Exhibit 12
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
SHOREWOOD PACKAGING CORPORATION
WITH XXXXXX X. XXXXXXX
AGREEMENT made effective as of May 3, 1998, among SHOREWOOD PACKAGING
CORPORATION, a Delaware corporation having its principal executive offices at
000 Xxxx Xxxxxx, Xxx Xxxx, X.X. 00000-0000 (herein called the "Corporation"),
and XXXXXX X. XXXXXXX, currently residing at 0000 Xxxxx Xxxxx, Xxxxxxx Xxxxxx,
X.X. 00000 (herein called the "Executive").
W I T N E S S E T H:
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The Corporation and the Executive entered into that certain Employment
Agreement dated as of May 16, 1994 (the "Prior Employment Agreement"), which
provides for the employment of the Executive by the Corporation upon the terms
and conditions set forth therein.
The Corporation and the Employee desire to enter into a new employment
agreement upon the terms and conditions hereinafter set forth, which employment
agreement will supersede and replace the Prior Employment Agreement in its
entirety.
The Corporation recognized that the longer the Executive remains in the
full time active employ of the Corporation, the more valuable will be any
consultative and advisory services that the Executive may provide during his
full time employment by the Corporation.
The Corporation recognized that the possibility of a proposal from a third
person, whether solicited by the Corporation or unsolicited, concerning a
possible business combination with the Corporation, including the acquisition of
a substantial share of the equity or voting securities of the Corporation, may
be unsettling to the Executive and deter him from continuing full time
employment with the Corporation.
This Agreement is intended to help assure a continuing dedication by the
Executive to his duties to the Corporation notwithstanding the possibility or
occurrence of a business combination proposal.
The Corporation and the Executive believe it imperative that should the
Corporation receive proposals from third parties with respect to its future, the
Executive should, without being influenced by the uncertainties of his own
situation, assess and advise the Corporation whether such proposals would be in
the best interest of the Corporation and its stockholders and take such other
action regarding such proposals as the Corporation might
determine to be appropriate.
Accordingly, the parties desire to and do hereby enter into this Agreement
as of the date first set forth above.
NOW, THEREFORE,
1. EMPLOYMENT; TERM. Subject to the terms hereof, the term of this Agreement
shall be from May 3, 1998 through and including May 2, 2003. The Corporation
agrees to and does hereby employ the Executive as Chief Financial Officer and an
Executive Vice President for the period commencing May 3, 1998 and terminating
May 2, 2003 (the "Employment Period") and the Executive agrees that he shall
serve an Executive Vice President and the Chief Financial Officer of the
Corporation during the Employment Period. The foregoing notwithstanding, in the
event of any "Change in Control" (as hereinafter defined) of the Corporation at
any time during the last two fiscal years of the Corporation beginning prior to
May 2, 2003, the Employment Period hereunder shall be automatically extended
through and including May 2, 2005.
2. DUTIES. Except as hereinafter provided, the Executive shall during the
Employment Period perform the executive and administrative duties and functions
and shall have the powers and privileges of an Executive Vice President and the
Chief Financial Officer of the Corporation, as such duties, functions, powers
and privileges are defined in the By-Laws of the Corporation in effect on the
date hereof and as currently interpreted, and, to the extent not defined
therein, as the same are customarily performed and exercised by a Chief
Financial Officer or an Executive Vice President of a publicly owned corporation
incorporated in one of the states of the United States of America. The Executive
shall serve as a member of the Board of Directors (and of the Executive
Committee or any similar committee having powers of the Board of Directors now
in existence or hereafter created) of the Corporation without any additional
compensation for such services for so long as the Executive is elected to serve
on the Board, the Executive Committee or any similar committee. As used in this
Agreement, the term "Corporation" includes each Subsidiary of the Corporation.
So long as he is an officer of the Corporation, the Executive agrees to devote
substantially all his business time to the business and affairs of the
Corporation, and to exert his best efforts in the performance of his duties as
an officer, director and member of any committee of the Board of Directors of
the Corporation to which he may be elected, so as to promote the profit, benefit
and advantage of the business to the Corporation. The Executive agrees to accept
the payments to be made to him under his Agreement as full and complete
compensation for the services required to be performed by him under this
Agreement.
