EXHIBIT 10.9
EMPLOYMENT AGREEMENT
BETWEEN
XXXXX X. XXXX
AND
CHECKPOINT SYSTEMS, INC.
THIS AGREEMENT is made as of the 1st day of July, 1998, by and between
CHECKPOINT SYSTEMS, INC. a Pennsylvania corporation ("CSI"), and XXXXX 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 President and
Chief Executive Officer and as a Director 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 President and Chief
Executive Officer. Executive agrees to serve CSI in such capacity, subject to
the terms and conditions of this Agreement, for a term of three (3) 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 Board of
Directors 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 Chairman of the Board 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 $377,520(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 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 1998 Bonus 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 1998 Bonus Plan, which 1998 Bonus 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 executive benefits program, subject only to
Executive's meeting or satisfying the eligibility requirements and standards
therefor with regard to health, life and disability insurance benefits. Said
executive benefits program 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 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 harrassment 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
twenty four (24) months thereafter (or such earlier date as Executive shall
obtain other employment, but in no event less than twelve (12) months after
termination) 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, life and disability insurance benefits and 401(k)
benefits contemporaneous with the severance pay. If, as a result in a Change
in Control as set forth in Section D(ii), Executive leaves the employ of the
Company, the severance payment set forth in this Section C shall be increased
to thirty six months from twenty four months.
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 "Acquiror") 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 Acquiror 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 Acquiror;
(iii) The election, appointment or designation of any
individual as an operating officer or agent of the Board of Directors
(excluding the Chairman of the Board or any members thereof) to act as the
superior of or with authority exceeding that of Executive with respect to the
powers, authority and duties of Executive described in Exhibit A.
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
twenty four (24) months (or such earlier date as Executive shall obtain other
employment, but in no event less than twelve (12) months after termination)
from the date he leaves the employ of CSI. During such severance period
Executive shall have health insurance benefits, life and disability insurance
benefits and 401(k) benefits continued. 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 as set forth in Exhibit C.
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, vested stock options
granted under 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:
Xxxxx X. Xxxx
0000 Xxxxxxxx Xxxx
Xxxxx, XX 00000
B. 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.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed on the date first above written.
ATTEST: CHECKPOINT SYSTEMS, INC.
_________________________ By:________________________________
WITNESS:
_________________________ ___________________________________
Xxxxx X. Xxxx
