EMPLOYMENT AGREEMENT
BETWEEN
W. ▇▇▇▇▇ ▇▇▇▇▇
AND
CHECKPOINT SYSTEMS, INC.
THIS AGREEMENT is made as of the 27 day of April, 2000,
by and between CHECKPOINT SYSTEMS, INC. a Pennsylvania
corporation ("CSI"), and W. ▇▇▇▇▇ ▇▇▇▇▇ ("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 - Finance, Chief Financial Officer and
Treasurer 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
- Finance, Chief Financial Officer and Treasurer. Executive
agrees to serve CSI in such capacity, subject to the terms and
conditions of this Agreement, for a term of two (2) calendar
years, commencing on the date hereof (the "Term").
2. Duties.
A. During the Term, Executive shall use his best
efforts to perform all duties required in furtherance of his
position as outlined in Exhibit "A" or as are assigned to him
from time to time by the Chief Executive Officer of CSI.
B. Executive shall diligently and faithfully
devote his entire time, energy, skill, and best efforts to
perform his duties under this Agreement. Executive shall conduct
himself at all times so as to advance the best interests of CSI,
and shall not undertake or engage in any other business activity
or continue or assume any other business affiliations which
conflict or interfere with the performance of his services
hereunder without the prior written consent of the Chief
Executive Officer of CSI.
3. Compensation.
CSI shall pay Executive and Executive shall
accept, as his base compensation for all services rendered to CSI
pursuant hereto:
A. During the Term, an annual base salary of
$200,000., (the "Base Salary"), payable at regular intervals in
accordance with CSI's normal payroll practice, which Base Salary
shall be adjusted as of January 1st during the Term hereof,
effective as of the aforesaid date. The amount of such
adjustment, while in the discretion of the Chief Executive
Officer and the Board of Directors, shall reflect Executive's
performance; and
B. In addition to the Base Salary payable to
Executive under Subsection 3A above, upon achieving the certain
goals and objectives as defined in CSI's Bonus Pool Plan,
attached hereto as Exhibit B, an incentive bonus ("Bonus") shall
be paid for each year of the Term in accordance with the terms of
said Bonus Pool Plan, which Bonus Pool Plan may be amended or
revoked by CSI at any time during the term hereof.
4. Fringe Benefits and Other Compensation.
A. During the Term, Executive shall be entitled
to participate in and receive the program of executive fringe
benefits, subject only to Executive's meeting or satisfying the
eligibility requirements and standards therefor with regard to
health, life and disability insurance benefits. Said program of
executive fringe benefits may be amended or revoked by CSI at any
time during the term hereof.
5. Termination.
A. Executive's employment and rights to
compensation hereunder shall terminate immediately if Executive
voluntarily leaves the employment of CSI, except that CSI shall
have the obligation to pay Executive such portion of his Base
Salary provided for in Subsection 3A hereof as may be accrued but
unpaid (including vacation pay) on the date Executive voluntarily
leaves the employment of CSI. Executive shall have no right to
receive any Bonus payments that have accrued and are payable if
Executive voluntarily leaves the employment of CSI, it being the
understanding of the parties that in this event, the amount and
payment of any accrued Bonus shall be in the sole discretion of
the Board of Directors of CSI. In the event that Executive
voluntarily leaves the employment of CSI, he shall provide at
least thirty (30) days written notice.
B. CSI may upon written notice to Executive
giving the reasons therefor terminate Executive's employment and
his rights to compensation hereunder for cause. As used herein,
the term "cause" shall include and be limited to, the following:
conviction of Executive for any felony, fraud or embezzlement or
crime of moral turpitude; being held liable by a court of
competent jurisdiction for sexual harassment in violation of
applicable federal, state or local laws; controlled substance
abuse, alcoholism or drug addiction which interferes with or
affects Executive's responsibilities to CSI or which reflects
negatively upon the integrity or reputation of CSI; or
Executive's breach of any of the material covenants contained in
this Agreement which breach is not cured within ten (10) days of
the receipt of written notice thereof by Executive. If Executive
is terminated for cause as provided above, Executive's employment
and rights to compensation hereunder shall terminate immediately
upon receipt of written notice except that CSI shall have the
obligation to pay Executive such portion of his Base Salary as
may be accrued but unpaid on the date his employment is
terminated. Executive shall have no right to receive any Bonus
payments that have accrued and are payable if Executive is
terminated for cause as provided above.
