EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and
between GEORGE OFF, a resident of the State of Colorado ("Executive"), and
CHECKPOINT SYSTEMS, INC., a corporation organized and existing under the laws of
the Commonwealth of Pennsylvania ("Company") as of August 15, 2002.
WHEREAS, in recognition of Executive's contributions to Company's
success and accomplishments during his tenure as an interim President and Chief
Executive Officer of Company, the Board of Directors of Company ("Board of
Directors") wishes to have the Company retain Executive and obtain his
commitment to continue to serve as President and Chief Executive Officer of
Company on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, and intending to be legally bound, the parties,
subject to the terms and conditions set forth herein, agree as follows:
1. Employment and Term. Executive hereby agrees to be employed as President
and Chief Executive Officer of Company, and Company hereby agrees to retain
Executive as President and Chief Executive Officer. By executing this Agreement
the Company confirms that the Board of Directors has approved this Agreement and
has elected Executive Chairman of the Board of Directors effective as of the
date hereof. The term of Executive's employment as President and Chief Executive
Officer under this Agreement (the "Term") shall be the period commencing on
August 15, 2002 and ending on December 31, 2005.
2. Duties. During the Term, Executive will have the titles of President and
Chief Executive Officer of Company. Executive shall report to and receive
instructions from Company's Board of Directors and shall assume such duties and
responsibilities as may be reasonably assigned to Executive from time to time by
the Board of Directors provided such duties are of a nature customarily assigned
to directors, presidents and chief executive officers of public companies
similarly situated. Without limitation, Executive shall have full authority and
discretion relating to the general and day-to-day management of the affairs of
the Company including, but not limited to, finances and other financial matters,
compensation matters (other than with respect to the compensation of Executive,
himself, if any, and the other executive officers of the Company which shall be
determined by the Compensation Committee of the Board of Directors), personnel
matters (other than such matters that relate to Executive himself), budgeting,
operations, intellectual property, investor relations, retention of
professionals and strategic planning and implementation. Executive will be the
most senior executive officer of the Company and all other executives and
businesses of the Company will report to Executive or his designee. The
foregoing language shall not be construed so as to limit the duties and
responsibilities of the Board of Directors as described in the Company's
Articles of Incorporation and Bylaws.
3. Other Business Activities. Executive shall serve Company faithfully and
to the best of his ability and shall devote his full business time, attention,
skill and efforts to the performance of the duties required by or appropriate
for his position as President and Chief Executive Officer. In furtherance of the
foregoing, and not by way of limitation, for so long as he remains President and
Chief Executive Officer of Company, Executive shall not directly or indirectly
engage in any other business activities or pursuits, except for those arising
from positions held as of August 15, 2002 as a director or otherwise with
charitable or business organizations, as identified by Executive to the Board of
Directors or such other activities as would not materially interfere with
Executive's ability to carry out his duties under this Agreement.
Notwithstanding the foregoing, Executive shall be permitted to engage in
activities in connection with (i) service as a volunteer, officer or director or
in a similar capacity of any charitable or civic organization, (ii) managing
personal investments, and (iii) serving as a director, executor, trustee or in
another similar fiduciary capacity for a non commercial entity; provided,
however, that any such activities do not materially interfere with Executive's
performance of his responsibilities and obligations pursuant to this Agreement.
4. Base Salary. The Company shall pay Executive a salary at the annual rate
of Six Hundred Seventy-Five Thousand Dollars ($675,000.00) (the "Base Salary"),
payable pursuant to the Company's normal practice, but no less frequently than
monthly. The Base Salary shall be inclusive of all applicable income, Social
Security and other taxes and charges which are required by law or requested to
be withheld by Executive and which shall be withheld and paid in accordance with
Company's normal payroll practice for its similarly-situated executives as in
effect from time to time. The Board of Directors, in consultation with
Executive, shall periodically review Executive's Base Salary during the Term, at
least annually (at times according to its customary practice) for increases
based on Executive's performance and other relevant factors.
5. Annual Incentive Compensation. Executive shall participate in an annual
incentive compensation program(s) to be developed by the Board of Directors
which will enable Executive to earn incentive compensation up to a maximum of
sixty percent (60%) of Base Salary provided specified goals and objectives
identified by the Board of Directors in consultation with Executive are
achieved. Such goals and objectives shall be identified no later than the end of
the first quarter of each calendar year and shall be consistent with the
Company's budgets and business plans which are reasonably achievable. Any
compensation payable to Executive pursuant to this Section shall be paid to
Executive no later than the date of publication of the Company's audited
financial statements for the prior fiscal year, whether or not Executive is then
employed by the Company, except as otherwise expressly limited in this
Agreement.
