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EXHIBIT 10.12
EMPLOYMENT AGREEMENT
dated as of May 31, 2000, between
HUNTSMAN PACKAGING CORPORATION, a Utah corporation
(the "Company"), and
RICHARD P. DURHAM (the "Executive").
Reference is made to the Recapitalization Agreement dated as of
March 31, 2000 (as the same may be amended from time to time, the
"Recapitalization Agreement") among the Company, Chase Domestic Investments,
L.L.C., a Delaware limited liability company (the "Investor"), and the other
Persons signatory thereto. Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Recapitalization Agreement.
Each of the Company and its Subsidiaries is engaged in the
business (the "Business") of producing and distributing polymer-based,
value-added films and flexible packaging products for food, personal care,
medical, agricultural, industrial and other applications.
The Executive is, and prior to the date hereof has been, an
employee, officer, an indirect stockholder and director of the Company and as
such has substantial experience that is valuable to the Business and the
Company.
As an inducement to the Investor to enter into the
Recapitalization Agreement, the Company desires to employ the Executive, and the
Executive desires to accept such employment, on the terms and subject to the
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and in the Recapitalization Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as set forth below.
SECTION 1. EMPLOYMENT.
The Company hereby employs the Executive, and the Executive
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the Closing Date and ending on the
Termination Date determined pursuant to Section 4(a) (the "Employment Period").
SECTION 2. BASE SALARY AND BENEFITS.
(a) During the Employment Period, the Executive's base salary
shall be $500,000 per annum (the "Base Salary"), which salary shall be payable
in such installments as is customary for senior executives of the Company. In
addition, during the Employment Period, the Executive shall be entitled to
participate in all employee benefit programs for which other senior executives
of the Company are generally eligible, and the Executive shall be eligible to
participate in all insurance plans available generally to other senior
executives of the Company. The Executive shall be entitled to take four weeks of
paid vacation annually, or any greater amount of paid vacation to which he is
entitled under the Company's vacation policy as in effect
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during the Employment Period. The Board shall conduct a review of the
Executive's Base Salary on an annual or more frequent basis.
(b) The Executive shall be entitled to participate in the
Company's stock option program. The Executive understands that the stock option
program is a discretionary program that may or may not result in additional
compensation to the Executive in any particular year, and that the Company may
modify or revoke the stock option program at any time (although the Executive
would be entitled to participate in any program adopted to replace the stock
option program).
(c) On the Closing Date, the Company will grant the Executive
14,500 restricted shares of the Company's Common Stock, under the Restricted
Stock Purchase Agreement entered into by the parties on the same date as this
Agreement.
(d) The Executive shall be entitled to participate in the
Company's Management Incentive Plan, as amended, revised or replaced from time
to time. The Executive understands that the Management Incentive Plan is a
discretionary program that may or may not result in additional compensation to
the Executive in any particular year, and that the Company may modify or revoke
the Management Incentive Plan at any time (although the Executive would be
entitled to participate in any program adopted to replace the Management
Incentive Plan). Notwithstanding the foregoing, the parties agree that the
Executive's minimum bonus target for calendar 2000 will be 75% of Base Salary,
and that the Executive will receive a minimum bonus of 50% of the bonus target
for calendar 2000.
(e) The Executive will continue to be covered under the terms
of the Company's leased car program, which covers the cost of his annual lease,
car insurance, gasoline and maintenance. The Company will pay the cost of first
class business travel for the Executive. The Executive will continue to be
eligible for benefits under the Company's relocation program, should he
experience an eligible relocation. The Executive will be entitled to participate
in all other perquisite programs offered by the Company to senior executives of
the Company.
(f) The Company shall reimburse the Executive for all
reasonable expenses incurred by him in the course of performing his duties under
this Agreement which are consistent with the Company's policies in effect from
time to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses.
(g) The Company shall deduct from any payments to be made by it
to the Executive under this Agreement any amounts required to be withheld in
respect of any federal, state or local income or other Taxes.
SECTION 3. POSITION AND DUTIES.
(a) The Company employs the Executive as President and Chief
Executive Officer. His responsibilities and duties will be commensurate with the
title of his position, and will include those duties and responsibilities
normally performed by the Chief Executive Officer of a private corporation in
the Business. The Executive will report directly to the Board. The Executive
will perform his duties from the Salt Lake City, Utah location.
