Exhibit 10.23
Employment Security
Agreement
THIS EMPLOYMENT SECURITY AGREEMENT
is entered into effective as of August 28, 2008, between
SMURFIT-STONE CONTAINER CORPORATION, a Delaware corporation (the
“Company”), and Steven C. Strickland (the
“Executive”);
Witnesseth That:
WHEREAS, Executive is employed by
the Company, and the Company desires to provide protection to
Executive in connection with any change in control of the
Company;
WHEREAS, Executive and the Company
entered into an Employment Security Agreement effective as of
November 15, 2006, and desire to replace such prior agreement
as of the date hereof;
NOW, THEREFORE, it is hereby agreed
by and between the parties, for good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, as
follows:
1.
Payments and Benefits Upon
Employment Termination After a Change in Control
. If within two (2) years
after a Change in Control (all capitalized terms as defined below)
or during the Period Pending a Change in Control,
(i) Executive’s employment with the Company and its
Affiliates is terminated without Cause and for a reason other than
death or Disability, or (ii) Executive voluntarily terminates
such employment with Good Reason, the Company will, within 30 days
(except as otherwise expressly provided) of Executive’s Date
of Termination, make the payments and provide the benefits
described below.
(a)
Cash Payment
. The Company will make a lump
sum cash payment to Executive equal to two times the
Executive’s Annual Compensation.
(b)
Welfare Benefit Plans
. With respect to each Welfare
Benefit Plan, for the period beginning on Executive’s Date of
Termination and ending on the earlier of (i) two years
following Executive’s Date of Termination, or (ii) the
date Executive becomes covered by a welfare benefit plan or program
maintained by an entity other than the Company or an Affiliate that
provides coverage or benefits at least equal, in all respects, to
such Welfare Benefit Plan, Executive will continue to participate
in such Welfare Benefit Plan on the same basis and at the same cost
to Executive as was the case immediately prior to the Change in
Control (or, if more favorable to Executive, as was the case at any
time thereafter), or, if any benefit or coverage cannot be provided
under a Welfare Benefit Plan because of applicable law or
contractual provisions, the Company will provide Executive with
substantially similar benefits and coverage for such period.
The Company and Executive intend that the continued group health
benefit plan coverage period provided under Section 4980B of
the Internal Revenue Code of 1986, as amended (the
“Code”) (so-called “COBRA coverage”) will
be concurrent with the continued coverage period provided for in
the preceding sentence. Executive shall report to the Company
any coverage or benefits actually received by Executive.
(c)
Equity Awards
. All stock options and
restricted stock units granted under the Smurfit-Stone Container
Corporation 2004 Long Term Incentive Plan, and any similar or
successor stock plan or program, will immediately become fully
vested and exercisable upon the Change in Control.
2.
Incentive Plans
. The Company will make a lump
sum cash payment to Executive within 30 days of the end of the year
of a “change in control event” within the meaning of
Reg. 1.109A-3(a)(5)
with respect to any incentive plan
whose performance period has not ended as of a Change in
Control. The Change in Control will be treated as the end of
any performance period that has not ended as of the Change in
Control.
(a)
With respect to the Management
Incentive Plan or any similar or successor plan (the
“MIP”), the Company will pay to Executive an amount
determined by pro rating the financial, strategic and performance
objectives applicable to Executive under the MIP, based on the
number of days in the year prior to the Change in
Control.
(b)
With respect to any long-term
incentive plan maintained by the Company (the “LTIP”)
the Company will pay to Executive an amount determined by pro
rating the financial, strategic and/or performance objectives
applicable to Executive under the LTIP, based on the number of days
in the performance period prior to the Change in
Control.
3.
Change in Control
. 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 conditions is
satisfied:
(a)
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 (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 (i), (ii) and
(iii) of paragraph (c) of this Section will not be a
Change in Control under this paragraph (a); or
(b)
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
(c)
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:
(i) 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, (ii) no Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination)
beneficially
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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 (iii) 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
(d)
Approval by the Company’s
stockholders of a complete liquidation or dissolution of the
Company.
