Exhibit 10.1
EMPLOYMENT AGREEMENT
between
PAXAR CORPORATION and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
October 1, 2004
1. PURPOSE.
Under this Employment Agreement (the "Agreement"), dated as of October 1, 2004
(the "Effective Date"), Paxar Corporation (the "Company") acknowledges and
recognizes the value of the services of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Executive"), which
services are of special, unique and extraordinary character. The Company desires
to continue to employ Executive and retain his abilities and services as Chief
Executive Officer and to continue to obtain his advice as Chairman of the
Company's Board of Directors (the "Board"). In recognition of his long and
faithful service to the Company, the Company also desires to provide Executive
and his spouse, upon his retirement, with the retirement benefits specified in
this Agreement.
2. JULY 11, 2001 AGREEMENT SUPERSEDED.
(a) Executive and the Company entered into an Agreement on July 11, 2001
(the "2001 Agreement") that superseded Executive's Employment Agreement
dated as of December 16, 1986, and amended as of January 1, 1996 (as
amended, the "1986 Agreement"). The parties have agreed that the terms
and conditions set forth in this Agreement shall supersede any and all
provisions of the 2001 and 1986 Agreements, and any other existing oral
or written agreements, representations, or warranties, between
Executive and the Company, and that such agreements shall be null and
void and of no further force and effect, except as otherwise
specifically provided in this Agreement.
(b) Notwithstanding the termination of the 2001 Agreement as of the
Effective Date, the Company shall be required to pay Executive in
accordance with the terms of 2001 Agreement (i) any accrued but unpaid
base salary under the 2001 Agreement for services rendered before the
Effective Date, (ii) the amount of any compensation earned and deferred
under the 2001 Agreement by Executive before the Effective Date, (iii)
any earned but unpaid incentive compensation for any calendar year
ended before the Effective Date, and (iv) any expenses required to be
reimbursed under the 2001 Agreement that have accrued but are unpaid as
of the Effective Date.
3. EMPLOYMENT.
The Company hereby agrees to continue to employ Executive, and Executive hereby
agrees to continue to be employed by the Company, upon the terms, and subject to
the conditions, set forth in this Agreement.
4. PERIOD OF EMPLOYMENT; AGREED RETIREMENT DATE.
As used in this Agreement, the phrase, "Employment Period," refers to
Executive's period of employment from the Effective Date until December 31,
2006, unless his employment is extended to such later date as may be mutually
agreed upon by both parties or terminated earlier in accordance with Section 10,
below. In the event of an extension of the Employment Period, all dates herein
shall automatically be extended to coincide with the extended Employment Period.
If said extension ends other than on December 31 of any year, payments to
Executive for any compensation based on full-year results shall be
proportionately adjusted.
5. POSITIONS, DUTIES AND RESPONSIBILITIES.
(a) Executive shall continue to serve, at the pleasure of the Board, as the
Chairman of the Board until December 31, 2006. In his capacity as
Chairman, Executive shall have the customary duties and
responsibilities of Chairman.
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(b) Executive shall continue to serve, at the pleasure of the Board, as the
Company's Chief Executive Officer until December 31, 2006. In such
capacity, Executive shall perform the customary duties and have the
customary responsibilities of such position.
(c) Prior to December 31, 2006, upon mutual agreement or upon ninety days
prior written notice to Executive, the Board may transfer the
positions, duties and responsibilities of the Chairman and/or the Chief
Executive Officer positions to one or more other employees of the
Company. If both positions are so transferred, whether jointly or on
separate occasions, the Board shall establish an Executive Committee
consisting of the Executive, the Lead Director and the Chairpersons of
each of the three standing committees of the Board. The Executive shall
be designated Chairman of the Executive Committee, which Committee
shall meet upon the request of three or more of its members to review
matters of urgency that may occur between scheduled meetings of the
Board.
(d) Executive agrees to serve the Company faithfully, to devote such
business time, attention and energies as is necessary or appropriate to
the performance of his duties, and to perform the duties under this
Agreement to the best of his abilities.
(e) Executive agrees (i) to comply with all applicable laws, rules and
regulations, and all requirements of all applicable regulatory,
self-regulatory, and administrative bodies; (ii) to comply with the
Company's rules, procedures, policies, requirements, and directions;
and (iii) not to engage in any other business or employment without the
written consent of the Company, except as otherwise specifically
provided herein.
6. COMPENSATION AND BENEFITS DURING EMPLOYMENT PERIOD.
Executive shall receive the following compensation and benefits, as approved
annually by the Board of Directors, during the Employment Period.
(a) Base Salary. The Company shall pay Executive a base salary at the
annual rate in effect immediately prior to the Effective Date of this
Agreement ("Base Salary") in accordance with the compensation policy
applicable to the Company's senior executive officers. The Board may
increase Executive's Base Salary from time to time in its discretion.
The Board also may reduce Executive's Base Salary, provided that it has
also reduced the base salaries of other senior executive officers and
the reduction of Executive's Base Salary is comparable with that of the
other senior executive officers. Such Base Salary shall be paid in
accordance with the Company's standard payroll practice for senior
executive officers.
(b) Annual Incentive Compensation. Executive shall be eligible to receive
annual incentive compensation in the form of a cash bonus, profit
sharing or otherwise, as the Board or the Compensation Committee may
grant the Executive from time to time in accordance with targets and
other criteria established by the Board or the Compensation Committee
for senior executive officers of the Company. Executive's annual bonus
award will be equal to 75% of his Base Salary in effect for the
calendar year, if the Company achieves 100% of the plan targets.