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(b) The Executive acknowledges and agrees to discharge his
duties and otherwise act in a manner consistent with the best interests of the
Company and its Subsidiaries. During the Employment Period, the Executive shall
devote his best efforts, on a full-time basis, to the performance of his duties
and responsibilities under this Agreement (except for vacations to which he is
entitled pursuant to Section 2(a), illness or incapacity or other personal or
personal investment activities that do not interfere with his full and timely
performance of his duties and responsibilities under this Agreement). During the
Employment Period, the Executive shall not engage in any business activity
which, in the reasonable judgment of the Board (excluding the Executive if he
should be a member of the Board at the time of such determination), materially
conflicts with his duties under this Agreement, whether or not such activity is
pursued for gain, profit or other pecuniary advantage.
SECTION 4. TERMINATION.
(a) Termination Date. The Executive's employment under this
Agreement shall terminate upon the earliest to occur (the date of such
occurrence being the "Termination Date") of (i) the fifth anniversary of the
Closing Date (an "Expiration"), (ii) the effective date of the Executive's
resignation (a "Resignation"), (iii) the effective date of the Executive's
Resignation for Good Reason, (iv) the Executive's death, (v) the Executive's
Disability (as later defined), (vi) the Executive's Retirement (as later
defined), (vii) the effective date of a termination of the Executive's
employment for Cause by the Board (a "Termination for Cause"), and (viii) the
effective date of a termination of the Executive's employment by the Board for
reasons that do not constitute Cause (a "Termination Without Cause"). The
effective date of the Executive's Resignation or the Executive's Retirement
shall be as determined under Section 4(b); the effective date of a Resignation
for Good Reason shall be as determined under Section 4(c); the effective date of
the Executive's Disability shall be the date specified in a notice delivered to
the Executive by the Company; and the effective date of a Termination for Cause
or a Termination Without Cause shall be the date specified in a notice delivered
to the Executive by the Company of such termination.
(b) Resignation or Retirement. The Executive shall give the
Company and the Board at least ninety (90) days' prior written notice of a
Resignation or Retirement, with the effective date of such Resignation or
Retirement specified therein. The Board may, in its discretion, accelerate the
effective date of the Resignation, but not of a Retirement.
(c) Resignation for Good Reason. The Executive will give the
Company and the Board at least thirty (30) days' prior written notice of a
Resignation for Good Reason.
SECTION 5. EFFECT OF TERMINATION; SEVERANCE.
(a) In the event of a Termination Without Cause or a
Resignation for Good Reason, the Executive or his beneficiaries or estate shall
receive the following:
(i) the unpaid portion of the Base Salary, computed on a
pro rata basis to the Termination Date;
(ii) the unpaid portion of the Base Salary for the period
beginning on the Termination Date and ending on the first anniversary of
the Termination Date,
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payable in the same amounts and at the same intervals as the Base Salary
was paid immediately prior to the Termination Date; provided, however,
that in the event of a breach by the Executive of Sections 7, 8, 9, or 10
on or after the Termination Date, the provisions of Section 12 shall
apply;
(iii) the quarterly bonus payment(s) that would have been
payable to the Executive under the quarterly portion of the Company's
Management Incentive Plan, as amended, revised or replaced from time to
time for all senior executives of the Company, plus an amount equal to
the annual portion of the bonus that was paid or is payable to the
Executive for the year preceding the calendar year in which the
Termination Date occurs, multiplied by a fraction, the numerator of which
is the number of days of the then-current calendar year that elapse
before the Termination Date, and the denominator of which is 365;
(iv) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as provided in
Section 2(f); and
(v) continued participation in the Company's
comprehensive medical and dental plan for the period beginning on the
Termination Date and ending on the first anniversary of the Termination
Date, with the COBRA continuation coverage qualifying event, connected
with the Executive's termination occurring when he loses coverage at the
end of that one-year period. If it is unable to obtain the consent of its
medical and/or dental plan insurer to provide coverage under this clause
(v), the Company may instead pay the full premium cost of other medical
and dental insurance that provides comparable coverage for the required
one-year period, and require the Executive to pay an amount equal to the
then-current COBRA continuation premium for the period after the one-year
period during which the Executive would be entitled to COBRA continuation
coverage (with the Executive and his dependents being treated for all
notice, election, coverage entitlement and other administrative purposes
the same as other COBRA qualified beneficiaries under the Company's
medical and dental plan). The parties agree that the Executive's
entitlement to medical and dental coverage during the first year after
the Termination Date will end on the date he becomes eligible for
comprehensive medical and dental coverage under a plan of his successor
employer, if he becomes so eligible before the first anniversary of the
Termination Date.
