and all Excise Tax, and the Company will not be
obligated to pay all or any portion of any Excise Tax.

     10. Other Activities. In order to protect the Company’s valuable proprietary
information, you agree that during your employment and for a period of [one] year[s] following the
termination of your employment with the Company for any reason, you will not, as a compensated or
uncompensated officer, director, consultant, advisor, partner, joint venturer, investor,
independent contractor, employee or otherwise, provide any labor, services, advice or assistance to
any entity or its successor, which is a direct competitor of the Company (and specifically
identified as such in the Company’s Form 10K), unless specifically permitted to do so in writing by
the Company or its successor. You acknowledge and agree that the restrictions contained in the
preceding sentence are reasonable and necessary, as there is a significant risk that your provision
of labor, services, advice or assistance to any of those competitors could result in the inevitable
disclosure of the Company’s proprietary information. You further acknowledge and agree that the
restrictions contained in this paragraph will not preclude you from engaging in any trade, business
or profession that you are qualified to engage in.

     11. Dispute Resolution. In the event of any dispute or claim relating to or arising
out of your employment relationship with the Company, this Agreement, or the termination of your
employment with the Company for any reason (including, but not limited to, any claims of breach of
contract, wrongful termination or age, sex, race, sexual orientation, disability or other
discrimination or harassment), you and the Company agree that all such disputes shall be fully,
finally and exclusively resolved by binding arbitration conducted by the American Arbitration
Association in Santa Clara County, California. You and the Company hereby knowingly and willingly
waive your respective rights to have any such disputes or claims tried to a judge or jury.
Provided, however, that this arbitration provision shall not apply to any claims for injunctive
relief by you or the Company.

     12. Severability. If any provision of this Agreement is deemed invalid, illegal or
unenforceable, such provision shall be modified so as to make it valid, legal
and enforceable, and the validity, legality and enforceability of the remaining provisions of
this Agreement shall not in any way be affected.

 

 

McFall Employment Agreement

     13. Applicable Withholding. All salary, bonus, severance and other payments identified
in this Agreement are subject to applicable withholding by the Company.

     14. Assignment. In view of the personal nature of the services to be performed under
this Agreement by you, you cannot assign or transfer any of your obligations under this Agreement.

     15. Entire Agreement. This Agreement and the agreements referred to above constitute
the entire agreement between you and the Company regarding the terms and conditions of your
employment, and they supersede all prior negotiations, representations or agreements between you
and the Company regarding your employment, whether written or oral, including your Employment
Agreement dated May 1, 1996, with the Company. This Agreement sets forth our entire agreement
regarding the Company’s obligation to provide you with severance benefits upon any termination of
your employment, and you shall not be entitled to receive any other severance benefits from the
Company pursuant to any Company severance plan, policy or practice.

     16. Governing Law. This Agreement shall be governed by and construed in accordance
with the law of the State of California.

     17. Modification. This Agreement may only be modified or amended by a supplemental
written agreement signed by you and an authorized representative of the Company.

     Shaun, we look forward to continuing to work with you at DMC Stratex Networks, Inc. Please
sign and date this letter on the spaces provided below to acknowledge your acceptance of the terms
of this Agreement.

Sincerely,

DMC Stratex Networks, Inc.

	 	 	 	 	 
	By:

	 	/s/ Charles D. Kissner 	 	 
	 

	 	 

Charles D. Kissner
	 	 
	 

	 	Chairman and Chief Executive Officer	 	 

     I agree to and accept continued employment with DMC Stratex Networks., Inc. on the terms and
conditions set forth in this Agreement.

	 	 	 	 	 	 	 
	Date: 28 June, 2002

	 	 	 	/s/ Shaun McFall 	 	 
	 

	 	 	 	 

Shaun McFall

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