(c) Stock Options. Executive shall participate in the Company's stock
option plans and be eligible to receive grants under such plans in
accordance with the Company's policy applicable to senior executive
officers.
(d) Benefit Plans, Fringe Benefits and Vacations. Executive shall be
eligible to participate in or receive benefits under any pension plan,
401(k) savings plan, nonqualified deferred compensation plan,
supplemental executive retirement plan, medical and dental benefits
plan, life insurance plan, short-term and long-term disability plans,
supplemental and/or incentive compensation plans, perquisite allowance
or any other employee benefit or fringe benefit plan that is generally
made available by the Company to senior executive officers in
accordance with the eligibility requirements of such plans and subject
to the terms and conditions set forth in this Agreement.
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(e) Company-Provided Automobile. The Company shall continue to provide
Executive with the full-time use of an automobile and payment of
related expenses at the same style and level as provided to Executive
immediately prior to the Effective Date of this Agreement.
(f) Expense Reimbursement. The Company shall promptly reimburse Executive
for the ordinary and necessary business expenses incurred by Executive
in the performance of his duties under this Agreement in accordance
with the Company's customary practices applicable to senior executive
officers.
(g) Private Office, Personal Administrative Assistant, Other Services and
Support. The Company shall continue to furnish Executive with the same
or comparable (of his choosing) private office and exclusive personal
administrative assistant and such other facilities, services and staff,
in each case at a level that is consistent with his position, duties
and responsibilities.
7. ADVISORY ROLE AFTER EMPLOYMENT PERIOD.
Effective January 1, 2007 through December 31, 2007, Executive shall
provide his services as an Advisor to the Board and the Company with
such duties and responsibilities as are assigned to him by the Board or
the Company's then Chief Executive Officer. Executive agrees to be
available for up to 10 days a month, for an annual fee of $300,000,
which the Company will pay him on a monthly basis, plus reimbursement
for all business and travel expenses approved by the Chief Executive
Officer and incurred by the Executive during this period. Executive
shall be responsible for payment of all federal, state, and local taxes
applicable to such payments. The Executive's services as an Advisor to
the Board and the Company may be extended after December 31, 2007 upon
mutual consent of both parties.
8. SUPPLEMENTAL RETIREMENT BENEFIT.
The Company shall pay Executive a supplemental retirement benefit as follows:
(a) The supplemental retirement benefit will be an amount equal to 60% of
Executive's Final Average Compensation. The following rules shall apply
for purposes of determining Executive's Final Average Compensation:
(i) Executive's Final Average Compensation shall be equal to the
average of Executive's Total Compensation for the three (3)
calendar years of the last seven (7) full calendar years of
Executive's employment with the Company preceding such last
day of employment in which Executive earned the highest Total
Compensation.
(ii) "Total Compensation" means the total Base Salary and incentive
compensation earned by Executive for a calendar year,
including compensation earned in one calendar year and paid or
payable in a subsequent calendar year.
It is the intention of the parties that, upon termination of the
Employment Period on December 31, 2006, the year 2006 shall be included
as a full calendar year for purposes of determining Executive's Final
Average Compensation.
(b) The Company shall pay the supplemental retirement benefit to Executive
in equal monthly installments commencing on January 1, 2007.
(c) In the event of Executive's death, the Company shall pay to his
surviving spouse until her death or such earlier date as determined in
accordance with Section 24(f) below an amount equal to 50% of the
supplemental retirement benefit determined under this Section 8 in
equal monthly installments. Such payments will commence as soon as
practicable following Executive's date of death.
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(d) The supplemental retirement benefit will be payable to Executive and
his surviving spouse if Executive's employment is terminated before
December 31, 2006, regardless of the reason for termination of
employment.
9. COMPENSATION AND BENEFITS FOLLOWING TERMINATION OF EMPLOYMENT.
In addition to the supplemental retirement benefit described in Section 8 above,
the Company will provide Executive and his spouse with the benefits described in
this Section 9 following termination of his employment:
(a) Health Insurance. The Company shall provide the following health
insurance benefits to Executive and his spouse:
(i) The Company shall pay the full annual premium for any Medicare
supplemental insurance coverage selected by Executive until
his death.
(ii) The Company shall provide Executive's surviving spouse (as
determined in accordance with Section 24(f) below) with health
insurance coverage (through the purchase of insurance or
otherwise) that is substantially similar to the coverage that
she would have received if Executive had continued in active
employment until she becomes eligible for Medicare. The
Company shall pay the full cost of such coverage.
(iii) The Executive shall continue to participate in the Executive
Medical Reimbursement Plan or any comparable successor plan
that is made available to the Company's most senior executive
officers.
(b) Stock Options. Upon Executive's last day of employment, all outstanding
unexercised stock options granted to Executive under the Company's
employee stock option plans (i) shall become fully vested and
exercisable as of his last day of employment and (ii) shall continue to
be exercisable until the option expiration date (determined without
regard to Executive's employment termination date).
