EMPLOYMENT AGREEMENT
BETWEEN
XXXXXX X. XXXX
AND
CHECKPOINT SYSTEMS, INC.
THIS AGREEMENT is made as of the 18th day of
August, 2000, by and between CHECKPOINT SYSTEMS, INC. a
Pennsylvania corporation ("CSI"), and XXXXXX X. XXXX
("Executive").
BACKGROUND
CSI is involved in providing integrated security
and safety solutions for retail, industrial and
institutional applications worldwide, both directly and
through its affiliates.
Executive has agreed to accept employment with
CSI as its Vice President, Corporate Controller and Chief
Accounting Officer and has agreed to furnish his skills to
CSI and fulfill the duties of the aforementioned position
as outlined in Exhibit "A", attached hereto and made a part
hereof, on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises
and the mutual promises and covenants contained herein, and
intending to be legally bound hereby, the parties hereto
agree as follows:
1. Employment and Term.
CSI hereby employs Executive as its Vice
President - Corporate Controller and Chief Accounting
Officer. Executive agrees to serve CSI in such capacity,
subject to the terms and conditions of this Agreement, for
a term of two (2) calendar years, commencing on the date
hereof (the "Term").
2. Duties.
A. During the Term, Executive shall use
his best efforts to perform all duties required in
furtherance of his position as outlined in Exhibit "A" or
as are assigned to him from time to time by the Chief
Financial Officer of CSI.
B. Executive shall diligently and
faithfully devote his entire time, energy, skill, and best
efforts to perform his duties under this Agreement.
Executive shall conduct himself at all times so as to
advance the best interests of CSI, and shall not undertake
or engage in any other business activity or continue or
assume any other business affiliations which conflict or
interfere with the performance of his services hereunder
without the prior written consent of the Chief Financial
Officer of CSI.
3. Compensation.
CSI shall pay Executive and Executive shall
accept, as his base compensation for all services rendered
to CSI pursuant hereto:
A. During the Term, an annual base salary
of $145,000. (the "Base Salary"), payable at regular
intervals in accordance with CSI's normal payroll practice,
which Base Salary shall be adjusted as of January 1st
during the Term hereof, effective as of the aforesaid date.
The amount of such adjustment, while in the discretion of
the Chief Executive Officer and the Board of Directors,
shall reflect Executive's performance; and
B. In addition to the Base Salary payable
to Executive under Subsection 3A above, upon achieving the
certain goals and objectives as defined in CSI's Bonus Pool
Plan, attached hereto as Exhibit B, an incentive bonus
("Bonus") shall be paid for each year of the Term in
accordance with the terms of said Bonus Pool Plan, which
Bonus Pool Plan may be amended or revoked by CSI at any
time during the term hereof.
4. Fringe Benefits and Other Compensation.
A. During the Term, Executive shall be
entitled to participate in and receive the program of
executive fringe benefits, subject only to Executive's
meeting or satisfying the eligibility requirements and
standards therefor with regard to health, life and
disability insurance benefits. Said program of executive
fringe benefits may be amended or revoked by CSI at any
time during the term hereof.
5. Termination.
A. Executive's employment and rights to
compensation hereunder shall terminate immediately if
Executive voluntarily leaves the employment of CSI, except
that CSI shall have the obligation to pay Executive such
portion of his Base Salary provided for in Subsection 3A
hereof as may be accrued but unpaid (including vacation
pay) on the date Executive voluntarily leaves the
employment of CSI. Executive shall have no right to
receive any Bonus payments that have accrued and are
payable if Executive voluntarily leaves the employment of
CSI, it being the understanding of the parties that in this
event, the amount and payment of any accrued Bonus shall be
in the sole discretion of the Board of Directors of CSI.
In the event that Executive voluntarily leaves the
employment of CSI, he shall provide at least thirty (30)
days written notice.