3. COMPENSATION. As compensation for the services to be rendered by the
Executive pursuant to this Agreement, subject to the conditions herein stated,
the Corporation agrees to pay to the Executive all of the following:
(a) BASE SALARY. Beginning May 3, 1998 and until the expiration of the
Employment Period, the Corporation shall pay to the Executive a base salary (the
"Base Salary") at a minimum rate of $450,000 per year, payable in weekly or
bi-weekly installments as nearly
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equal as may be practicable or otherwise in accordance with the Corporation's
customary payroll practices for its Executives. Executive's Base Salary shall
be reviewed annually and may be increased at the Corporation's discretion. This
Agreement shall not be deemed abrogated or terminated if the Corporation, in
its discretion, shall determine to increase the compensation of the Executive
for any period of time or if the Executive shall accept such increase; but,
nothing herein shall be deemed to obligate the Corporation to make any such
increase.
(b) PARACHUTE EFFECTIVE DATE. Notwithstanding the present effectiveness of
this Agreement, the provisions of Sections 3(f), (g) and (l) of this Agreement
shall become operative only when, as and if there has been a "Change in Control"
of the Corporation. For purposes of this Agreement, the terms "Subsidiary" and
"Subsidiaries" shall mean each corporation of which more than 50% of the
outstanding capital stock entitled to vote for directors is owned directly or
indirectly by the Corporation and a "Change in Control" of the Corporation shall
be deemed to have occurred upon the occurrence of any of the following events:
(i) A change in control of the direction and administration of the
Corporation's business of a nature that if any securities of the Corporation
were registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), would be required to be reported in response to (a) Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Exchange Act, or (b)
Item 1(a) of Form 8-K under the Exchange Act as each is in effect on the date
hereof and any successor provisions of such regulations under the Exchange Act,
whether or not the Corporation is then subject to such reporting requirements;
or
(ii) Any "person" or "group" (as such term is used in connection with
Section 13(d) and 14(d)(2) of the Exchange Act) but excluding any employee
benefit plan of the Corporation or any "affiliate" or "associate" of the
Corporation (as defined in Regulation 12b-2 under the Exchange Act)(a) is or
becomes the "beneficial owner" (as defined in rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation representing
fifty percent (50%) or more of the combined voting power of the Corporation's
outstanding securities then entitled ordinarily (and apart from rights accruing
under special circumstances) to vote for the election of directors or (b)
acquires by proxy or otherwise 50% or more of the combined voting securities of
the Corporation having the right to vote for the election of directors of the
Corporation, for any merger or consolidation of the Corporation, or for any
other matter; or
(iii) During any period of twenty-four (24) consecutive months, the
individuals who at the beginning of such period constitute the Board of
Directors of the Corporation or any individuals who would be "Continuing
Directors" (as hereinafter defined) cease for any reason to constitute at least
a majority thereof; or
(iv) The Corporation shall cease to meet the basic conditions of
listing on the New York Stock Exchange (or any other securities exchange on
which the Corporation's Common Stock, as hereinafter defined, is listed for
trading) in respect of the number of shares of the Corporation's Common Stock
held by the public; or
(v) There shall be consummated (A) any consolidation, merger or
recapitalization of the Corporation or any similar transaction involving the
Corporation, whether
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or not the Corporation is the continuing or surviving corporation, pursuant to
which shares of the Corporation's common stock, par value $.01 per share
("Common Stock"), would be converted into cash, securities or other property,
other than a merger of the Corporation in which the holders of Common Stock
immediately prior to the merger have the same proportion and ownership of
common stock of the surviving corporation immediately after the merger, (B) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Corporation or (C) the adoption of a plan of complete liquidation of the
Corporation (whether or not in connection with the sale of all or substantially
all of the Corporation's assets) or a series of partial liquidations of the
Corporation that is de jure or de facto part of a plan of complete liquidation
of the Corporation; provided, that the divestiture of less than substantially
all of the assets of the Corporation in one transaction or a series of related
transactions, whether effected by sale, lease, exchange, spin-off, sale of the
stock or merger of a Subsidiary or otherwise, or a transaction solely for the
purpose of reincorporating the Corporation in another jurisdiction, shall not
constitute a "Change-in-Control"; or
(vi) The Board of Directors of the Corporation shall approve any
merger, consolidation, or like business combination or reorganization of the
Corporation, the consummation of which would result in the occurrence of any
event described in Section 3(c)(i), (ii) or (v) above.
