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EXHIBIT (C)2(I)
SEVERANCE PAY AGREEMENT
THIS AGREEMENT is entered into as of the 1st day of December, 1995 by and
between ("Employee") and Varitronic Systems, Inc., a Minnesota corporation
("VSI").
RECITALS
WHEREAS, Employee is currently employed by VSI; and
WHEREAS, by a VSI Compensation Committee resolution dated December 1, 1995,
the Board of Directors of VSI has agreed, in light of the importance to VSI of
Employee's continued and diligent service, to make severance payments to
Employee in the event of the termination of Employee's employment under certain
conditions; and
WHEREAS, Employee and VSI desire to establish the terms of such severance
pay;
AGREEMENT
NOW, THEREFORE, in consideration of the recitals stated above and
incorporated herein and the mutual promises and covenants made herein, the
parties hereby agree as follows:
1. Severance Pay. (a) In the event of a Change of Control, as defined
below:
(i) if the Employee is not retained or hired by the surviving or
acquiring corporation, or, if retained or hired by such corporation,
Employee is Involuntarily Terminated, as defined below, within twenty-four
(24) months, then Employee shall be entitled to severance pay in an amount
equal to one and one-half (1 1/2) times Annual Base Salary, as defined
below, in effect as of the date of the Change of Control;
(ii) if the Employee is retained or hired by such corporation but
Employee is Constructively Terminated, as defined below, within twenty-four
(24) months after the Change of Control, Employee shall be entitled to
severance pay equal to one and one-half (1 1/2) times Annual Base Salary in
effect as of the date of the Change of Control; and
(iii) if the transaction closes before June 30, 1996 and the Employee
elects to voluntarily terminate employment within thirty (30) days after
the Change of Control, Employee shall be entitled to severance pay in an
amount equal to one (1) times Annual Base Salary in effect as of the date
of the Change of Control.
(b) Employee shall receive the amount of severance pay in one of the two
following manners at the election of the Employee made as of the date of this
Agreement:
(i) A lump sum payment paid thirty (30) days after termination; or
(ii) Equal monthly payments beginning thirty (30) days after
termination and continuing for eighteen (18) months if the Employee is
receiving 1.5 times Annual Base Salary; or for twelve (12) months if the
Employee is receiving 1 times Annual Base Salary.
It is the intention of the parties that the severance payments under this
paragraph shall not constitute "excess parachute payments" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended, and any
regulations thereunder. If the independent accountants acting as auditors for
VSI on the date of a Change of Control (or another accounting firm designated by
them) determine that the severance payments under this Agreement may constitute
"excess parachute payments," the payments shall be reduced to the maximum amount
which may be paid without the payments being "excess parachute payments." The
determination shall take into account (i) whether the payments are "parachute
payments" under Section 280G and, if so, (ii) the amount of payments under the
Agreement that constitutes reasonable compensation under Section 280G.
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(c) Employee shall also receive medical coverage, dental coverage and life
insurance coverage at the same amounts and level as of the date of employment
termination for a period of equal to the period of severance pay specified
above. (Subject to payment by the employee of the same portion of the premiums
for any such benefits previous paid.)
(d) For the purposes of this paragraph, a Change of Control is defined to
include the following transactions if the then current Board of Directors of VSI
determines that such transaction is a Change of Control within the intent of
this Agreement: (1) a merger or other combination in which VSI's shareholders
own less than a majority of the outstanding stock of the surviving corporation,
(2) a sale of all or substantially all of VSI's assets, or (3) the acquisition
of a majority of VSI's outstanding stock by a single person or a group acting in
concert.
(e) For the purposes of this paragraph, "Involuntarily Terminated" is
defined to mean termination without Cause, as defined below.
(f) For the purposes of this paragraph, "Constructively Terminated" is
defined as: (1) a reduction in Annual Base Salary of more than 10% when compared
with Annual Base Salary in effect immediately prior to the Change of Control;
(2) a significant diminution in authority or responsibility; (3) a requirement
to involuntarily relocate more than fifty (50) miles from the Employee's current
location; or (4) a significant increase in travel requirement resulting in the
Employee being required to travel outside the Twin Cities metropolitan area at
least 25% more often than for the comparable period immediately prior to the
Change of Control.
(g) For the purposes of this paragraph, Cause is defined to include, but is
not limited to, the following:
(1) Unreasonable neglect, absenteeism, incompetence, or
insubordination;
(2) Dishonesty, fraud, or breach of trust in connection with the
affairs of VSI;
(3) Conviction of any felony, gross misdemeanor, or misdemeanor, other
than a minor traffic offense;
(4) Death;
(5) Physical or mental disability of Employee which renders Employee
unable to perform the essential functions of Employee's position after
reasonable accommodation; or
(6) Breach of any of the material terms or conditions contained in any
employment contract between Employee and VSI.