(b) In the event of the Executive's death, Disability,
Retirement, or Resignation, or an Expiration, the Executive or his beneficiaries
or estate shall have the right to receive the following:
(i) the unpaid portion of the Base Salary, computed on a
pro rata basis to the Termination Date;
(ii) the quarterly bonus payment(s) that would have been
payable to the Executive under the quarterly portion of the Company's
Management Incentive Plan, as amended, revised or replaced from time to
time for all senior executives of the Company, plus an amount equal to
the annual portion of the bonus that was paid or is payable to the
Executive for the year preceding the calendar year in which the
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Termination Date occurred, multiplied by a fraction, the numerator of
which is the number of days of the then-current calendar year that elapse
before the Termination Date, and the denominator of which is 365;
(iii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as provided in
Section 2(f); and
(iv) in the event of a termination due to Disability,
such Executive's Base Salary will continue until such time as the
Executive first receives benefits under the Company's then-effective
long-term disability plan.
(c) In the event of a Termination for Cause, the Executive or
his beneficiaries or estate shall have the right to receive the
following:
(i) the unpaid portion of the Base Salary, computed on a
pro rata basis to the Termination Date; and
(ii) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed, as provided in
Section 2(f); and
(d) Notwithstanding any other term of this Agreement to the
contrary, upon termination of the Executive's employment for any reason, the
Executive will in all events receive, when they would otherwise be then due and
owing, any amounts he will have accrued and vested in under the Company's
qualified and nonqualified retirement plans, all statutory rights to receive or
purchase welfare benefits, reimbursement for unreimbursed expenses in accordance
with the policies of the Company in effect as of the Termination Date, accrued
vacation pay, and any other employee benefits owing to him, all as determined in
accordance with the applicable terms of the plans themselves and the laws
applicable to them. No provision of this Agreement will be deemed to curtail or
reduce the Executive's rights under any Company employee benefit plan, program
or arrangement.
SECTION 6. REPURCHASE OF SHARES.
(a) In the event that the Executive's employment with the
Company or any of its Subsidiaries is terminated for whatever reason, the
Company or its designee shall have the right (but not the obligation) to
repurchase from (i) the Executive, (ii) each member of his Family Group, (iii)
his Permitted Transferees (as defined in the Stockholders' Agreement) and (iv)
Durham Capital, Ltd. or any other investment vehicle owning shares attributable
to the Executive or through which the Executive otherwise owns, or has a
beneficial interest in, Shares (all of the persons referred to in the foregoing
clauses (i), (ii) (iii) and (iv) hereinafter collectively referred to as the
"Executive Group") all or any part of the Shares owned by the Executive Group.
(b) The repurchase right of the Company or its designee under
this Section 6 may be exercised by written notice on one occasion (the
"Repurchase Notice"), specifying the number of Shares to be repurchased, and
given to the Executive within 120 days of the Termination Date (or, if the
Company shall not have assigned its rights under this Section 6 and shall be
legally prevented (whether by contract or statutorily) from making such
repurchase during the foregoing 120-day period, then the Repurchase Notice may
be delivered by the Company within forty-five
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(45) days after the date on which it shall be legally permitted to make such
repurchase), but in no event shall the Company be permitted to make such
election after the third anniversary of the Termination Date. Upon the delivery
of a Repurchase Notice to the Executive, each member of the Executive Group
shall be obligated to sell or cause to be sold to the Company or its designee
the Shares specified in such Repurchase Notice.