(c) Post Employment Office and Office Services. After Executive's last day
of employment and for seven years thereafter, if the Executive so
requests, the Company will provide office space for him on Paxar
premises or, at the option of the Company, other premises convenient to
the Executive's primary residence. Such office space shall be at a
level commensurate with Executive's status as the Company's former
Chief Executive Officer and Chairman of the Board. In addition, during
this period, whenever the Executive so requests, the Company will also
provide the Executive with the services of an administrative assistant
who, in the opinion of the Executive, is capable of providing services
at a level equal to the administrative services provided to the
Executive during the Employment Period.
(d) Director's Fees and Expenses. After completion of his services as
Advisor pursuant to Section 7, above, during the period that Executive
continues to serve as a member of the Board of Directors of the
Company, executive shall be paid the fees and be reimbursed for
expenses as are provided to non-employee members of the Board.
10. TERMINATION OF EMPLOYMENT BEFORE DECEMBER 31, 2006.
Executive's employment under this Agreement may be terminated prior to December
31, 2006 under any of the circumstances set forth in this Section 10.
(a) Death. Executive's employment shall terminate upon Executive's death.
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(b) Total Disability. The Company may terminate Executive's employment upon
his becoming "Totally Disabled." For purposes of this Agreement,
Executive shall be "Totally Disabled" if Executive is physically or
mentally incapacitated so as to render Executive incapable of
performing his usual and customary duties under this Agreement without
reasonable accommodation. Executive's receipt of disability benefits
under the Company's long-term disability benefits plan (the "LTD Plan")
or receipt of Social Security disability benefits shall be deemed
conclusive evidence of Total Disability for purpose of this Agreement;
provided, however, that in the absence of Executive's receipt of such
long-term disability benefits or Social Security benefits, the
Company's Board of Directors (the "Board") may, in its reasonable
discretion (but based upon appropriate medical evidence), determine
that Executive is Totally Disabled.
(c) Termination by the Company for Cause. The Company may terminate
Executive's employment for "Cause". Such termination shall be effective
as of the date specified in the written notice of termination provided
to Executive.
(i) For purposes of this Agreement, the term "Cause" shall mean
any of the following: (A) conviction (including conviction on
a nolo contendere plea) of (I) a crime involving the
commission by Executive of a felony or (II) a criminal act
intended to result directly or indirectly in substantial gain
or personal enrichment to Executive at the expense of the
Company, but excluding any such conviction that results solely
from Executive's title or position with the Company and is not
based on his personal conduct; or (B) willful misconduct or
gross negligence in connection with the business of the
Company or an affiliate occurring after the Effective Date of
this Agreement that results in material damage to the Company
or the affiliate or to their respective businesses, whether
monetary or otherwise; or (C) persistent failure to observe or
perform Executive's duties and responsibilities or to comply
with Company policies as set forth in Section 5 hereof after
written notice thereof by the Company; or (D) breach of any of
the covenants set forth in Section 13 or 14 of this Agreement.
(ii) Executive's employment shall in no event be considered to have
been terminated by the Company for Cause if the act or failure
to act upon which such termination is based was done or
omitted to be done as a result of bad judgment or negligence
on Executive's part.
(iii) Any determination of Cause under this Agreement shall be made
by resolution duly adopted by the affirmative vote of all of
the non-employee members of the Board at a meeting of the
Board called and held for that purpose. Executive shall be
provided with reasonable notice of such meeting and shall be
given the opportunity to be heard before such vote is taken by
the Board.
(d) Termination by Executive for Good Reason. Executive may terminate his
employment under this Agreement for "Good Reason" after providing
thirty (30) days' written notice to the Company. Termination of
employment by Executive for "Good Reason" shall be deemed to have
occurred, if Executive terminates his employment following the
occurrence of any of the following:
(i) The Company's failure to comply with its obligations under
this Agreement in any material respect if such failure
continues for thirty (30) days after notice in writing from
Executive specifying such failure.
(ii) The failure by the Company to obtain an assumption of the
obligations of the Company under this Agreement as required by
Section 20(a).
(e) Termination by Executive other than for Good Reason. Executive may
terminate his employment under this Agreement for any reason other than
"Good Reason" pursuant to Section 10(d) above after providing thirty
(30) days' prior written notice to the Company.
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(f) Notice of Termination. Any termination by the Company or by Executive
under this Agreement shall be communicated by notice of termination to
the other party hereto. For purposes of this Agreement, a Notice of
Termination shall mean a notice in writing which shall indicate the
specific termination provision in this Agreement relied upon to
terminate Executive's employment and, if applicable, shall set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment under the provision so
indicated.
11. COMPENSATION AND BENEFITS PAYABLE FOLLOWING TERMINATION PRIOR TO
DECEMBER 31, 2006
In the event that Executive's employment is terminated prior to December 31,
2006, Executive (or his surviving spouse, beneficiary or estate, as the case may
be) shall receive the following compensation and benefits:
(a) Death. In the event that Executive's employment is terminated by reason
of his death:
(i) Health Insurance. The Company shall provide Executive's
surviving spouse with the health insurance benefits set forth
in Section 9(a)(ii) above.
(ii) Stock Options. All outstanding unexercised stock options
granted to Executive shall become fully vested and exercisable
as of Executive's date of death.
(iii) Supplemental Retirement Benefit. The Company shall provide
Executive's surviving spouse with the supplemental retirement
benefit set forth in Section 8(c) above.
(b) Total Disability. In the event that Executive's employment is
terminated by reason of his Total Disability pursuant to Section 10(b)
above:
(i) Health Insurance. The Company shall provide Executive and his
spouse with the health insurance benefits set forth in Section
9(a) above.