VSI shall act reasonably and in good faith in determining whether cause exists,
and a finding of cause by VSI shall be conclusive for all purposes, precluding
any remedy of Employee at law or equity.
(h) For the purposes of this paragraph, "Annual Base Salary" is defined to
mean the base compensation rate of Employee not including incentive compensation
or fringe benefits. Fringe benefits shall include medical, life and disability
insurance, 401K contributions, current non-cash compensation received by the
Employee, and other current fringe benefits provided by VSI to the Employee.
2. Non-Competition. (a) In consideration for the severance pay provided in
Section 1 above, Employee agrees that during the term this Agreement is in
effect, and for a period of eighteen (18) months (or for twelve (12) months if
the Employee is receiving one (1) times Annual Base Salary) thereafter, Employee
shall not (i) compete with either VSI or the surviving or acquiring corporation
in any way which provides a product, process, system or service which is the
same as or similar to or competes with, or has a usage allied to, a product,
process, system or service of VSI, whether as owner, partner, shareholder,
director, officer, employee, or consultant, in the United States or (2) solicit
other employees of VSI or the surviving or acquiring corporation to become
employed by another employer.
(b) In the event Employee is offered employment by the acquiring or
surviving corporation, but Employee declines to accept such employment, the
noncompete agreement described in paragraph (a) above shall apply.
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(c) The parties recognize that money damages would not be an adequate
remedy to VSI for breach of the foregoing covenant and agree that in the event
of breach of such covenant VSI is entitled to seek additional judicial relief,
including, but not limited to, restraining orders, injunctions, and an
accounting. Employee agrees to pay all costs of VSI, including reasonable
attorneys' fees, incurred in securing enforcement of the foregoing covenant.
3. Enforcement Costs. Employee and VSI agree to pay all costs of the other,
including reasonable attorneys' fees, incurred in securing enforcement of any
breach of this Agreement.
4. Interpretation. This Agreement constitutes the entire agreement between
the parties on the subject matter hereof and supersedes any prior oral or
written agreements between the parties. This Agreement can be modified only by a
writing signed by both parties. This Agreement shall be interpreted in
accordance with the laws of the State of Minnesota. This Agreement is binding
upon, and shall inure to the benefit of, each of the parties and their
respective heirs, representatives, successors and assigns.
5. Venue. Any disputes arising under or related to this Agreement shall be
under the sole and exclusive jurisdiction of the Hennepin County State District
Court located in Minneapolis, Minnesota.
-------------------------------------------- VARITRONIC SYSTEMS, INC.
Employee By
-----------------------------------------
Its
-----------------------------------------
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EXHIBIT (C)2(II)
SEVERANCE PAY AGREEMENT
THIS AGREEMENT is entered into as of the 1st day of December, 1995 by and
between Xxxx Xxxxx ("Employee") and Varitronic Systems, Inc., a Minnesota
corporation ("VSI").
RECITALS
WHEREAS, Employee is currently employed by VSI; and
WHEREAS, by a VSI Compensation Committee resolution dated December 1, 1995,
the Board of Directors of VSI has agreed, in light of the importance to VSI of
Employee's continued and diligent service, to make severance payments to
Employee in the event of the termination of Employee's employment under certain
conditions; and
WHEREAS, Employee and VSI desire to establish the terms of such severance
pay;
AGREEMENT
NOW, THEREFORE, in consideration of the recitals stated above and
incorporated herein and the mutual promises and covenants made herein, the
parties hereby agree as follows:
1. Severance Pay. (a) In the event of a Change of Control, as defined
below:
(i) if the Employee is not retained or hired by the surviving or
acquiring corporation, or, if retained or hired by such corporation,
Employee is involuntarily terminated within twenty-four (24) months, then
Employee shall be entitled to severance pay in an amount equal to one
(1) time annual base salary calculated as of the time of the Change of
Control; or
(ii) if the Employee is retained or hired by such corporation and such
Employee is Constructively Terminated, as defined below, within twenty-four
(24) months after the Change of Control, Employee shall be entitled to
severance pay equal to three-quarters (.75) times annual base salary
calculated as of the time of the Change of Control.
(b) Employee shall receive the amount of severance pay in one of the two
following manners at the election of the Employee made as of the date of this
Agreement:
(i) A lump sum payment paid thirty (30) days after termination; or
(ii) Equal monthly payments beginning thirty (30) days after
termination and continuing for 12 months if the Employee is receiving 1
times annual base salary or 9 months if the Employee is receiving .75 times
annual base salary.