(c) In the event of the Executive's (w) Resignation for Good
Reason, (x) death, (y) Disability or (z) Retirement, the Executive, or his
estate, as applicable shall have the right (but not the obligation) to cause the
Company to repurchase all (but not less than all) of the Shares owned by the
Executive Group; provided, however, that the Executive, or his estate, as
applicable, provides the Company with prior written notice (the "Put Notice") of
an intent to exercise the rights hereunder and such notice is delivered to the
Company not later than 120 days after the Termination Date, or, in the event of
the Executive's death or the Executive's Disability resulting in legal
incapacity, not later than 120 days after an executor or other legally empowered
representative has been appointed to administer the Executive's estate or
affairs. The Company's obligation to repurchase Shares under this Section 6(c)
shall be subject to any financing or other restrictive covenants to which the
Company is subject at the time of the proposed repurchase.
(d) The price per Share to be paid under this Section 6 shall
be the Fair Market Value of as of the last day of the calendar month ending on
or immediately before the Termination Date. The purchase price to be paid for
any repurchase of Shares pursuant to this Section 6 shall be paid in cash.
(e) The purchasers of any Shares pursuant to this Section 6
will be entitled to require all of the sellers of Shares to provide
representations and warranties from each such seller regarding (i) such seller's
power, authority and legal capacity to enter into such sale and to transfer
valid right, title and interest in such Shares, (ii) such seller's ownership of
such Shares and the absence of any liens, pledges, and other encumbrances on
such Shares and (iii) the absence of any violation, default, or acceleration of
any agreement or instrument pursuant to which such seller or the assets of such
seller are bound as the result of such sale.
(f) Should the Company or any of its designees elect to
exercise the repurchase rights pursuant to this Section 6 and any seller fails
to deliver such Shares in accordance with the terms hereof, the purchaser of
such Shares hereunder may, at its option, in addition to all other remedies it
may have, deposit the repurchase price in an escrow account administered by an
independent third party (to be held for the benefit of and payment over to such
seller in accordance herewith), whereupon the Company shall by written notice to
such seller (i) cancel on its books the certificates(s) representing such Shares
registered in the name of such seller and (ii) issue to the purchaser, in lieu
thereof, new certificate(s) representing such Shares registered in the
purchaser's name, and all of the seller's right, title, and interest in and to
such Shares shall terminate in all respects.
(g) Notwithstanding anything to the contrary contained herein,
as used in this Section 6 only, "Shares" shall not include any Shares ("Excluded
Shares") which have been issued pursuant to the terms of the Restricted Stock
Agreement and which have not been released from the Repurchase Option (as
defined in the Restricted Stock Agreement). The Company's right to purchase the
Excluded Shares shall be governed by the Restricted Stock Agreement.
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SECTION 7. NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION.
The Executive will not disclose or use at any time, either during
the Employment Period or thereafter, any Confidential Information (as later
defined) of which the Executive is or becomes aware, whether or not such
information is developed by him, except to the extent that such disclosure or
use is directly related to and required by the Executive's performance of duties
assigned to the Executive by the Company.
SECTION 8. INVENTIONS AND PATENTS.
The Executive agrees that all Work Product (as later defined)
belongs to the Company. The Executive will perform all actions reasonably
requested by the Board (whether during or after the Employment Period) to
establish and confirm such ownership (including, without limitation, the
execution and delivery of assignments, consents, powers of attorney and other
instruments) and to provide reasonable assistance to the Company in connection
with the prosecution of any applications for patents, trademarks, trade names,
service marks or reissues thereof or in the prosecution or defense of
interferences relating to any Work Product.
SECTION 9. NON-COMPETE, NON-SOLICITATION, NON-DISPARAGEMENT.
The Executive acknowledges and agrees that during the course of
such Executive's association with the Company or any of its Subsidiaries, the
Executive has had the opportunity to develop relationships with existing
employees, customers and other business associates of the Company and its
Subsidiaries which relationships constitute goodwill of the Company and its
Subsidiaries, and the Company and its Subsidiaries would be irreparably damaged
if the Executive were to take actions that would damage or misappropriate such
goodwill. Accordingly, from and after the Closing Date, the Executive covenants
and agrees to comply with the terms and provisions set forth in this Section 9.