6. Stock Options. Executive shall be granted stock options under which he
may purchase up to a total of Three Hundred Thirty Seven Thousand Five Hundred
(337,500) shares of Company common stock (the "Stock Options") subject to the
terms and conditions set forth in this Agreement, the Company's Stock Option
Plan and, to the extent not inconsistent with this Agreement, to the terms and
conditions of stock options provided generally to Company executive officers.
Notwithstanding the foregoing, to the extent that this Agreement is contrary to
or inconsistent with the Company's Stock Option Plan, then the language of the
Company's Stock Option Plan shall apply and prevail. Consistent with the vesting
schedule and applicable law, the maximum number of shares subject to the option
shall qualify as incentive stock option shares under Section 422 of the Internal
Revenue Code. The Board of Directors, in consultation with Executive, shall
annually review the number of stock options granted to Executive in order to
determine if increases are appropriate after consideration of all relevant
factors including but not limited to options granted to other executive
employees.
6.1. Grants of Stock Options.
(a) One-Third (1/3) of the Stock Options (that is, options for One Hundred
Twelve Thousand Five Hundred (112,500) shares (the "2003 Stock Options")) shall
be fully vested and exercisable on August 15, 2003. An additional one-third of
the Stock Options (that is, options for One Hundred Twelve Thousand Five Hundred
(112,500) shares ("2004 Stock Options")) shall be fully vested and exercisable
on August 15, 2004. The remainder of the Stock Options (that is, options for One
Hundred Twelve Thousand Five Hundred (112,500) shares ("2005 Stock Options"))
shall be fully vested and exercisable on August 15, 2005, provided only that
Executive remains employed by the Company pursuant to this Agreement at the time
such vesting and exercisability are to occur. The Stock Options shall have an
exercise price equal to the mean between the highest and lowest quoted selling
prices as reported in customary financial reporting services on the date of
grant.
(b) Notwithstanding paragraph (a) of this Section 6.1, the Stock Options
shall become 100% vested upon Executive's termination of employment on account
of death or Disability, termination of employment by Company Without Cause,
termination of employment by Executive For Good Reason, or upon a Change in
Control, as each such term is defined in Section 10.3.
(c) In the event of Executive's termination of employment during the Term
of this Agreement for any reason other than a termination for Cause, the Stock
Options that are vested and exercisable on the date of such termination of
employment shall expire on the fifth annual anniversary of the date of such
termination of employment.
6.2. Anti-Dilution Adjustments. The number or type of shares or other
property subject to the Stock Options and the exercise price of the Stock
Options shall be appropriately and proportionately adjusted by the Board of
Directors if the class of securities which are subject to the Stock Options are
(i) exchanged for or converted into cash, property or a different number or kind
of shares or securities as a result of a reorganization, merger, consolidation,
recapitalization, restructuring or reclassification, or (ii) if the number of
securities of the class of securities then subject to the Stock Options are
increased or decreased or if cash, property or shares or securities are
distributed in respect of such subject securities as a result of a dividend
(other than a regular, quarterly cash dividend) or other distribution, stock
split, reverse stock split, spin-off or the like.
6.3. Tax Withholding. Executive shall pay in cash or make other
arrangements satisfactory to the Board of Directors for the satisfaction of any
withholding tax obligations that arise by reason of exercise of the Stock
Options. The Stock Options shall be exercisable, in whole or in part in cash, by
surrender of shares previously acquired or through a cashless exercise in
accordance with the terms of the Company's plan. Company shall not be required
to issue shares of common stock or to recognize the disposition of such shares
until such obligations are satisfied.
7. Other Benefits.
(a) Pension Plans. Executive shall be entitled to participate in all tax-
qualified and non-tax-qualified pension plans maintained or contributed to by
Company or for the benefit of its executives (collectively, the "Company Pension
Plans"), in accordance with the terms of such Company Pension Plans as they may
be amended from time to time in the discretion of the Company.
