EXHIBIT 10.27
Employment Agreement of Xxx X. Xxxxxx
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This Employment Agreement (the "Agreement") is effective as of April 1,
1999 (the "Effective Date"), by and between Smurfit-Stone Container Corporation
(the "Company"), and Xxx X. Xxxxxx (the "Executive").
WHEREAS, the Company desires to employ the Executive as its President and
Chief Executive Officer; and
WHEREAS, the Company and the Executive have reached agreement concerning
the terms and conditions of his employment and wish to formalize that agreement;
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions stated in this Agreement, the Company and the Executive hereby agree
as follows:
1. Employment. The Company hereby employs the Executive and the Executive
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hereby accepts employment with the Company as President and Chief Executive
Officer. During the Employment Term (as hereinafter defined), Executive will
have the title, status and duties of President and Chief Executive Officer and
will report directly to the Company's Board of Directors (the "Board"); provided
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that, the Executive shall use reasonable diligence to inform the Chairman of the
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Board of developments relating to the Company on a routine and regular basis.
2. Term of Employment. The term of employment ("Employment Term") will
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commence on the Effective Date, and will continue thereafter until three years
from the Effective Date and will be automatically extended for subsequent one
(1) day periods for each day of the Employment Term that passes after the
Effective Date, unless sooner terminated by either party in accordance with the
provisions of this Agreement. The intent of the foregoing provision is that the
Agreement becomes "evergreen" on the Effective Date so that on each passing day
after the Effective Date the Employment Term automatically extends to a full
three-year period.
3. Duties. During the Employment Term:
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(a) The Executive will perform duties assigned by the Company's Board,
from time to time; provided that, before any Change in Control, the
Executive shall not be assigned tasks inconsistent with those of President
and Chief Executive Officer.
(b) The Executive will devote his full time and best efforts, talents,
knowledge and experience to serving as the Company's President and Chief
Executive Officer. However, the Executive may devote reasonable time to
activities such as supervision of personal investments and activities
involving professional, charitable, educational, religious and similar
types of activities, speaking engagements and membership on other boards of
directors, provided such activities do not interfere in any material way
with the business of the Company; provided that, the Executive cannot
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serve on the board of directors of more than one publicly-traded company
without the Board's written consent. The time involved in such activities
shall not be treated as vacation time. The Executive shall be entitled to
keep any amounts paid to him in connection with such activities (e.g.,
director fees and honoraria).
(c) The Executive will perform his duties diligently and competently
and shall act in conformity with Company's written and oral policies and
within the limits, budgets and business plans set by the Company. The
Executive will at all times during the Employment Term strictly adhere to
and obey all of the rules and regulations in effect from time to time
relating to the conduct of executives of the Company. Except as provided
in (b) above, the Executive shall not engage in consulting work or any
trade or business for his own account or for or on behalf of any other
person, firm or company that competes, conflicts or interferes with the
performance of his duties hereunder in any material way.
4. Compensation and Benefits. During Executive's employment hereunder,
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Company shall provide to Executive, and Executive shall accept from Company as
full compensation for Executive's services hereunder, compensation and benefits
as follows:
(a) Base Salary. The Company shall pay the Executive at an annual
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base salary ("Base Salary") of one million two hundred seventy-five
thousand dollars ($1,275,000). The Board, or such committee of the Board
as is responsible for setting the compensation of senior executive
officers, shall review the Executive's performance and Base Salary annually
in January of each year, and determine whether to adjust the Executive's
Base Salary on a prospective basis. The first review shall be in January
2000. Such adjusted annual salary then shall become the Executive's "Base
Salary" for purposes of this Agreement. The Executive's annual Base Salary
shall not be reduced after any increase, without the Executive's consent.
The Company shall pay the Executive's Base Salary according to payroll
practices in effect for all senior executive officers of the Company.
(b) Incentive Compensation. The Executive shall be eligible to
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participate in any annual performance bonus plans, long-term incentive
plans, and/or equity-based compensation plans established or maintained by
the Company for its senior executive officers, including, but not limited
to, the Management Incentive Plan and the Smurfit-Stone Container
Corporation 1998 Long-Term Incentive Plan. For the Company's 1999 fiscal
year, the Executive shall be eligible for a target bonus under the
Company's annual incentive plan equal to 40% of his Base Salary provided
that all performance goals set by the Company are met. The Board (or
appropriate Board committee) will determine and communicate to the
Executive his annual incentive plan participation for subsequent fiscal
years, no later than March 31 of such fiscal year.