(a) The Executive acknowledges that the Company and its
Subsidiaries currently conduct the Business throughout the world (the
"Territory"). Accordingly, during the period (the "Non-Compete Period")
commencing on the Closing Date and ending on (x) in the case of a termination
for any reason except Expiration, the first anniversary of the Termination Date,
or (y) in the case of an Expiration, the Termination Date, the Executive shall
not, directly or indirectly, enter into, engage in, assist, give or lend funds
to or otherwise finance, be employed by or consult with, or have a financial or
other interest in, any business which competes with the Business, whether for or
by himself or as an independent contractor, agent, stockholder, partner or joint
venturer for any other Person. To the extent that the covenant provided for in
this Section 9(a) may later be deemed by a court to be too broad to be enforced
with respect to its duration or with respect to any particular activity or
geographic area, the court making such determination shall have the power to
reduce the duration or scope of this Section 9(a), and to add or delete specific
words or phrases. This Section 9(a) as modified shall then be enforced.
(b) The Executive covenants and agrees that during the
Non-Compete Period, the Executive will not, directly or indirectly, either for
himself or for any other Person (i) solicit any employee of the Company or any
of its Subsidiaries to terminate his or her employment with the Company or any
of its Subsidiaries, (ii) solicit any customer of the Company or any of its
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Subsidiaries to purchase products or services of or on behalf of the Executive
or such other Person that are competitive with the products or services provided
by the Company or any of its Subsidiaries or (iii) take any action intended to
cause injury to the relationships between the Company or any of its Subsidiaries
or any of their employees and any lessor, lessee, vendor, supplier, customer,
distributor, employee, consultant or other business associate of the Company or
any of its Subsidiaries as such relationship relates to the Company's or any of
its Subsidiaries' conduct of their business.
(c) The Executive understands that the foregoing restrictions
may limit his ability to earn a livelihood in a business similar to the business
of the Company and any of its Subsidiaries, but he nevertheless believes that he
has received and will receive sufficient consideration and other benefits under
this Agreement and the Recapitalization Agreement to clearly justify such
restrictions which, in any event, he does not believe would prevent him from
otherwise earning a living.
SECTION 10. DELIVERY OF MATERIALS UPON TERMINATION OF EMPLOYMENT.
The Executive shall deliver to the Company at the termination of
the Employment Period or at any time the Company may request all memoranda,
notes, plans, records, reports, computer tapes and software and other documents
and data (and copies thereof) relating to the Confidential Information or Work
Product which he may then possess or have under his control regardless of the
location or form of such material and, if requested by the Company, will provide
the Company with written confirmation that all such materials have been
delivered to the Company.
SECTION 11. INSURANCE.
The Company may, for its own benefit, maintain "keyman" life and
disability insurance policies covering the Executive. The Executive will
cooperate with the Company and provide such information or other assistance as
the Company may reasonably request in connection with the Company's obtaining
and maintaining such policies.
SECTION 12. ENFORCEMENT.
Because the Executive's services are unique and because the
Executive has access to Confidential Information and Work Product, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event of 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 to the foregoing, and not in any way in
limitation thereof, or in limitation of any right or remedy otherwise available
to the Company, if the Executive violates any provision of the foregoing
Sections 7, 8, 9 or 10, any payments then or thereafter due from the Company to
the Executive pursuant to Section 5(a)(ii) shall be terminated forthwith and the
Company's obligation to pay and the Executive's right to receive such payments
shall terminate and be of no further force or effect, in each case without
limiting or affecting the Executive's obligations
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under such Sections 7, 8, 9 and 10 or the Company's other rights and remedies
available at law or equity.
SECTION 13. REPRESENTATIONS.
Each party hereby represents and warrants to the other party that
the execution, delivery and performance of this Agreement by such party does not
and will not conflict with, breach, violate or cause a default under any
agreement, contract or instrument to which such party is a party or any
judgment, order or decree to which such party is subject. In addition, the
Executive represents and warrants to the Company that the Executive is not a
party to or bound by any employment agreement, consulting agreement, non-compete
agreement, confidentiality agreement or similar agreement with any Person other
than the Company or one of its affiliates. The Company and the Executive hereby
terminate all existing employment or consulting agreements between them, if any,
to the extent such agreements may be in effect after the date hereof.
SECTION 14. DEFINITIONS.
"Board" shall mean the board of directors of the Company.
"Business Day" shall mean any day that is not (a) Pioneer Day in
the State of Utah, (b) a Saturday, Sunday or legal holiday or (c) a day in which
banks are not required to be open in New York, New York.