(ii) Stock Options. All outstanding unexercised stock options
granted to Executive under the Company's stock option plans
(A) shall become fully vested and exercisable as of his
employment termination date and (B) shall continue to be
exercisable until the option expiration date (determined
without regard to Executive's employment termination).
(iii) Supplemental Retirement Benefit. The Company shall provide
Executive with the supplemental retirement benefit set forth
in Section 8.
(c) Termination for Cause. In the event that Executive's employment is
terminated by the Company for Cause pursuant to Section 10(c) above:
(i) The Company shall provide Executive with the supplemental
retirement benefit set forth in Section 8 above.
(ii) If Executive notifies the Company in writing that he intends
to contest the termination for Cause, then the Company shall
continue to provide Executive with the compensation and
benefits that he would have received if he had continued in
employment until the issuance of a final determination
pursuant to the arbitration procedure set forth in Section 17
below that his employment was terminated for Cause or, if
earlier, the date Executive ceases to contest such
termination. If, however, the Company is the prevailing party
in such arbitration or Executive ceases to contest the
termination after having given the required notice, then the
Company shall have the right to recover from Executive all
compensation paid to Executive under this clause (ii) and the
reasonable cost of all benefits provided to him under this
clause (ii), in each case in excess of the amounts that would
have otherwise been payable or provided to him under this
Agreement; the Company shall have the further right to set off
any such amounts payable by Executive against any amounts
payable by the Company under this Agreement.
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(d) Termination by Executive for Good Reason. In the event that Executive
terminates his employment for Good Reason pursuant to Section 10(d)
above:
(i) Continuation of Compensation and Benefits. The Company shall
continue to provide Executive the compensation and benefits
set forth in Section 6 above that would have been payable to
him if he had continued to perform his normal duties and
responsibilities on a full-time basis until the earlier of (i)
December 31, 2006 or (ii) his death, subject to clause (ii)
below relating to the payment of annual incentive
compensation.
(ii) Annual Incentive Compensation. The Company shall pay Executive
the amounts described in this clause (ii) in lieu of the
annual incentive compensation set forth in Section 6(b) above:
(A) For each calendar year commencing after Executive's
last day of employment, the Company shall pay
Executive an amount equal to the incentive
compensation Executive would have earned under the
Company's annual incentive compensation plan for such
calendar year had the Company achieved 100% of such
plan's targets for such calendar year.
(B) For the calendar year in which Executive's employment
is terminated, the Company shall pay Executive (I)
the amount determined under Section 10(f) below, plus
(II) an amount equal to a pro rata portion (based on
the number of days remaining in the calendar year
following Executive's last day of employment) of the
incentive compensation Executive would have earned
under the Company's incentive compensation plan for
such calendar year had the Company achieved 100% of
such plan's targets for such calendar year.
(C) Payments for any calendar year under this clause (ii)
shall be made at the same time and in the same manner
as incentive compensation is paid to senior executive
officers who are participants in such annual
incentive compensation plan.
(iii) Stock Options. All outstanding unexercised stock options
granted to Executive under the Company's stock option plans
(A) shall become fully vested and exercisable as of his
employment termination date and (B) shall continue to be
exercisable until the option expiration date (determined
without regard to Executive's employment termination).
(iv) Special Retirement Benefits. Executive and his surviving
spouse will receive (A) the supplemental retirement benefit
described in Section 8 and (B) the additional retirement
health benefits described in Section 9 above, commencing on
the earlier December 321, 2006 or Executive's death.
(e) Termination by Executive without Good Reason. In the event that
Executive terminates his employment without Good Reason pursuant to
Section 10(f) above, Executive and his surviving spouse shall receive
only (A) the supplemental retirement benefits described in Section 8
and (B) the additional retirement health benefits described in Section
9 above, commencing as of the last day of Executive's employment.
(f) Annual Incentive Compensation. In the event that Executive's employment
is terminated for any reason prior to the last day of a calendar year,
the Company shall pay Executive (or his personal representative) an
amount equal to the pro rata portion (based on the number of days of
employment prior to the termination date) of the annual incentive
compensation that would have been payable to Executive if he had
continued in employment through the end of the calendar year. Such
amount will be paid at the same time and in the same manner as the
annual incentive compensation for such year is paid to other senior
executive officers.
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(g) Earned but Unpaid Compensation. Upon termination of Executive's
employment under Section 10 hereof, the Company shall pay Executive (or
his personal representative) any accrued but unpaid Base Salary for
services rendered to the date of termination, the amount of any
compensation previously earned and deferred by Executive, any earned
but unpaid incentive compensation for any calendar year ended prior to
the year in which his employment terminates, any accrued but unpaid
expenses required to be reimbursed under this Agreement, and any
vacation accrued to the date of the termination.
The Company shall pay all of the foregoing amounts, except for earned
but unpaid incentive compensation, within 30 days after the date of
termination; earned but unpaid incentive compensation for any calendar
year ended prior to the year in which Executive's employment terminates
shall be paid at the same time as the Company pays incentive
compensation to its other senior executives.
(h) Other Compensation and Benefits. Except as may otherwise be provided
under this Agreement,
(i) any benefits to which Executive may be entitled pursuant to
the plans, policies and arrangements referred to in Section
6(d) above shall be determined and paid in accordance with the
terms of such plans, policies and arrangements; and
(ii) Executive shall have no right to receive any other
compensation, or to participate in any other plan, arrangement
or benefit, with respect to future periods after such
termination or resignation.
