EXHIBIT No. 10.11
FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement is made as of the 12th day of
May, 1999 by and between Checkpoint Systems, Inc. ("CSI") and Xxxxx X. Xxxx
("Executive").
WHEREAS, CSI and Executive are parties to an Employment Agreement dated
July 1, 1998 ("Agreement"); and
WHEREAS, the parties wish to amend the Agreement as set forth herein;
NOW THEREFORE, in consideration of the premises and mutual promises and
covenants contained herein and intending to be bound hereby, the parties agree
as follows:
1. Subsection 5C Termination is hereby amended and restated in its entirety as
follows:
"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 twenty
four (24) 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 the First Amendment to 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, provided
however that in the event that Executive shall not have obtained
employment
within twenty four (24) months after the date of termination,
Executive shall be entitled to receive up to an additional amount
equal to one hundred percent (100%) of the Executive's highest Base
Salary and such amount shall be payable monthly commencing with the
twenty fifth month following termination and shall terminate upon the
earlier of the date the Executive shall have obtained employment or
thirty six months (36) from date of termination.
(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 the First Amendment to 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."
2. Subsection 5E. The second sentence of Subsection 5E is deleted and replaced
with the following:
"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 twenty four
(24) 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."
3. All other terms of the Agreement shall remain the same.
IN WITNESS WHEREOF, the parties have caused this First Amendment to be
executed as of the date first above written.
CHECKPOINT SYSTEMS, INC.
By:
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XXXXX X. XXXX
