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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
Paxar Corporation, 000 Xxxxxxxxx Xxxx Xxxxx, Xxxxx Xxxxxx, Xxx Xxxx 00000 (the
"Company"), and Xxxx X. Xxxxxxxx, 00 Xxxxxxxx Xxxxx, Xxxx Xxxxxx, Xxxxxxxx,
00000 (the "Executive") hereby agree to enter into this EMPLOYMENT AGREEMENT
(the "Agreement") as of the 28th day of February 2000.
1. EMPLOYMENT.
The Company hereby agrees to employ Executive, and Executive hereby agrees to be
employed by the Company upon the terms and subject to the conditions set forth
in this Agreement.
2. TERM OF EMPLOYMENT.
The period of Executive's employment under this Agreement shall begin as of
February 28, 2000 and shall continue until terminated in accordance with Section
5 below (the "Employment Term").
3. DUTIES AND RESPONSIBILITIES.
(a) The Company will employ Executive as its Chief Operating Officer. In
such capacity, Executive shall perform the customary duties and have
the customary responsibilities of such positions, as enumerated in
Attachment A to this Agreement, and shall perform such other duties as
may be assigned to Executive from time to time by the Company's Board
of Directors and its Chief Executive Officer.
(b) Executive agrees to faithfully serve the Company, devote his full
working time, attention and energies to the business of the Company,
its subsidiaries and affiliated entities, and perform the duties under
this Agreement to the best of his abilities, in compliance with all
applicable laws, rules and regulations; as well as the Company's
rules, procedures, policies, requirements, and directions.
(c) The Company and Executive agree that Executive is expected to become
Chief Executive Officer of the Company in not longer than 18 months
from the commencement of the Employment Term. That date may be
accelerated upon the recommendation of the Company's present Chief
Executive Officer and approval by its Board of Directors.
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(d) Executive shall be nominated to the Company's Board of Directors and
serve as a Director when elected, and when subsequently nominated and
elected to successive terms, during the Employment Term.
4. COMPENSATION AND BENEFITS.
(a) BASE SALARY. During the Employment Term, the Company shall pay
Executive a base salary at the annual rate of $450,000.00 per year or
such higher rate as may be determined from time to time by the Company
("Base Salary"). Such Base Salary shall be paid in accordance with the
Company's standard payroll practice for senior executives.
(d) INCENTIVE COMPENSATION AND STOCK AWARDS. Executive's initial incentive
and stock compensation shall be as set forth in Attachment B to this
Agreement.
(c) BENEFITS APPLICABLE TO COMMENCEMENT OF EMPLOYMENT. Executive shall
also receive those benefits listed in Attachment C to this Agreement
in recognition of his resigning his present employment and becoming an
employee of the Company.
(d) BENEFIT PLANS, FRINGE BENEFITS AND VACATIONS. In addition to
Executive's benefits set forth in Attachments B&C, Executive shall be
eligible to participate in or receive benefits under, all savings,
deferred compensation, health, insurance, disability and similar plans
made available to the Company's other executives and employees, in
accordance with the eligibility requirements of such plans.
(e) EXPENSE REIMBURSEMENT. The Company shall advance or promptly reimburse
Executive for the ordinary and necessary business expenses incurred by
Executive in the performance of the duties under this Agreement in
accordance with the Company's customary practices applicable to senior
executives, provided that such expenses are incurred and accounted for
in accordance with the Company's policy.
5. TERMINATION OF EMPLOYMENT.
Upon termination of Executive's employment under this Agreement under any of the
circumstances set forth in this Section 5, Executive (beneficiary or estate)
shall be entitled to receive the compensation and benefits described in Section
6, below.
(a) DEATH OR TOTAL DISABILITY. Executive's employment shall terminate upon
Executive's death or upon Executive's becoming "Totally Disabled." For
purposes of this Agreement, Executive shall be Totally Disabled if, in
the opinion of the Board of Directors of the Company, based upon
appropriate medical evidence, Executive is physically or mentally
incapable of performing his usual and customary duties under this
Agreement.
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(b) 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. For purposes of this Agreement:
(i) Cause shall mean any of the following: (A) conviction of a
crime (including a nolo contendere plea) involving the
commission by Executive of a felony or any other criminal
act involving fraud, dishonesty, or moral turpitude but
excluding any conviction that results solely from
Executive's title or position with the Company and is not
based on personal conduct; (B) deliberate and continual
refusal to perform employment duties reasonably requested by
the Company after 30 days written notice by certified mail
of such failure to perform; (C) gross misconduct or gross
negligence in connection with the business of the Company;
or (D) breach of any of the covenants set forth in Section 7
hereof.