(c) DEFINITION OF "CONTINUING DIRECTORS". For purposes of this Agreement,
"Continuing Directors" shall mean the directors of the Corporation in office on
the date hereof and any successor to any such director and any additional
director who after the date hereof (i) was nominated or selected by a majority
of the Continuing Directors in office at the time of his nomination or
selection and (ii) who is not an "affiliate" or "associate" (as defined in
Regulation 12b-2 under the Exchange Act) or any person who is the beneficial
owner, directly or indirectly, of securities representing ten percent (10%) or
more of the combined voting power of the Corporation's outstanding securities
then entitled ordinarily to vote for the election of directors.
(d) TERMINATION RIGHTS UNCHANGED. Except as provided in Section 3(f)
below, nothing in this Agreement shall affect any right which the Executive may
otherwise have to terminate his employment by the Corporation or a Subsidiary,
nor shall anything in this Agreement affect any right which the Corporation or
any Subsidiary may have to terminate the Executive's employment at any time in
any lawful manner, subject to the provision that in the event of termination of
the Executive's employment under the circumstances specified in Sections 3(g)
and 3(l) below following a Change in Control, the Corporation will provide to
the Executive the payments and benefits described in Sections 3(g) and 3(l) of
this Agreement.
(e) VOLUNTARY TERMINATION. In the event any person or organization
commences a tender or exchange offer, circulates a proxy statement to the
Corporation's stockholders, or takes other steps designed to effect a Change in
Control of the Corporation, the Executive agrees that in order to receive the
benefits provided by this Agreement, he will not voluntarily leave the employ of
the corporation or any of its Subsidiaries, and will continue to perform his
regular duties and to render the services specified in the recitals of this
Agreement, until such person or organization has abandoned or terminated his
efforts to effect a Change in
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Control or until a Change in Control has occurred. Should the Executive
voluntarily terminate his employment before any such effort to effect a Change
in Control of the Corporation has commenced, or after any such effort has been
abandoned or terminated without effecting a Change in Control and no such
effort is then in process, this Agreement shall lapse and be of no further force
or effect. Should the Executive voluntarily terminate his employment with the
Corporation or any of its Subsidiaries during such time as any person or
organization has commenced, but has not yet abandoned, any steps designed to
effect a Change in Control of the Corporation, but at a time when a Change in
Control has not been effected, the Executive shall not be entitled to receive
any of the benefits of Sections 3(g) or 3(l) hereof.
(f) TERMINATION FOLLOWING CHANGE OF CONTROL. If a Change of Control of the
Corporation shall have occurred, then Executive shall be entitled to the
benefits provided in Section 3(l) hereof upon the subsequent termination of his
employment by the Corporation or the Executive for any reason or for no reason
within the applicable period set forth in Section 3(l) hereof following such
Change in Control.
(g) TERMINATION BY REASON OF DEATH OR DISABILITY. If the Executive's
employment is terminated by reason of his death or Disability during the two
(2) years following a Change in Control, the Executive shall be entitled to
death or long-term disability benefits, as the case may be, from the Corporation
no less favorable than the most favorable benefits to which he would have been
entitled had the death or termination for Disability occurred at any time
during the period commencing one year prior to the initiation of actions that
resulted in a Change in Control. If prior to any such termination for
Disability during the two (2) years following a Change in Control, the
Executive fails to perform his duties as a result of incapacity due to physical
or mental illness, he shall continue to receive his Base Salary and Guaranteed
Bonus (as herein defined) less any benefits as may be received by him under the
Corporation's or Subsidiary's disability plan until his employment is
terminated for Disability, and shall be entitled to the most favorable other
benefits applicable under the Corporation's policies during the period
commencing one year prior to the initiation of actions that resulted in the
Change in Control.
(h) DEFINITIONS. For purposes of this Agreement:
(i) "Disability" shall mean that, as a result of the Executive's
incapacity due to physical or mental illness, the Executive has been absent
from the full-time performance of his duties (as described in Section 2 hereof)
with the Corporation for six (6) consecutive months and, within thirty (30)
days after Notice of Termination is given to the Executive, he has not returned
to the full-time performance of his duties (as described in Section 2 hereof).
