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EXHIBIT 10.3(b)
GAYLORD CONTAINER CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AS AMENDED AND RESTATED EFFECTIVE
MARCH 1, 2000
ARTICLE 1
Introduction
1.1 The Plan and Its Effective Date. Gaylord Container Corporation
Supplemental Executive Retirement Plan (the "plan") has been established by
Gaylord Container Corporation, a Delaware corporation (the "company"), effective
June 1, 1995 (the "effective date") as amended from time to time.
1.2 Purpose. The company maintains the Gaylord Container Retirement
Plan (the "retirement plan"), which is intended to meet the requirements of a
"qualified plan" under the Internal Revenue Code. The purpose of this plan is to
provide to a select group of management or highly compensated employees benefits
in addition to those provided under the retirement plan.
ARTICLE 2
Participation and Benefits
2.1 Eligibility. The persons designated by the Compensation Committee
of the Board of Directors (the "committee"), shall be participants in the plan.
The following persons have been designated as participants:
Dale E. Stahl President and Chief Operating Officer
Daniel P. Casey Executive Vice President and Chief
Financial Officer
Lawrence G. Rogna Senior Vice President
R. Bruce Grimm Vice President, Primary Products Sales &
Marketing
Michael J. Keough Vice President and General Manager,
Container Operations
Ray C. Dillon Vice President, Primary Product Operations
Jeffrey B. Park Vice President, Corporate Controller
David F. Tanaka Vice President, General Counsel and Secretary
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2.2 Normal Benefit. Subject to the provisions of section 2.3 of the
plan and the conditions and limitations of the plan, a participant shall be
entitled to receive under this plan an annual pension benefit in an amount equal
to the excess of (a) over (b) below:
(a) the participant's "final average pay" multiplied by the
"applicable percentage".
(b) the benefit payable under the retirement plan plus the
participant's annual primary Social Security benefit, as defined in the
retirement plan.
A participant's final average pay shall be the average of the
participant's base salary plus incentive awards, excluding awards under the
Shareholder Value Plan, for each of the four calendar years during the last 10
calendar years of the participant's employment for which such total base salary
plus incentive awards received by such participant was greatest.
A participant's applicable percentage shall be determined in accordance
with the following table, based on the participant's age on the date of
termination of employment.
Age % Final Average Pay
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65 60%
64 57.5
63 55
62 50
61 45
60 40
55 35
2.3 Termination Prior to Age 55. A participant who retires or
terminates employment on or after age 55 with five years of service shall be
entitled to the normal benefit set forth in section 2.2. If a participant
terminates employment prior to age 55 with five years of service, his benefit
shall be his normal age 55 benefit multiplied by a fraction, the numerator of
which is his actual years of service and the denominator of which is the number
of years of service he would have if he terminated on the day he attains age 55.
If a participant terminates employment before being credited with five
years of service, his benefit shall be further reduced in accordance with the
following schedule:
Years of Service % of Benefit Payable
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1 20%
2 40
3 60
4 80
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2.4 Change in Control. Notwithstanding anything herein to the contrary,
in the event of a "change in control", each participant shall have the absolute
right to receive payment of his benefit in the form of an immediate lump sum
payment whether or not the participant continues employment with the successor
company and the benefit payable to a participant who has not attained age 55
shall be the normal age 55 benefit without the reduction set forth in section
2.3. A "change in control" shall be deemed to have occurred;
(a) if any "person" or "group" as those terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), other than an Exempt Person, is or becomes the "beneficial
owner" (as defined in Rule l3d-3 under the Exchange Act), directly or
indirectly, of securities of Gaylord representing 50% or more of the combined
voting power of Gaylord's then outstanding securities; or
(b) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board and any new director
whose election by the Board or nomination for election by Gaylord's stockholders
was approved by at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose election was
previously so approved, cease for any reason to constitute a majority thereof,
or
(c) the stockholders of Gaylord approve a merger or
consolidation of Gaylord with any other corporation, other than a merger or
consolidation which would result in all or a portion of the voting securities of
Gaylord outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of Gaylord or such surviving entity outstanding immediately after
such merger or consolidation, or the stockholders of Gaylord approve a plan of
complete liquidation of Gaylord or an agreement for the sale or disposition by
Gaylord of all or substantially all of Gaylord's assets, other than a sale to an
Exempt Person.
2.5 Pre-retirement Death Benefit. If a participant dies before he has
begun to receive benefits under the plan, his spouse shall receive a lump sum
payment in the amount equal to the present actuarial value of the spouse's
benefit payable as if the participant had retired or terminated employment on
the date of his death.
2.6 Payment of Benefits. Except as provided under Section 2.4 and 2.5,
a participant's benefit under this plan shall be paid to him, and in the event
of his death prior to his receipt of all benefits payable under the plan, to his
beneficiary, in the normal or optional form of payment elected by or otherwise
applicable to participant under the retirement plan; provided that a participant
may elect at any time prior to retirement to receive payment in a lump sum in an
amount mutually agreeable to the participant and the committee; provided,
further, that such election must be on file with the company prior to the first
day of the year in which the participant retires or otherwise terminates his
employment and provided, further that such lump sum election shall be permitted
only with the consent of the committee in its sole discretion.
