EMPLOYMENT AGREEMENT
This is an agreement made as of January 1, 2004 (this
"Agreement") by and between Checkpoint Systems, Inc. ("Company") and Xxxx X.
Xxx Xxxx ("Executive").
W I T N E S S E T H:
WHEREAS, Company desires to employ Executive and Executive
desires to be employed on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the mutual covenants and
the agreements hereinafter set forth, the parties hereto, intending to be
legally bound, hereby covenant and agree as follows:
1. Term of Employment.
Company agrees to employ Executive and Executive agrees to be
employed from January 1, 2004 through December 31, 2004 (the "Initial Employment
Period"). The term of employment under this Agreement shall be renewed for
successive one year periods upon the expiration of the Initial Employment Period
(the Initial Employment Period and, if the period of employment is so extended,
such successive periods of employment, are collectively referred to herein as
the "Employment Period"), unless notice of termination of this Agreement is
given by Company at least thirty (30) days prior to the end of the Employment
Period, in which case this Agreement shall terminate at the end of the
Employment Period. This Agreement may be otherwise terminated during the
Employment Period only as provided in Section 5 hereof.
2. Compensation.
a. Company shall pay Executive during the Employment
Period a base
salary of $242,579.00 per annum (the "Base Salary"), to be paid in equal
installments in accordance with the normal payroll practices of Company.
Pursuant to Executive's offer letter dated May 20, 2003, base salary will be
increased by $25,000 prior to January 1, 2005.
b. Executive shall be eligible to participate in such
bonus plan(s) of Company as may exist during the Employment Period (Bonus Plan).
Company shall determine the eligibility of Executive for a bonus under the Bonus
Plan in accordance with its terms. Company may amend or terminate the Bonus Plan
at its sole discretion at any time.
c. Executive shall be eligible at his/her election
to participate in Company's employee benefit plans and to receive all fringe
benefits and vacations for which his/her level and tenure of employment makes
him eligible in accordance with Company's policies.
d. Company shall promptly reimburse Executive for
his/her ordinary and necessary business expenses incurred in the performance of
his/her duties hereunder, consistent with Company's policy and practices.
3. Duties.
Executive shall be employed as Senior Vice President, General
Counsel and Secretary. Executive shall perform such reasonable duties relating
to Company's business and operations as may from time to time be assigned to him
by Company. Executive shall devote substantially all of his/her business time to
his/her duties hereunder and shall, to the best of his/her ability, perform such
duties in a manner that will faithfully and diligently further the lawful
business and interests of Company.
4. Covenant Not to Compete: Confidentiality
a. Executive covenants and agrees that during the period Executive is employed
by Company, whether pursuant to this Agreement or otherwise (e.g. as an employee
at will), and for a period of twelve (12) months from the date of termination of
Executive's employment with the Company (whether voluntary or involuntary) (the
"Restricted Period"), Executive shall not compete in the United States or
anywhere in the world with Company by engaging in Company's business directly
for his/her own account or indirectly, as agent, employee, consultant,
representative or otherwise, or as a sole proprietor, partner or joint venturer,
or by having any direct or indirect financial interest, including, without
limitation, the interest of a creditor, in any entity that engages in Company's
business as such business exists on termination date; and
b. Executive further covenants that during the
Restricted Period, Executive shall not contact, solicit or accept any business
(directly or indirectly, as agent, employee, consultant, representative or
otherwise, or as a sole proprietor, partner or joint venturer, or by having any
direct or indirect financial interest, including, without limitation, the
interest of a creditor) from any present client of Company for whom Executive
has provided or assisted Company in providing services while employed by
Company.
c. Except as required in the course of performing
duties hereunder, by law, or with Company's express written consent, during the
Restricted Period, Executive shall keep secret and retain in strictest
confidence, and shall not disclose to anyone outside Company or use for the
benefit of himself or others, any confidential matters relating to Company's
business and to Company and its affiliates, including, without limitation, and
to the extent confidential, trade "know-how", secrets, Client Lists (as
hereinafter defined), subscription lists, pricing policies, distribution
policies, operational methods, marketing plans or strategies, product
development techniques or plans, business acquisition plans, software programs,
new personnel acquisition plans, technical processes, designs and design
projects, inventions and research projects, investment strategies and
techniques and other business affairs relating to Company's business and to
Company and its affiliates learned by Executive heretofore or hereafter.
d. During the Restricted Period, Executive shall not,
directly or indirectly, (i) solicit or encourage to leave the employment or
service of Company, any employee or consultant of Company, or (ii) hire or
retain any employee or consultant who is employed or retained by, or who,
within twelve months of any particular time, has left the employment or
service of Company.
e. The term "Past Client" shall mean any person or
entity who within one year prior to the date of Executive's termination of
employment with Company had been a customer or client of Company or of any
entity affiliated with Company.
f. The term "Present Client" shall mean any person or
entity who on the date of Executive's termination of employment with Company is
a customer or client of Company or of any entity affiliated with Company.
g. The term "Potential Client" shall mean any person
or entity to whom
Company, on its own behalf, through any of its officers or employees, had within
one year prior to the date of Executive's termination of employment with Company
offered (by means of a formal presentation made in person to the Potential
Client) to provide services as a client or customer.
h. The terms "Client" or "Client List" when used
herein shall include all Past, Present and Potential Clients as heretofore
defined.
i. Executive recognizes that Company does not have an
adequate remedy at law to protect its rights under Section 4 of this Agreement.
