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EXHIBIT 10.26
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of July 2, 1996 between American Pad &
Paper Company, a Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
("Executive").
In consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
I. Employment. The Company shall employ Executive, and
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on the date
hereof and ending as provided in paragraph 4 hereof (the "Employment Period").
I. Position and Duties.
A. During the Employment Period, Executive shall serve as an
Executive Vice President of the Company and shall have the normal duties,
responsibilities and authority of an Executive Vice President, which shall
consist of, among other things, coordinating the Company's sales and marketing
efforts.
A. Executive shall report to the Company's board of directors
(the "Board") and the Company's chief executive officer, and Executive shall
devote his best efforts and his full business time and attention (except for
permitted vacation periods and reasonable periods of illness or other
incapacity) to the business and affairs of the Company and its Subsidiaries.
Executive shall perform his duties and responsibilities to the best of his
abilities in a diligent, trustworthy, businesslike and efficient manner.
A. For purposes of this Agreement, "Subsidiaries" shall mean
any corporation of which the securities having a majority of the voting power
in electing directors are, at the time of determination, owned by the Company,
directly or through one of more Subsidiaries.
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I. Base Salary and Benefits.
A. During the first three years of the Employment Period,
Executive's base salary shall be $300,000 per annum (the "Base Salary"), which
salary shall be payable in regular installments in accordance with the
Company's general payroll practices and shall be subject to customary
withholding. Thereafter, the Base Salary shall be such higher rate as the
Board may designate from time to time. The Company represents and warrants
that, as of the date hereof, Executive has the third highest salary in the
Company. In addition, during the Employment Period, Executive shall be
entitled to participate in all of the Company's employee benefit programs for
which senior executive employees of the Company and its Subsidiaries are
generally eligible (including the Company's stock option program).
A. In addition to the Base Salary, the Board will award a
bonus to Executive following the end of each fiscal year during the Employment
Period based upon a formula on Exhibit I attached hereto. In addition to the
Base Salary and any bonuses payable to Executive pursuant to this paragraph,
Executive shall be entitled to the following benefits during the Employment
Period:
1. a maximum of three weeks vacation each year with salary,
subject to additional weeks upon Board approval;
1. reimbursement for travel, entertainment and other business
expenses reasonably incurred by Executive;
1. an automobile allowance of $500 per month;
1. reimbursement for all reasonable expenses relating to
Executive's moving to Dallas, Texas area, purchasing a new residence in
Dallas, Texas, and selling his New York residence, including all closing
costs, inspection fees, packing and unpacking costs, but excluding any
"points" paid to a broker or mortgage lender;
1. reimbursement for all reasonable costs relating to
Executive's living in the Dallas, Texas area incurred during the first
year following the date of this Agreement;
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(vi) reimbursement for the cost of an annual physical,
examination by a physician of Executive's choice; and
(vii) reimbursement for the reasonable expenses of preparation
of Executive's annual tax returns.
A. Termination. The Employment Period shall continue
until Executive's resignation, death or disability or other incapacity (as
determined by the Board in its good faith judgment) or until the Board
determines in its good faith judgment that termination of Executive's
employment is in the best interests of the Company. In the event of
Executive's resignation (other than due to a material breach by the Company of
this Agreement) or termination for Cause, Executive shall not be entitled to
receive his Base Salary or any fringe benefits or bonuses for periods after the
termination of the Employment Period. Upon any other termination of the
Employment Period, Executive shall be entitled to receive (i) his Base Salary,
the health and disability benefits described in paragraph 3(a) and the fringe
benefits described in paragraph 3(b) for a period of 12 months thereafter, and
(ii) following the end of the fiscal year in which Executive's employment is
terminated and the determination of the amount of bonus which Executive would
have been entitled if he remained employed by the Company or its Subsidiaries
for the entire fiscal year (the "Bonus Amount"), (A) 50% of the Bonus Amount if
such termination occurs in the first six months of such fiscal year, or (B)
100% of the Bonus Amount if such termination occurs in the second six months of
such fiscal year.
