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Exhibit 12
EMPLOYMENT AGREEMENT
LEONARD VEREBAY
WITH
SHOREWOOD PACKAGING CORPORATION
AGREEMENT made effective as of October 30, 1998, between
Shorewood Packaging Corporation, a Delaware corporation having its principal
executive offices at 277 Park Avenue, New York, N.Y., 10172-0124 (herein called
the "Corporation"), and Leonard Verebay currently residing at 6521 Woodworth
Court, Indianapolis, IN 46237 (herein called the "Executive").
W I T N E S S E T H
The Corporation has acquired the assets of Queens Group, Inc.,
the former employer of the Executive.
The Corporation recognizes that the Executive possesses
extensive knowledge and skill in the business of his former employer and
recognizes that this expertise is essential to an orderly transaction.
This Agreement is intended to provide the Corporation with the
exclusive benefit of the Executive's skill and experience for the term hereof.
Accordingly, the parties desire to and do hereby enter into
this Agreement as of the date first set forth above.
NOW, THEREFORE,
1. EMPLOYMENT
(a) EMPLOYMENT PERIOD. The Corporation agrees to and does hereby
employ the Executive as Executive Vice President of the
Corporation for the period commencing October 30, 1998 and
terminating December 31, 2001, unless earlier terminated
pursuant to Section 6 below (the "Employment Period"), and the
Executive agrees that he shall serve as Executive Vice
President of the Corporation during the Employment Period.
(b) EMPLOYMENT 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
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
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interpreted, and, to the extent not defined therein, as the
same are customarily performed and exercised by an Executive
Vice President of a publicly owned corporation incorporated in
one of the states of the United States of America. If so
elected, the Executive shall, during the Employment Period,
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. Notwithstanding the foregoing, the Corporation
acknowledges that Executive is a stockholder, and serves on
the board of directors, of each of Oliver Trucking Corporation
and Q2 Marketing, Inc. (the "Other Interests") and agrees that
Executive may devote that portion of his business time not
required to be devoted to the business and affairs of the
Corporation as provided above to such Other Interests,
provided that (i) neither such activities nor the time devoted
thereto by Executive interfere with the duties to be performed
by Executive hereunder and (ii) in no event shall Executive
assume an active role in the day-to-day management of Oliver
Trucking Corporation or Q2 Marketing, Inc. As used in this
Agreement, the term "Q2 Marketing, Inc." shall mean Q2
Marketing, Inc. and its successors and assigns.
(c) EMPLOYMENT COMPENSATION. As compensation for the services to
be rendered by the Executive during the Employment Period,
subject to the conditions herein stated, the Corporation
agrees to pay to the Executive all of the following:
(i) BASE SALARY. Beginning October 30, 1998 and until the
expiration of the Employment Period, the Corporation
shall pay to the Executive a base salary (the "Base
Salary") at a minimum rate of $500,000 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 generally. Executive's
Base Salary shall be reviewed annually during the
Employment Period 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.
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(ii) BENEFITS. During the Employment Period, the Executive
shall be entitled to participate in any life
insurance, pension, stock, bonus, profit sharing,
accident and health insurance, hospitalization,
vacation 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 automobile insurance,
maintenance and gasoline expenses.
2. CONSULTING SERVICES.
(a) CONSULTING PERIOD. If the Executive's employment is not
terminated prior to the natural expiration of the Employment
Period pursuant to Section 6 hereof, the Corporation agrees to
engage the Executive as a consultant for the period commencing
on December 31, 2001 and terminating on December 31, 2006,
unless earlier terminated pursuant to Section 6 below (the
"Consulting Period") and the Executive agrees to serve as a
consultant to the Corporation during the Consulting Period.
(b) CONSULTING DUTIES. During the Consulting Period, Executive
shall provide general advisory and strategic services at the
direction of and to the Corporation and perform such other
duties as the Chief Executive Officer of the Corporation shall
from time to time request. Executive shall devote such time,
attention, skill, energy and efforts as may be necessary for
the faithful performance of his consulting obligations
hereunder during the Consulting Period, subject to a maximum
commitment of six (6) business days per year (prorated in
respect of lesser periods), and such consulting obligations
may be rendered by telephone.