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2.7 Lump Sum Payments.
(a) In calculating the amount of any lump sum or installment
payments, actuarial equivalence shall be calculated based on the actuarial
assumptions applicable to a lump sum payment under the retirement plan.
(b) The benefit payable under Section 2.4 of the plan as a
lump sum amount shall be equal to an amount which is sufficient to provide, on
an after-tax basis, monthly benefits for the life of the participant and the
life of the participant's spouse if a joint and survivor benefit is payable
under the retirement plan commencing at the "commencement date" (as herein
defined) actuarially equivalent to the product of (i) times (ii) where:
(i) is one minus the participant's, or if he is
deceased his spouse's, marginal tax rate in effect as of the date of the change
in control, and
(ii) is the monthly benefit otherwise payable under
the plan if the participant had retired and started benefits on the commencement
date.
The "after-tax basis" and "marginal tax rate" as described
above shall be determined by the Committee, with the assistance of the Actuary.
For purposes of a lump sum payment in accordance with Section
2.4, the "commencement date" shall be the later of the date of a change in
control or the participant's attainment of age 55.
2.8 Funding. Benefits payable under this plan to a participant or his
beneficiary shall be paid directly by the company. The company shall not be
required to segregate on its books or otherwise any amount to be used for
payment of benefits under this plan.
2.9 Termination for Serious Misconduct. In the event a participant is
terminated for serious misconduct, as defined below, no amount shall be payable
to such participant under the plan. "Serious Misconduct" means embezzlement or
misappropriation of corporate Rinds, other acts of dishonesty, commission of a
felony, willful refusal to perform or substantial disregard of the duties
imposed by his employment contract with Gaylord, significant violation of any
statutory or common law duty of loyalty to Gaylord, or repeated acts tending to
bring Gaylord into public disgrace or disrepute, including but not limited to,
alcohol, drug or other substance abuse.
ARTICLE 3
General Provisions
3.1 Committee. This plan shall be administered by the committee
responsible for administration of the retirement plan. The committee shall have,
to the extent appropriate, the same powers, rights, duties and obligations with
respect to this plan as it has with respect to the retirement plan.
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3.2 Beneficiary. A participant's "beneficiary" under this plan means
any person who becomes entitled to benefits under the retirement plan because of
the participant's death; provide that, if a participant dies while his benefits
under this plan are payable to him in installments, his beneficiary under this
plan shall be either the person or persons designated by him by signing and
filing a beneficiary designation form in the time and manner prescribed by the
committee or if the beneficiary designated above dies before the date of the
participant's death, any one or more of the participant's estate and his
relatives by blood or marriage, in such proportions as the committee shall
determine.
3.3 Employment Rights. Establishment of the plan shall not be construed
to give any participant he right to be retained in the company's service or to
any benefits not specifically provided by the plan.
3.4 Interest Not Transferable. Except as to withholding of any tax
under the laws of the United States or any state, the interests of the
participants and their beneficiaries under the plan are not subject to the
claims of their creditors and may not be voluntarily or involuntarily
transferred, assigned, alienated or encumbered. No participant shall have any
right to any benefit payments hereunder prior to his termination of employment
with the company and all other Gaylord Companies, as defined in the retirement
plan.
3.5 Payment with Respect to Incapacitated Participants or
Beneficiaries. If any person entitled to benefits under the plan is under a
legal disability or in the committee's opinion is incapacitated in any way so as
to be unable to manage his financial affairs, the committee may direct the
payment of such benefit to such person's legal representative or to a relative
or friend of such person for such. Person's benefit, or the committee may direct
the application of such benefits for the benefit of such person in any manner
which the committee may select that is consistent with the plan. Any payments
made in accordance with the foregoing provisions of this section shall be a full
and complete discharge of any liability for such payments.
3.6 Limitation of Liability. To the extent permitted by law, no person
(including the company, its Board of Directors, the committee, any present or
former member of the company's Board of Directors or the committee, and any
present or former officer of the company) shall be personally liable for any act
done or omitted to be done in good faith in the administration of the plan.
3.7 Controlling Law. The laws of Illinois shall be controlling in all
matters relating to the plan.
3.8 Gender and Number. Where the context admits, words in the masculine
gender shall include the feminine gender, the plural shall include the singular
and the singular shall include the plural.
3.9 Action by the Company. Any action required of or permitted by the
company under the plan shall e by resolution of the committee.
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3.10 Successor to the Company. The term "company" as used in the plan
shall include any successor to the company by reason of merger, consolidation,
the purchase of all or substantially all of the company's assets or otherwise.
ARTICLE 4
Amendment and Termination
While the company expects to continue the plan, it must necessarily
reserve and hereby does reserve the right to amend the plan from time to time or
to terminate the plan at any time; provided that no amendment of the plan, nor
the termination of the plan may cause the reduction or cessation of any benefits
that were accrued as of the date of such amendment or termination and otherwise
would be payable under this plan, but for such amendment or termination.
IN WITNESS WHEREOF, this plan has been executed on behalf of the
company by its duly authorized officers as of the day and year first above
written.
GAYLORD CONTAINER CORPORATION
By:
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Its: Chairman and Chief
Executive Officer
ATTEST:
By:
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Its: Secretary
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