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EXHIBIT 10.1
Employment Agreement of Joseph J. Gurandiano
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This Employment Agreement (the "Agreement") is effective as of May 31, 2000
(the "Effective Date"), by and between Smurfit-Stone Container Corporation (the
"Company"), and Joseph J. Gurandiano (the "Executive").
WHEREAS, the Company desires to employ the Executive as its Chief Operating
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
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Executive hereby accepts employment with the Company as Chief Operating Officer.
During the Employment Term (as hereinafter defined), Executive will have the
title, status and duties of Chief Operating Officer and will report directly to
the Company's President and Chief Executive Officer.
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 be primarily responsible for the operation
of the Company"s folding carton and boxboard, specialty packaging and bag
packaging divisions, and the specialty packaging operations of recently
acquired "St. Laurent Paperboard". In addition, the Executive will be
primarily responsible for managing the development and marketing of the
Company"s micro-flute, protective packaging and internet-based marketing
operations and activities.
(b) The Executive will perform such other duties assigned by the
Company's President and Chief Executive Officer, or the Company's Board of
Directors (the "Board"), from time to time; provided that the Executive
shall not be assigned tasks inconsistent with those of Chief Operating
Officer.
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(c) The Executive will devote his full time and best talents,
knowledge and experience to serving as the Company's Chief Operating
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 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 and any compensation granted to him in connection with such
activities (including, but not limited to, director fees, stock options,
stock awards and other similar grants and honoraria).
(d) The Executive will perform his duties diligently and competently
and shall act in conformity with Company's written policies of general
application and, to the extent reasonably possible, and within the limits,
budgets and business plans set by the Company (as approved by the Board).
The Executive will at all times during the Employment Term 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 (c)
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 eight hundred thousand dollars ($800,000).
The Board, or such committee of the Board as is responsible for setting the
compensation of senior executive officers of the Company, 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 2001. 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. When used in this Agreement,
the expression "senior executive officers" shall include, without
limitation, the President and Chief Executive Officer of the Company and
the Vice President and Chief Financial Officer of the Company.
(b) Incentive Compensation. The Executive shall be eligible to
participate in any annual performance bonus plans, long-term incentive
plans, equity-based compensation plans and/or other performance bonus,
incentive or 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. On the Effective Date, the Company will
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grant to Executive 750,000 options to purchase the common stock, par value
$.01 per share, of the Company. The terms of the aforesaid 750,000 options
shall be in accordance with those granted to the Chairman of the Board,
President and Chief Executive Officer and Vice President and Chief
Financial Officer of the Company. For the Company's 2000 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,
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 (including, but not limited to, the President and Chief
Executive Officer, and the Vice President and Chief Financial Officer of
the Company).
(d) Business Expenses. The Company shall reimburse the Executive
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for 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. On
the Effective Date, the Company will purchase from the leasing company the
car currently leased by St. Laurent Paperboard Inc. for the benefit of the
Executive and will give the said car to the Executive together with a
gross-up payment to cover any and all taxes and duties, if any,
(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.
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(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. For greater certainty, it is acknowledged that the Executive is
fully vested under the Company"s long-term disability plans.
(i) Restricted Stock Award. On the Effective Date, the Company shall
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issue to the Executive a one-time award of restricted shares (the
"Restricted Shares") of Company stock, equal to $750,000 (such amount to be
calculated based on closing price of the Company's stock on the day prior
to Effective Date), which stock will become vested on the first anniversary
of the Effective Date (the "Vesting Date"), if the Executive remains
continuously employed by the Company until that date. In the event that the
value of the Restricted Shares on the Vesting Date (based on the closing
price of the Company"s common stock on the last trading day immediately
preceding the Vesting Date) is less than $750,000, the Company shall make a
cash payment to the Executive equal to the amount of such shortfall. In the
event that the amount of the excess of the after-tax value of the
Restricted Shares on the Vesting Date over $750,000 (based on the closing
price of the Company"s common stock on the last trading day immediately
preceding the Vesting Date, and assuming a 40% tax rate on the excess value
over $750,000) is greater than $125,000, the Executive shall make a cash
payment to the Company equal to the amount of such excess over $125,000. By
way of example, if the value of the Restricted Shares on the Vesting Date
is $1,000,000, the Executive would make a payment equal to (1,000,000 "
750,000) (1 - .40) " 125,000, or $25,000.