(ii) Any determination of Cause under this Agreement shall be
made by resolution adopted by unanimous vote of the Board of
Directors at a meeting called and held for that purpose.
Executive shall be provided with reasonable notice of such
meeting and Executive shall be given opportunity to be heard
before such vote is taken by the Board.
(c) TERMINATION BY THE EXECUTIVE FOR CAUSE.
(i) If after a Change in Control as set forth in the policy
adopted by the Company's Board of Directors on August 12,
1998, or any subsequent Change of Control policy adopted by
the Board, if Executive has "good reason," Executive has
Cause to terminate employment and receive benefits under the
policy then in effect upon giving written Notice of
Termination to the Company.
(ii) If Executive does not become the Company's Chief Executive
Officer within 18 months from the beginning of the
Employment Term, Executive has Cause to, and may, terminate
employment upon giving written Notice of Termination to the
Company.
(d) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
Executive's employment under this Agreement "Without Cause" after
providing Notice of Termination to Executive.
(e) TERMINATION BY EXECUTIVE WITHOUT CAUSE. Executive may terminate his
employment under this Agreement "Without Cause" after providing Notice
of Termination to the Company.
6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.
(a) In the event that Executive's employment is terminated by Death; by
the Company by reason of Total Disability as determined in accordance
with Section 5(a); with Cause pursuant to Section 5(b); or by the
Executive voluntarily pursuant to Section 5(e), the Company shall
continue to pay Executive the compensation and benefits set forth in
Section 4 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 end of the month in which such termination occurs; plus any
accrued but unpaid base salary, expenses, and vacation. In any such
event of termination under this Section 6 (a), Executive shall not be
entitled to separation pay benefits under the Company's applicable
plans and policies, but will be entitled benefits, if any, under the
plans, policies and arrangements referred to in Section 4 (d),
determined and paid in accordance with the terms of such plans,
policies and arrangements.
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(b) In the event that Executive's employment is terminated by the
Executive pursuant to Section 5(c) (i) or (c) (ii), or by the Company
pursuant to Section 5 (d), and Executive executes a Separation
Agreement and Release on or after the Termination Date, the Company
shall:
(i) Pay Executive an amount that equals the amount to which he
would have been entitled under the Change in Control
practices approved by the Company's Board on August 12,
1998, or as subsequently superseded and approved by the
Board, had a Change in Control occurred and payment been
triggered, but in no event shall the amount be less than
2.99 Executive's then current Base Salary plus 2.99 times
the average of the last three years' bonus awards (prorated
for less than three years of service), and
(ii) Provide continued coverage under all Company health
insurance plans pursuant to the then current change in
control policy, to be offset by any other primary coverage
subsequently available to Executive from a successor
employer.
7. RESTRICTIVE COVENANTS.
(a) PROTECTED INFORMATION. Executive recognizes and acknowledges that, as
the Company's Chief Operating Officer, Executive will have access to
various confidential or proprietary information concerning the
Company. Therefore, Executive covenants and agrees while employed by
the Company or afterwards, not to knowingly make any independent use
of, or knowingly disclose to any other person or organization (except
as authorized by the Company) any of the Protected Information.
(b) COMPETITIVE ACTIVITY. Executive agrees that at all times while
employed by the Company and for one year after the date of termination
of employment (whether such termination is voluntary or involuntary,
or otherwise) or after cessation of payments under Section 6, if any,
whichever is later, Executive will not directly or indirectly:
(i) Engage in, assist, or have any active interest or
involvement whether as an employee, agent, consultant,
creditor, advisor, officer, director, stockholder (excluding
holding of less than 1% of the stock of a public company),
partner, proprietor or any type of principal whatsoever in
any person, firm, or business entity which, directly or
indirectly, is engaged in the same business as that
conducted and carried on by the Company, without the
Company's specific written consent to do so, which consent
will not be unreasonably withheld;
(ii) Recruit, solicit, hire, or cause to be hired, any individual
who is then, or who has been within the preceding 90 days,
an employee of the Company;
(iii) Disparage, or make any remarks that would tend to or be
construed to tend to defame the Company, any of its
employees, or members of its Board.
(c) Executive shall promptly deliver to the Company upon termination of
employment, or at any other time as the Company may so request, all
lists of customers, leads and customer pricing, data processing
programs and documentation, employee information, memoranda, notes,
records, reports, tapes, manuals, drawings, blueprints, programs, and
any other documents and other materials (and all copies thereof)
relating to the Company's business or that of its customers, and all
property associated therewith, which Executive may then possess or
which may then be under the Executive's control.