(b) Medical Insurance. During the Term of this Agreement, Executive shall
be entitled to participate in any medical and dental insurance plans generally
available to the senior management of Company, as such plans may be in effect
from time to time. For thirty months (30) months after termination of
Executive's employment with Company other than on account of termination by
Company for Cause or Executive Without Good Reason, Executive and his eligible
dependents or survivors shall be entitled to continue to participate in such
plans on the terms generally applied to actively employed senior management of
Company, including any employee cost-sharing provisions. To the extent the terms
and conditions of the aforesaid plans do not permit participation by Executive,
his dependents, or his survivors, Company shall arrange to provide Executive,
his dependents, or his survivors with the after-tax economic equivalent of such
continued coverage. After the termination of his employment with Company,
Executive shall cease to be covered under the foregoing medical and/or dental
insurance plans if he obtains coverage under other medical and/or dental
insurance plans; provided, however, that if the coverage under the new medical
and/or dental insurance plans is less than under the foregoing plans, Company
shall provide Executive with a cash payment in an amount necessary for Executive
to obtain coverage comparable to that provided under the foregoing plans.
(c) Other Benefit Plans. Executive shall be entitled to receive or
participate in such further savings, deferred compensation, health or welfare
benefit plans offered to Company's senior management generally, in accordance
with the terms of such plans as they may be amended from time to time in the
discretion of the Company.
(d) Perquisites; Expenses. The Company agrees to promptly reimburse
Executive for all reasonable business expenses incurred by Executive in
performing his duties pursuant to this Agreement, in accordance with Company's
reimbursement policies generally applicable to management personnel. During the
Term of this Agreement, Company agrees to provide Executive with such
perquisites as are generally made available to management personnel from time to
time, including the perquisites provided as of the date the Board of Directors
approves this Agreement.
(e) Vacation and Relocation. Executive shall be entitled to six (6) weeks
paid vacation annually, and to cash compensation in respect of accrued but
unused vacation days if Executive is terminated under the terms hereof, for the
calendar year in which such termination occurs. Executive shall also be entitled
to the Relocation benefits described in the attached Exhibit "A".
(f) Severance Upon Expiration of Term. Commencing at least nine (9) months
prior to the expiration of the Term of this Agreement, the Board of Directors
and Executive shall negotiate in good faith to extend the Term of Executives'
employment pursuant to terms and conditions similar to this Agreement. In the
event that the parties are unable to agree, then upon the expiration of the Term
of this Agreement, Executive shall receive, in one lump sum payment, an amount
equal to one (1) times the sum of the Base Salary as in effect as of the date of
the expiration of the Term and any other compensation received by Executive
pursuant to any bonus or incentive plan during the immediately preceding year,
in addition to any other amounts due to Executive pursuant to the terms hereof.
Those options granted during the nine (9) month period referred to in the first
sentence of this Section 7(f), shall expire immediately. However, all other
options granted pursuant to this Agreement; including, but not limited to, the
2005 Stock Options, shall vest immediately.
8. Nondisclosure of Confidential Information.
(a) Executive and Company acknowledge that Executive will, in the course of
his employment, come into possession of confidential, proprietary business and
technical information, and trade secrets of Company and its Affiliates (the
"Proprietary Information"). Proprietary Information includes, but is not limited
to, the following:
Business procedures. All information concerning the way Company and
its Affiliates conduct their business, which is not publicly available
or generally known in the industry or trade in which Company or its
Affiliates compete (such as Company contracts, internal business
procedures, controls, plans, licensing techniques and practices,
supplier, subcontractor and prime contractor names and contacts and
other vendor information, computer system passwords and other computer
security controls, financial information, distributor information, and
employee data) and the physical embodiments of such information (such
as check lists, samples, service and operational manuals, contracts,
proposals, printouts, correspondence, forms, listings, ledgers,
financial statements, financial reports, financial and operational
analyses, financial and operational studies, management reports of
every kind, databases, employment or personnel records, and any other
written or machine-readable expression of such information as are
filed in any tangible media).
Marketing Plans and Customer Lists. All information which is not
publicly available or generally known in the industry or trade in
which Company or its Affiliates compete pertaining to Company's and
its Affiliates' marketing plans and strategies; forecasts and
projections; marketing practices, procedures and policies; goals and
objectives; quoting practices, procedures and policies; and customer
data including the customer list, contracts, representatives,
requirements and needs, specifications, data provided by or about
prospective customers, and the physical embodiments of such
information.
Business Ventures: All information which is not publicly available or
generally known in the industry or trade in which Company or its
Affiliates compete concerning new product development, negotiations
for new business ventures, future business plans, and similar
information and the physical embodiments of such information.