A. For purposes of this Agreement, "Cause" shall mean (i) the
willful and continued failure by Executive to perform his duties as an
Executive Vice President of the Company or any of its Subsidiaries or his
continued failure to perform duties reasonably requested or reasonably
prescribed by the Board (other than as a result of Executive's death or
disability), (ii) the engaging by Executive in conduct which is materially
monetarily injurious to the Company or any of its Subsidiaries, (iii) gross
negligence or willful misconduct by Executive in the performance of his duties
which results in, or causes, material monetary harm to the Company or any of
its Subsidiaries, or (iv) Executive's commission of a felony or other civil or
criminal offense involving moral turpitude. In the case of (i), (ii) and (iii)
above, finding of Cause for termination shall be made only after reasonable
notice to Executive and an opportunity for Executive, together with
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counsel, to be heard before the Board. A determination of Cause by the Board
shall be effective only if agreed upon by a majority of the directors, which
shall include at least one director who is not an employee of the Company or
its Subsidiaries and is not employed by ▇▇▇▇ Capital, Inc. ("Bain").
I. Confidential Information. Executive acknowledges that the
information, observations and data obtained by him while employed by the
Company and its Subsidiaries concerning the business or affairs of the Company
or any other Subsidiary ("Confidential Information") are the property of the
Company or such Subsidiary. Therefore, Executive agrees that he shall not
disclose to any unauthorized person or use for his own purposes any
Confidential Information without the prior written consent of the Board, unless
and to the extent that the aforementioned matters become generally known to and
available for use by the public other than as a result of Executive's acts or
omissions. Executive shall deliver to the Company at the termination of the
Employment Period, or at any other time the Company may request, all memoranda,
notes, plans, records, reports, computer tapes, printouts and software and
other documents and data (and copies thereof) relating to the Confidential
Information, Work Product (as defined below) or the business of the Company or
any Subsidiary which he may then possess or have under his control.
I. Inventions and Patents. Executive acknowledges that all
inventions, innovations, improvements, developments, methods, designs,
analyses, drawings, reports and all similar or related information (whether or
not patentable) which relate to the Company's or any of its Subsidiaries'
actual or anticipated business, research and development or existing or future
products or services and which are conceived, developed or made by Executive
while employed by the Company and its Subsidiaries ("Work Product") belong to
the Company or such Subsidiary. Executive shall promptly disclose such Work
Product to the Board and perform all actions reasonably requested by the Board
(whether during or after the Employment Period) to establish and confirm such
ownership (including, without limitation, assignments, consents, powers of
attorney and other instruments).
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I. Non-Compete, Non-Solicitation.
A. In further consideration of the compensation to be paid to
Executive hereunder, Executive acknowledges that in the course of his
employment with the Company he shall become familiar with the Company's trade
secrets and with other Confidential Information concerning the Company and its
Subsidiaries and that his services shall be of special, unique and
extraordinary value to the Company and its Subsidiaries. Therefore, Executive
agrees that, during the Employment Period and for one year thereafter (the
"Noncompete Period"), he shall not directly or indirectly own any interest in,
manage, control, participate in, consult with, render services for, or in any
manner engage in any business competing with the businesses of the Company or
its Subsidiaries, as such businesses exist or are in process on the date of the
termination of Executive's employment, within any geographical area in which
the Company or its Subsidiaries engage or plan to engage in such businesses.
Nothing herein shall prohibit Executive from being a passive owner of not more
than 2% of the outstanding stock of any class of a corporation which is
publicly traded, so long as Executive has no active participation in the
business of such corporation.
A. During the Noncompete Period, Executive shall not directly
or indirectly through another entity (i) hire any person who was an employee of
the Company or any Subsidiary at any time during the three-month period prior
to the expiration of the Employment Period or (ii) induce or attempt to induce
any customer, supplier, licensee, licensor, franchisee or other business
relation of the Company or any Subsidiary to cease doing business with the
Company or such Subsidiary, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Company or any Subsidiary (including, without limitation, making any negative
statements or communications about the Company or its Subsidiaries) which
interference causes material monetary damage to the Company or its
Subsidiaries.