(j) Relocation Benefit. The Company shall reimburse the reasonable
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expenses of the Executive and his family in relocating to the Chicago
metropolitan area from Montreal, Canada, in accordance with the Company's
existing relocation policy, including, without limitation: (i) moving
expenses, (ii) temporary living arrangements, (iii) "home visit" expenses,
(iv) real estate commissions and closing costs on the sale of the
Executive's current residence, and (v) real estate commissions and closing
costs on the purchase of a residence in the Chicago metropolitan area. The
Employee agrees to furnish the Company with substantiation for the moving
expenses he incurs, in accordance with Company policy. The portion of the
moving expenses attributable to the Executive's "qualified moving expenses"
(as such term is defined in Code Section 132) is eligible for exclusion
from the Executive's gross income, and the reimbursement of such expenses
shall not be reported by the Company as taxable income of the Executive.
The reimbursement of any expenses that do not qualify as "qualified moving
expenses" shall be reported as taxable compensation on the Executive's IRS
Form W-2 for the calendar year in which such payment was made and shall be
"grossed-up" for tax purposes pursuant to Company policy.
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5. Payments on Termination of Employment.
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(a) Termination of Employment for any Reason. The following
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payments 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;
(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 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:
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(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 (A) the actual bonus paid for the fiscal year
immediately preceding such termination, (B) the target bonus for the fiscal
year in which such termination occurs, or (C) 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 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: (A)
reimbursement for club dues through the end of the Employment Term; and (B)
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 subparagraph (iii)
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 (including, but not limited to, predecessor companies and
entities) with respect to (A) eligibility, vesting and the amount of
benefits under the Company's executive benefit plans, and (B) 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.
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(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
described in Section 3(a) (except to the extent the Company promotes the
Executive to a higher executive position); (ii) requiring the Executive to
report to other than the Company's President and Chief Executive Officer,
or the Company's Board; (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 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
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in 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
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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.
(ii) Three times the highest of (A) the average annual bonus paid for
the three fiscal years immediately preceding the Executive's employment
termination, (B) the target bonus for the fiscal year in which such
termination of employment occurs, or (C) 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: (A)
reimbursement for club dues for 36 months following the Executive's
employment termination; and (B) reimbursement of expenses relating to
financial planning services and tax return
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preparation through December 31 of the calendar year that includes the
third anniversary of the 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
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.
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(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 (the "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, 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,
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a "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
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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 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.
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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).
(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.
---------------------
(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 (A) any entity that
directly or indirectly, is controlled by the Company, and (B) any
entity in which the Company has a significant equity interest.
(b) Inventions or Developments. The Executive agrees that the
--------------------------
will 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
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<PAGE>
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
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
-----------------------------------------------------------
Developments. The Executive acknowledges that he has had and will have
------------
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
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<PAGE>
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.
(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, to the extent of the damages suffered by
the Company, if any, forfeit his right to all payments and benefits
under Section 5(d) and Section 6 above, except to the extent otherwise
provided by law.
(l) Unenforceability. If any provision(s) of this Section 7
----------------
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.
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<PAGE>
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.
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. 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
150 North Michigan Avenue
Chicago, Illinois 60610
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.
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<PAGE>
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.
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.
21. Dollars. All references to dollars in this Agreement are to United
-------
States dollars.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date first above written.
Smurfit-Stone Container Corporation
/S/ Joseph J. Gurandiano
------------------------
Joseph J. Gurandiano By: /s/ Ray M. Curran
-----------------
Ray M. Curran
Its: President and Chief Executive Officer
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