(c) CONSULTING FEES. For all services rendered by the Executive
during the Consulting Period, the Corporation shall pay
Executive Ten Thousand Dollars ($10,000) per annum, payable
weekly or biweekly in the Corporation's sole discretion.
Additionally, Executive shall participate in the Corporation's
group family medical insurance plan on the same basis as other
plan participants, if and to the extent the Executive is then
eligible to participate in accordance with the provisions of
such plan, and shall also be furnished with an automobile
lease allowance of $1,000 per month during the Consulting
Period plus reimbursement for reasonable automobile insurance,
maintenance and gasoline expenses.
(d) NATURE OF RELATIONSHIP. The parties hereto acknowledge and
agree that this Agreement, in and of itself, is not intended
to create an employer/employee relationship between the
Corporation and the Executive during the Consulting Period.
During the Consulting Period, Executive shall not, solely as a
result of
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this Agreement, be considered an employee of the
Corporation and shall not, solely as a result of this
Agreement, be entitled to participate in any plans,
arrangements, or distributions by the Corporation pertaining
to or in connection with any pension, stock, bonus,
profit-sharing or similar benefits for its regular employees
and shall have no right or authority, without the express
written consent of the Corporation, to bind or act on behalf
of the Corporation with respect to any matter whatsoever. The
Executive shall be responsible for all taxes related to his
service as a consultant hereunder.
3. RELOCATION. The Executive shall not be required to relocate his current
place of employment in Indiana. The Executive acknowledges, however,
that significant domestic and international travel may be required as
part of his duties hereunder and the Executive agrees to undertake such
travel as may be reasonably required by the business of the Corporation
from time to time.
4. REIMBURSEMENT FOR EXPENSES. The Executive shall be reimbursed by the
Corporation for all reasonable traveling and other expenses actually
and properly incurred and documented by the Executive in connection
with his duties during the Employment Period and the Consulting Period.
For all such expenses, the Executive shall furnish to the Corporation
statements and vouchers to the reasonable satisfaction of the
Corporation.
5. COMPLETE PAYMENT. 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. 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 Sections 1(c)(ii) and 2(c) hereof.
Notwithstanding the foregoing, Executive expressly reserves any rights
he may have at law, equity or otherwise in the event that his
employment or his consulting engagement by the Corporation is
terminated in contravention of this Agreement.
6. EARLY TERMINATION.
(a) TERM. This Agreement shall commence on the date first written
above and shall continue until the eight year anniversary of
such date (the "Term").
(b) TERMINATION. If prior to the expiration of the Term (a) the
Executive fails because of Disability (defined below) to
perform services of the character contemplated by Section 1(b)
above during the Employment Period or the services
contemplated in Section 2(b) above during the Consulting
Period; or (b) if the Corporation's Board of Directors
determines that, during the Employment Period or the
Consulting Period, the Executive has been grossly negligent in
the performance of his duties, has willfully neglected his
duties, has been dishonest with respect to the business of the
Corporation or has been
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convicted of any misdemeanor relating to the business of the
Corporation or any felony, has willfully disobeyed the
Corporation's rules, instructions or orders or has breached in
any material respect any of his covenants herein contained
(any such conduct, to be referred to as "Objectionable
Conduct"); then, the Corporation may by written "Notice of
Termination" (defined below) specifying the Objectionable
Conduct terminate Executive's employment or consulting
engagement, as the case may be, unless the Objectionable
Conduct is capable of being cured and is cured by the
Executive to the reasonable satisfaction of the Corporation
within twenty (20) days of the Corporation's delivery of the
Notice of Termination. In addition, Executive's employment or
consulting engagement, as the case may be, shall terminate
immediately upon the death of Executive. Further, upon thirty
(30) days written notice to the Corporation, Executive may
terminate his employment or consulting engagement, as the case
may be, at any time within ninety (90) days after the
occurrence of a Capital Transaction (as defined below) or any
Change of Control (as defined below). Upon any termination of
the Executive's employment under this Section 6, 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" (defined below) and any
termination of the Executive's consulting engagement pursuant
to this Section 6 shall be deemed effective as of the "Date of
Termination." Upon any termination of the Executive's
employment or consulting engagement under this Section 6, the
Executive shall be entitled to receive solely all amounts and
benefits to be paid or provided by the Corporation under
Section 1(c) above, in the case of termination of his
employment, and Section 2(c) above, in the case of termination
of his consulting engagement, up to the Date of Termination.