12. ADDITIONAL COMPENSATION FOLLOWING CHANGE OF CONTROL.
(a) Applicability. Executive shall be entitled to the compensation and
benefits described in this Section 12 if (i) a Change of Control (as
hereinafter defined) occurs and (ii) prior to December 31, 2006,
Executive terminates his employment for Good Reason pursuant to Section
10(d) above.
(b) Additional Compensation. In addition to the compensation and benefits
set forth in Section 11(d) above, the Company shall pay Executive an
amount equal to the excess (if any) of:
(i) the product of (A) 2.99 TIMES (B) the sum of (I) an amount
equal to Executive's annual rate of Base Salary at the rate in
effect immediately prior his employment termination date and
(II) the amount of annual incentive compensation that the
Executive would have received had the Company achieved 100% of
the Company's incentive compensation plan targets for the
calendar year in which his employment termination date occurs;
over
(ii) the amount payable under Section 11(d) above;
provided, however, that in no event shall the additional cash
compensation payable under this Section 12(b) exceed an amount equal to
one dollar less than the amount that would trigger the excise tax
payable under Section 4999 of the Internal Revenue Code with respect to
"excess parachute payments," as defined in Section 280G of the Code, it
being the intention of the parties that the Company shall have no
obligation to make any payment under this Section 12(b) to Executive
upon termination of his employment that would result in the requirement
to pay such excise tax. Such additional cash compensation shall be
payable to Executive in a single lump sum within thirty (30) days after
his employment termination.
(c) Subject to the provisions of Section 12(d), the amount described in
Section 12(b) shall be initially determined by a certified public
accounting firm designated by the Company and agreed to by Executive
(the "Accounting Firm") which determination shall provide detailed
supporting calculations both to the Company and Executive. All fees and
expenses of the Accounting Firm shall be borne by the Company. The
determination of the Accounting Firm of the amount payable under
Section 12(b) shall be binding on the Company and Executive, and no
greater amount shall be owed by the Company. Notwithstanding the
preceding sentence, if any amount is finally determined pursuant to
Section 12(d) to be subject to the excise tax described in Section
12(b), the Executive shall repay excess amount to the Company within 90
days of such final determination.
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(d) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment
by Executive of the additional tax described in Section 12(b)
(determined without regard to the repayment obligation of the
Executive). Such notification shall be given as soon as practicable,
but no later than ten (10) business days, after Executive is informed
in writing of such claim and whether Executive chooses to defend such
claim at his own cost and expense or desires the Company to defend such
claim. If Executive notifies the Company that he desires the Company to
defend such claim, then the Company shall defend such claim at its cost
and expense. If Executive elects to have the Company defend such claim,
Executive shall apprise the Company of the notice of such claim and (i)
give the Company any information reasonably requested by the Company
relating to such claim, (ii) take such action in connection with
contesting such claim as the Company shall reasonably request from time
to time; and (iii) cooperate with the Company in good faith in order to
effectively contest such claim.
(e) Establishment of Trust. In the event that Executive notifies the
Company that this Section 12 is to become effective, the Company shall,
as soon as possible, but in no event later than five (5) business days
after receipt of notice, take the following actions:
(i) The Company shall establish an irrevocable trust for the
purpose of providing funds for the payment of the supplemental
retirement benefits payable pursuant to Section 7 of this
Agreement. Such trust shall be a grantor trust containing
provisions that are the same as, or are similar to, the
provisions contained in the model "rabbi trust" set forth in
IRS Revenue Procedure 92-64. The Company shall pay all costs
relating to the establishment and maintenance of the trust and
the investment of funds held in such trust.
(ii) The Company shall make an irrevocable contribution to the
Trust in an amount that is sufficient to pay Executive (and
his surviving spouse) the supplemental retirement benefits
pursuant to Section 7 above.
(f) Definitions. For purposes of this Section 12:
(i) "Change of Control" shall have the meaning set forth in
Appendix A attached to this Agreement.
(ii) "Change of Control Effective Date" means the date on which a
Change of Control occurs; provided that if (A) a Change of
Control occurs, (B) Executive's employment with the Company is
terminated prior to the date on which the Change of Control
occurs, and (C) such termination (I) was at the request of a
third party who has taken steps reasonably calculated to
effect a Change of Control or (II) otherwise arose in
connection or in anticipation of a Change of Control, then for
all purposes under this Section 12, the Change of Control
Effective Date shall mean the date immediately prior to the
date of such termination of employment.
13. RESTRICTIVE COVENANTS.
(a) Restrictions. Executive covenants that, except in furtherance of his
duties hereunder and as approved by the Board or Chief Executive
Officer:
(b) Competitive Activity. During the Restricted Period (as hereinafter
defined), Executive shall not directly or indirectly, own any interest
in, participate or engage in, assist, render any services (including
advisory services) to, become associated with, work for, serve (in any
capacity whatsoever, including, without limitation, as an employee,
consultant, advisor, agent, independent contractor, officer or
director) or otherwise become in any way or manner connected with the
ownership, management, operation, or control of, any business, firm,
corporation, partnership, trust or other business or governmental
entity (collectively, together with any individual, a "Person") that
engages in, or assists others in engaging in or conducting, any
business that deals, directly or indirectly, in products or services
similar to or competitive with the Company's product line or services
anywhere in the world that the Company does business as of Executive's
last day of employment; provided, however, that the restrictions set
forth above shall not be deemed to exclude the Executive from acting as
director of a corporation for the benefit of the Company with the
consent of the Board; and provided, further, that the restrictions set
forth above shall not be deemed to prohibit Executive from owning or
acquiring securities issued by any corporation whose securities are
listed on a national securities exchange or are quoted on NASDAQ or the
OTC Bulletin Board; provided that the Executive at no time owns,
directly or indirectly, beneficially or otherwise, one (1%) percent or
more of any class of any such corporation's outstanding capital stock.