(c) Executive Benefit Plans. The Executive will be eligible to
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participate on substantially the same basis as the Company's other senior
executive officers in any executive benefit plans offered by the Company
including, without limitation, medical, dental, short-term and long-term
disability, life, pension, profit sharing and nonqualified deferred
compensation arrangements. The Company reserves the right to modify,
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suspend or discontinue any and all of the plans, practices, policies and
programs at any time without recourse by the Executive, so long as Company
takes such action generally with respect to other similarly situated senior
executive officers.
(d) Business Expenses. The Company shall reimburse the Executive for
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all reasonable and necessary business expenses incurred in the performance
of services with the Company, according to Company's policies and upon
Executive's presentation of an itemized written statement and such
verification as the Company may require.
(e) Perquisites. The Company will provide the Executive with all
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perquisites it provides to other senior executive officers. Such
perquisites shall not be less than those provided to the Executive on the
Effective Date. The Company will also reimburse the Executive for annual
income tax return preparation and tax counseling up to $25,000 per year.
(f) Vacation. The Executive will be entitled to vacation in
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accordance with the Company's vacation policy for senior executive
officers, but in no event less than 5 weeks per calendar year. Unused
vacation shall be carried over for a period not in excess of twelve (12)
months.
(g) After-Tax Payment of LTD Coverage. The Company will permit the
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Executive to pay the entire premium for long-term disability coverage with
his after-tax dollars. If the Executive elects to pay the entire premium
for long-term disability coverage with after-tax dollars, the Company will
reimburse the Executive, at least annually, for the amount of such premium.
(h) Extended Short-Term Disability Coverage. If the Executive is
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unable to perform his duties under this Agreement by reason of illness or
injury, whether or not such inability leads to long-term disability
benefits, the Company shall continue to pay to the Executive his full Base
Salary until the earliest to occur of the following: (i) the end of the
Employment Term, (ii) the end of the Executive's disability and return to
the usual duties of his employment on a substantially full-time basis, and
(iii) the date on which long-term disability payments begin to the
Executive.
5. Payments on Termination of Employment.
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(a) Termination of Employment for any Reason. The following payments
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will be made upon the Executive's termination of employment for any reason:
(i) Earned but unpaid Base Salary through the date of
termination;
(ii) Any annual incentive plan bonus, or other form of incentive
compensation, for which the performance measurement period has ended,
but which is unpaid at the time of termination;
(iii) Any accrued but unpaid vacation;
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(iv) Any amounts payable under any of the Company's executive
benefit plans in accordance with the terms of those plans, except as
may be required under Code Section 401(a)(13); and
(v) Unreimbursed business expenses incurred by the Executive on
the Company's behalf.
(b) Voluntary Termination of Employment for Other Than Good Reason.
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In addition to the amounts determined under (a) above, if the Executive
voluntarily terminates employment for other than Good Reason, then in
addition to the amounts determined under (a) above, the Executive shall be
entitled to a pro rata portion of the target bonus under the Company's
annual incentive plan for the year in which such termination occurs.
(c) Termination of Employment for Death or Disability. In addition to
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the amounts determined under (a) above, if the Executive's termination of
employment occurs by reason of death or Disability, the Executive (or his
estate) will receive a pro rata portion of any bonus payable under the
Company's annual incentive plan for the year in which such termination
occurs determined based on the highest of (i) the actual annual bonus paid
for the fiscal year immediately preceding such termination, (ii) the target
bonus for the fiscal year in which such termination occurs, or (iii) the
actual bonus attained for the fiscal year in which such termination occurs.
For purposes of this Agreement, "Disability" means the Executive's long-
term disability as defined under the Company's long-term disability plan,
or (iii) if the Executive is not covered by a long-term disability plan
sponsored by the Company, the Executive's inability to engage in any
substantial gainful activity by reason of any medically-determined physical
or mental impairment that can be expected to result in death or to be of
long-continued and indefinite duration.