B. CSI may upon written notice to
Executive giving the reasons therefor terminate Executive's
employment and his rights to compensation hereunder for
cause. As used herein, the term "cause" shall include and
be limited to, the following: conviction of Executive for
any felony, fraud or embezzlement or crime of moral
turpitude; being held liable by a court of competent
jurisdiction for sexual harassment in violation of
applicable federal, state or local laws; controlled
substance abuse, alcoholism or drug addiction which
interferes with or affects Executive's responsibilities to
CSI or which reflects negatively upon the integrity or
reputation of CSI; or Executive's breach of any of the
material covenants contained in this Agreement which breach
is not cured within ten (10) days of the receipt of written
notice thereof by Executive. If Executive is terminated
for cause as provided above, Executive's employment and
rights to compensation hereunder shall terminate
immediately upon receipt of written notice except that CSI
shall have the obligation to pay Executive such portion of
his Base Salary as may be accrued but unpaid on the date
his employment is terminated. Executive shall have no
right to receive any Bonus payments that have accrued and
are payable if Executive is terminated for cause as
provided above.
C. If Executive is terminated by CSI
during the Term hereof, for reasons other than those
provided in Subsections 5A or 5B above, and provided that
Executive is not in violation of the provisions of Section
6 hereof, Executive shall be entitled to receive severance
pay for a period of twelve (12) months thereafter
consisting of payment of one hundred percent (100%) of
Executive's monthly Base Salary payable at regular
intervals in accordance with CSI's normal payroll
practices, as well as any Bonus payments that are accrued
and payable through the date of such termination, and
continuation of health insurance benefits contemporaneous
with the severance pay.
D. Executive shall not be considered to
have voluntarily left his employment within the meaning of
Section 5A if he leaves for any of the following reasons:
(i) The assignment of the Executive to
any duties substantially inconsistent with his position,
duties, responsibilities or status with CSI as defined
herein or a substantial reduction of the aforesaid duties
or responsibilities;
(ii) In the event of a "Change in
Control" as defined herein, any failure of CSI to obtain
the assumption of the obligation to perform this Agreement
as contemplated. For purposes of this Agreement, a "Change
in Control" of CSI shall be deemed to have occurred if (a)
any person or entity or group thereof acting in concert (an
" Acquirer") acquires from the shareholders of CSI (whether
through a merger, a consolidation, or otherwise) and
possesses, directly or indirectly, the power to elect or
appoint or approve the appointment of a majority of the
Board of Directors and does, in fact, elect or appoint or
approve the appointment of the majority of the Board; or
(b) such Acquirer obtains the right or power to elect a
substitute or replacement Board, and does, in fact,
exercise such right; or (c) the shareholders of CSI approve
an agreement for the sale or disposition by CSI of all or
substantially all of CSI's assets to an Acquirer;
E. No later than six (6) months prior to
the end of the Term of this Agreement, CSI and Executive
shall commence negotiations for either an extension of Term
or the entering into of a new agreement. In the event that
the parties are unable to agree upon an extension or new
agreement, and Executive leaves the employ of CSI,
Executive shall be entitled to receive severance pay equal
to his Base Salary at the end of the Term, for a period of
twelve (12) months from the date he leaves the employ of
CSI. If Executive is employed for the full calendar year,
and employment is terminated for any reason, other than
cause as defined in Section 5B, Executive shall be entitled
to receive payment from the Bonus Plan, even if such
payment is payable after Executive's employment has ceased.
F. If Executive is terminated by CSI during
the Term hereof, for reasons other than those provided in
Subsections 5A or 5B above, or if this Agreement is not
renewed, CSI shall provide Executive outplacement
consulting services comparable to those received by senior
officials of similar organizations.
G. If Executive becomes unable to perform
his duties hereunder due to partial or total disability or
incapacity resulting from a mental or physical illness,
injury or any similar cause, CSI will continue the payment
of Executive's total compensation at his then current rate
for a period of six (6) months following the date Executive
is first unable to perform his duties due to such
disability or incapacity. Thereafter, CSI shall have no
obligation for the Base Salary or other compensation
payments to Executive during the continuance of such
disability or incapacity, except that CSI shall pay to
Executive, based upon the portion of the calendar year that
Executive was able to perform his duties prior to the
disability, the pro rata portion of the Bonus that
Executive would have earned if he had remained in the
employ of CSI for the full calendar year (payable at such
time that Executive would have received such Bonus).