I. Enforcement. If, at the time of enforcement of paragraph
5, 6 or 7 of this Agreement, a court holds that the restrictions stated herein
are unreasonable under circumstances then existing, the parties hereto agree
that the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services are unique and because Executive has access to
Confidential Information and Work Product, the
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parties hereto agree that money damages would not be an adequate remedy for any
breach of this Agreement. Therefore, in the event a breach or threatened
breach of this Agreement, the Company or its successors or assigns may, in
addition to other rights and remedies existing in their favor, apply to any
court of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce, or prevent any violations of, the provisions
hereof (without posting a bond or other security). In addition, in the event
of an alleged breach or violation by Executive of paragraph 7, the Noncompete
Period shall be tolled until such breach or violation has been duly cured.
Executive agrees that the restrictions contained in paragraph 7 are reasonable.
I. Executive's Representations. Executive hereby represents
and warrants to the Company that (i) the execution, delivery and performance of
this Agreement by Executive do not and shall not conflict with, breach, violate
or cause a default under any contract, agreement, instrument, order, judgment
or decree to which Executive is a party or by which he is bound, (ii) Executive
is not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms. Executive hereby acknowledges and represents that he has
consulted with independent legal counsel regarding his rights and obligations
under this Agreement and that he fully understands the terms and conditions
contained herein.
I. Survival. Paragraphs 4, 5, 6 and 7 and paragraphs 10
through 18 shall survive and continue in full force in accordance with their
terms notwithstanding any termination of the Employment Period.
I. Notices. Any notice provided for in this Agreement shall
be in writing and shall be either personally delivered, or mailed by first
class mail, return receipt requested, to the recipient at the address below
indicated:
Notices to Executive:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇. ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇
Rosenman & Colin
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Notices to the Company:
American Pad & Paper Company
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: Board of Directors
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. Learner
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so
delivered or mailed.
I. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
I. Complete Agreement; Amendments. This Agreement, the Stock
Option Agreement dated the date hereof between the Company and Executive, those
documents expressly referred to herein and other documents of even date
herewith embody the complete agreement and understanding among the parties and
supersede and preempt any prior understandings, agreements or representations
by or among the parties, written or oral, which may have related to the subject
matter hereof in any way.
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I. No Strict Construction. The language used in this
Agreement shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be
applied against any party.
I. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
I. Successors and Assigns. This Agreement is intended to
bind and inure to the benefit of and be enforceable by Executive, the Company
and their respective heirs, successors and assigns, except that Executive may
not assign his rights or delegate his obligations hereunder without the prior
written consent of the Company.
I. CHOICE OF LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE
OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
I. Amendment and Waiver. The provisions of this Agreement
may be amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
I. Stock Transfers. Executive hereby agrees that he will not
sell, pledge or otherwise transfer any interest in the 66,667 shares of the
Company's common stock which Executive purchased in connection with the
Company's initial public offering of its common stock before July 2, 1997,
except pursuant to (a) a Sale of the Company (as defined in that certain Stock
Option Agreement dated the date hereof between the Company and Executive), or
(b) that certain Pledge Agreement date the date hereof between the Company and
Executive.
20. Change of Control Payment. Executive hereby acknowledges
that the $1,156,500 payment received on the date hereof constitutes payment in
full of the Company's
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obligation pursuant to that certain Change of Control Agreement between WR
Acquisition, Inc. and the Executive.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
AMERICAN PAD & PAPER COMPANY
By
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Its
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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EXHIBIT I
1996 BONUS PROGRAM
Amount Target
------ ------
100% of Base Salary Company achieving $100 million of consolidated
earnings before interest, taxes, depreciation and
amortization, determined in accordance with GAAP
("EBITDA"), after giving effect to the sale of the
------
Regency business but not giving effect to the
acquisition of Niagara Envelope or the bonuses under
this Bonus Program.
60% of Base Salary Company achieving $89.2 million of EBITDA, after
giving effect to the sale of the Regency business and
the bonuses under this Bonus Program but not giving
effect to the acquisition of Niagara Envelope.
Bonus amounts above 100% of Base Salary, below 60% of Base Salary and the
determination of the allocation between 60% and 100% of Base Salary will be
determined mutually between the Compensation Committee of the Board and
Executive. The bonus for fiscal 1997 and 1998 will be defined mutually between
the Compensation Committee of the Board and Executive.