(d) Termination by the Company Without Cause, or Voluntary
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Termination by the Executive for Good Reason. If the Company terminates the
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Executive's employment other than for Cause, or the Executive voluntarily
terminates his employment for Good Reason, in addition to the benefits
payable under (a), the Company will pay the following amounts and provide
the following benefits:
(i) The Base Salary and annual bonus that the Company would have
paid under the Agreement had the Executive's employment continued to
the end of the Employment Term. For this purpose, annual bonus will
be determined as the highest of (i) the actual bonus paid for the
fiscal year immediately preceding such termination, (ii) the target
bonus for the fiscal year in which such termination occurs, or (iii)
the actual bonus attained for the fiscal year in which such
termination occurs.
(ii) Continued coverage under the Company's medical, dental,
life, disability, pension, profit sharing and other executive benefit
plans through the end of the Employment Term, at the same cost to the
Executive as in effect on the date of the Executive's termination. If
the Company determines that the
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Executive cannot participate in any benefit plan because he is not
actively performing services for the Company, the Company may provide
such benefits under an alternate arrangement, such as through the
purchase of an individual insurance policy that provides similar
benefits or, if applicable, through a nonqualified pension or profit
sharing plan. To the extent that the Executive's compensation is
necessary for determining the amount of any such continued coverage or
benefits, such compensation (Base Salary and annual bonus) through the
end of the Employment Term shall be at the highest rate in effect
during the 12-month period immediately preceding the Executive's
termination of employment.
(iii) The Company will provide the Executive with the following
executive perquisites on the same basis on which the Executive was
receiving such perquisites prior to his employment termination: (i)
reimbursement for club dues through the end of the Employment Term;
and (ii) reimbursement of expenses relating to financial planning
services and tax return preparation through December 31 of the
calendar year that includes the third anniversary of Executive's
employment termination. The Company will bear the cost of such
perquisites, at the same level in effect immediately prior to the
Executive's employment termination. Perquisites otherwise receivable
by the Executive pursuant to this paragraph shall be reduced to the
extent comparable perquisites are actually received by or made
available to the Executive without cost during the 36 month period
following the Executive's employment termination. The Executive shall
report to the Company any such perquisites actually received by or
made available to the Executive.
(iv) The period through the end of the Employment Term shall
continue to count for purposes of determining the Executive's age and
service with the Company with respect to (i) eligibility, vesting and
the amount of benefits under the Company's executive benefit plans,
and (ii) the vesting of any outstanding stock options, restricted
stock or other equity-based compensation awards.
(v) Outplacement services, as elected by the Executive (and
with a firm elected by the Executive), not to exceed $50,000 in total.
(e) Good Reason. For purposes of this Agreement, "Good Reason" shall
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mean the occurrence of any of the following without the Executive's consent
(i) assigning duties to the Executive that are inconsistent with those of
the position of (A) before a Change in Control, President and Chief
Executive Officer, and (B) on or after a Change in Control, President and
Chief Executive Officer of North American Operations, in each case, as
those duties apply in similar companies in similar industries (except to
the extent the Company places the Executive in, promotes the Executive to,
a higher executive position); (ii) requiring the Executive to report to
other than the Board or the Chairman of the Board of the Company; (iii) the
failure of the Company to pay any portion of the Executive's compensation
within 10 days of the date such compensation is due; (iv) the Company
requires the Executive to relocate his principal business office to a
location not
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within 50 miles of either the Company's principal business office located
in the St. Louis, Missouri metropolitan area, or the Company's principal
business office located in the Chicago, Illinois metropolitan area
(provided, that, the Company's requiring the Executive to relocate his
principal office from Chicago to St. Louis, or from St. Louis to Chicago,
will not constitute Good Reason); or (v) the Company's failure to continue
in effect any cash or stock-based incentive or bonus plan, pension plan,
welfare benefit plan or other benefit plan, program or arrangement, unless
the aggregate value of all such arrangements provided to the Executive
after such discontinuance is not materially less than the aggregate value
as of the Effective Date. For purposes of this paragraph, "Company" shall
mean the Company and, following any Change in Control, the Surviving
Corporation or, if applicable, the Parent Corporation (as those terms are
defined in Section 6(d)).