Software. All information relating to Company's and its Affiliates'
software or hardware in operation or various stages of research and
development, which is not publicly available or generally known in
industry or trade in which Company or its Affiliates compete and the
physical embodiments of such information.
Litigation. Information which is not publicly available or generally
known in the industry or trade in which Company or its Affiliates
compete regarding litigation and potential litigation matters and the
physical embodiments of such information.
Policy Information. Information which is not publicly available or
generally known in the industry or trade in which the Company competes
regarding the policies and positions that have been or will be
advocated by Company and its Affiliates with governmental officials,
the views of government officials toward such policies and positions,
and the status of any communications that Company or its Affiliates
may have with any government officials.
Information Not Generally Known. Any information which (a) is not
available to the public or within the industry or trade in which
Company or its Affiliates compete, (b) gives Company or its Affiliates
a significant advantage over its or their competitors, or (c) has
significant economic value or potentially significant economic value
to Company or its Affiliates, including the physical embodiments of
such information.
"Proprietary Information" does not include (i) information which at
the time of disclosure or thereafter is in the public domain or is
already possessed by Executive, free of any confidentiality
obligation, (ii) information disclosed to Executive in good faith by a
third party who has an independent right to such information and who
discloses the same to Executive, free of any confidentiality
obligation, (iii) information which is independently developed by
Executive, (iv) information which the Company generally discloses to
third parties without imposing obligations of confidentiality thereon,
and (v) information known by Executive prior to entering into this
Agreement.
(b) Executive acknowledges that the Proprietary Information is a valuable
and unique asset of Company and its Affiliates. Executive agrees that he will
not, at any time during his employment or for a period of two (2) years after
the termination of his employment with Company, without the prior written
consent of Company or its Affiliates, as applicable, either directly or
indirectly divulge any Proprietary Information for his own benefit or for any
purpose other than the exclusive benefit of Company and/or its Affiliates.
9. Agreement Not to Compete.
(a) Executive agrees that he shall not compete with Company or its
Affiliates for the Restricted Period. The Restricted Period is defined as the
period beginning on the date hereof and ending (i) if Executive is terminated
for Cause (as defined in Section 10.4(a)) or Executive terminates this Agreement
Without Good Reason (as defined in Section 10.2(b)), on the date which is thirty
(30) months following the date of termination, (ii) if this Agreement is
terminated by the Company for any reason other than Cause or Executive for Good
Reason, on the date of such termination, and (iii) if this Agreement terminates
due to the expiration of the Term, on the date which is twelve (12) months
following the expiration of the Term.
(b) For the purposes of this Section 9, "compete" shall mean directly or
indirectly through one or more intermediaries (i) working or serving as a
director, officer, employee, consultant, agent, representative, or in any other
capacity, with or without compensation, on behalf of one or more entities
engaged in the Company's Business (as defined below) in any country where
Company (including any Affiliate) either engages in the Company's Business at
the time of Executive's termination or where Company, at the time of Executive's
termination, has developed a business plan or taken affirmative steps to engage
in the Company's Business, (ii) soliciting any employees of the Company other
than a general solicitation via any communication medium directed generally to
the public at large or to industry participants or if Executive's employer
solicited such employee without input or encouragement from Executive, and/or
(iii) inducing any customer or business partner of the Company to breach a
contract with the Company or otherwise cease doing business with the Company or
any principal for whom the Company acts as agent to terminate such agency
relationship. For purposes of this provision, the term "the Company's Business"
shall mean any business activity or line of business similar to the type of
business conducted by Company, and/or its Affiliates at the time of Executive's
termination of employment or which Company, and/or its Affiliates at the time of
Executive's termination of employment or within one year prior thereto have
developed a business plan or taken affirmative steps to enter into or conduct.
Executive expressly agrees that the markets served by Company and its Affiliates
extend worldwide and are not dependent on the geographic location of the
executive personnel or the businesses by which they are employed and that the
restrictions set forth in this Section 9 are reasonable and are no greater than
are required for the protection of Company, and its Affiliates. For purposes of
this Agreement, the term "Affiliate" shall be deemed to refer to Company, and
any entity (whether or not existing on the date hereof) controlling, controlled
by or under common control with Company.
10. Termination. Executive's employment hereunder may be terminated during
the Term upon the occurrence of any one of the events described in this Section
10 upon fifteen days prior written notice to Executive. Upon termination,
Executive shall be entitled only to such compensation and benefits as described
in this Section 10.