"Cause" shall mean:
(a) the conviction of the Executive of a crime involving his
fraud, theft or dishonesty;
(b) the material and willful breach by the Executive of his
responsibilities under this Agreement or willful failure to comply with
reasonable directives or policies of the Board, but only if the Company has
given Executive written notice specifying the breach or failure to comply,
demanding that the Executive remedy the breach or failure to comply and giving
the Executive an opportunity to be heard in connection with the breach or
failure to comply, and the Executive either (i) failed to remedy the alleged
breach or failed to comply within thirty days after receipt of the written
notice or (ii) failed to take all reasonable steps to that end during the thirty
days after he received the notice;
(c) the continued use of alcohol or drugs by the Executive to
an extent that, in the good faith determination of the Board, such use
interferes with the performance of the Executive's duties and responsibilities;
or
(d) the conviction of the Executive for violating any Law
constituting a felony (including the Foreign Corrupt Practices Act of 1977).
"Common Stock" means the common stock of the Company.
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"Confidential Information" means information that is not known to
the public, that is used, developed or obtained by the Company or any of its
Subsidiaries in connection with the Business, and that the Executive learns in
the course of performing services for the Company or any of its Subsidiaries,
including, but not limited to, (a) information, observations, procedures and
data obtained by the Executive while employed by the Company (including those
obtained prior to the date of this Agreement) concerning the business or affairs
of the Company or any of its Subsidiaries, (b) products or services of the
Company or any of its Subsidiaries, (c) costs and pricing structures of the
Company or any of its Subsidiaries, (d) analyses of the Company or any of its
Subsidiaries, (e) drawings, photographs and reports of the Company or any of its
Subsidiaries, (f) computer software, including operating systems, applications
and program listings of the Company or any of its Subsidiaries, (g) flow charts,
manuals and documentation of the Company or any of its Subsidiaries, (h) data
bases of the Company or any of its Subsidiaries, (i) accounting and business
methods of the Company or any of its Subsidiaries, (j) inventions, devices, new
developments, methods and processes, whether patentable or unpatentable and
whether or not reduced to practice of the Company or any of its Subsidiaries,
(k) customers and customer lists of the Company or any of its Subsidiaries, (l)
other copyrightable works of the Company or any of its Subsidiaries, (m) all
production methods, processes, technology and trade secrets of the Company or
any of its Subsidiaries, and (n) all similar and related information of the
Company or any of its Subsidiaries in whatever form. Confidential Information
will not include any information that is now or later becomes part of the public
domain, without breach of this Agreement by the Executive. Confidential
Information will not be deemed to be in the public domain merely because
individual portions of the information have been separately published, but only
if all material features comprising such information have been published in
combination.
"Disability" shall means a condition or disease of the Executive
that would cause him to be considered "disabled" within the meaning of the
Company's long-term disability plan as in effect at the relevant time, as
determined by the Company's long-term disability insurance carrier.
"Fair Market Value" shall mean, with respect to any Share, as of
any date of determination, the fair value of each Share (or, with respect to a
warrant or option, the fair value of each Share obtainable upon exercise thereof
net of the exercise price), determined in accordance with the terms hereof. At
any time that the Fair Market Value shall be required to be determined
hereunder, the Board shall make a good faith determination (the "Board's
Determination") of the fair market value of each Share within thirty (30) days
of the delivery (i) by the Company of the Repurchase Notice or (ii) by the
Executive of the Put Notice (in each case, without taking into account that the
Shares may be "restricted securities" and without any discount for the minority
position represented by the Shares) and shall provide within such 30-day period
to each member of the Executive Group with respect to whose Shares such
determination is being made, a written notice thereof which notice shall set
forth supporting data in respect of such calculation (the "Determination
Notice"). Each member of the Executive Group shall have thirty (30) days
following receipt of the Determination Notice within which to deliver to the
Company a written notice (the "Objection Notice") of an objection, if any, to
the Board's Determination, which Objection Notice shall set forth such member of
the Executive Group's good faith determination (the "Shareholder's
Determination") of the fair value of each Share. The failure by such member of
the Executive Group to deliver the Objection Notice
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within such 30-day period shall constitute such Person's acceptance of the
Board's Determination as conclusive. In the event of the timely delivery of an
Objection Notice, the Company and applicable members of the Executive Group
shall attempt in good faith to arrive at an agreement with respect to the Fair
Market Value, which agreement shall be set forth in writing within fifteen (15)
days following delivery of the Objection Notice. If the Company and the
applicable members of the Executive Group are unable to reach an agreement
within such 15-day period, the matter shall be promptly referred for
determination to a regionally or nationally recognized investment banking or
valuation firm (the "Valuer") reasonably acceptable to the Company and the
applicable members of the Executive Group. The Company and the applicable
members of the Executive Group will cooperate with each other in good faith to
select such Valuer. The Valuer may select the Board's Determination or the
Shareholder's Determination as the Fair Market Value or may select any other
number or value (determined without taking into account that the Shares may be
"restricted securities" and without any discount for the minority position
represented by such Shares). The Valuer's selection will be furnished to the
Company and the applicable members of the Executive Group in writing and will be
conclusive and binding upon the Company and the applicable members of the
Executive Group. The fees and expenses of the Valuer shall be borne equally by
the Company, on the one hand, and the applicable members of the Executive Group
(on a pro rata basis based on the number of Shares being purchased), on the
other.