(f) Cause. For purposes of this Agreement, "Cause" shall mean: (i)
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the Executive's willful and continued failure to substantially perform his
duties as an executive of the Company (other than any such failure
resulting from incapacity due to physical or mental illness) after a
written demand for substantial performance is delivered to the Executive by
the Board, which demand specifically identifies the manner in which the
Board believes that the Executive has not substantially performed his
duties, and which gives the Executive at least 30 days to cure such alleged
deficiencies, (ii) the Executive's willful misconduct, which is
demonstrably and materially injurious to the Company, monetarily or
otherwise, or (iii) the Executive's engaging in egregious misconduct
involving serious moral turpitude to the extent that his creditability and
reputation no longer conforms to the standard of senior executive officers
of the Company.
(g) Timing of Payments. All payments described above shall be made in
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a lump sum cash payment as soon as practicable (but in no event more than
10 days) following the Executive's termination of employment. If the total
amount of annual bonus is not determinable on that date, the Company shall
pay the amount of bonus that is determinable and the remainder shall be
paid in a lump sum cash payment within 10 days of the date that annual
performance results are finalized.
6. Change in Control.
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(a) Payments and Benefits Upon Employment Termination After a Change
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in Control. If within two years after a Change in Control (as defined
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below), the Company terminates the Executive's employment other than for
Cause, or the Executive voluntarily terminates his employment for Good
Reason, the Company will provide the following payments and benefits to the
Executive, in lieu of those payments and benefits provided under Sections
5(c) or (d) above, but in addition to the amounts payable under Section
5(a) above:
(i) Three times the Executive's Base Salary as in effect on the
date of the Executive's termination of employment.
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(ii) Three times the highest of (i) the average annual bonus
paid for the three fiscal years immediately preceding the Executive's
employment termination, (ii) the target bonus for the fiscal year in
which such termination of employment occurs, or (iii) the actual bonus
attained for the fiscal year in which such termination occurs.
(iii) Continued coverage for a period of 36 months from the
Executive's termination under the Company's medical, dental, life,
disability and other welfare benefit plans, at the same cost to the
Executive as in effect on the date of the Change in Control (or, if
lower, as in effect at any time thereafter). If the Company
determines that the Executive cannot participate in any benefit plan
because he is not actively performing services for the Company, the
Company may provide such benefits under an alternate arrangement, such
as through the purchase of an individual insurance policy that
provides similar benefits. The amount of such continued coverage
shall be determined, if applicable, by adding 36 additional months of
age and service to the Executive's actual age and service as of the
Executive's termination date and as if the Executive earned
compensation during such 36-month period at the rate in effect during
the 12-month period immediately preceding his termination date. The
Executive's eligibility for any retiree medical or life coverage
following such termination date shall also be determined by adding 36
additional months of age and service to the Executive's actual age and
service as of the termination date.
(iv) The value of continued coverage for a period of 36 months
under any pension, profit sharing or other retirement plan maintained
by the Company. The value of such coverage under a tax qualified plan
may be provided through a nonqualified pension or profit sharing plan
and shall be determined by adding 36 additional months of age and
service to the Executive's actual age and service at the date of the
Executive's termination of employment and as if the Executive earned
compensation during such 36-month period at the rate in effect during
the 12-month period immediately preceding his termination date. In
the case of a defined benefit pension plan, such value shall include
any early retirement subsidies to which the Executive would have
become entitled under the plan and shall be determined using the
actuarial factors set forth in such plan.
(v) The Company will provide the Executive with the following
executive perquisites on the same basis on which the Executive was
receiving such perquisites prior to the Change in Control: (i)
reimbursement for club dues for 36 months following the Executive's
employment termination; and (ii) reimbursement of expenses relating to
financial planning services and tax return preparation through
December 31 of the calendar year that includes the third anniversary
of Executive's employment termination. The Company will bear the cost
of such perquisites, at the same level in effect immediately prior to
the Change in Control. Perquisites otherwise receivable by the
Executive pursuant to this paragraph shall be reduced to the extent
comparable perquisites are actually received by or made available to
the Executive without cost during the 36 month period following the
Executive's employment termination. The Executive shall
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report to the Company any such perquisites actually received by or
made available to the Executive.
(vi) Immediate vesting of all stock options, restricted stock
and other equity-based awards.
(vii) Outplacement services, as elected by the Executive (and
with a firm elected by the Executive), not to exceed $50,000.
