SECOND AMENDMENT TO
EMPLOYMENT AGREEMENT
This Second Amendment to Employment Agreement is made as of the 25th day of
March, 1999 by and between Checkpoint Systems, Inc. ("CSI") and Xxxxxxx X. Xxxxx
("Executive").
WHEREAS, CSI and Executive are parties to an Employment
Agreement dated July 1, 1995 ("Agreement") which was amended on July 1,
1997; and
WHEREAS, the parties wish to amend the Agreement as set
forth herein;
NOW THEREFORE, in consideration of the premises and mutual
promises and covenants contained herein and intending to be bound
hereby, the parties agree as follows:
1. Section 1. Employment and Term is hereby extended so that the
expiration date of the Term shall be July 1, 2001.
2. Subsection 5C Termination is hereby amended and restated in its
entirety as follows:
"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
eighteen (18) months thereafter (or such shorter period ending on the date
Executive obtains other employment, but in no event less than twelve (12)
months after termination) consisting of the 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 payments in lieu of 401(K) benefits (in the same
manner such payments are made as of the date of the Second Amendment to
this Agreement) contemporaneously with the severance pay. If the
Executive's employment with CSI terminates during the Term and after a
Change in Control or Potential Change in Control (as those terms are
hereinafter defined), the Executive shall be entitled to receive, in lieu
of the foregoing, the Change in Control Severance Benefits (as that term is
hereinafter defined). However, the Executive shall not be entitled to
receive the Change in Control Severance Benefits if he voluntarily leaves
the employ of CSI, other than his voluntary leaving after any of the
following events occur:
(a) The Executive is assigned to any duties
substantially inconsistent with his position, duties,
responsibilities or status with CSI or a substantial
reduction of the aforesaid duties, in each case as set forth
in Exhibit A to this Employment Agreement;
(b) The relocation of the Executive's office to
a geographic area which is more than thirty (30) miles from
the city limits of Philadelphia;
(c) An adjustment of the Executive's Base
Salary pursuant to Section 3 which results in a reduction in
the Executive's Base Salary; or
(d) The failure by CSI to obtain the assumption
of the obligation to perform this Agreement by any successor
entity in the Change in Control.
For the purposes of this Subsection 5C, the following terms
shall have the following meanings:
(a) A "Change in Control" occurs upon any one of
the following circumstances or events:
(i) The stockholders of CSI approve a
transaction or transactions (however denominated or
effectuated) with another corporation or other entity
("Combination"), and immediately after such transaction(s)
less than eighty percent (80%) of the combined voting power
of the then outstanding securities of such corporation or
entity will be held in the aggregate by the holders of
securities entitled, immediately prior to such Combination,
to vote generally in the election of directors of CSI
("Voting Stock");
(ii) The stockholders of CSI approve a
consolidation (however denominated or effectuated) pursuant
to a recommendation of the Board of Directors;
(iii) At any time, Continuing Directors
(as herein defined) shall not constitute a majority of the
members of the Board of Directors ("Continuing Director"
means (i) each individual who has been a director of CSI for
at least twenty-four (24) consecutive months before such
time and (ii) each individual who was nominated or elected
to be a director of CSI by at least two-thirds of the
Continuing Directors at the time of such nomination or
election);
(iv) The stockholders of CSI approve the
sale of all or substantially all of its assets to any other
corporation or other entity, and less than eighty percent
(80%) of the combined voting power of the then outstanding
securities of such corporation or other entity immediately
after such transaction will be held in the aggregate by the
holders of Voting Stock immediately prior to such sale;
(v) Any person or entity becomes the
beneficial owner, directly or indirectly, of securities of
CSI representing more than twenty percent (20%) or more of
the then outstanding shares of Voting Stock (not including
in the securities beneficially owned by such person or
entity any securities acquired directly from CSI or its
affiliates);
(vi) The stockholders of CSI approve a
plan of complete liquidation or dissolution of CSI; or
(vii) The Board of Directors determines by
a majority vote that, because of the occurrence, or the
threat or imminence of the occurrence, of another event or
situation with import or effects similar to the foregoing,
the Executive should be entitled to the benefits of this
Section.