Any question as to the existence of Disability shall be determined by a
qualified independent physician selected by the Executive (or, if he is unable
to make such selection, such selection shall be made by any adult member of the
Executive's family) and approved by the Corporation. The written determination
of such physician shall be final and conclusive for purposes of this Agreement.
(ii) "Retirement" shall mean that the Executive shall have retired after
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reaching the earliest normal or early retirement date provided in the
Corporation's retirement plans as then in effect (or if Executive retires after
a Change in Control of the Corporation, as in effect on the date of the Change
in Control).
(iii) "For Cause" shall mean:
(A) The willful and continued failure by the Executive to
substantially perform his duties with the Corporation (other than any such
failure resulting from the Executive's incapacity due to physical or mental
illness or any such actual or anticipated failure resulting from termination by
the Executive for Good Reason) which is not cured within thirty (30) days after
a written demand for substantial performance is delivered to the Executive by
the Board of Directors, which demand specifically identifies the manner in which
the Board of Directors believes that the Executive has not substantially
performed his duties; or
(B) The willful engagement in conduct by the Executive which is
demonstrably and materially injurious to the Corporation, monetarily or
otherwise, which is not discontinued within five (5) days after written demand
to cease and desist from such conduct is delivered to the Executive by the Board
of Directors, which demand specifically identifies the conduct which the Board
of Directors believes is injurious to the Corporation; or
(C) Conviction for a felony or other crime punishable by
imprisonment for more than one (1) year, or the entering of a plea of nolo
contendere thereto.
Notwithstanding any of the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to the Executive a resolution duly adopted by the affirmative vote of not less
than a majority of the entire membership of the Board of Directors (other than
the Executive) at a meeting called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the Executive, together with his
counsel, to be heard before the Board of Directors), finding that in the good
faith opinion of the Board of Directors the Executive was guilty of conduct set
forth above in clause (A), (B) or (C) and specifying the particulars thereof in
detail.
For purposes of this Section 3(j), no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by him knowing and with the intent that such action or inaction would not
be in the best interests of the Corporation or otherwise was done or omitted to
be done in bad faith.
(iv) "Base Salary" shall mean the annual base salary paid to the
Executive immediately prior to the Change in Control of the Corporation
(provided that such amount shall in no event be less than the annual Base Salary
paid to the Executive during the one (1) year period immediately prior to the
Change in Control).
(i) NOTICE OF TERMINATION. Any purported termination of employment by
the Corporation by reason of the Executive's Disability or for Cause, or by the
Executive for any or no reason, shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice given by the
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Executive or by the Corporation or a Subsidiary, as the case may be, which shall
indicate the specific basis for termination (if any) and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
determination of any payments under this Agreement; provided, however, that the
Corporation shall not be entitled to give a Notice of Termination that it is
terminating Executive's employment hereunder with the Corporation or a
Subsidiary by reason of Executive's Disability or for Cause after the expiration
of six (6) months following the last to occur of the events specified by it to
constitute Cause or Disability.
(j) DATE OF TERMINATION. For purposes of this Agreement, "Date of
Termination" shall mean (i) if the Executive's employment is terminated for
Disability, thirty (30) days after Notice of Termination is given (provided that
the Executive shall not have returned to the full-time performance of his duties
(as described in Section 2 hereof) during such thirty (30) day period) or (ii)
if the Executive's employment is terminated by the Corporation for Cause or by
the Executive for any or no reason, the date specified in the Notice of
Termination, which shall be not more than ninety (90) days after such Notice of
Termination is given. If within thirty (30) days after any Notice of Termination
is given, the party who receives such Notice of Termination notifies the other
party that a Dispute (as hereinafter defined) exists, the parties agree to
pursue promptly the resolution of such Dispute with reasonable diligence.
Pending the resolution of any such Dispute, the Corporation or a Subsidiary
shall make the payments and provide the benefits to the Executive provided for
in Section 3(l) or Section 5 hereof, as the case may be. In the event that it is
finally determined, either by mutual written agreement of the parties, by a
binding arbitration award or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or the time for appeal therefrom
having expired and no appeal having been perfected), that a challenged
termination by the Corporation or a Subsidiary by reason of the Executive's
Disability or for Cause was justified, then all sums paid by the Corporation or
a Subsidiary to the Executive from the Date of Termination specified in the
Notice of Termination until final resolution of the Dispute pursuant to this
Section 3(l) shall be repaid promptly by the Executive to the Corporation or a
Subsidiary, with interest at the base rate charged from time to time by the
Corporation's principal commercial bank. In the event that it is finally
determined that a challenged termination by the Corporation or a Subsidiary by
reason of the Executive's Disability or for Cause was not justified, then the
Executive shall be entitled to retain all sums paid to the Executive pending
resolution of the Dispute.