10.1. Disability and Death.
(a) Disability. If Executive becomes physically or mentally disabled to
such an extent that he has not been able to perform the duties set forth in
Section 2 of this Agreement, with or without a reasonable accommodation, for a
period of more than 180 days, either consecutively or within any 365-day period
("Disability"), Company may terminate Executive's employment hereunder. The
determination of whether Executive has a Disability under this Agreement shall
be made by the Board of Directors, which shall consider the information
presented by Executive's personal physician and by any other advisors, including
any other physician, which the Board of Directors determines appropriate. The
determination of the Board of Directors shall be final and binding, unless it is
determined to have been arbitrary and capricious. If the employment of Executive
terminates during the Term due to the Disability of Executive, Company shall
provide to Executive (i) whatever benefits are available to him under any
disability benefit plan(s) applicable to him at the time of such termination to
the extent Executive satisfies the requirements of such plan(s), and (ii) the
payments set forth in Section 10.1.(c).
(b) Death. If Executive dies during the Term, Company shall pay to
Executive's executors, legal representatives or administrators the payments set
forth in Section 10.1.(c). Except as specifically set forth in this Section 10.1
or under applicable laws, Company shall have no liability or obligation
hereunder to Executive's executors, legal representatives, administrators, heirs
or assigns or any other person claiming under or through him by reason of
Executive's death, except that Executive's executors, legal representatives or
administrators will be entitled to receive any death benefit payable to them as
beneficiaries under any insurance policy or other benefits plans in which
Executive participates as an employee of Company and to exercise any rights
afforded them under any benefit plan then in effect.
(c) Payment Upon Disability or Death. Upon termination of the employment of
Executive due to death or Disability during the Term, Company shall pay an
amount equal to all accrued but unpaid Base Salary through the date of
termination of employment, plus a portion of the Average Annual Incentive
Compensation (as defined in Section 10.2(d) below) pro-rated for the year
through the date of termination.
10.2. Termination By Company Without Cause; Termination By Executive For
Good Reason.
(a) Termination By Company Without Cause. The Company may terminate
Executive's employment hereunder at any time for any reason other than Cause,
Disability or Death upon thirty (30) days written notice to Executive
("Termination Without Cause").
(b) Termination By Executive For Good Reason. Executive may terminate his
employment hereunder at any time for Good Reason ("Termination for Good
Reason"). For purposes of this Agreement, Good Reason shall mean (i) a material
reduction in the position or responsibilities of Executive, provided that a
Change in Control (including the fact that the Company's stock is not publicly
held or is held or controlled by a single stockholder as a result of a Change in
Control) shall of itself be deemed a material reduction in the position or
responsibilities of Executive; (ii) a reduction in Executive's Base Salary or a
material reduction in Executive's compensation arrangements or benefits; (iii) a
substantial failure of Company to perform any material provision of this
Agreement; (iv) a relocation of Company's executive offices to a distance of
more than seventy-five (75) miles from its location as of the date of this
Agreement, unless such relocation results in Company's executive offices being
closer to Executive's then primary residence or does not substantially increase
the average commuting time of Executive; and (v) if Executive ceases
involuntarily (other than by reason of death, disability or Termination for
Cause) to be the Chairman of the Board of Directors.
(c) In the event of a Termination Without Cause or a Termination For Good
Reason, Company shall pay to Executive within forty-five (45) days after
termination an amount equal to all accrued but unpaid Base Salary through the
date of termination of employment, plus a portion of the Average Annual
Incentive Compensation pro-rated for the year through the date of termination,
plus the Multiplier times the Compensation Amount (as such terms are defined in
Section 10.2(d) below). In addition, upon Executive's Termination Without Cause
or Termination For Good Reason, the Stock Options shall fully vest and be
exercisable in accordance with Section 6.1(c).