(b) Timing of Payment. All payments under paragraphs (a)(i), (ii) and
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(iv) above, and paragraph (c) below, shall be made in a lump sum cash
payment as soon as practicable, but in no event more than 10 days after the
Executive's termination of employment (or the date of the Change in
Control, if applicable). If the total amount of bonus is not determinable
on that date, the Company shall pay the amount of bonus that is
determinable, and shall pay the remainder in a lump sum cash payment within
10 days of the date that annual performance results are finalized.
(c) Gross-Up Payment by the Company. In the event that any payment,
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benefit or distribution by or on behalf of the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section) (the "Payments") is determined to be an "excess parachute payment"
pursuant to Code Section 280G or any successor or substitute provision of
the Code, with the effect that the Executive is liable for the payment of
the excise tax described in Code Section 4999 or any successor or
substitute provision of the Code (the "Excise Tax"), then the Company shall
pay to the Executive an additional amount (the "Gross-Up Payment") such
that the net amount retained by Executive, after deduction of any Excise
Tax on the Total Payments and any federal, state and local income and
employment taxes and Excise Tax on the Gross-Up Payment, shall be equal to
the Total Payments.
(i) All determinations required to be made under this paragraph
(c), and the assumptions to be utilized in arriving at such
determination, shall be made by the certified public accounting firm
used for auditing purposes by the Company immediately prior to the
Executive's employment termination (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the Company and
the Executive. The Company shall pay all fees and expenses of the
Accounting Firm. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive, except as provided in
subparagraph (ii) below.
(ii) As a result of the uncertainty in the application of Code
Sections 280G and 4999 at the time of the initial determination by the
Accounting Firm hereunder, it is possible that the Internal Revenue
Service ("IRS") or other agency will claim that a greater or lesser
Excise Tax is due. In the event that the Excise Tax is finally
determined to be less than the amount taken into account hereunder in
calculating the Gross-Up Payment, the Executive shall repay to the
Company,
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at the time that the amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment attributable to
the Excise Tax and federal, state and local income and employment
taxes imposed on the Gross-Up Payment being repaid by the Executive to
the extent that such repayment results in a reduction in Excise Tax
and/or a federal, state or local income or employment tax deduction)
plus interest on the amount of such repayment at 120% of the rate
provided in Code Section 1274(b)(2)(B). In the event that the Excise
Tax is determined to exceed the amount taken into account hereunder in
calculating the Gross-Up Payment (including by reason of any payment
the existence or amount of which cannot be determined at the time of
the Gross-Up Payment), the Company shall make an additional Gross-Up
Payment in respect of such excess (plus any interest, penalties or
additions payable by the Executive with respect to such excess) at the
time that the amount of such excess is finally determined. The
Executive and the Company shall each reasonably cooperate with the
other in connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax with
respect to the Total Payments. The Company shall pay all fees and
expenses of the Executive relating to a claim by the IRS or other
agency.
(d) Definition of Change in Control. For purposes of the Agreement, a
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"Change in Control" of the Company will be deemed to occur as of the first
day that any one or more of the following condition is satisfied:
(i) The "beneficial ownership" (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
of securities representing more than 20 percent (20%) of the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Company
Voting Securities") is accumulated, held or acquired by a Person (as
defined in Section 3(a)(9) of the Exchange Act, as modified, and used
in Sections 13(d) and 14(d) thereof) (other than the Company, any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or an affiliate thereof, any corporation
owned, directly or indirectly, by the Company's stockholders in
substantially the same proportions as their ownership of stock of the
Company); provided, however that any acquisition from the Company or
any acquisition pursuant to a transaction that complies with clauses
(A), (B) and (C) of subparagraph (iii) of this paragraph will not be a
Change in Control under this subparagraph (i), and provided further,
that immediately prior to such accumulation, holding or acquisition,
such Person was not a direct or indirect beneficial owner of 20
percent or more of the Company Voting Securities; or
(ii) Individuals who, as of the date of the Agreement, constitute
the Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors; provided,
however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a
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majority of the directors then comprising the Incumbent Board will be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of
Directors; or
(iii) Consummation by the Company of a reorganization, merger or
consolidation, or sale or other disposition of all or substantially
all of the assets of the Company or the acquisition of assets or stock
of another entity (a "Business Combination"), in each case, unless
immediately following such Business Combination: (A) more than 60% of
the combined voting power of then outstanding voting securities
entitled to vote generally in the election of directors of (x) the
corporation resulting from such Business Combination (the "Surviving
Corporation"), or (y) if applicable, a corporation that as a result of
such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries
(the "Parent Corporation"), is represented, directly or indirectly by
Company Voting Securities outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares into
which such Company Voting Securities were converted pursuant to such
Business Combination), and such voting power among the holders thereof
is in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Company Voting
Securities, (B) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20%
or more of the combined voting power of the then outstanding voting
securities eligible to elect directors of the Parent Corporation (or,
if there is no Parent Corporation, the Surviving Corporation) except
to the extent that such ownership of the Company existed prior to the
Business Combination and (C) at least a majority of the members of the
board of directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) were members of the
Incumbent Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business
Combination; or
(iv) Approval by the Company's stockholders of a complete
liquidation or dissolution of the Company.