It is the intention of the parties that the severance payments under this
Section shall not constitute "excess parachute payments" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended, and any
regulations thereunder. If the independent accountants acting as auditors for
VSI on the date of a Change of Control (or another accounting firm designated by
them) determine that the severance payments under this Agreement may constitute
"excess parachute payments," the payments may be reduced to the maximum amount
which may be paid without the payments being "excess parachute payments." The
determination shall take into account (i) whether the payments are "parachute
payments" under Section 280G and, if so, (ii) the amount of payments under the
Agreement that constitutes reasonable compensation under Section 280G.
(c) Employee shall also receive medical coverage, dental coverage and life
insurance coverage at the same amounts and level as of the date of employment
termination for a period equal to the period of severance pay specified above.
(Subject to payment by the employee of the same portion of the premiums for any
such benefits previous paid.)
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(d) For the purposes of this paragraph, a Change of Control is defined to
include the following transactions if the then current Board of Directors of VSI
determines that such transaction is a Change of Control within the intent of
this Agreement: (1) a merger or other combination in which VSI's shareholders
own less than a majority of the outstanding stock of the surviving corporation,
(2) a sale of all or substantially all of VSI's assets, or (3) the acquisition
of a majority of VSI's outstanding stock by a single person or a group acting in
concert.
(e) For the purposes of this paragraph, "Involuntarily Terminated" is
defined to mean termination without Cause, as defined below.
(f) For the purposes of this paragraph, "Constructively Terminated" is
defined as: (1) a reduction in Annual Base Salary of more than 10% when compared
with Annual Base Salary in effect immediately prior to the Change of Control;
(2) a significant diminution in authority or responsibility; (3) a requirement
to involuntarily relocate more than fifty (50) miles from the Employee's current
location; or (4) a significant increase in travel requirement resulting in the
Employee being required to travel outside the Twin Cities metropolitan area at
least 25% more often than for the comparable period immediately prior to the
Change of Control.
(g) For the purposes of this paragraph, Cause is defined to include, but is
not limited to, the following:
(1) Unreasonable neglect, absenteeism, incompetence, or
insubordination;
(2) Dishonesty, fraud, or breach of trust in connection with the
affairs of VSI;
(3) Conviction of any felony, gross misdemeanor, or misdemeanor, other
than a minor traffic offense;
(4) Death;
(5) Physical or mental disability of Employee which renders Employee
unable to perform the essential functions of Employee's position after
reasonable accommodation; or
(6) Breach of any of the material terms or conditions contained in any
employment contract between Employee and VSI.
VSI shall act reasonably and in good faith in determining whether cause exists,
and a finding of cause by VSI shall be conclusive for all purposes, precluding
any remedy of Employee at law or equity.
(h) For the purposes of this paragraph, "Annual Base Salary" is defined to
mean the base compensation rate of Employee not including incentive compensation
or fringe benefits. Fringe benefits shall include medical, life and disability
insurance, 401K contributions, current non-cash compensation received by the
Employee, and other current fringe benefits provided by VSI to the Employee.
2. Non-Competition. (a) In consideration for the severance pay provided in
Section 1 above, Employee agrees that during the term this Agreement is in
effect, and for a period of one (1) year (or for nine (9) months if the Employee
is receiving three-quarters times annual base salary) thereafter, Employee shall
not (i) compete with either VSI or the surviving or acquiring corporation in any
way which provides a product, process, system or service which is the same as or
similar to or competes with, or has a usage allied to, a product, process,
system or service of VSI, whether as owner, partner, shareholder, director,
officer, employee, or consultant, in the United States or (ii) solicit other
employees of VSI or the surviving or acquiring corporation to become employed by
another employer.
(b) In the event Employee is offered employment by the acquiring or
surviving corporation, but Employee declines to accept such employment, the
noncompete agreement described in paragraph (a) above shall apply.
(c) The parties recognize that money damages would not be an adequate
remedy to VSI for breach of the foregoing covenant and agree that in the event
of breach of such covenant VSI is entitled to seek additional judicial relief,
including, but not limited to, restraining orders, injunctions, and an
accounting.
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Employee agrees to pay all costs of VSI, including reasonable attorneys' fees,
incurred in securing enforcement of the foregoing covenant.
3. Interpretation. This Agreement constitutes the entire agreement between
the parties on the subject matter hereof and supersedes any prior oral or
written agreements between the parties. This Agreement can be modified only by a
writing signed by both parties. This Agreement shall be interpreted in
accordance with the laws of the State of Minnesota. This Agreement is binding
upon, and shall inure to the benefit of, each of their parties and their
respective heirs, representatives, successors and assigns.
4. Venue. Any disputes arising under or related to this Agreement shall be
under the sole and exclusive jurisdiction of the Hennepin County State District
Court located in Minneapolis, Minnesota.
--------------------------------------------- VARITRONIC SYSTEMS, INC.
Employee
By
---------------------------------------------
Its
---------------------------------------------
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