C. If Executive is terminated by CSI during the
Term hereof, for reasons other than those provided in Subsections
5A or 5B above, and provided that Executive is not in violation
of the provisions of Section 6 hereof, Executive shall be
entitled to receive severance pay for a period of eighteen (18)
months thereafter (or such shorter period ending on the date
Executive obtains other employment, but in no event less than
twelve (12) months after termination) consisting of the 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, life and disability
insurance benefits and payments in lieu of 401(K) benefits (in
the same manner such payments are made as of the date of this
Agreement) contemporaneously with the severance pay. If the
Executive's employment with CSI terminates during the Term and
after a Change in Control or Potential Change in Control (as
those terms are hereinafter defined), the Executive shall be
entitled to receive, in lieu of the foregoing, the Change in
Control Severance Benefits (as that term is hereinafter defined).
However, the Executive shall not be entitled to receive the
Change in Control Severance Benefits if he voluntarily leaves the
employ of CSI, other than his voluntary leaving after any of the
following events occur:
(a) The Executive is assigned to any duties
substantially inconsistent with his position, duties,
responsibilities or status with CSI or a substantial
reduction of the aforesaid duties, in each case as set
forth in Exhibit A to this Employment Agreement;
(b) The relocation of the Executive's office
to a geographic area which is more than thirty (30)
miles from the city limits of Philadelphia;
(c) An adjustment of the Executive's Base
Salary pursuant to Section 3 which results in a
reduction in the Executive's Base Salary; or
(d) The failure by CSI to obtain the
assumption of the obligation to perform this Agreement
by any successor entity in the Change in Control.
For the purposes of this Subsection 5C, the following
terms shall have the following meanings:
(a) A "Change in Control" occurs upon any
one of the following circumstances or events:
(i) The stockholders of CSI approve a
transaction or transactions (however denominated or
effectuated) with another corporation or other entity
("Combination"), and immediately after such
transaction(s) less than eighty percent (80%) of the
combined voting power of the then outstanding
securities of such corporation or entity will be held
in the aggregate by the holders of securities entitled,
immediately prior to such Combination, to vote
generally in the election of directors of CSI ("Voting
Stock");
(ii) The stockholders of CSI approve a
consolidation (however denominated or effectuated)
pursuant to a recommendation of the Board of Directors;
(iii) At any time, Continuing
Directors (as herein defined) shall not constitute a
majority of the members of the Board of Directors
("Continuing Director" means (i) each individual who
has been a director of CSI for at least twenty-four
(24) consecutive months before such time and (ii) each
individual who was nominated or elected to be a
director of CSI by at least two-thirds of the
Continuing Directors at the time of such nomination or
election);
(iv) The stockholders of CSI approve
the sale of all or substantially all of its assets to
any other corporation or other entity, and less than
eighty percent (80%) of the combined voting power of
the then outstanding securities of such corporation or
other entity immediately after such transaction will be
held in the aggregate by the holders of Voting Stock
immediately prior to such sale;
(v) Any person or entity becomes the
beneficial owner, directly or indirectly, of securities
of CSI representing more than twenty percent (20%) or
more of the then outstanding shares of Voting Stock
(not including in the securities beneficially owned by
such person or entity any securities acquired directly
from CSI or its affiliates);
(vi) The stockholders of CSI approve a
plan of complete liquidation or dissolution of CSI; or
(vii) The Board of Directors determines
by a majority vote that, because of the occurrence, or
the threat or imminence of the occurrence, of another
event or situation with import or effects similar to
the foregoing, the Executive should be entitled to the
benefits of this Section.