However, in no event will a Change in Control be deemed to have occurred,
with respect to the Executive, if the Executive is part of a purchasing
group that consummates the Change in Control transaction. The Executive
will be deemed "part of a purchasing group" for purposes of the preceding
sentence if the Executive is an equity participant in the purchasing
company or group (except: (i) passive ownership of less than two percent
(2%) of the stock of the purchasing company; or (ii) ownership of equity
participation in the purchasing company or group that is otherwise not
significant, as determined prior to the Change in Control by a majority of
the nonemployee continuing Directors).
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(e) Change in Control Involving Jefferson Smurfit Group plc. Any
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reorganization, merger or consolidation of, or sale, acquisition or
exchange of substantially all of the assets or a majority of the voting
securities between, the Company and Jefferson Smurfit Group plc, shall
constitute a Change in Control for purposes of this Section 6. If within
two years after such Change in Control, the Company terminates the
Executive's employment other than for Cause, or the Executive voluntarily
terminates his employment for Good Reason (as defined in Section 5(e)), the
Company will provide the payments and benefits described in Section 6(a)
above.
7. Restrictive Covenants.
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(a) Definitions. For purposes of this Agreement, the following terms
will be defined as follows:
(i) "Confidential Information" shall mean the Company's trade
secrets and all other information unique to the Company and not
readily available to the public, including developments, designs,
improvements, inventions, formulas, compilations, methods, strategies,
forecasts, software programs, processes, know-how, data, research,
operating methods and techniques, and all business plans, strategies,
costs, profits, customers, vendors, markets, sales, products, key
personnel, pricing policies, marketing, sales or other financial or
business information, and any modifications or enhancements of any of
the foregoing.
(ii) The term "Business Conducted by the Company or any of its
Affiliates" shall mean all businesses conducted by the Company or any
of its Affiliates as of the Effective Date, of whatever kind, within
or outside of the United States.
(iii) The term "Affiliates" shall mean (i) any entity that
directly or indirectly, is controlled by the Company, and (ii) any
entity in which the Company has a significant equity interest.
(b) Inventions or Developments. The Executive agrees that he will
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promptly and fully disclose to the Company all discoveries, improvements,
inventions, formulas, ideas, processes, designs, techniques, know-how, data
and computer programs (whether or not patentable, copyrightable or
susceptible to any other form of protection), made, conceived, reduced to
practice or developed by the Executive, either alone or jointly with
others, during his employment with the Company (collectively, the
"Inventions or Developments"). All Inventions and Developments shall be
the sole property of the Company, including all patents, copyrights,
intellectual property or other rights related thereto and Executive assigns
to the Company all rights (if any) that the Executive may have or acquire
in such Inventions or Developments.
Notwithstanding the foregoing, any right of the Company or assignment
by the Executive as provided in this paragraph shall not apply to any
Inventions or Developments for which no equipment, supplies, facility or
trade secret information of the Company or its Affiliates were used and
which were developed entirely on the
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Executive's own time, unless: (i) the Inventions or Developments relate to
the Business Conducted by the Company or any of its Affiliates or the
actual or demonstrably anticipated research or development of the Company
or any of its Affiliates; or (ii) the Inventions or Developments result
from any work performed by the Executive for the Company or any of its
Affiliates.
