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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:
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 recognizes 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 recognizes 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
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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 as 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 this 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
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Salary") at a minimum rate of $450,000 per year, payable in weekly or bi-weekly
installments as nearly 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
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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 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.
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(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 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 in 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
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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 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
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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 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.
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(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 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
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(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 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(l)(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(l) 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
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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) 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(l)(viii), or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
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(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, 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
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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 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 or 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.
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(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 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 or 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 circumstance 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 his 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 not 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
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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 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 ____ day of November 1999 effective as of
May 3, 1998.
SHOREWOOD PACKAGING CORPORATION
By: _____________________________
Name:
Title:
__________________________________
XXXXXX X. XXXXXXX
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