(d) The Multiplier is defined as two and one-half (2-1/2). The Compensation
Amount is defined as the sum of (i) the annual Base Salary of Executive as in
effect immediately prior to Executive's termination of employment, and (ii) the
Average Annual Incentive Compensation. The Average Annual Incentive Compensation
shall be a cash payment determined as follows: (i) if the termination occurs on
or before December 31, 2003, the Average Annual Incentive Compensation shall be
deemed to equal one-half (1/2) of the maximum annual incentive compensation or
thirty percent (30%) of Base Salary; (ii) if the termination occurs between
January 1, 2004 and December 31, 2004, the Average Annual Incentive Compensation
shall be the actual amount of Annual Incentive Compensation earned for the
preceding calendar year; (iii) if the termination occurs on or after January 1,
2005, the Average Annual Incentive Compensation shall be the average of the
Annual Incentive Compensation earned for the two preceding calendar years. For
purposes of determining the Average Annual Incentive Compensation earned by
Executive in any past year, any non-cash compensation awarded to Executive shall
be included as annual incentive compensation only if specifically designated as
such by the Board of Directors, and such non-cash compensation shall be valued
by such method as the Board of Directors in its discretion shall determine,
which may be the manner in which such compensation is valued for proxy reporting
purposes.
10.3. Change in Control.
(a) For purposes of this Agreement, "Change in Control" shall mean an
occurrence of one or more of the following events:
(i) an acquisition of any voting securities of Company (the "Voting
Securities") by any "person" or "group" (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) other
than an employee benefit plan of Company, immediately after which such
Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
under the Exchange Act) of more than fifty percent (50%) of the
combined voting power of Company's then outstanding Voting Securities;
or
(ii) within any 18-month period, the individuals who were directors of
the Company as of the date the Board of Directors approved this
Agreement (the "Incumbent Directors") ceasing for any reason other
than death, disability, retirement or by reason of the plan adopted by
the Board of Directors on even date herewith to expand the number of
members of the Board to constitute at least a majority of the Board of
Directors, provided that any director who was not a director as of the
date the Board of Directors approved this Agreement shall be deemed to
be an Incumbent Director if such director was appointed or nominated
for election to the Board of Directors by, or on the recommendation or
approval of, at least a majority of directors who then qualified as
Incumbent Directors, provided further that any director appointed or
nominated to the Board of Directors to avoid or settle a threatened or
actual proxy contest shall in no event be deemed to be an Incumbent
Director; or
(iii) satisfaction of all conditions to a merger, consolidation, or
reorganization involving Company that results or would result in the
stockholders of Company immediately before such merger, consolidation
or reorganization owning, directly or indirectly, immediately
following such merger, consolidation or reorganization, less than
fifty percent (50%) of the combined voting power of the corporation
which survives such transaction as the ultimate parent entity, unless
such merger, consolidation or reorganization is not thereafter
consummated.
(iv) a sale of all or substantially all of the assets of Company.
(b) If, as a result of payments provided for under or pursuant to this
Agreement together with all other payments in the nature of compensation
provided to or for the benefit of Executive under any other agreement in
connection with a Change in Control, Executive becomes subject to taxes of any
state, local or federal taxing authority that would not have been imposed on
such payments but for the occurrence of a Change in Control, including any
excise tax under Section 4999 of the Internal Revenue Code of 1986 (the "Code")
and any successor or comparable provision, then, in addition to any other
benefits provided under or pursuant to this Agreement or otherwise, Company
(including any successor to Company) shall pay to Executive at the time any such
payments are made under or pursuant to this or the other agreements, an amount
equal to the amount of any such taxes imposed or to be imposed on Executive (the
amount of any such payment, the "Parachute Tax Reimbursement"). In addition,
Company (including any successor to Company) shall "gross up" such Parachute Tax
Reimbursement by paying to Executive at the same time an additional amount equal
to the aggregate amount of any additional taxes (whether income taxes, excise
taxes, special taxes, employment taxes or otherwise) that are or will be payable
by Executive as a result of the Parachute Tax Reimbursement being paid or
payable to Executive and/or as a result of the additional amounts paid or
payable to Executive pursuant to this sentence, such that after payment of such
additional taxes Executive shall have been paid on a net after-tax basis an
amount equal to the Parachute Tax Reimbursement. The amount of any Parachute Tax
Reimbursement and of any such gross-up amounts shall be determined by Company's
independent auditing firm, whose determination, absent manifest error, shall be
treated as conclusive and binding absent a binding determination by a
governmental taxing authority that a greater amount of taxes is payable by
Executive.