(K) DEFINITION OF "DISPUTE". For purposes of this Agreement,
"Dispute" shall mean (i) in the case of the Executive's termination as an
Executive with the Corporation or a Subsidiary for Disability or Cause, that the
Executive challenges the existence of Disability or Cause.
(L) PARACHUTE PAYMENTS UPON TERMINATION; CHANGE OF CONTROL. If within
two (2) years after a Change in Control of the Corporation, the Executive's
employment shall terminate for any or no reason, subject in each case to Section
3(j) hereof, the Corporation or a Subsidiary will pay to the Executive as
compensation for services rendered, beginning not later than the fifth business
day following completion of the "Parachute Procedure" (as hereinafter defined)
if the Corporation elects to follow such procedure and not later than the
fifteenth day
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after the Date of Termination otherwise:
(i) the Executive's Base Salary and Guaranteed Bonus through
the Date of Termination, any existing fringe benefits (including medical
benefits) and incentive compensation for the fiscal year in which the
termination occurs in accordance with any arrangements then existing with the
Executive and proportionate to the period of the fiscal year which has expired
prior to the termination; and
(ii) a lump sum severance payment equal to 2.99 times the
Executive's average annual compensation during the Base Period (as hereinafter
defined)(subject to any applicable payroll or other taxes and charges required
to be withheld computed at the rate for supplemental payments) provided that in
no event shall "Total Payments" (as hereinafter defined) exceed 2.99 times the
Executive's "Base Amount", as such term is defined in Section 28OG of the
Internal Revenue Code (the "Code"). The Executive's Base Amount shall be
determined in accordance with temporary or final regulations promulgated under
section 28OG of the Code then in effect, if any. In the absence of such
regulations, if the Executive was not employed by the Corporation (or any
corporation or partnership affiliated with the Corporation (an "Affiliate")
within the meaning of Section 1504 of the Code or a predecessor of the
Corporation) during the entire five calendar years (the "Base Period") preceding
the calendar year in which a Change in Control of the Corporation occurred, the
Executive's average annual compensation for the purposes of such determination
shall be the lesser of (1) the average of the Executive's annual compensation
for the complete calendar years during the Base Period during which the
Executive was so employed or (2) the average of the Executive's annual
compensation for both complete and partial calendar years during the Base Period
during which the Executive was so employed, determined by annualizing any
compensation (other than nonrecurring items) includible in the Executive's gross
income for any partial calendar year or (3) the annual average of the
Executive's total compensation for the Base Period during which the Executive
was so employed, determined by dividing such total compensation by the number of
whole and fractional years included in the Base Period. Compensation payable to
the Executive by the Corporation or any Affiliate or predecessor of the
Corporation shall include every type and form of compensation includible in the
Executive's gross income in respect of the Executive's employment by the
Corporation or any Affiliate or predecessor of the Corporation, including
compensation income recognized as a result of the Executive's exercise of stock
options or sale of the stock so acquired, except to the extent otherwise
provided in temporary or final regulations promulgated under Section 28OG of the
Code. For purposes of this Section 3(l), a "change in control of the
Corporation" shall have the meaning set forth in Section 28OG of the Code and
any temporary or final regulations promulgated thereunder, subject to the
limitation stated in Section 3(l)(iii) below; and
(iii)(A) Notwithstanding anything to the contrary contained
herein, in the event that any portion of the aggregate payments and benefits
(the "Total Payments") received or to be received by the Executive, whether paid
or payable pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Corporation, a subsidiary or any other person
or entity, would not be deductible in whole or in part by the Corporation, a
Subsidiary or by such other person or entity in the calculation of its Federal
income tax by reason
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of section 28OG of the Code, the Total Payments payable shall be reduced by the
least amount necessary so that no portion of the Total Payments would fail to be
deductible by reason of being an "excess parachute payment."