(c) DEFINITIONS. For purposes of this Agreement:
(i) "Date of Termination" shall mean, (x) in respect of
any termination of Executive's employment or
consulting engagement by reason of death, the date of
death, (y) in respect of any termination of
Executive's employment by reason of Disability,
thirty (30) days after the Notice of Termination is
given to Executive (provided that Executive shall not
have returned to the full performance of his
applicable duties during such thirty (30) day period)
and (z) in respect of any termination of Executive's
employment or consulting engagement by reason of
Objectionable Conduct, immediately upon the
Corporation's delivery of the Notice of Termination
to Executive, unless such Objectionable Conduct is
capable of being cured in which case "Date of
Termination" shall mean twenty (20) days after the
Corporation's delivery of the Notice of Termination
to Executive (provided Executive has not cured the
Objectionable Conduct within such twenty (20) day
period).
(ii) "Disability" shall mean that, as a result of the
Executive's incapacity due to physical or mental
illness, the Executive is unable to substantially
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perform his duties (as described in Sections 1(b) and
2(b) hereof, as applicable) 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 substantial
performance of his duties (as described in Sections
1(b) and 2(b) hereof, as applicable). 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 whose approval shall not be unreasonably
withheld. The written determination of such physician
shall be final and conclusive for purposes of this
Agreement.
(iii) "Notice of Termination" shall mean a notice given by
the Corporation to Executive which shall indicate the
specific basis for termination and shall set forth in
reasonable detail the facts and circumstances claimed
to provide a basis for determination of any payments
due 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 after the expiration of six (6) months
following the last to occur of the events
constituting the basis for such termination.
(iv) "Capital Transaction" shall mean with respect to the
Corporation the transaction underlying any of the
following events: (i) the stockholders of the
Corporation approve a merger, consolidation or other
combination of the Corporation with any other
company, other than (1) a merger, consolidation or
other combination which would result in the voting
securities of the Corporation outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity) more than
50% of the combined voting power of the voting
securities of the Corporation or such surviving
entity outstanding immediately after such merger,
consolidation or other combination or (2) a merger or
consolidation effected to implement a
recapitalization of the Corporation (or similar
transaction) in which no "person" (as such term is
used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act")) acquires more than 50% of the combined voting
power of the Corporation's then outstanding
securities; or (ii) the stockholders of the
Corporation approve an agreement for the sale or
disposition by the Corporation of all or
substantially all of the Corporation's assets and
properties to any Person (as defined below) which is
not an Affiliate (as defined below) of the
Corporation; or (iii) the stockholders of the
Corporation approve any compulsory share exchange
pursuant to which the Common Stock is converted into
other securities, cash or property of another Person
which is not an Affiliate of the Corporation or (iv)
the Board of Directors of the Corporation approves
any exchange or
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tender offer for outstanding Common Stock by any
Person which is not an Affiliate of the Corporation
if, upon consummation of such exchange or tender
offer, the offeror would become the beneficial owner
of fifty percent (50%) or more of the voting stock of
the Corporation.
(v) "Affiliate" shall mean a Person that directly, or
indirectly through one or more intermediaries,
controls, is controlled by, or is under common
control with, the Person referred to, and in this
definition, "control" means the possession, direct or
indirect, of the power to direct or cause the
direction of the management and policies of a Person,
whether through ownership of securities, by contract,
or otherwise.