10.4. Termination For Cause; Termination By Executive Without Good Reason.
(a) Termination for Cause. The Company may terminate the employment of
Executive for Cause at any time during the Term. For purposes of this Agreement,
Cause shall mean that Executive has committed an act of Misconduct (as defined
below) or that there has been a willful and continuing failure of Executive to
perform substantially his obligations under this Agreement, other than as a
result of Executive's death or Disability. For purposes of this Agreement,
"Misconduct" shall mean: (i) embezzlement, fraud, or breach of fiduciary duty by
Executive against the Company; (ii) personal dishonesty of Executive materially
injurious to Company; (iii) an unauthorized and intentional disclosure of any
Proprietary Information in breach of Executive's duty of loyalty; (iv)
conviction of, or entering a plea of nolo contendere or guilty to, a felony
criminal offense; or (v) competing with the Company while employed by the
Company or during the Restricted Period, in contravention of Section 9.
(b) Termination By Executive Without Good Reason. Executive may terminate
his employment hereunder at any time Without Good Reason (as defined in
Section 10.2(b)).
(c) In the event Executive's employment with Company is terminated by
Company for Cause or by Executive Without Good Reason, Executive shall receive
all accrued but unpaid Base Salary, and benefits as of the effective date of
Termination. In the event Executive's employment with Company is terminated by
the Company for Cause or by Executive during the Term of this Agreement Without
Good Reason, Executive shall forfeit all unvested Stock Options granted under
this Agreement.
11. Other Agreements. Executive represents and warrants to Company that:
(a) There are no restrictions, agreements or understandings whatsoever to
which Executive is a party or by which he is bound that would prevent or make
unlawful Executive's execution of this Agreement or Executive's employment
hereunder, or which is or would be inconsistent or in conflict with this
Agreement or Executive's employment hereunder, or would prevent, limit or impair
in any way the performance by Executive of his obligations hereunder.
(b) Executive shall disclose the existence and terms of the restrictive
covenants set forth in this Agreement to any employer by whom Executive may be
employed during the Term (which employment is not hereby authorized) or during
the Restricted Period as defined in the Agreement Not to Compete by and between
Executive and Company set forth in Section 9 hereof.
12. Survival of Provisions. The provisions of this Agreement shall survive
the termination of Executive's employment hereunder and the payment of all
amounts payable and delivery of all post-termination compensation and benefits
pursuant to this Agreement incident to any such termination of employment.
13. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon Company and its successors or permitted assigns and
Executive and his executors, administrators or heirs. The Company shall require
any successor or successors expressly to assume the obligations of Company under
this Agreement. The Company's failure to obtain the agreement of any successor
or assign to assume the obligations of this Agreement shall be considered "Good
Reason" for purposes of Section 10.2(b). For purposes of this Agreement, the
term "successor" shall include the ultimate parent corporation of any
corporation involved in a merger, consolidation, or reorganization with or
including the Company that results in the stockholders of Company immediately
before such merger, consolidation or reorganization owning, directly or
indirectly, immediately following such merger, consolidation or reorganization,
securities of another corporation, regardless of whether any such merger,
consolidation or reorganization is deemed to constitute a Change in Control for
purposes of this Agreement. Executive may not assign any obligations or
responsibilities under this Agreement or any interest herein, by operation of
law or otherwise, without the prior written consent of Company. At any time
prior to a Change in Control, Company may provide, without the prior written
consent of Executive, that Executive shall be employed pursuant to this
Agreement by any of its Affiliates or Company, and in such case all references
herein to the "Company" shall be deemed to include any such entity, provided
that (i) such action shall not relieve Company of its obligation to make or
cause an Affiliate to make or provide for any payment to or on behalf of
Executive pursuant to this Agreement, and (ii) Executive's duties and
responsibilities shall not be significantly diminished as a result thereof. The
Board of Directors may not assign any or all of its responsibilities hereunder
to any committee of the Board of Directors.
14. Executive Benefits. This Agreement shall not be construed to be in lieu
of or to the exclusion of any other rights, benefits and privileges to which
Executive may be entitled as an executive of Company under any retirement,
pension, profit-sharing, insurance, hospitalization or other plans or benefits
which may now be in effect or which may hereafter be adopted.
15. Board of Directors Service. Subject to re-election by a vote of
stockholders, Executive shall continue to serve on the Board of Directors
through the Term and shall tender his resignation from the Board of Directors
upon expiration of the Term, or upon any earlier termination of his employment,
which resignation may or may not be accepted.
16. Notices. All notices required to be given to any of the parties of this
Agreement shall be in writing and shall be deemed to have been sufficiently
given, subject to the further provisions of this Section 16, for all purposes
when presented personally to such party, or sent by facsimile transmission, any
national overnight delivery service, or certified or registered mail, to such
party at its address set forth below:
(a) If to Executive:
George Off
(b) If to Company:
Checkpoint Systems, Inc.