(B) At the option of the Corporation, no payments shall be made
pursuant to this section until the procedure described in this Section 3(1)(iii)
is completed (the "Parachute Procedure"). If the Corporation elects to comply
with such procedure, the Corporation shall cause its independent auditors to
deliver to the Executive, within fifteen (15) days after the Date of
Termination, a statement which shall indicate whether payment to the Executive
of the Total Payments would cause any portion of the Total Payment not to be
deductible in whole or part in the calculation of Federal income tax by reason
of Section 28OG of the Code, or would cause, directly or indirectly, an "excess
parachute payment" to exist within the meaning of Section 28OG of the Code. Such
statement shall set forth the value, calculated in accordance with the
principles of Section 28OG of the Code and any temporary or final regulations
promulgated thereunder, of any non-cash benefits or any deferred or contingent
payment or benefit payable pursuant to the terms of this Agreement or any other
plan, arrangement or benefit, together with sufficient information to enable the
Corporation to determine the payments that may be made to the Executive without
resulting in a loss of deduction under Section 28OG of the Code or an "excess
parachute payment" to the Executive within the meaning of Section 28OG of the
Code. The Corporation warrants to the Executive the accuracy of all information
and calculations supplied to the Executive in such statement. If such statement
indicates that payment of the Total Payments would result in a loss of a
deduction by reason of Section 28OG of the Code or would cause an "excess
parachute payment" to exist within the meaning of Section 28OG of the Code, the
Executive shall, within thirty (30) days after receipt of the statement, deliver
to the Corporation a statement indicating which of the payments and benefits
specified in such auditor's statement the Executive elects to receive; provided,
however, that the payments and benefits selected by the Executive shall not
result in a loss of deduction under Section 28OG of the Code or an "excess
parachute payment" to the Executive within the meaning of Section 28OG of the
Code and, provided, further, however, that if the Corporation does not comply
with the Parachute Procedure, it shall deliver the payments required by this
Section 3(1) within fifteen (15) days after the Date of Termination. Delivery of
the statement by the Executive to the Corporation shall constitute completion of
the Parachute Procedure; and
(iv) The Corporation shall contest any improper assessment of an
excise or other tax imposed as a result of determination that an "excess
parachute payment" has been made to the Executive within the meaning of Section
28OG of the Code. If it is established pursuant to a final determination of a
court of competent jurisdiction or an Internal Revenue Service proceeding that
an "excess parachute payment" does in fact exist, within the meaning of Section
28OG of the Code, then the Executive shall pay to the Corporation, upon demand,
an amount not to exceed the sum of (i) the excess of the aggregate Total
Payments over the aggregate Total Payments that would have been paid without any
portion of such payment being deemed an "excess parachute payment" within the
meaning of Section 28OG of the Code and (ii)
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interest on the amount set forth in clause (i) above at the applicable federal
rate specified in Section 1274(d) of the Code from the date of receipt by the
Executive of such excess until the date of such repayment.
(v) If litigation shall be brought to enforce or interpret any provision
contained herein, the Corporation shall indemnify the Executive for his
attorneys' fees and disbursements incurred in such litigation and pay
prejudgment interest on any money judgment obtained by the Executive calculated
at the base rate of interest charged from time to time from the date that
payment should have been made under this Agreement; provided, however, that the
Executive shall not have been found by the court to have had no cause to bring
the action, or to have acted in bad faith, which findings must be final with the
time to appeal therefrom having expired and no appeal having been taken.
(vi) The Corporation's obligation to pay the Executive the compensation
and to make the arrangements provided herein shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
any setoff, counterclaim, recoupment, defense or other right which the
Corporation may have against the Executive or anyone else. All amounts payable
by the Corporation hereunder shall be paid without notice or demand.
(vii) Except as expressly provided herein, the Corporation waives all
rights it may now have or may hereafter have conferred upon it, by statute or
otherwise, to terminate, cancel or rescind this Agreement in whole or in part.
Except as otherwise provided herein, each and every payment made hereunder by
the Corporation shall be final and the Corporation will not seek to recover for
any reason all or any part of such payment from the Executive or any person
entitled thereto. The Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment, and if
Executive obtains such other employment, any compensation earned by Executive
pursuant thereto shall not be applied to mitigate any payment made to Executive
pursuant to this Agreement.