(vi) "Person" shall mean a corporation, an association, a
limited liability company, a partnership, an
organization, a business, an individual, a
governmental or political subdivision thereof or a
governmental agency.
(vii) "Change in Control" shall mean (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the
Exchange Act) (other than the Corporation, any
trustee or other fiduciary holding securities under
an employee benefit plan of the Corporation, or any
corporation owned, directly or indirectly, by the
stockholders of the Corporation in substantially the
same proportion as their ownership of stock of the
Corporation), 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 40% or more of the combined
voting power of the Corporation's then outstanding
securities without the approval of the Board of
Directors of the Corporation; (ii) during any period
of two consecutive years, individuals who at the
beginning of such period constitute the Board, and
any new director whose election by the Board or
nomination for election by the Corporation's
stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of
the period or whose election or nomination for
election was previously so approved cease for any
reason to constitute at least a majority thereof, or
(iii) if Marc Shore, together with his immediate
family members and all Affiliates of Marc Shore
and/or his immediate family members, either
individually or acting as a group, cease to own at
least 15% of the outstanding Common Stock of the
Corporation.
7. EXECUTIVE COVENANTS.
(a) NOTICE OF CREATION. Executive will both during and after the
Employment Period promptly and fully disclose to the
Corporation any and all inventions, discoveries, improvements,
ideas, devices, designs, models, prototypes, processes,
compositions, know-how, information, works (including computer
programs and written and graphics materials), mask works and
data, whether of a business,
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technical or other nature and whether or not protectable under
U.S. or foreign patent, copyright, trade secret or other law
(collectively, "Works"), that concern or relate directly to
Competitive Activities (as defined in Section 7(d) below) and
that are first conceived, reduced to practice, fixed in a
tangible medium of expression or are otherwise made by
Executive solely or jointly with others during the Employment
Period, whether during regular business hours or otherwise
(the "Intellectual Property"). Notwithstanding the foregoing,
Executive shall have the right to maintain his ownership
interest in and serve on the board of Q2 Marketing, Inc. and,
through Q2 Marketing, Inc., continue his involvement in the
development and licensing of the "Q-Pack" patent and related
trademark, copyright and other related intellectual property
rights (subject in all respects to the provisions of the last
two sentences of Section 1(b) hereof).
(b) OWNERSHIP OF INTELLECTUAL PROPERTY. Upon its respective
conception, reduction to practice, fixation in a tangible of
expression or other making, an item of Intellectual Property
and all worldwide right, title and interest in and to that
Intellectual Property, including all common law, statutory,
treaty and convention rights, including the right to sue for
all past, present and future infringement, shall immediately
become and forever remain the property of the Corporation
without any further act or deed being required and without any
additional consideration from the Corporation to Executive,
and Executive hereby irrevocably assigns to the Corporation,
and the Corporation hereby accepts, all such Intellectual
Property and all such worldwide right, title and interest. The
Executive hereby waives and agrees not to assert any moral
rights or similar rights under the laws of any jurisdiction
with respect to any Intellectual Property. Notwithstanding the
foregoing, Executive shall have the right to maintain his
ownership interest in and serve on the board of Q2 Marketing,
Inc. and, through Q2 Marketing, Inc., continue his involvement
in the development and licensing of the "Q-Pack" patent and
related trademark, copyright and other related intellectual
property rights (subject in all respects to the provisions of
the last two sentences of Section 1(b) hereof).