101 Wolf Drive
Thorofare, NJ 08086
Attn: Vice President and General Counsel
Such notice shall be deemed to be received when delivered if delivered
personally, upon electronic or other confirmation of receipt if delivered by
facsimile transmission, the next business day after the date sent if sent by a
national overnight delivery service, or three (3) business days after the date
mailed if mailed by certified or registered mail. Any notice of any change in
such address shall also be given in the manner set forth above. Whenever the
giving of notice is required, the giving of such notice may be waived in writing
by the party entitled to receive such notice.
17. Entire Agreement; Amendments. This Agreement and any other documents,
instruments or other writings delivered or to be delivered in connection with
this Agreement as specified herein constitute the entire agreement among the
parties with respect to the subject matter of this Agreement and supersede all
prior and contemporaneous agreements, understandings, and negotiations, whether
written or oral, with respect to the terms of Executive's employment by Company.
This Agreement may be amended or modified only by a written instrument signed by
all parties hereto.
18. Waiver. The waiver of the breach of any term or provision of this
Agreement shall not operate as or be construed to be a waiver of any other
or subsequent breach of this Agreement.
19. Governing Law. This Agreement shall be governed and construed as to its
validity, interpretation and effect by the laws of the Commonwealth of
Pennsylvania.
20. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or such provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
21. Section Headings. The section headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
22. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one and
the same instrument.
23. Specific Enforcement; Extension of Period. Executive acknowledges that
the restrictions contained in Sections 8 and 9 hereof are reasonable and
necessary to protect the legitimate interests of Company and its Affiliates and
that Company would not have entered into this Agreement in the absence of such
restrictions. Executive also acknowledges that any breach by him of Sections 8
or 9 hereof will cause continuing and irreparable injury to Company for which
monetary damages would not be an adequate remedy. Executive shall not, in any
action or proceeding by Company to enforce Sections 8 or 9 of this Agreement,
assert the claim or defense that an adequate remedy at law exists. In the event
of such breach by Executive, Company shall have the right to enforce the
provisions of Sections 8 and 9 of this Agreement by seeking injunctive or other
relief in any court, and this Agreement shall not in any way limit remedies at
law or in equity otherwise available to Company. In the event that the
provisions of Sections 8 or 9 hereof should ever be adjudicated to exceed the
time, geographic, or other limitations permitted by applicable law in any
applicable jurisdiction, then such provisions shall be deemed reformed in such
jurisdiction to the maximum time, geographic, or other limitations permitted by
applicable law.
24. Arbitration. Any dispute or claim other than those referred to in
Section 23, arising out of or relating to this Agreement or otherwise relating
to the employment relationship between Executive and Company (including but not
limited to any claims under Title VII of the Civil Rights Act of 1964, as
amended; the Americans with Disabilities Act; the Age Discrimination in
Employment Act; the Family Medical Leave Act; and the Employee Income Retirement
Security Act) shall be submitted to Arbitration, in Philadelphia County,
Commonwealth of Pennsylvania, and except as otherwise provided in this Agreement
shall be conducted in accordance with the rules of, but not under the auspices
of, the American Arbitration Association. The arbitration shall be conducted
before an arbitration tribunal comprised of three individuals, one selected by
Company, one selected by Executive, and the third selected by the first two. The
parties and the arbitrators selected by them shall use their best efforts to
reach agreement on the identity of the tribunal within ten (10) business days of
either party to this Agreement submitting to the other party a written demand
for arbitration. The proceedings before the tribunal shall take place within
twenty (20) business days of the selection thereof. Executive and Company agree
that such arbitration will be confidential and no details, descriptions,
settlements or other facts concerning such arbitration shall be disclosed or
released to any third party without the specific written consent of the other
party, unless required by law or court order or in connection with enforcement
of any decision in such arbitration. The parties shall equally divide the costs
of the arbitrators, and each party shall bear his or its attorneys' fees and
other costs, except that the arbitrators may specifically direct one party to
bear a greater portion or the entire cost of the arbitration, including all
attorneys fees, if the arbitrators determine that such party acted in bad faith.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed the day and year first written above.
Attest: CHECKPOINT SYSTEMS, INC.
________________________ By:____________________________
R. Keith Elliott
____________________________
George Off