Notwithstanding the foregoing, unless otherwise
determined in a specific case by majority vote of the
Board of Directors, a Change in Control for purposes of
this Agreement shall not be deemed to have occurred
solely because (a) CSI, (b) an entity of which CSI is
the direct or indirect beneficial owner of fifty
percent (50%) or more of the voting securities or (c)
any CSI-sponsored employee stock ownership plan or any
other employee benefit plan of CSI becomes the
beneficial owner of shares of Voting Stock, whether in
excess of twenty percent (20%) or otherwise, or because
CSI reports that a change in control of CSI has or may
have occurred or will or may occur in the future by
reason of such beneficial ownership. The foregoing
definition shall supersede the definition of Change in
Control set forth in Subsection 5D(ii) of the
Agreement.
(b) The "Change in Control Severance
Benefits" shall be the following:
(i) the amounts of the Executive's Base
Salary and Bonus which are accrued and payable through
the date of the termination of the Executive's
employment, which amounts will be paid within thirty
(30) days after the date the Executive's employment is
terminated;
(ii) a lump sum payment in an amount
equal to two hundred percent (200%) of the Executive's
highest Base Salary in effect during the Term, which
lump sum payment will be made within thirty (30) days
after the date the Executive's employment is
terminated,
(iii) the continuation of the
Executive's health insurance benefits, life and
disability insurance benefits and payments in lieu of
401K benefits (in the same manner such payments are
made as of the date of this Agreement) for a period of
twenty four (24) months (or thirty six (36) months as
the case may be) after the date the Executive's
employment is terminated. The Executive shall continue
to make such contributions with respect to such
continued benefits as are required of the Executive
prior to the termination of his employment; and
(iv) in the event that any payment or
benefit provided by CSI to the Executive (whether
pursuant to this Agreement or otherwise) (a "Payment")
would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended,
or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive
an additional payment (a "Gross-Up Payment") in an
amount such that, after payment by the Executive of all
taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed on
the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payments.
(c) A "Potential Change in Control" occurs
upon any one of the following circumstances or events:
(i) CSI enters into an agreement, the
consummation of which would result in the occurrence of
a Change in Control;
(ii) CSI or any person or entity
publicly announces an intention to take or consider
taking actions which, if consummated, would result in
the occurrence of a Change in Control;
(iii) any person or entity becomes the
beneficial owner, directly or indirectly, of securities
of CSI representing more than fifteen percent (15%) or
more of the then outstanding shares of Voting Stock
(not including in the securities beneficially owned by
such person or entity any securities acquired directly
from CSI or its affiliates); or
(iv) the Board of Directors adopts a
resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.
Notwithstanding the foregoing, unless otherwise determined in a
specific case by majority vote of the Board of Directors, a
Potential Change in Control for purposes of this Agreement shall
not be deemed to have occurred solely because (a) CSI, (b) an
entity of which CSI is the direct or indirect beneficial owner of
fifty percent (50%) or more of the voting securities or (c) any
CSI-sponsored employee stock ownership plan or any other employee
benefit plan of CSI becomes the beneficial owner of shares of
Voting Stock, whether in excess of fifteen percent (15%) or
otherwise, or because CSI reports that a change in control of CSI
has or may have occurred or will or may occur in the future by
reason of such beneficial ownership."
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
Acquirer 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 Acquirer;
E. 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 for a period of eighteen (18) months thereafter (or
such shorter period ending on the date Executive obtains other
employment, but in no event less than twelve (12) months after
the date he leaves the employ of CSI) consisting of the payment
of one hundred percent (100%) of Executive's monthly Base Salary
at the end of the term payable at regular intervals and
continuation of health insurance benefits, life and disability
insurance benefits and 401(K) benefits contemporaneous with the
severance pay."
F. If Executive is terminated by CSI during the
Term hereof, for reasons other than those provided in Subsections
5A or 5B above, or if this Agreement is not renewed, CSI shall
provide Executive outplacement consulting services comparable to
those received by senior officials of similar organizations.
G. If Executive becomes unable to perform his
duties hereunder due to partial or total disability or incapacity
resulting from a mental or physical illness, injury or any
similar cause, CSI will continue the payment of Executive's total
compensation at his then current rate for a period of six (6)
months following the date Executive is first unable to perform
his duties due to such disability or incapacity. Thereafter, CSI
shall have no obligation for the Base Salary or other
compensation payments to Executive during the continuance of such
disability or incapacity, except that CSI shall pay to Executive,
based upon the portion of the calendar year that Executive was
able to perform his duties prior to the disability, the pro rata
portion of the Bonus that Executive would have earned if he had
remained in the employ of CSI for the full calendar year (payable
at such time that Executive would have received such Bonus).