Executive shall receive CSI's standard disability coverage.
H. If Executive dies, all payments
hereunder shall continue for a period of two (2) months
after the end of the week in which Executive's death shall
occur, at which point such payments shall cease and CSI
shall have no further obligations or liabilities hereunder
to Executive's estate or legal representative or otherwise,
except that CSI shall pay to Executive's estate or legal
representation, based upon the portion of the calendar year
that Executive was employed by CSI prior to his death, the
prorated portion of the Bonus Executive would have earned
if he had remained in the employ of CSI for the full
calendar year (payable at such time that Executive would
have received such Bonus).
I. CSI's obligation to make payments
hereunder is purely contractual and a general obligation of
CSI and the amounts payable hereunder shall not be held by
CSI in a trust or segregated fund for Employee nor shall
Employee have any right against CSI or any director,
officer or employee of CSI, in respect of any payment
hereunder other than as a general creditor of CSI.
J. Upon termination of employment, all
vested stock options granted under the CSI Stock Option
Plan (1992) will be treated in accordance with the terms of
the CSI Stock Option Plan (1992).
6. Confidentiality and Covenant Not to Compete.
A. Executive covenants and agrees that he
will at all times keep confidential and will not at any
time, except with the prior written consent of CSI,
directly or indirectly, communicate or disclose or use for
his benefit or the benefit of any Person (as defined in
subsection 9E hereof) except CSI, any trade secrets or
confidential or proprietary information of CSI or any of
its affiliates including, but not limited to, strategic
planning documents, data, reports, records, plans,
policies, applications, and other documents, and Executive
will also use his best efforts to prevent unauthorized
disclosure by others.
B. Executive agrees not to compete with CSI
in any manner whatsoever, as an employee, shareholder,
director, creditor, joint venturer, consultant, or
otherwise, or any currently existing or hereinafter created
subsidiary, joint venture, or business line of CSI, at any
time during this Agreement, and for a period of two years
following the date of termination of employment in the area
constituting the United States, Puerto Rico and Europe.
C. The parties agree that any breach by
Executive of the covenants contained in this Section 6 will
result in irreparable injury to CSI for which money damages
could not adequately compensate CSI, and therefore, in the
event of any such breach, CSI shall be entitled (in
addition to any other rights and remedies which it may have
at law or in equity) to have an injunction issued by any
competent court of equity enjoining and restraining
Executive and/or any other Person involved therein from
continuing such breach. The covenants contained in this
Section 6 are independent of all other covenants between
Executive and CSI.
D. If any portion of the covenants or
agreements contained herein, or the application thereof, is
construed to be invalid or unenforceable, then the other
portions of such covenant(s) or agreement(s) or the
application thereof shall not be affected and shall be
given full force and effect without regard to the invalid
or unenforceable portions.
E. All information, lists, data, reports,
records, plans, policies, applications, and other papers,
articles, and materials of any kind relating to CSI's
business and obtained by Executive in the course of his
association with CSI, whether developed by him or not,
shall be and remain CSI's property and will be returned to
CSI along with any and all copies thereof, at such time as
Executive ceases to be an employee of CSI.
7. Conflict of Interest.
A. Executive represents and warrants that
he is not subject to any restrictions or prohibitions
whatsoever, and has no interest whatsoever, contractual or
otherwise, which would in any way prevent, restrict or
interfere with his right and/or ability to enter into this
Agreement and perform hereunder, or which would create a
conflict of interest for him or for CSI.
B. Executive covenants that, during the
Term, he will disclose to CSI, in writing, any and all
interests he may have, whether for profit or compensation
or not, in any venture or activity which could interfere
with his ability to perform under this Agreement or create
a conflict of interest for him or for CSI.
8. Notices.
All notices, requests, demands and other
communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand or
mailed, certified or registered mail, return receipt
requested, with postage prepaid, at the following addresses
or to such other address as either party may designate by
like notice:
A. If to Executive, to:
XXXXXX X. XXXX
X. If to CSI, to:
Checkpoint Systems, Inc.