(c) Non-Disclosure of Confidential Information or Inventions or
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Developments. The Executive acknowledges that he has had and will have
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access to Confidential Information or Inventions or Developments of the
Company and/or its Affiliates and agrees that he shall not, at any time,
directly or indirectly use, divulge, furnish or make accessible to any
person any Confidential Information or Inventions or Developments, but
instead shall keep all such matters strictly and absolutely confidential.
(d) No Diversion of Business Opportunities and Prospects. The
----------------------------------------------------
Executive agrees that during his employment with the Company: (i) the
Executive shall not directly or indirectly engage in any employment,
consulting or other business activity that is competitive with the Business
Conducted by the Company or any of its Affiliates; (ii) the Executive shall
promptly disclose to the Company all business opportunities that are
presented to the Executive in his capacity as an employee of the Company or
which is of a similar nature to the Business Conducted by the Company or
any of its Affiliates or which the Company or its Affiliates have expressed
an interest in engaging in the future; and (iii) the Executive shall not
usurp or take advantage of any such business opportunity without first
offering such opportunity to the Company.
(e) Actions Upon Termination. Upon the Executive's employment
------------------------
termination for whatever reason, the Executive shall neither take or copy
nor allow a third party to take or copy, and shall deliver to the Company
all property of the Company, including, but not limited to, all
Confidential Information or Inventions or Developments, regardless of the
medium (i.e., hard copy, computer disk, CD ROM) on which the information is
contained.
(f) Non-Competition. The Executive agrees that so long as he is
---------------
employed by the Company and for a period of two (2) years thereafter (the
"Period"), he shall not, without the prior written consent of the Company,
participate or engage in, directly or indirectly (as an owner, partner,
employee, officer, director, independent contractor, consultant, advisor or
in any other capacity calling for the rendition of services, advice, or
acts of management, operation or control), any business that, during the
Period, is competitive with the Business Conducted by the Company or any of
its Affiliates within the United States (hereinafter, the "Geographic
Area").
(g) Non-Solicitation of Employees. The Executive agrees that, during
-----------------------------
the Period, he shall not, without the prior written consent of the Company,
directly or indirectly solicit any current employee of the Company or any
of its Affiliates, or any individual who becomes an employee during the
Period, to leave such employment and join or become affiliated with any
business that is, during the Period, competitive with the Business
Conducted by the Company or any of its Affiliates within the Geographic
Area.
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(h) Non-Solicitation of Suppliers or Customers. The Executive agrees
------------------------------------------
that, during the Period, he shall not, without the prior written consent of
the Company, directly or indirectly solicit, seek to divert or dissuade
from continuing to do business with or entering into business with the
Company or any of its Affiliates, any supplier, customer, or other person
or entity that had a business relationship with or with which the Company
was actively planning or pursuing a business relationship at or before the
date of termination of his employment.
(j) Irreparable Harm. The Executive acknowledges that: (i) the
----------------
Executive's compliance with this Section is necessary to preserve and
protect the Confidential Information, Inventions or Developments and the
goodwill of the Company and its Affiliates as going concerns; (ii) any
failure by the Executive to comply with the provisions of this Section will
result in irreparable and continuing injury for which there will be no
adequate remedy at law; and (iii) in the event that the Executive should
fail to comply with the terms and conditions of this Section, the Company
shall be entitled, in addition to such other relief as may be proper, to
all types of equitable relief (including, but not limited to, the issuance
of an injunction and/or temporary restraining order) as may be necessary to
cause the Executive to comply with this Section, to restore to the Company
its property, and to make the Company whole.
(j) Survival. The provisions set forth in this Section shall, as
--------
noted, survive termination of this Agreement.
(k) Forfeiture. If the Executive violates any provision of this
----------
Section, the Executive will forfeit his right to all payments and benefits
under Section 5(d) and Section 6, except to the extent otherwise provided
by law.
(l) Unenforceability. If any provision(s) of this Section shall be
----------------
found invalid or unenforceable, in whole or in part, then such provision(s)
shall be deemed to be modified or restricted to the extent and in the
manner necessary to render the same valid and enforceable, or shall be
deemed excised from this Agreement, as the case may require, and this
Agreement shall be construed and enforced to the maximum extent permitted
by law, as if such provision(s) had been originally incorporated herein as
so modified or restricted, or as if such provision(s) had not been
originally incorporated herein, as the case may be.