Executive shall receive CSI's standard disability coverage.
H. If Executive dies, all payments hereunder
shall continue for a period of two (2) months after the end of
the week in which Executive's death shall occur, at which point
such payments shall cease and CSI shall have no further
obligations or liabilities hereunder to Executive's estate or
legal representative or otherwise, except that CSI shall pay to
Executive's estate or legal representation, based upon the
portion of the calendar year that Executive was employed by CSI
prior to his death, the prorated portion of the Bonus Executive
would have earned if he had remained in the employ of CSI for the
full calendar year (payable at such time that Executive would
have received such Bonus).
I. CSI's obligation to make payments hereunder is
purely contractual and a general obligation of CSI and the
amounts payable hereunder shall not be held by CSI in a trust or
segregated fund for Employee nor shall Employee have any right
against CSI or any director, officer or employee of CSI, in
respect of any payment hereunder other than as a general creditor
of CSI.
J. Upon termination of employment, all vested
stock options granted under the CSI Stock Option Plan (1992) will
be treated in accordance with the terms of the CSI Stock Option
Plan (1992).
6. Confidentiality and Covenant Not to Compete.
A. Executive covenants and agrees that he will
at all times keep confidential and will not at any time, except
with the prior written consent of CSI, directly or indirectly,
communicate or disclose or use for his benefit or the benefit of
any Person (as defined in subsection 9E hereof) except CSI, any
trade secrets or confidential or proprietary information of CSI
or any of its affiliates including, but not limited to, strategic
planning documents, data, reports, records, plans, policies,
applications, and other documents, and Executive will also use
his best efforts to prevent unauthorized disclosure by others.
B. Executive agrees not to compete with CSI in
any manner whatsoever, as an employee, shareholder, director,
creditor, joint venturer, consultant, or otherwise, or any
currently existing or hereinafter created subsidiary, joint
venture, or business line of CSI, at any time during this
Agreement, and for a period of two years following the date of
termination of employment in the area constituting the United
States, Puerto Rico and Europe.
C. The parties agree that any breach by
Executive of the covenants contained in this Section 6 will
result in irreparable injury to CSI for which money damages could
not adequately compensate CSI, and therefore, in the event of any
such breach, CSI shall be entitled (in addition to any other
rights and remedies which it may have at law or in equity) to
have an injunction issued by any competent court of equity
enjoining and restraining Executive and/or any other Person
involved therein from continuing such breach. The covenants
contained in this Section 6 are independent of all other
covenants between Executive and CSI.
D. If any portion of the covenants or agreements
contained herein, or the application thereof, is construed to be
invalid or unenforceable, then the other portions of such
covenant(s) or agreement(s) or the application thereof shall not
be affected and shall be given full force and effect without
regard to the invalid or unenforceable portions.
E. All information, lists, data, reports,
records, plans, policies, applications, and other papers,
articles, and materials of any kind relating to CSI's business
and obtained by Executive in the course of his association with
CSI, whether developed by him or not, shall be and remain CSI's
property and will be returned to CSI along with any and all
copies thereof, at such time as Executive ceases to be an
employee of CSI.
7. Conflict of Interest.
A. Executive represents and warrants that he is
not subject to any restrictions or prohibitions whatsoever, and
has no interest whatsoever, contractual or otherwise, which would
in any way prevent, restrict or interfere with his right and/or
ability to enter into this Agreement and perform hereunder, or
which would create a conflict of interest for him or for CSI.
B. Executive covenants that, during the Term, he
will disclose to CSI, in writing, any and all interests he may
have, whether for profit or compensation or not, in any venture
or activity which could interfere with his ability to perform
under this Agreement or create a conflict of interest for him or
for CSI.