(viii) The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation, by written
agreement to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
it if no such succession had taken place. As used in this Agreement, the term
"Corporation" shall mean the Corporation as hereinbefore defined and any
successor to or assignee of its business and/or assets as aforesaid which
executes and delivers the agreement required by this Section 3(1)(viii), or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(ix) This Agreement shall constitute the entire agreement between the
Executive and the Corporation concerning the Executive's termination subsequent
to a Change in Control as provided herein, and performance of its obligations
hereunder by the Corporation shall constitute full settlement and release of any
claim or cause of action, of whatsoever nature,
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which the Executive might otherwise assert or claim against the Corporation or
any of its directors, stockholders, officers or employees on account of such
termination. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing, signed by the Executive and an authorized officer of the Corporation.
No waiver by either party hereto at any time of any breach by the other party
hereto of compliance with any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of any similar or
dissimilar provision or condition at such same or at any prior or subsequent
time. No assurances or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. However, this Agreement is in
addition to and not in lieu or any other plan providing for payments to or
benefits for the Executive or any agreement now existing or which hereafter may
be entered into between the Corporation and the Executive, provided that,
notwithstanding anything to the contrary contained in the terms of any such
plan or agreement, in the event of Executive's termination, within two (2)
years after a Change in Control as provided herein, of Executive's employment,
this Agreement shall govern the rights and the obligations of the Corporation
and the Executive.
4. BENEFITS. The Executive shall be entitled to participate in any life,
accident and health insurance, hospitalization or any other plan or benefits
afforded by the Corporation to its executives generally, if and to the extent
that the Executive is eligible to participate in accordance with the provisions
of any such plan or for such benefits. Nothing herein is intended, or shall be
construed, to require the Corporation to institute any, or any particular, plan
or benefits. In addition, the Executive shall be furnished with an automobile
lease allowance of $[1,000] per month during the Employment Period plus
reimbursement for reasonable insurance, maintenance, gasoline and parking
expenses incurred in furtherance of the Corporation's business.
5. EARLY TERMINATION; NO CHANGE OF CONTROL. If prior to the expiration of
this Agreement or a Change in Control of the Corporation, (a) the Executive
fails because of Disability to perform services of the character contemplated
by Section 2 of this Agreement, or (b) if the Corporation's Board of Directors
determines that the Executive's employment should be terminated for Cause;
then, the Corporation may by written Notice of Termination terminate
Executive's employment. In addition, this Agreement shall terminate immediately
upon the death or Retirement of Executive prior to a change of Control of the
Corporation. Upon any termination of the Executive's employment under this
Section 5, the Executive shall be deemed removed from all positions held by him
with the Corporation, its subsidiaries and affiliates, effective as of the Date
of Termination. Upon any termination of the Executive's employment under this
Section 5, the Executive shall be entitled to receive solely all amounts and
benefits to be paid or provided by the Corporation under Sections 3(a), 3(b)
and 4 of this Agreement up to the Date of Termination, except that a
"Proportionate Part" (hereinafter defined) of the Guaranteed Bonus is payable
under Section 3(b) of this Agreement. The provisions of this Section 5 shall
terminate and cease to be of any force or effect immediately upon any Change in
Control of the Corporation.
6. (a) COMPLETE PAYMENT. Upon the payment of the amounts provided in this
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Agreement, the Corporation shall have no further liability of any kind or
nature whatsoever to the Executive under this Agreement, except such liability,
if any, as may continue under any plan or for the benefits (in accordance with
the express terms hereof) referred to in Section 4 hereof. Notwithstanding the
foregoing, Executive expressly reserves any rights he may have at law equity or
otherwise in the event that his employment by the Corporation is terminated in
contravention of this Agreement.
(b) NON-COMPETITION. The Executive expressly covenants and agrees that
during the term of this Agreement he will not, directly or indirectly, own,
manage, operate, join, control or participate in or be connected with as an
officer, employee, partner, stockholder, or otherwise, any business,
individual, partnership, firm or corporation (other than a parent of the
Corporation or a subsidiary or affiliate of such parent), which is at the time
engaged wholly or partly, in the business of manufacturing and marketing
packaging products or in any business which is directly in competition with the
then business of the Corporation or any subsidiary or affiliate of the
Corporation (as defined in the General Rules and Regulations promulgated under
the Securities and Exchange Act of 1934), or any firm, partnership or
corporation which shall succeed to all or a substantial part of the business of
the Corporation, or any such subsidiary or affiliate.