"Family Group" means (a) the Executive's spouse and descendants
(whether natural or adopted) and (b) any trust solely for the benefit of such
individual and/or the individual's spouse or descendants. Notwithstanding
anything to the contrary contained herein, the terms "Family Group" shall not
include The Christena Karen H. Durham Trust.
"Resignation for Good Reason" occurs if the Executive terminates
his employment with the Company and the Subsidiaries because, without
Executive's express written consent, any of the events described below occurs
during the Employment Period.
(a) The Company significantly diminishes the Executive's
assigned duties and responsibilities from the level or extent at which they
existed before the Closing Date, including, without limitation, if the Company
removes Executive's title or materially diminishes the powers associated with
the Executive's title. The Executive must deliver written notice to the Company
specifying the diminution in assigned duties and responsibilities that he
believes constitutes Good Reason, and the Company must fail to reverse the same
or to take all reasonable steps to that end within thirty days after receiving
the notice.
(b) The Company reduces the Executive's Base Salary below that
in effect as of the Closing Date.
(c) The Company requires the Executive to, or assigns duties to
the Executive which would reasonably require him to, relocate his principal
business office more than fifty (50) miles from where it is located on the
Closing Date.
(d) The Company fails to continue in effect any cash or
stock-based incentive or bonus plan, retirement plan, welfare benefit plan, or
other benefit plan, program or
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arrangement that applied to the Executive on the Closing Date, unless the
aggregate value (as computed by an independent employee benefits consultant
selected by the Company) of all such compensation, retirement and benefit plans,
programs and arrangements provided to the Executive is not materially less than
their aggregate value as of the Closing Date.
"Restricted Stock Agreement" means the Restricted Stock Purchase
Agreement dated as of the date hereof between the Company and the Executive and
any other restricted stock agreement entered into between such Persons after the
date hereof, as each such agreement is amended, supplemented or modified from
time to time.
"Retirement" means a separation from the service of the Company
that would be treated as a normal retirement or early retirement under the
Huntsman Packaging Corporation Defined Benefit Pension Plan.
"Shares" means (a) shares of any Common Stock purchased or
otherwise acquired by the Executive (including, without limitation, any shares
of Common Stock purchased upon exercise of an option to acquire Common Stock or
acquired upon the consummation of a merger), (b) shares of any equity securities
issued or issuable directly or indirectly with respect to the Common Stock
referred to in clause (a) above by way of stock dividend or stock split or in
connection with a combination of shares, exchange of capital stock,
recapitalization, merger, consolidation or other reorganization and (c) any
other shares of capital stock of the Company purchased or otherwise acquired by
the Executive.
"Stockholders' Agreement" means the Stockholders' Agreement dated
as of the date hereof among the Company and the stockholders of the Company from
time to time, as amended, modified or supplemented from time to time.
"Work Product" shall mean all inventions, innovations,
improvements, technical information, systems, software developments, methods,
designs, analyses, drawings, reports, service marks, trademarks, tradenames,
logos and all similar or related information (whether patentable or
unpatentable) which relates to the Company's or any of its Subsidiaries'
business, research and development or existing or future products or services
and which are conceived, developed or made by the Executive (whether or not
during usual business hours and whether or not alone or in conjunction with any
other Person) while employed by the Company (including those conceived,
developed or made prior to the date of this Agreement) together with all patent
applications, letters patent, trademark, tradename and service mark applications
or registrations, copyrights and reissues thereof that may be granted for or
upon any of the foregoing.