8. Assignment; Successors. This Agreement shall inure to the benefit of
----------------------
and be binding upon the Company and its successors. The Company may not assign
this Agreement without the Executive's written consent, except that the
Company's obligations under this Agreement shall be the binding legal
obligations of any successor to the Company by sale, and in the event of any
transaction that results in the transfer of substantially all of the assets or
business of the Company, the Company will use its best efforts to cause the
transferee to assume the obligations of the Company under this Agreement. The
Executive may not assign this Agreement during his life. Upon the Executive's
death this Agreement will inure to the benefit of Executive's heirs, legatees
and legal representatives of the Executive's estate.
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9. Interpretation. The laws of the State of Illinois shall govern the
--------------
validity, interpretation, construction and performance of this Agreement,
without regard to the conflict of laws principles thereof.
10. Withholding. The Company may withhold from any payment that it is
-----------
required to make under this Agreement amounts sufficient to satisfy applicable
withholding requirements under any federal, state or local law.
11. Amendment or Termination. This Agreement may be amended at any time
------------------------
by written agreement between the Company and the Executive.
12. Notices. Notices given pursuant to this Agreement shall be in writing
-------
and shall be deemed received when personally delivered, or on the date of
written confirmation of receipt by (i) overnight carrier, (ii) telecopy, (iii)
registered or certified mail, return receipt requested, addressee only, postage
prepaid, or (iv) such other method of delivery that provides a written
confirmation of delivery. Notice to the Company shall be directed to:
Smurfit-Stone Container Corporation
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
The Company may change the person and/or address to whom the Executive must give
notice under this Section by giving the Executive written notice of such change,
in accordance with the procedures described above. Notices to or with respect
to the Executive will be directed to the Executive, or to the Executive's
executors, personal representatives or distributees, if the Executive is
deceased, or the assignees of the Executive, at the Executive's home address on
the records of the Company.
13. Severability. If any provisions(s) of this Agreement shall be found
------------
invalid or unenforceable by a court of competent jurisdiction, in whole or in
part, then it is the parties' mutual desire that such court modify such
provision(s) to the extent and in the manner necessary to render the same valid
and enforceable, and this Agreement shall be construed and enforced to the
maximum extent permitted by law, as if such provision(s) had been originally
incorporated herein as so modified or restricted, or as if such provision(s) had
not been originally incorporated herein, as the case may be.
14. Entire Agreement. This Agreement sets forth the entire agreement and
----------------
understanding between the Company and the Executive and supersedes all prior
agreements and understandings, written or oral, relating to the subject matter
hereof.
15. Consultation With Counsel. Executive acknowledges that he has had a
-------------------------
full and complete opportunity to consult with counsel of Executive's own
choosing concerning the terms, enforceability and implications of this
Agreement, and the Company has made no representations or warranties to
Executive concerning the terms, enforceability or implications of this Agreement
other than as are reflected in this Agreement.
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16. No Waiver. No failure or delay by the Company or the Executive in
---------
enforcing or exercising any right or remedy hereunder shall operate as a waiver
thereof. No modification, amendment or waiver of this Agreement nor consent to
any departure by the Executive from any of the terms or conditions thereof,
shall be effective unless in writing and signed by the Chairman of the Company's
Board. Any such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.
17. Effect on Other Obligations. Payments and benefits herein provided to
---------------------------
be paid to the Executive by the Company shall be made without regard to and in
addition to any other payments or benefits required to be paid the Executive at
any time hereafter under the terms of any other agreement between the Executive
and the Company or under any other policy of the Company relating to
compensation, or retirement or other benefits. No payments or benefits provided
the Executive hereunder shall be reduced by any amount the Executive may earn or
receive from employment with another employer or from any other source.
18. Survival. All Sections of this Agreement survive beyond the
--------
Employment Term except as otherwise specifically stated.
19. Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning thereof.
20. Counterparts. The parties may execute this Agreement in one or more
------------
counterparts, all of which together shall constitute but one Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first above written.
Smurfit-Stone Container Corporation
/s/ Xxx X. Xxxxxx
-----------------
Xxx X. Xxxxxx
By: /s/ Xxxx X. Xxxxxxxx
--------------------
Its: Chairman of the Compensation Committee
--------------------------------------
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