8. Notices.
All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed
to have been duly given if delivered by hand or mailed, certified
or registered mail, return receipt requested, with postage
prepaid, at the following addresses or to such other address as
either party may designate by like notice:
A. If to Executive, to:
W. ▇▇▇▇▇ ▇▇▇▇▇
B. If to CSI, to:
Checkpoint Systems, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chairman of the Board of Directors
C. In all cases, copies to:
Stradley, Ronon, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
9. Additional Provisions.
A. This Agreement shall inure to the benefit of
and be binding upon CSI and its successors and assigns and
Executive, his heirs, executors, administrators and legal
representatives.
B. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter
hereof, and cannot be changed or terminated orally. This
Agreement supersedes all prior and contemporaneous written or
oral agreements between the parties relating to the subject
matter hereof. No modification or waiver of any of the
provisions hereof shall be effective unless in writing and signed
by the party against whom it is sought to be enforced.
C. If any provision of this Agreement shall be
or shall become illegal or unenforceable in whole or in part, for
any reason whatsoever, the remaining provisions shall
nevertheless be deemed valid, binding and subsisting.
D. No failure on the part of any party hereto to
exercise and no delay in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of
any other right, power or remedy.
E. "Person" as used herein shall mean a natural
person, joint venture, corporation, partnership, trust, estate,
sole proprietorship, governmental agency or authority or other
juridical entity.
F. This is a personal service contract and may
not be assigned by Executive. This Agreement may not be assigned
by CSI to any affiliate of CSI which accedes to or otherwise
carries on the business of CSI, whether by merger, liquidation,
consolidation or otherwise, unless the duties and
responsibilities of Executive remain substantially unchanged
after such assignment.
G. The headings of the several sections of this
Agreement have been inserted for convenience of reference only
and shall in no way restrict or modify any of the terms or
provisions hereof.
H. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State
of New Jersey, without regard to its conflicts of laws
principles. Subject to the provisions of Subsection 6C hereof,
all unresolved claims, demands or disputes between Executive and
CSI arising out of or relating to this Agreement, or the parties'
respective performances hereunder, shall be subject to binding
arbitration in the local Chapter in Philadelphia, Pennsylvania
pursuant to the Rules of the American Arbitration Association.
The prevailing party shall be entitled to reimbursement for all
costs, including reasonable attorneys' fees, associated with such
arbitration.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed on the date first above written.
ATTEST: CHECKPOINT SYSTEMS, INC.
_________________________ By:________________________________
WITNESS:
_________________________ ___________________________________
W. ▇▇▇▇▇ ▇▇▇▇▇
EXHIBIT A
TO
EMPLOYMENT AGREEMENT
VICE PRESIDENT - FINANCE, CHIEF FINANCIAL OFFICER AND TREASURER
This position reports directly to CSI's CEO and President.
The following positions report directly to this position: Vice
President, Corporate Controller; Director of Taxation; Director,
U.S. Controller and Director of Business Analysis.
The responsibilities of this position include:
- All accounting and financial functions worldwide
- All treasury functions, including investments, insurance,
foreign currency hedging, and tax
- Primary contact for Wall Street analysts and institutional
investors
- Merger and acquisition analysis and due diligence
- Primary contact for commercial and investment banking
relationships
- Assist in operational management of all subsidiaries
- Securities and Exchange Commission reports and compliance
EXHIBIT B
TO
EMPLOYMENT AGREEMENT
CHECKPOINT SYSTEMS, INC.
1999 BONUS PLAN
For 1999 the Board of Directors approved the 1999 Bonus Plan. The
1998 Bonus Plan provides for a Bonus Pool to be formed when
earnings per share ("EPS") increases over a defined target. The
Bonus Pool is then apportioned among four (4) groups of
employees; corporate officers; vice presidents, middle management
and front line employees. Each group has a targeted bonus
percentage assigned which is adjusted, depending on the
percentage increase or decrease over the targeted EPS growth.
Other than for Messrs. Aguilera, Dowd, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇, who's bonuses are determined solely on the basis of
financial performance of the Company, all participants will have
a percentage of their bonuses determined by individual
performance. No Bonus Pool will be formed unless 1999 EPS attains
a specified level. The specified minimum target for EPS was not
attained for the fiscal year 1999 and therefore no bonuses were
paid. No discretionary bonuses were paid for the fiscal year
1999.