However, in no event will a Change
in Control be deemed to have occurred, with respect to Executive,
if Executive is part of a purchasing group that consummates the
Change in Control transaction. Executive will be deemed
“part of a purchasing group” for purposes of the
preceding sentence if 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 non-employee continuing Directors).
4.
Other Definitions
. For purposes of this
Agreement:
(a)
“Affiliate” shall mean
any entity that is a member of a controlled group of corporations
or a group of trades or businesses under common control (each as
defined in Code Section 1563), which includes the
Company.
(b)
“Amount Payable Under Any
Bonus Plans” shall mean the average of the gross amounts
earned by Executive for the three complete fiscal years prior to
Executive’s Date of Termination (or, if greater, in the
fiscal year prior to the Change in Control) under the MIP, or any
similar bonus plan in which Executive participates before or after
the date of this Agreement. For purposes of the preceding
sentence, if Executive’s number of full fiscal years of
participation in the MIP prior to the Change in Control is less
than three, the amount under this paragraph shall be calculated as
the average of the gross annual amounts earned by Executive over
the number of full fiscal years of Executive’s participation
in the MIP prior to the Change in Control, or the number of full
fiscal years of Executive’s participation in the MIP prior to
Executive’s Date of Termination, whichever produces a higher
average annual amount.
(c)
“Annual Compensation”
shall mean the sum of: (i) Executive’s salary at
the greater of Executive’s salary rate in effect on the date
of (A) the Change in Control, or (B) Executive’s
Date of Termination; and (ii) the Amount Payable Under Any
Bonus Plans in which Executive participates.
(d)
“Employment Termination”
shall mean the effective date of: (i) Executive’s
voluntary termination of employment with the Company or any
Affiliate with Good Reason; or (ii) the termination of
Executive’s employment by the Company or any Affiliate
without Cause. For purposes of this Agreement, Executive has
terminated employment if he has incurred a separation from service
within the meaning of Section 409A of the Code and Treasury
Regulation §1.409A-1(h).
(e)
“Cause” shall
mean: (i) Executive’s fraud or criminal misconduct
that materially injures the financial condition or business
reputation of the Company or any Affiliate; or (ii)
Executive’s willful and continued failure to substantially
perform Executive’s duties with the Company or any Affiliate
(other than any such failure resulting from Executive’s
incapacity due to physical or mental injury or illness or any such
actual or anticipated
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failure after the issuance of a
Notice of Termination for Good Reason by the Executive pursuant to
Section 8(a) hereof) after the Company’s Board of
Directors delivers a written demand for substantial performance to
Executive, which demand specifically identifies the manner in which
the Board believes that Executive has not substantially performed
Executive’s duties. For purposes of clauses
(i) and (ii) of this definition: (x) no act, or
failure to act, on Executive’s part shall be deemed
“willful” unless done, or omitted to be done, by
Executive not in good faith and without reasonable belief that
Executive’s act, or failure to act, was in the best interest
of the Company; and (y) in the event of a dispute concerning
the application of this provision, no claim by the Company that
Cause exists shall be given effect unless the Company establishes
to the Board by clear and convincing evidence that Cause
exists.
(f)
“Disability” shall be
deemed the reason for the termination by the Company of
Executive’s employment, if, as a result of Executive’s
incapacity due to physical or mental illness, Executive has been
absent from the full-time performance of Executive’s duties
with the Company for a period of six (6) consecutive months,
the Company has given Executive a Notice of Termination for
Disability, and, within thirty (30) days after the Company gives
such Notice of Termination, Executive has not returned to the
full-time performance of Executive’s duties.
(g)
“Good Reason” shall
exist if, without Executive’s express written
consent:
(i)
Executive’s assigned duties
and responsibilities are significantly diminished from the level or
extent of such duties and responsibilities prior to the Change in
Control including, without limita