000 Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Chairman of the Board of
Directors
C. In all cases, copies to:
Stradley, Ronon, Xxxxxxx & Xxxxx
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esquire
9. Additional Provisions.
A. This Agreement shall inure to the
benefit of and be binding upon CSI and its successors and
assigns and Executive, his heirs, executors, administrators
and legal representatives.
B. This Agreement constitutes the entire
agreement between the parties with respect to the subject
matter hereof, and cannot be changed or terminated orally.
This Agreement supersedes all prior and contemporaneous
written or oral agreements between the parties relating to
the subject matter hereof. No modification or waiver of
any of the provisions hereof shall be effective unless in
writing and signed by the party against whom it is sought
to be enforced.
C. If any provision of this Agreement
shall be or shall become illegal or unenforceable in whole
or in part, for any reason whatsoever, the remaining
provisions shall nevertheless be deemed valid, binding and
subsisting.
D. No failure on the part of any party
hereto to exercise and no delay in exercising any right,
power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any
right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other
right, power or remedy.
E. "Person" as used herein shall mean a
natural person, joint venture, corporation, partnership,
trust, estate, sole proprietorship, governmental agency or
authority or other juridical entity.
F. This is a personal service contract and
may not be assigned by Executive. This Agreement may not
be assigned by CSI to any affiliate of CSI which accedes to
or otherwise carries on the business of CSI, whether by
merger, liquidation, consolidation or otherwise, unless the
duties and responsibilities of Executive remain
substantially unchanged after such assignment.
G. The headings of the several sections of
this Agreement have been inserted for convenience of
reference only and shall in no way restrict or modify any
of the terms or provisions hereof.
H. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the
State of New Jersey, without regard to its conflicts of
laws principles. Subject to the provisions of Subsection
6C hereof, all unresolved claims, demands or disputes
between Executive and CSI arising out of or relating to
this Agreement, or the parties' respective performances
hereunder, shall be subject to binding arbitration in the
local Chapter in Philadelphia, Pennsylvania pursuant to the
Rules of the American Arbitration Association. The
prevailing party shall be entitled to reimbursement for all
costs, including reasonable attorneys' fees, associated
with such arbitration.
I. To the extent not covered in the above
provisions, the items covered in the attached letter dated
May 18, 2000 are incorporated herein, with the exception of
the last sentence of the first paragraph on page two of the
letter, which has been replaced by the severance provisions
above, provided however, in the event the Employee
voluntary resigns, and would otherwise not be entitled to
severance pay as described in this Agreement, then in such
case, Employee shall be paid in accordance with the last
sentence of the first paragraph on Page two of the May 18
letter.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed on the date first above written.
ATTEST: CHECKPOINT SYSTEMS, INC.
______________ ______________________
WITNESS:
______________ ____________________
XXXXXX X. XXXX
EXHIBIT A
TO
EMPLOYMENT AGREEMENT
VICE PRESIDENT, CORPORATE CONTROLLER
AND CHIEF ACCOUNTING OFFICER
DUTIES AND RESPONSIBILITIES:
The position reports to the Vice President - Chief Financial
Officer and includes primary responsibility for the corporate
controller and financial reporting functions.
EXHIBIT B
TO
EMPLOYMENT AGREEMENT
CHECKPOINT SYSTEMS, INC.
1999 BONUS PLAN
For 1999 the Board of Directors approved the 1999 Bonus
Plan. The 1998 Bonus Plan provides for a Bonus Pool to be
formed when earnings per share ("EPS") increases over a
defined target. The Bonus Pool is then apportioned among
four (4) groups of employees; corporate officers; vice
presidents, middle management and front line employees.
Each group has a targeted bonus percentage assigned which
is adjusted, depending on the percentage increase or
decrease over the targeted EPS growth. Other than for
Messrs. Aguilera, Dowd, Xxxxxx, Xxxxxxxx and Xxxxx, who's
bonuses are determined solely on the basis of financial
performance of the Company, all participants will have a
percentage of their bonuses determined by individual
performance. No Bonus Pool will be formed unless 1999 EPS
attains a specified level. The specified minimum target for
EPS was not attained for the fiscal year 1999 and therefore
no bonuses were paid. No discretionary bonuses were paid
for the fiscal year 1999.