(c) FURTHER ASSURANCES. Executive will from time to time, both
during and after the Term, upon the request and at the expense
of the Corporation, but without further consideration from the
Corporation, (a) make application through the attorneys for
the Corporation for Letters Patent, utility models, copyright
registrations and other forms of intellectual property
protection for and on the Intellectual Property in the United
States and in countries foreign thereto, (b) cooperate with
the attorneys in the prosecution, maintenance, reissue,
renewal, extension and defense of, and suit upon, all such
applications and resulting Letters Patent, utility models,
copyright registrations and other forms of intellectual
property protection, and (c) do and perform all acts,
including executing documents, believed by the attorneys to be
necessary or desirable in furtherance of the foregoing and for
assigning and perfecting all right, title and interest in and
to the Intellectual Property in the Corporation or its
successors or assigns, including
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executing applications and assignment documents. All decisions
concerning such applications and resulting Letters Patent,
utility models, copyright registrations and other forms of
intellectual property protection, including all decisions
concerning their filing, prosecution, maintenance, reissue,
renewal, extension, defense and suits upon them, shall be
solely those of the Corporation, and Executive shall have no
claim or cause of action against the Corporation arising out
of or concerning any such decisions or the results of those
decisions. Notwithstanding the foregoing, Executive shall have
the right to maintain his ownership interest in and serve on
the board of Q2 Marketing, Inc. and, through Q2 Marketing,
Inc., continue his involvement in the development and
licensing of the "Q-Pack" patent and related trademark,
copyright and other related intellectual property rights
(subject in all respects to the provisions of the last two
sentences of Section 1(b) hereof).
(d) NON-COMPETITION. In order to induce the Corporation to enter
into this Agreement, the Executive hereby expressly covenants
and agrees that he shall not, without the express written
consent of the Corporation, for his own account or jointly
with any other person, for the Term, for any reason (a)
participate in, engage in or be connected in any way with,
directly or indirectly, as a proprietor, contractor, employee,
principal, partner, officer, stockholder, member, advisor,
consultant, agent or licensor (whether paid or unpaid),
Competitive Activities (as defined below) anywhere in the
world in which the Corporation conducts business, (b) directly
or indirectly, own, manage, operate, join, control, loan money
to, invest in, or otherwise participate in, or be connected
with, or become or act as an officer, employee, consultant,
representative or agent of any Competitor (defined below), or
(c) intervene in or interfere with any relationships between
the Corporation and its vendors or customers or prospective
customers or disrupt its customer markets, anywhere in the
world in which the Corporation conducts business.
Notwithstanding the foregoing, the Executive may at any time
own, solely as a passive investor, securities of any entity,
whether or not in competition with the Corporation, if (a)
such securities are publicly traded on a nationally-recognized
stock exchange or on NASDAQ, and (b) the aggregate holdings of
such securities by the Executive and his immediate family do
not exceed one percent (1%) of the voting power or one percent
(1%) of the capital stock of such entity. As used herein,
"Competitive Activities" means the development, sale or
resale, licensing or sublicensing, distribution or
redistribution, or other commercial exploitation, of packaging
products, "Competitor" means any Person whose principal
business consists of Competitive Activities, or any
combination thereof. Notwithstanding the foregoing, nothing
contained in this Section 7(d) shall be deemed to prohibit
Executive from (i) maintaining an ownership interest in,
serving on the board of directors of or participating in the
operations of, Oliver Trucking Corporation, provided that the
business activities of Oliver Trucking Corporation are limited
solely to trucking brokerage and warehousing and other
activities not constituting Competitive Activities, or (ii)
maintaining an ownership interest in or serving on the board
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Q2 Marketing, Inc. or, through Q2 Marketing, Inc.,
participating in the development and licensing of, the
"Q-Pack" patent and related trademark, copyright and other
related intellectual property rights; provided, further, that
any such activities described in clauses (i) and (ii) above
are in strict compliance with the last two sentences of
Section 1(b) hereof, or from maintaining an ownership interest
in and conveying or leasing the property located at 620 South
Belmont Avenue, Indianapolis, Indiana.
(e) REASONABLENESS OF RESTRICTIONS. The Executive acknowledges and
agrees that the covenants contained herein with respect to
non-competition are reasonable in scope, geographic
application and duration, in view of the economic bargain
contained herein. The Executive represents and warrants to the
Corporation that, notwithstanding any termination of his
employment or consulting engagement prior to the expiration of
the Term pursuant to Section 6, his experience, background and
skills are such that he is able to obtain consulting projects
on reasonable terms and conditions without violation of the
restrictive covenant contained herein with respect to
non-competition; and that such covenant does not and will not
pose any undue hardship to the Executive.