Executive agrees that Company shall have (i) the right to an injunction in any
court of competent jurisdiction permanently enjoining Executive from a violation
of Section 4 of this Agreement during the Restrictive Period (the "Restrictive
Covenants"), and (ii) the right and remedy to require Executive to account for
and pay over to Company all compensation, profits, monies, accruals, increments
or other benefits (collectively, "Benefits") derived or received by Executive as
the result of any transactions constituting a breach of any of the Restrictive
Covenants, and Executive shall account for and pay over such Benefits to
Company, and (iii) the right to recover any losses, liabilities or damages
(including interest, penalties and reasonable attorneys' fees) arising out of or
due to a breach of Section 4 of this Agreement.
j. Executive recognizes and agrees in the event of a
violation of the Restrictive Covenants, the period during which he shall not
compete shall be extended for a period equal to the period during which he
engaged in conduct constituting such violation.
k. The remedies set forth in this Section shall not
be mutually exclusive and any one or all may be pursued without the pursuit of
one impairing or precluding the pursuit of another. The parties agree that
neither shall, under any circumstances for any reason whatsoever, challenge the
existence or validity of the Restrictive Covenants or this Agreement for any
reason, including, without limitation, through a claim or action based upon
failure of consideration or in an action for rescission or like legal or
equitable claim.
l. The Restrictive Covenants in this Agreement shall
inure to the benefit of Company, its affiliated entities and their respective
successors and assigns.
5. Termination of Employment.
a. Executive's employment hereunder shall terminate
upon his/her death, and Company's obligation to pay further compensation
hereunder shall cease immediately, except that Executive's legal
representative shall be entitled to receive Executive's salary for the period
up to the last day of the calendar month in which his/her death occurred.
b. Executive may voluntarily terminate this
Agreement upon thirty (30) days notice. In such event, Company's obligation to
pay further compensation hereunder shall cease as of the effective date of
Executive's termination.
c. Company may terminate this Agreement upon thirty
(30) days notice in the event that Executive becomes unable to perform the
essential functions of his/her position, with or without reasonable
accommodation, due to sickness or disability. In such event, Company's
obligation to pay further compensation hereunder shall cease, except as
otherwise required by law or company policy or benefit plan(s), as of the
effective date of Executive's termination.
d. Company may terminate this Agreement at any time
for "cause". For purposes of this Agreement, the term "cause" shall mean
(i) Executive's willful and continued insubordination or Executive's failure or
refusal to perform his/her duties hereunder after notice by Company specifically
identifying the offending conduct; (ii) dishonesty in the performance of his/her
duties hereunder; (iii) Executive's breach of the Restrictive Covenants in
Section 4 or any other provision of this Agreement; (iv) Executive's
subjection to a judgment, decree or final order of a judicial or
administrative body of competent jurisdiction effectively preventing
Executive from the substantial performance of his/her duties hereunder
or causing substantial damage to Company or to its business reputation;
and (v) Executive's conviction of a felony or a crime involving moral
turpitude which, in the reasonable judgment of Company, renders Executive
unfit to continue his/her office as herein described or causes
substantial damage to Company or its business reputation. In the event
of a termination for "cause", Company's obligation to pay further
compensation hereunder shall cease as of the effective date of
Executive's termination.
e. In the absence of "cause" as defined in this
Agreement, Company may terminate this Agreement upon thirty (30) days notice.
In such event, Executive shall be entitled to receive the following:
(i) the Base Salary for a period of fifteen
(15) months (Severance Payment Period),
to be paid in accordance with the
Company's normal payroll practices;
(ii) any payment to which Executive may be
entitled in accordance with the terms
of any applicable Bonus Plan then
existing;
(iii) continued participation in Company's
health care insurance plan for the
Severance Payment Period at the same
cost charged for employees actively
employed by the Company;
f. In the event of a "Change in Control" as defined
herein, Executive may terminate this Agreement upon thirty (30) days notice if,
but only if, one of the following occurs:
(i) Executive is assigned duties
substantially inconsistent with his/her
position, duties, responsibilities or
status, or his/her duties are
substantially reduced; or
(ii) Executive's principal office is
relocated more than thirty (30) miles
;or
(iii) Executive's Base Salary is reduced.
g. If Executive is terminated or properly terminates
this Agreement pursuant to Subsection 5.f above, Executive shall be entitled to
receive the following:
(i) the Base Salary for a period equal to
1-1/2 times the Severance Payment
Period, to be paid in accordance with
the Company's normal payroll practices;
(ii) any payment to which Executive may be
entitled in accordance with the terms
of any applicable Bonus Plan then
existing;
(iii) continued participation in Company's
health care insurance plan for a
period equal to 1 1/2 times the
Severance Payment Period at the same
cost charged for employees actively
employed by the Company;
h. "Change in Control" of Company shall be deemed to
have occurred if (i) any person or entity or group acting in concert
(an "Acquirer") acquires from the shareholders of Company (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 (ii) such Acquirer obtains the
right or power to elect a substitute or replacement Board, and does, in fact,
exercise such right; or (iii) the shareholders of Company approve an agreement
for the sale or disposition by Company of substantially all of Company's assets
to an Acquirer.