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(c) (i) Non-solicitation of Customers. During the Restricted Period,
Executive shall not knowingly provide or solicit to provide to
any Person any goods or services that are competitive with
those provided by the Company or that would be competitive
with the goods or services that the Company has planned to
provide. The term "customer" shall mean any Person to whom the
Company has provided goods and services during the last five
(5) years of Executive's employment by the Company.
(ii) Non-Solicitation of Company Personnel. During the Restricted
Period, Executive will not solicit for employment, or attempt
to solicit, directly or by assisting others, any employee of
Company with whom Executive had contact during Executive's
employment with the Company. For the purposes of this
paragraph, "contact" means any interaction whatsoever between
Executive and the other employee.
(iii) Protected Information. Executive shall not divulge to others,
nor shall he use at any time during the Restricted Period or
thereafter, any confidential or trade secret information
obtained by him during the course of his employment with the
Company, including information relating to sales, salesmen,
sales volume or strategy, customers, formulas, processes,
methods, machines, manufactures, compositions, ideas,
improvements or inventions belonging to or relating to the
business of the Company, or its subsidiary or affiliated
companies.
(iv) Non-Disparagement. Executive covenants and agrees that during
the Restricted Period or at any time thereafter, Executive
shall not, directly or indirectly, in public or private,
deprecate, impugn, disparage, or make any remarks that would
tend to or be construed to tend to defame the Company or any
of its employees, members of its board of directors or agents,
nor shall Executive assist any other person, firm or company
in so doing.
(b) Definition of "Restricted Period." For purposes of this Agreement, the
term "Restricted Period" shall mean the Employment Period and the
period of five (5) years after the end of the Employment Period.
(c) Enforcement of Covenants. Executive acknowledges that his breach of any
of the restrictive covenants contained in this Section 12 may cause
irreparable damage to the Company for which remedies at law would be
inadequate. Accordingly, if Executive breaches or threatens to breach
any of the provisions of this Section 12, the Company shall be entitled
to appropriate injunctive relief, including, without limitation,
preliminary and permanent injunctions, in any court of competent
jurisdiction, restraining Executive from taking any action prohibited
hereby. This remedy shall be in addition to all other remedies
available to the Company at law or in equity. If any portion of this
Section 12 is adjudicated to be invalid or unenforceable, this Section
12 shall be deemed amended to delete there from the portion so
adjudicated, such deletion to apply only with respect to the operation
of this Section 12 in the jurisdiction in which such adjudication is
made.
14. PROPRIETARY PROPERTY.
(a) Ownership of Proprietary Property. Executive agrees that any and all
inventions, discoveries, investigations, know-how, trade secrets and
developments or improvements in technology (collectively "Inventions")
as well as any and all Proprietary Information (as defined in Section
14(b)) created, developed, conceived of or discovered during the
Employment Period (i) by Executive (solely or jointly with others)
either (A) in the course of his employment or engagement, on the
Company's time or with the Company's materials or facilities, or (B)
relating to any subject matter with which his work for the Company is
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or may be concerned or to any business in which the Company or any of
its subsidiaries or affiliated companies is involved, regardless of how
or when he shall have created, developed, conceived, or discovered such
Inventions or Proprietary Information (collectively, "Proprietary
Property"), or (ii) by or for the Company, or (iii) by any independent
Person and thereafter acquired by the Company, and which are within the
Executive's knowledge or possession in the case of (i) above or that
come into the Executive's knowledge or possession during the Restricted
Period in the case of (ii) or (iii) above, shall be, if created,
developed, conceived of or discovered by the Executive, promptly
disclosed to the Company, or shall be, if otherwise developed or
acquired by the Company, received by Executive as an employee,
consultant or retiree of the Company and not in any way for his own
benefit. Executive shall neither have nor obtain any right, title or
interest in or to such Proprietary Property unless and until the
Company shall expressly and in writing waive the rights that it has
therein and thereto under the provisions of this Section. With respect
to any and all Proprietary Property that is invented, created, written,
developed, furnished or produced by Executive, or suggested by
Executive to the Company, during the Employment Period, Executive does
hereby agree that all such Proprietary Property shall be the exclusive
property of the Company, and that the Executive shall neither have nor
retain any right, title or interest, of any kind therein and thereto or
in and to any results or proceeds there from. At any time, whether
during or after the Employment Period, the Executive will, upon the
request and at the expense of the Company, (A) obtain patents or
copyrights on, or (B) permit the Company to patent or copyright, any
such Proprietary Property, whichever (A) or (B) is appropriate, and/or
(C) execute, acknowledge and deliver any and all assignments,
instruments of transfer, or other documents, that the Company deems
necessary or appropriate to transfer to and vest in the Company all
right, title and interest in and to such Proprietary Property and to
evidence the Company's ownership of such Proprietary Property,
including, without limitation, taking all steps necessary to enable the
Company to publish or protect said Proprietary Property by patents or
otherwise in any and all countries and to render all such assistance as
the Company may require in any patent office proceeding or litigation
involving said Proprietary Property. Executive shall not, without
limitation as to time or place, use any Proprietary Property except on
Company business, during or after the Employment Period, nor disclose
the same to any other Person or individual except for disclosure on
Company business or as may be required by law.