(f) TANGIBLE THINGS. Executive covenants and agrees that (i) all
tangible things, including confidential memoranda, notes,
notebooks, drawings, lists (including, without limitation,
mailing and customer lists), records and other confidential
documents (and all copies thereof), made or compiled by
Executive during the Employment Period or made available to
Executive concerning the Corporation's business shall be the
property of the Corporation, and (ii) if such tangible things
are in the possession or control of Executive, Executive shall
deliver them to the Corporation promptly following the
Consulting Period or at any other time upon request of the
Corporation.
(g) NO IMPROPER DISCLOSURE. Executive represents and warrants that
Executive has not disclosed, and will not disclose, to the
Corporation any information, whether confidential, proprietary
or otherwise, that the Executive possesses and that Executive
is not legally free to disclose. Executive further agrees to
defend, indemnify and hold harmless the Corporation against
all claims, demands, losses, damages or expenses, including
attorneys' fees, suffered or incurred as a result of any
violation of the representations contained in this clause (g).
(h) NO EMPLOYEE SOLICITATION. The Executive hereby agrees that
during the Term, he shall not, directly or indirectly, for his
own account or jointly with another, or for or on behalf of
any entity, as principal, agent or otherwise, solicit, induce
or hire or in any manner attempt to solicit, induce or hire
any person employed by the Corporation or any of its
affiliates to leave such employment, whether or not such
employment is pursuant to a written contract with the
Corporation or otherwise; provided, however, that Executive
shall not be in breach of this provision unless the person so
solicited or induced is hired by Executive or any of
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his Affiliates or any entity on whose behalf Executive
solicited or induced such person within six (6) months after
the last act constituting such solicitation or inducement but
only if such solicitation or inducement did not include any
future commitment to employ the person so solicited or induced
by Executive or any individual or entity on whose behalf
Executive made such solicitation or inducement.
(i) TRADE SECRETS. Executive acknowledges that Executive's work
for the Corporation is expected to bring Executive into close
contact with various confidential technical and research data,
confidential business data and other information of the
Corporation not readily available to the public. The Executive
expressly covenants and agrees that he will not at any time,
whether during or after the Term, directly or indirectly, on
any basis for any reason, use or permit third parties within
his control, the use of any trade secrets, confidential
information or proprietary information of, or relating to, the
Corporation, or any affiliate of the Corporation (including,
without limitation, data and other information relating to any
of the Corporation's processes, apparatus, products, software,
packages, programs, trends in research, product development
techniques or plans, research and development programs and
plans or any Works and all secrets, customer lists, lists of
employees, sales representatives and their territories,
mailing lists, details of consultant contracts, pricing
policies, operational methods, marketing plans or strategies,
business acquisition plans, new personnel acquisition plans,
designs and design projects and other confidential business
affairs concerning the Corporation and the Corporation's
business), in connection with any activity or business,
whether for his own account or otherwise, and will not divulge
such trade secrets, confidential information or proprietary
information to any person, firm, corporation or other entity
whatsoever. The Executive shall not be prohibited from
divulging information deemed to be trade secret or
confidential or proprietary information of the Corporation:
(i) if and to the extent that disclosure of any such
information is pursuant to appropriate safeguards on
confidentiality and (x) necessary and appropriate in
connection with the submission of bids by the Corporation in
the ordinary course of business or (y) required pursuant to
the Corporation's marketing efforts directed to specific
clients or bona fide prospective clients or the provision of
services to existing clients in the ordinary course of
business or (z) is made to other employees of the Corporation
or independent contractors thereof in the ordinary course of
the Corporation's business, (ii) if the specific item of
information becomes generally available to the public without
violation of this Agreement or any other confidentiality
agreement among the Executive and the Corporation or any other
confidentiality agreement to which the Executive is a party,
or (iii) if such disclosure is compelled by law, in which
event the Executive agrees to give the Corporation prior
written notice of any disclosure to be made pursuant to this
Subsection (iii), and the Executive, at the Corporation's
expense, shall cooperate fully with the Corporation to obtain
protective orders, confidential treatment or other such
protective action as may be available to preserve the
confidentiality of the information required to be disclosed.