6. Notice of Termination at the End of Employment Period.
a. If Executive gives notice of termination at the
end of the Employment Period pursuant to Section 1 of this Agreement, he shall
have no further right to compensation or benefits, except that he shall be paid
his/her Base Salary through his/her last day of employment.
b. If Company gives notice of termination at the end
of the Employment Period pursuant to Section 1 of this Agreement, Executive
shall be entitled to receive the same compensation and benefits as specified
in 5. (e) (i)-(iii) above.
7. All Business To Be the Property of Employer:
Assignment of Intellectual Property
a. Executive hereby grants to Company (without any
separate remuneration or compensation other than that received by Executive from
time to time in the course of his/her employment) Executive's entire right,
title and interest throughout the world in and to all research, information,
Client Lists and all technical and research data (herein sometimes called
"Intellectual Property") made, conceived, developed and/or acquired by Executive
solely or jointly with others during the period of his/her employment by
Company.
b. All business of Company developed by Executive or
any other employee of Company, including, without limitation, fees, commissions,
compensation, records, Clients Lists, agreements, memoranda, notes, lists,
records and other documents (and all copies thereof) made or compiled by
Executive or made available to Executive concerning Company's business or
Company are and shall be the exclusive property of Company for its sole use and
shall be delivered to Company promptly upon the termination of Executive's\
employment with Company or at any other time upon request.
8. Consultation on legal proceedings.
Executive covenants and agrees that during the period
Executive is employed by Company, and during The Restricted Period, Executive
shall cooperate with Company in any legal or quasi-legal matter, such as
governmental or private legal actions or litigation, investigations, or other
proceedings. Company will reimburse Employee for any pre-approved costs and
expenses in connection with such cooperation.
9. 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 X. Xxx Xxxx
B. If to Company to:
Checkpoint Systems, Inc.
000 Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Chairman of the Board
of Directors
9. Assignability.
This Agreement shall be assignable by Company and shall be
binding upon and inure to the benefit of Company and its successors and assigns
(by purchase of substantially all of the assets, by merger or otherwise). This
Agreement shall not be assignable by Executive, but it shall be binding upon,
and to the extent provided in Section 5, shall inure to the benefit of
Executive's heirs, executors, administrators and legal representatives.
10. Entire Agreement.
This Agreement contains the entire agreement between Company
and Executive with respect to the subject matter hereof.
11. Waivers, Amendments and Further Agreements.
Neither this Agreement nor any term or condition hereof,
including, without limitation, the terms and conditions of this Section 11, may
be waived, modified or amended in whole or in part as against Company or
Executive except by written instrument executed by each of the parties expressly
stating that it is intended to operate as a waiver, modification or amendment of
this Agreement or the applicable term or condition hereof, it being understood
that any action on behalf of Company under this Section 11 may be taken only
with the consent of the Board of Directors of Company. Each of the parties
hereto agrees to execute all such further instruments and documents and to take
all such further action as the other party may reasonably require in order to
effectuate the terms and purposes of this Agreement.
12. Severability.
It is understood and agreed by the parties hereto that the
provisions contained in this Agreement are independent of and severable from
each other and the invalidity of any section or any portion thereof shall not
affect the validity or hinder the enforceability of the remaining provisions of
this Agreement. The parties expressly agree and declare that the time
limitations and restrictions set forth in Section 4 hereof are reasonable and
necessary in view of Company's business, are properly required for the adequate
protection of Company's business and that in the event such time limitation is
deemed to be unreasonable by the final decision of a court of competent
jurisdiction, Company and Executive agree to submit to such revision or
modification thereof as said court shall deem reasonable.
13. No Conflicting Obligations.
Executive represents and warrants to Company that he is not
now under any obligation to any person, firm or corporation, other than Company,
and has no other interest which is inconsistent or in conflict with this
Agreement, or which would prevent, limit or impair, in any way, his/her
performance of any of the covenants or duties hereinabove set forth.
14. Survival.
The covenants and agreements, including without limitation the
Restrictive Covenants in Section 4 hereof and the representations and warranties
contained in or made pursuant to this Agreement shall survive the expiration of
this Agreement and the termination of Executive's employment hereunder.
15. Governing Law.
This Agreement shall be governed by and construed and enforced
in accordance with the law of the State of New Jersey.
IN WITNESS WHEREOF, the parties have executed or caused to be executed this
Agreement as of the date first above written.
Checkpoint Systems, Inc.
By: __________________________
Name: Xxxxxx Off
Title: Chairman and CEO
EXECUTIVE:
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Xxxx X. Xxx Xxxx
