EMPLOYMENT AGREEMENT
BETWEEN
XXXXXXX X. XXXXXX, XX.
AND
CHECKPOINT SYSTEMS, INC.
THIS AGREEMENT is made as of the 1st day of July, 1995,
by and between CHECKPOINT SYSTEMS, INC. a Pennsylvania
corporation ("CSI"), and XXXXXXX X. XXXXXX,
XX.("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 Senior Vice President Americas' and Pacific Rim 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 Senior
Vice President Americas' and Pacific Rim. 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 Executive
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 Executive
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 $180,000. (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
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 eighteen (18) 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 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
"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;
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 eighteen (18)
months from the date he leaves the employ (or such earlier
date as Executive shall obtain other employment, but in no
event less than twelve (12) months after termination) 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:
Xxxxxxx X. Xxxxxx, Xx.
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 Company's
Counsel:
Stradley, Ronon, Xxxxxxx & Xxxxx
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esquire
D. In all cases, copies to Executive's
Counsel:
Xxxxx & Xxxxxx
1 Chase Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx 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:
______________ ___________________________________
Xxxxxxx X. Xxxxxx, Xx.
EXHIBIT A
TO
EMPLOYMENT AGREEMENT
SENIOR VICE PRESIDENT - AMERICA'S AND PACIFIC RIM
Responsible for corporate sales activities
combined with that of senior executive for sales
conducted in the America's and Pacific Rim.
EXHIBIT B
TO
EMPLOYMENT AGREEMENT
________________________________________________
CHECKPOINT SYSTEMS, INC.
AMENDED AND RESTATED PROFIT INCENTIVE PLAN
RESOLVED, that the Management Incentive Plan ("MIP") is
amended and restated in its entirety to provide that the
revised plan shall be named the Profit Incentive Plan
("PIP"). The Chief Executive Officer, President
and Chief Operating Officer and all Vice Presidents will
participant in the PIP. Under the PIP, no bonus pool
will be created unless pre-tax, pre bonus earnings exceed
18% of the beginning balance of Shareholders Equity
for the relevant year. If such earnings are attained, a
bonus pool will be created and will be equal to (i) 3% of
all pre-tax, pre-bonus earnings plus (ii) 6% of pre-tax,
pre-bonus earnings in excess of 27% of the beginning
balance of Shareholders Equity for the relevant year.
Distribution of the pool, if any, will be as follows: 20%
to Xx. Xxxx, the Company's President, Chief Executive
Officer and Chief Operating Officer; 10% to Xx. Xxxxxxxx,
the Company's Senior Vice President - Manufacturing; 10%
to Xx. Xxxxxxxxx, the Company's Senior Vice President -
Operations and Chief Financial Officer; 5% to Xx. Xxxxxx,
the Company's Vice President - General Counsel and
Secretary, 10% to Xx. Xxxxxx, the Company's Senior Vice
President - Americas' and Pacific Rim; 10% to Xx. Xxxxx,
the Company's Senior Vice - Marketing and Western
European Operations; 5% to Xx. Xxxxxxxx, the Company's
Vice President - Research and Development and the
remaining 30% divided among the foregoing at the
discretion of the Committee.