(b) Definition of Proprietary Information. As used in this Agreement,
"Proprietary Information" means any information about the affairs of
the Company or any of its subsidiaries or affiliates, including,
without limitation, trade secrets, trade "know-how", inventions,
customer lists, client lists, business plans, operational methods,
pricing policies, marketing plans, sales plans, identity of suppliers,
trading positions, sales, profits or other financial information,
which is confidential to the Company or any of its subsidiaries or
affiliates or is not generally known in the relevant trade, regardless
of whether Executive developed such information.
(c) Disclosure of Proprietary Property. During the Employment Period and
thereafter, the Executive will not, directly or indirectly, lecture
upon, publish articles concerning, use, disseminate, disclose, sell or
offer for sale any Proprietary Property without the Company's prior
written permission.
15. INDEMNIFICATION.
(a) The Company agrees that if the Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he is or was a director,
officer or employee of the Company or is or was serving at the request
of the Company as a director, officer, member, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, including services with respect to employee benefits plans,
whether or not the basis of such Proceeding is the Executive's alleged
action in an official capacity while serving as a director, officer,
employee or agent, the Executive shall be indemnified and held harmless
by the Company to the fullest extent legally permitted or authorized by
the Company's certificate of incorporation or bylaws or resolutions of
the Board or, if greater, by the laws of the Company's state of
incorporation against all cost, expense, liability and loss (including
without limitation, attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to the Executive
even if he has ceased to be a director, member, employee or agent of
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the Company or other entity and shall inure to the benefit of the
Executive's heirs, executors and administrators. The Company shall
advance the Executive all reasonable costs and expenses incurred by him
in connection with a Proceeding within twenty (20) days after receipt
by the Company of a written request for such advance. Such request
shall include an undertaking by the Executive to repay the amount of
such advance if it shall ultimately be determined that he is not
entitled to be indemnified against such costs and expenses.
(b) Neither the failure of the Company (including its Board, independent
legal counsel or shareholders) to have made a determination prior to
the commencement of any Proceeding concerning payment of amounts
claimed by the Executive under paragraph (a) above that indemnification
of the Executive is proper because he has met the applicable standard
of conduct, nor a determination by the Company (including its Board,
independent legal counsel or shareholders) that the Executive has not
met such applicable standard of conduct, shall create a presumption
that the Executive has not met the applicable standard of conduct.
(c) The Company shall continue and maintain Directors and Officers
Liability Insurance covering the Executive to the extent the Company
provides such coverage for its other senior executive officers.
16. WITHHOLDING OF TAXES.
Except for Executive's services to be provided under Section 7, above, the
Company shall withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local, or other taxes.
17. ARBITRATION OF DISPUTES.
Except as provided in Section 13 above, any dispute, controversy or claim
arising out of or pursuant to this Agreement or the breach hereof shall be
settled by arbitration in the City of New York, State of New York. Such
arbitration shall be effected by arbitrators selected as hereinafter provided
and shall be conducted in accordance with the National Rules for the Resolution
of Employment Disputes, existing at the date thereof, of the American
Arbitration Association. The dispute, controversy or claim shall be submitted to
three arbitrators, one arbitrator to be selected by the Company, one arbitrator
to be selected by the Executive and the third arbitrator to be selected by the
two so selected by the Company and the Executive, or if they cannot agree on a
third, by the American Arbitration Association. In the event that either the
Company or the Executive within one (1) month after notification of any demand
for arbitration hereunder, shall not have selected its arbitrator and given
notice thereof to the other party in accordance with the terms of Section 23 of
this Agreement, the arbitrator for such party shall be selected by the American
Arbitration Association. Meetings of the arbitrators shall be held in New York,
New York, or at such other place or places as may be agreed upon by the parties
and the arbitrators. The results of final determination of any such arbitration
proceedings shall be binding on the parties hereto and a judgment may be entered
in any court having jurisdiction.
18. PAYMENT OF FEES, EXPENSES AND INTEREST.
If Executive is the prevailing party in any arbitration conducted under Section
17 hereof, the Company shall promptly reimburse Executive for all fees and
expenses (including legal, consultants' and other professional fees and
expenses) incurred by Executive in connection with such arbitration. In
addition, the Company shall pay Executive interest on any delayed payment under
this Agreement at the applicable federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code (or any successor to such section).
19. NO CLAIM AGAINST ASSETS.
Nothing in this Agreement shall be construed as giving Executive any claim
against any specific assets of the Company or as imposing any trustee
relationship upon the Company in respect of Executive. Subject to Section 12
above and Section 20 below, the Company shall not be required to establish a
special or separate fund or to segregate any of its assets in order to provide
for the satisfaction of its obligations under this Agreement. Executive's rights
under this Agreement shall be limited to those of an unsecured general creditor
of the Company and its affiliates.
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20. SUCCESSORS AND ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns.
