EMPLOYMENT AGREEMENT
BETWEEN
XXXX XXXXXX
AND
CHECKPOINT SYSTEMS, INC.
THIS AGREEMENT is made as of the 20th day of March, 2001, by and between
CHECKPOINT SYSTEMS, INC. a Pennsylvania corporation ("CSI"), and Xxxx Xxxxxx
("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,
Research and Development 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,
Research and Development. 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 Executive Vice President 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 $. (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 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 fringe benefits applicable to all employees, 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 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 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 "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 nine (9) 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 management 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:
Xxxx Xxxxxx
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:________________________________
Xxxxxxx X. Xxxxx
WITNESS:
_________________________ By: ________________________________
Xxxx Xxxxxx