SECTION 15. GENERAL PROVISIONS.
(a) Severability. It is the desire and intent of the parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such
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provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
(b) Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and sufficient if (i) delivered
personally, (ii) delivered by certified United States Post Office mail, return
receipt requested, (iii) telecopied or (iv) sent to the recipient by a
nationally-recognized overnight courier service (charges prepaid) and addressed
to the intended recipient as set forth below:
(i) if to the Executive, to him at:
Richard P. Durham
500 Huntsman Way
Salt Lake City, Utah 84108
Telecopier: (801) 584-5783
Telephone: (801) 584-5700
with a copy to:
Richard Johnson, Esq.
Stoel Rives
201 S. Main Street, Suite 1100
Salt Lake City, Utah 84111
Telecopier: (801) 578-6999
Telephone: (801) 328-3131
(ii) if to the Company, to:
Huntsman Packaging Corporation
500 Huntsman Way
Salt Lake City, Utah 84108
Attention: Ronald G. Moffitt, General Counsel
Telecopier: (801) 584-5783
Telephone: (801) 584-5700
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with copies to:
Chase Domestic Investments, L.L.C.
c/o Chase Capital Partners
1221 Avenue of the Americas, 40th Floor
New York, New York 10020
Telephone: (212) 899-3400
Telecopier: (212) 899-3401
Attention: Timothy Walsh;
and
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza, 41st Floor
New York, New York 10112
Telephone: (212) 408-2400
Telecopier: (212) 408-2420
Attention: Ilan S. Nissan, Esq.;
or such other address as the recipient party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. Any such
communication shall deemed to have been delivered and received (i) in the case
of personal delivery, on the date of such delivery, (ii) in the case of delivery
by mail, on the date received, (iii) if telecopied, on the date telecopied as
evidenced by confirmed receipt, and (iv) in the case of delivery by
nationally-recognized, overnight courier, on the Business Day following
dispatch.
(c) Entire Agreement. This Agreement and the documents
expressly referred to herein embody the complete agreement and understanding
among the parties and, with respect to the subject matter of this Agreement,
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.
(d) Counterparts and Facsimile Execution. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered (by facsimile or otherwise) to
the other party, it being understood that all parties need not sign the same
counterpart. Any counterpart or other signature to this Agreement that is
delivered by facsimile shall be deemed for all purposes as constituting good and
valid execution and delivery by such party of this Agreement.
(e) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Executive and the Company and their respective successors, assigns,
heirs, representatives and estate, as the case may be; provided, however, that
the obligations of the Executive under this Agreement shall not be assigned
without the prior written consent of the Company.
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(f) Amendment and Waiver. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company and the
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 or any provision hereof.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Utah without
giving effect to any choice or conflict of law provision or rule that would
cause the application of the laws of any jurisdiction other than the State of
Utah.
(h) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Mutual Contribution. The parties to this Agreement and
their counsel have mutually contributed to its drafting. Consequently, no
provision of this Agreement shall be construed against any party on the ground
that one party drafted the provision or caused it to be drafted.
(j) Descriptive Headings; Nouns and Pronouns. Descriptive
headings are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice-versa.
(k) Effectiveness. This Agreement shall not be deemed effective
until the Closing Date.
(l) Effect on Recapitalization Agreement. Notwithstanding any
other provision of this Agreement, the Parties agree that if either of them
breaches this Agreement, the breach will not be deemed or construed to be a
breach of the Recapitalization Agreement, or to be any other type of event that
would trigger the payment of damages under the Recapitalization Agreement, or
would entitle any party to the Recapitalization Agreement to refuse to pay, any
amounts otherwise owed under the Recapitalization Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the date first written above.
HUNTSMAN PACKAGING CORPORATION
By:/s/ SCOTT K. SORENSEN
-------------------------------
Name: Scott K. Sorensen
Title: Chief Financial Officer
EXECUTIVE:
/s/ RICHARD P. DURHAM
----------------------------------
Name: Richard P. Durham