(a) Company Successor. In the event of a Change of Control, the Company
shall require any person (or persons acting as a group) who acquires
ownership or effective control of the Company or ownership of a
substantial portion of the business or assets of the Company (whether
direct or indirect, by purchase, merger, consolidation or otherwise),
by agreement in form and substance reasonably satisfactory to
Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent as the Company would be required
to perform it if no such Change of Control had taken place. In the
event that the Company fails to obtain such agreement prior to or
concurrently with the effectiveness of any such Change of Control, the
Company shall establish an irrevocable trust fund or similar
arrangement containing assets sufficient to assure payment of all
obligations under this Agreement provided that Executive's right to
payment from such trust fund or arrangement shall be no greater than
the right of an unsecured creditor of the Company and its affiliates.
As used in this Agreement, the "Company" shall mean the Company as
defined in the first sentence of this Agreement and any Person (or
group) that acquires ownership or effective control of the Company or
ownership of a substantial portion of the business or assets of the
Company or which otherwise becomes bound by all the terms and
provisions of this Agreement, whether by the terms hereof, by operation
of law or otherwise.
(b) Assignment by Executive. The rights and benefits of Executive under
this Agreement are personal to him and no such right or benefit shall
be subject to voluntary or involuntary alienation, assignment or
transfer; provided, however, that nothing in this Section 20 shall
preclude Executive from designating a beneficiary or beneficiaries to
receive any benefit payable on his death.
21. ENTIRE AGREEMENT; AMENDMENT.
This Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Executive and the Company or any of its
subsidiaries or affiliated entities relating to the terms of Executive's
employment. It may not be amended except by a written agreement signed by both
parties.
22. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York applicable to agreements made and to be performed in that
State, without regard to its conflict of laws provisions.
23. NOTICES.
Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those persons listed below at
their following respective addresses or at such other address as each may
specify by notice to the others:
To the Company:
Paxar Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
To Executive:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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24. MISCELLANEOUS.
(a) No Set-Off, etc. Except as otherwise provided in Section 10(c)(ii), the
Company's obligation to make the payments provided for in this
Agreement and otherwise perform its obligations under this Agreement
shall not be affected by any set-off, counterclaim, defense, or other
claim, right, or action that the Company may have against Executive.
(b) Waiver. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver
thereof or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
(c) Severability. If any term or provision of this Agreement is declared
illegal or unenforceable by any court of competent jurisdiction and
cannot be modified to be enforceable, such term or provision shall
immediately become null and void, leaving the remainder of this
Agreement in full force and effect.
(d) Headings. Section headings are used herein for convenience of reference
only and shall not affect the meaning of any provision of this
Agreement.
(e) Rules of Construction. Whenever the context so requires, the use of the
singular shall be deemed to include the plural and vice versa.
(f) Term of Payments to and Benefits for Surviving Spouse. If ▇▇▇▇▇
▇▇▇▇▇▇▇▇, Executive's spouse on the date of this Agreement, is
Executive's surviving spouse at the time of his death, then she shall
be entitled to receive the payments to and benefits provided for a
surviving spouse under Sections 8, 9 and 11 of this Agreement for the
periods specified therein. However, if ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is not
Executive's surviving spouse at the time of his death, for purposes of
Sections 8, 9 and 11 of this Agreement, Executive's surviving spouse,
if any, shall be entitled to receive the amounts payable to and
benefits provided for a surviving spouse under this Agreement until the
earlier of (i) the date of such surviving spouse's death or (ii) the
last date on which ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ would have been entitled to receive
such payment or benefit, the date of death of such surviving spouse
being deemed to be the last day of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇'▇ life expectancy
used by the Company for purposes of preparing the Company's financial
statements to determine the accrual of the Company's expenses resulting
from such payments and benefits.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, and such counterparts will together constitute but one
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the first day of October, 2004.
/s/ LeoBenetar /s/ ArthurHershaft
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▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chairman, Executive Development &
Compensation Committee
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APPENDIX A
DEFINITION OF CHANGE OF CONTROL
For purposes of Section 11 of this Agreement, "Change of Control" means:
(a) The acquisition by any individual, entity, or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or
more of either (1) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (2) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this clause (A), the following acquisitions of stock shall
not result in a Change of Control: (1) any acquisition directly from
the Company, (2) any acquisition by the Company, (3) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company, or (4) any
acquisition by any corporation pursuant to a transaction that complies
with clauses (1), (2), and (3) of subsection (c) of this definition; or
(b) Individuals who, as of the date hereof, constitute the Company's Board
of Directors (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Company's Board of Directors; provided,
however, that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election, by the Company's
shareholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Company's Board of Directors; or
(c) Consummation of a reorganization, merger, or consolidation or sale or
other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless following such
Business Combination, (1) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of, respectively, the
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination, including, without limitation, a
corporation that as a result of such transaction owns the Company or
all or substantially all of the Company's assets either directly or
through one or more subsidiaries (any such corporation being referred
to herein as a "Resulting Corporation"), in substantially the same
proportions as their ownership of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be,
immediately prior to such Business Combination, (2) no Person
(excluding any employee benefit plan (or related trust) of the Company
or a Resulting Corporation) beneficially owns, directly or indirectly,
30% or more of, respectively, the outstanding shares of common stock of
the Resulting Corporation or the combined voting power of the then
outstanding voting securities of such Resulting Corporation except to
the extent that such ownership existed prior to the Business
Combination, and (3) at least a majority of the members of the board of
directors of the Resulting Corporation were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.