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(j) 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 this Section 7
of this Agreement, 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 which are prohibited by
this Agreement for any other person, firm or corporation. If
the Executive violates any provision of this Section 7, the
time period set forth herein with respect to such provision,
if any, shall be extended, until one year after the date of
entry of final judgment enforcing such provision and the time
for appeal has lapsed. If Executive is held by a court of
competent jurisdiction to have breached this Agreement,
Executive shall be liable for any actual and reasonable
attorneys' fees and costs incurred by the Corporation in
enforcing its rights hereunder.
(k) ENFORCEMENT. It is hereby expressly agreed by the Corporation
and the Executive that if any portion of the restrictive
covenants and provisions set forth in this Section 7 is held
to be unreasonable, arbitrary, against public policy or
otherwise unenforceable for any reason, then each such
covenant or provision shall be considered divisible as to
scope, time and geographical area, with each month of a
specified period being deemed a separate period of time and
each county within any geographical area being deemed a
separate geographic area. The parties hereto expressly agree
that notwithstanding their mutual expectation that the
covenants and restrictions contained herein will be
enforceable and enforced, a lesser scope, period of time or
geographic area shall be enforced to the extent that the
covenants contained herein may be unenforceable as written.
The Corporation and the Executive also agree that in the event
that any court of competent jurisdiction determines a portion
of the restrictive covenants contained herein to be
non-enforceable, such determination by such court shall be
deemed to have applicability only within the jurisdiction in
which such court is located and shall not be deemed to be
effective in any other jurisdiction. The existence of any
claim or cause of action by the Executive against the
Corporation, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement
by the Corporation of the restrictive covenants contained in
this Section 7.
(l) COVENANTS NON-EXCLUSIVE. The Executive acknowledges and agrees
that the covenants contained in this Section 7 shall not be
deemed exclusive of any common law rights of the Corporation
in connection with the relationships contemplated hereby; and
that the Corporation shall have any and all rights as
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may be provided by law in connection with the relationships
contemplated hereby. The provisions of this Section 7 shall
survive any expiration of the Term or Executive's employment
or consulting engagement hereunder in accordance with their
respective terms.
8. SEVERABILITY. The invalidity or unenforceability of any provision 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.
9. 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 (with a copy
to Rubin Baum Levin Constant & Friedman, 30 Rockefeller Plaza, New
York, New York 10112, Attention: Paul A. Gajer) 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.
10. 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.
11. 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
12. GOVERNING LAW. This Agreement shall be subject to, and governed by, the
laws of the State of New York.
13. CONSENT TO JURISDICTION. The parties hereby each agree that the
non-exclusive forum for resolving any litigation, action or claim by
any party against any other shall be a state or federal court located
in the County of New York, New York, United States, or any federal
court located within the Eastern District of New York or the Southern
District of New York (any of such, a "Designated U.S. Court"). In
addition, the parties each hereby consent to personal jurisdiction and
venue of any Designated U.S. Court with respect to any action brought
by the other party as provided herein.
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14. 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 nor any rights or obligations of the Executive
hereunder shall be transferable or assignable by the Executive;
provided, however, that this Agreement shall inure to the benefit of
and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while
any amounts would still be payable to the Executive hereunder if he had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee or other designee or, if there be no such
designee, to the Executive's estate.
15. WAIVER OF RIGHT TO TRIAL BY JURY. EXECUTIVE HEREBY AGREES NOT TO ELECT
A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL
NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT OR ANY CLAIM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION HEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY
EXECUTIVE, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND
EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE. THE CORPORATION IS HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY
EXECUTIVE.
IN WITNESS WHEREOF, the parties hereto have duly signed this
Agreement in duplicate original as of the 30th of October 1998, effective as of
October 30, 1998.
SHOREWOOD PACKAGING CORPORATION
By:
-----------------------------
Name:
Title:
--------------------------------
Leonard Verebay
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