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(d) Executive acknowledges that a breach of the covenants set forth in
this Section 7 above will cause irreparable damage to the Company with
respect to which the Company's remedy at law for damages will be
inadequate. Therefore, in the event of breach or anticipatory breach
of the covenants set forth in this section by Executive, Executive and
the Company agree that the Company shall be entitled to the following
particular forms of relief, in addition to remedies otherwise
available to it at law or equity: (i) injunctions, both preliminary
and permanent, enjoining or retraining such breach or anticipatory
breach and Executive hereby consents to the issuance thereof forthwith
and without bond by any court of competent jurisdiction; and (ii)
recovery of all reasonable sums expended and costs, including
reasonable attorney's fees, incurred by the Company to enforce the
covenants set forth in this Section 7.
(e) In the event a court shall hold unenforceable any of the separate
covenants deemed included herein, then such unenforceable covenant or
covenants shall be deemed eliminated from the provisions of this
Agreement for the purpose of such proceeding to the extent necessary
to permit the remaining separate covenants to be enforced in such
proceeding.
8. WITHHOLDING OF TAXES.
The Company shall withhold from any compensation and benefits payable under this
Agreement and the Attachments hereto all applicable federal, state, local, or
other taxes.
9. ARBITRATION OF DISPUTES AND WAIVER OF JURY TRIAL.
Except as provided in Section 7, above, any controversy or claim arising out of
or relating to this Agreement, or the breach thereof, shall be settled by
arbitration administered by the American Arbitration Association under its
National Rules for the Resolution of Employment Disputes and judgment upon the
award rendered by the arbitrator(s) may be entered by any court having
jurisdiction thereof. Any such arbitration shall take place in the State of New
York, County of Westchester.
In the event any controversy or claim arising out of Executive's employment or
the termination of Executive's employment is found by a court of competent
jurisdiction not to be subject to final and binding arbitration, Executive and
the Company agree to try such claim or controversy to the Court, without use of
a jury or advisory jury.
10. ENTIRE AGREEMENT; AMENDMENT; GOVERNING LAW.
This Agreement shall supersede any and all existing oral or written agreements,
between Executive and the Company relating to the terms of Executive's
employment and may be amended only by a written agreement signed by both
parties. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
11. NOTICES.
Any notice, or other communication, including a Notice of Termination, 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
listed below at their following respective addresses or at such other address as
each may specify by notice to the others:
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To the Company:
Paxar Corporation
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: General Counsel
To Executive:
Xx. Xxxx X. Xxxxxxxx
00 Xxxxxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
The terms of this Agreement are hereby accepted and agreed to for:
PAXAR CORPORATION EXECUTIVE
By: /s/ Xxxxxx Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx
------------------ -----------------------
Xxxxxx Xxxxxxxx Xxxx X. Xxxxxxxx
Title: Chairman & Chief Executive Officer
Date: February 17, 2000
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Date: February 7, 2000
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ATTACHMENT A
As Chief Operating Officer, the Executive, working in conjunction with the Chief
Executive Officer, will design, implement and execute a market-driven strategy
that will emphasize revenue and profit growth. The Chief Operating Officer will
be responsible for the Company's Sales, Manufacturing, Technology, Marketing,
Administration, and Finance functions, with all line and staff organizations
heads reporting to the Executive. In selected situations mutually agreed to by
the Chief Executive Officer and Chief Operating Officer, some staff heads may
report to both of them.
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ATTACHMENT B
Incentive Compensation and Stock Awards
1. Target Incentive is 65% of Base Salary, guaranteed at $292,500.00 for 2000,
prorated on months of service.
2. 300,000 stock options granted effective the first day of employment.
3. A long-term incentive of 75% of Base Salary, payable in Stock Options,
Performance Shares, and/or other types of stock awards.
4. A grant of 50,000 restricted shares, 16,335 of which vest on the first and
second anniversaries of the first day of employment and the remainder on
the third anniversary.
5. Change in Control provisions as now in effect for the COO as authorized by
the Company's Board of Directors at its August 12, 1998 meeting.
Note:Awards pursuant to Items 3 and 4 above are subject to adoption by
stockholders at the Company's May 4, 2000 Annual Meeting of the proposed Paxar
Long-Term Performance and Incentive Plan. If not adopted, equivalent incentives,
as authorized by the Company's Compensation Committee, will be provided.
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ATTACHMENT C
1. $1,350,000 of term life insurance, payable to your designated beneficiary
or an amount of coverage equal to three times the current Base Salary,
whichever is greater.
2. An annual income of $150,000 per year for 10 years, starting at age 65,
provided you are employed by the Company for a minimum of five years.
3. A sign on bonus of $200,000, payable in a lump sum within 10 days after
your first day of employment.
4. A car allowance of $700.00 per month.
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