Notwithstanding the foregoing, unless otherwise determined
in a specific case by majority vote of the Board of
Directors, a Change in Control for purposes of this
Agreement shall not be deemed to have occurred solely
because (a) CSI, (b) an entity of which CSI is the direct or
indirect beneficial owner of fifty percent (50%) or more of
the voting securities or (c) any CSI-sponsored employee
stock ownership plan or any other employee benefit plan of
CSI becomes the beneficial owner of shares of Voting Stock,
whether in excess of twenty percent (20%) or otherwise, or
because CSI reports that a change in control of CSI has or
may have occurred or will or may occur in the future by
reason of such beneficial ownership. The foregoing
definition shall supersede the definition of Change in
Control set forth in Subsection 5D(ii) of the Agreement.
(b) The "Change in Control Severance Benefits"
shall be the following:
(i) the amounts of the Executive's Base
Salary and Bonus which are accrued and payable through the
date of the termination of the Executive's employment, which
amounts will be paid within thirty (30) days after the date
the Executive's employment is terminated;
(ii) a lump sum payment in an amount equal
to two hundred percent (200%) of the Executive's highest
Base Salary in effect during the Term, which lump sum
payment will be made within thirty (30) days after the date
the Executive's employment is terminated;
(iii) the continuation of the Executive's
health insurance benefits, life and disability insurance
benefits and payments in lieu of 401K benefits (in the same
manner such payments are made as of the date of the Second
Amendment to this Agreement) for a period of twenty four
(24) months after the date the Executive's employment is
terminated. The Executive shall continue to make such
contributions with respect to such continued benefits as are
required of the Executive prior to the termination of his
employment; and
(iv) in the event that any payment or
benefit provided by CSI to the Executive (whether pursuant
to this Agreement or otherwise) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended, or any interest
or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall
be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed on the
Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(c) A "Potential Change in Control" occurs upon
any one of the following circumstances or events:
(i) CSI enters into an agreement, the
consummation of which would result in the occurrence of a
Change in Control;
(ii) CSI or any person or entity publicly
announces an intention to take or consider taking actions
which, if consummated, would result in the occurrence of a
Change in Control;
(iii) any person or entity becomes the
beneficial owner, directly or indirectly, of securities of
CSI representing more than fifteen percent (15%) or more of
the then outstanding shares of Voting Stock (not including
in the securities beneficially owned by such person or
entity any securities acquired directly from CSI or its
affiliates); or
(iv) the Board of Directors adopts a
resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.
Notwithstanding the foregoing, unless otherwise determined
in a specific case by majority vote of the Board of
Directors, a Potential Change in Control for purposes of
this Agreement shall not be deemed to have occurred solely
because (a) CSI, (b) an entity of which CSI is the direct or
indirect beneficial owner of fifty percent (50%) or more of
the voting securities or (c) any CSI-sponsored employee
stock ownership plan or any other employee benefit plan of
CSI becomes the beneficial owner of shares of Voting Stock,
whether in excess of fifteen percent (15%) or otherwise, or
because CSI reports that a change in control of CSI has or
may have occurred or will or may occur in the future by
reason of such beneficial ownership."
3. Subsection 5E. The second sentence of Subsection 5E is deleted
and replaced with the following:
"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
for a period of eighteen (18) months thereafter (or such
shorter period ending on the date Executive obtains other
employment, but in no event less than twelve (12) months
after the date he leaves the employ of CSI) consisting of
the payment of one hundred percent (100%) of Executive's
monthly Base Salary at the end of the term payable at
regular intervals and continuation of health insurance
benefits, life and disability insurance benefits and 401(K)
benefits contemporaneous with the severance pay."
4. Exhibit A is amended as set forth in Exhibit A hereto.
5. All other terms of the Agreement shall remain the same.
IN WITNESS WHEREOF, the parties have caused this Second
Amendment to be executed as of the date first above written.
CHECKPOINT SYSTEMS, INC.
By:__________________________ ____________________
XXXXXXX X. XXXXX
EXHIBIT A
TO
EMPLOYMENT AGREEMENT
EXECUTIVE VICE PRESIDENT
This position reports directly to the President and CEO.
The responsibilities of this position include:
Worldwide marketing
Worldwide research and development
Supply chain management
US customer and field service
Checkpoint Japan manufacturing operation
Diamond Checkpoint Joint Venture
CSSG Business Unit
Access Control Business Unit
Strategic Planning and Development