(c) INVESTMENTS. Nothing in this Agreement is intended, or shall be
construed, to prevent the Executive during the term of his employment hereunder
from investing in the stock or other securities listed on a national securities
exchange or actively traded on the over-the-counter market of any corporation
which is at the time engaged wholly or partly in any business which is,
directly or indirectly, at the time, in competition with the business of the
Corporation or any such subsidiary or affiliate, or any firm, partnership, or
corporation which shall succeed to all or a substantial part of the business of
the Corporation, or any such subsidiary of affiliate, provided that the
Executive and direct members of his family living in the same household as the
Executive shall not directly or indirectly, hold, beneficially or otherwise, in
the aggregate, more than three percent of any issue of such stock or other
securities of any one such corporation.
(d) CONFIDENTIAL INFORMATION. The Executive expressly covenants and
agrees that he will not at any time, during the term of his employment hereunder
or thereafter and without regard to when or for what reason, if any, such
employment shall terminate, directly or indirectly, use or permit the use of any
trade secrets, customers' lists or other information of, or relating to, the
Corporation, or any Subsidiary or affiliate, in connection with any activity of
business, except the business of the Corporation of any Subsidiary or affiliate
of the Corporation, and will not divulge such trade secrets, customers' lists,
and information to any person, firm, or corporation whatsoever, except as may be
necessary in the performance of his duties hereunder.
(e) REMEDIES. It is expressly understood and agreed that the services to
be rendered hereunder by the Executive are special, unique, and of extraordinary
character, and in the event of the breach by the Executive of any of the terms
and conditions of this Agreement on
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his part to be performed hereunder, or in the event of the breach or threatened
breach by the Executive of the terms and provisions of paragraphs (b) or (d) of
this Section, then the Corporation shall be entitled, if it so elects, to
institute and prosecute any proceedings in any court of competent jurisdiction,
either in law of equity, for such relief as it deems appropriate including,
without limiting the generality of the foregoing, any proceedings, to obtain
damages for any breach of this Agreement, or to enforce the specific performance
thereof by the Executive or to enjoin the Executive from performing services for
any other person, firm or corporation.
7. SEVERABILITY. The invalidity or unenforceability of any provisions of this
Agreement in any circumstances shall not affect the validity or enforceability
of such provision in any other circumstance or the validity or enforceability of
any other provision of this Agreement, and except to the extent such provision
is invalid or unenforceable, this Agreement shall remain in full force and
effect. Any provision in this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating or affecting
the remaining provisions hereof in such jurisdiction, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8. NOTICES. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by registered mail, to this then
residence in the case of the Executive or to its principal office in the case of
the Corporation, and shall be deemed given when deposited in the United States
mails, postage prepaid.
9. ENTIRE AGREEMENT. This Agreement embodies the entire agreement of the
parties and supersedes all prior agreements between the parties with respect
to the subject matter hereof. It may be changed orally but only by an agreement
in writing signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
10. WAIVER. The waiver by the Corporation of a breach of any provision of this
Agreement by the Executive shall not operate or be construed as a waiver of any
subsequent breach by the Executive. The waiver by the Executive of a breach of
any provisions of this Agreement by the Corporation shall not operate or be
construed as a waiver of any subsequent breach by the Corporation.
11. GOVERNING LAW. This Agreement shall be subject to, and governed by, the
laws of the State of New York.
12. SUCCESSORS. The rights and obligations of the Corporation under this
Agreement shall inure to the benefit of and shall be binding upon any successor
of the Corporation or to the business of the Corporation. Neither this
Agreement or any rights or obligations of the Executive hereunder shall be
transferable or assignable by the Executive; provided, however, that this
Agreement shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would still be payable to the Executive hereunder if he had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee, legatee
or
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other designee or, if there be no such designee, to the Executive's estate.
IN WITNESS WHEREOF, the parties hereto have duly signed this Agreement in
duplicate original on the 10th day of November 1999 effective as of May 3, 1998.
SHOREWOOD PACKAGING CORPORATION
By: /s/ Xxxx X. Xxxxx
------------------------------
Name: Xxxx X. Xxxxx
Title: CEO and Chairman
/s/ Xxxxxx X. Xxxxxxx
---------------------------------
XXXXXX X. XXXXXXX
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