EXHIBIT 10.1
AGREEMENT
AGREEMENT, dated as of August 10, 2001 by and between PAXAR CORPORATION, a New
York corporation (the "COMPANY"), and XXXX XXXXXXXX ("EXECUTIVE").
1. PURPOSE.
The Company acknowledges and recognizes the value of Executive's services, which
services are of special, unique and extraordinary character. The Company desires
to continue to employ Executive and retain his abilities and services as and
officer and director of the Company through February 28, 2005, and thereafter,
on the mutual agreement of the parties, until February 28, 2010, unless
Executive's employment is sooner terminated in accordance with this Agreement.
The Company also desires to provide Executive and his spouse with the retirement
benefits specified in this Agreement.
2. EMPLOYMENT.
The Company hereby agrees to continue to employ Executive, and Executive hereby
agrees to continue to be employed by the Company, upon the terms, and subject to
the conditions, set forth in this Agreement effective as of August 10, 2001 (the
"EFFECTIVE DATE").
3. PERIOD OF EMPLOYMENT.
The term of this Agreement shall consist of (i) an "INITIAL TERM," which shall
end on February 28, 2005, unless Executive's employment is terminated earlier in
accordance with Section 8 below, and (ii) if this Agreement has not theretofore
been terminated, an "EXTENSION TERM," which shall commence on March 1, 2005, and
shall end on February 28, 2010, unless Executive's employment is terminated
earlier in accordance with Section 8 below. As used in this Agreement, the
phrase "EMPLOYMENT PERIOD" refers to Executive's period of employment from the
Effective Date until his last day of employment.
4. MEMBERSHIP ON BOARD OF DIRECTORS.
During the Employment Period or Executive's attainment of the mandatory
retirement age for service on the Company's Board of Directors (the "BOARD"),
the Company shall include Executive in the management slate for election as a
director and shall recommend his election at any stockholders' meeting at which
his term otherwise would expire.
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5. POSITIONS; DUTIES AND RESPONSIBILITIES.
(a) DIRECTOR DUTIES. Executive shall have the following duties and
responsibilities as a member of the Board:
(i) Until Executive's appointment as Chairman of the Board, as
provided in Section 5(a)(ii) below, Executive shall have the
same duties and responsibilities as other members of the
Board.
(ii) After December 31, 2003 or such earlier date of the present
Chairman's resignation, and until the expiration of the
Employment Period or Executive's attainment of the Board's
mandatory retirement age or such earlier date as is mutually
agreed by the parties, Executive shall serve as the Chairman
of the Board. As Chairman of the Board, Executive shall have
such duties and responsibilities as shall be set forth in the
Company's By-Laws or as otherwise delegated by the Board of
Directors.
(b) CEO DUTIES. During the Employment Period, Executive shall continue to
serve as the Company's Chief Executive Officer. In such capacity,
Executive shall perform the customary duties and have the customary
responsibilities of such position.
(c) FULL TIME EMPLOYMENT. Executive agrees to serve the Company faithfully,
to devote his full business time, attention, efforts and energies to
the performance of his duties, and to perform the duties under this
Agreement to the best of his abilities.
(d) COMPLIANCE WITH LAWS, RULES, ETC. Executive agrees (i) to comply with
all applicable laws, rules and regulations, and all requirements of all
applicable regulatory, self-regulatory, and administrative bodies; (ii)
to comply with the Company's rules, procedures, policies, requirements,
and directions; and (iii) not to engage in any other business or
employment without the written consent of the Company, except as
otherwise specifically provided herein.
6. COMPENSATION AND BENEFITS DURING EMPLOYMENT PERIOD:
Executive shall receive the following compensation and benefits during the
Employment Period:
(a) BASE SALARY. The Company shall pay Executive a base salary at the rate
of $500,000 per annum ("Base Salary") in accordance with the
compensation policy applicable to the Company's senior executive
officers. Upon recommendation from the Board's Compensation Committee,
the Board may change Executive's Base Salary from time to time in its
discretion. Such Base Salary shall be paid in accordance with the
Company's standard payroll practice for senior executive officers.
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(b) ANNUAL INCENTIVE COMPENSATION. Executive shall be eligible to receive
annual incentive compensation in the form of a cash bonus, profit
sharing or otherwise as the Board or the Compensation Committee may
grant Executive from time to time in accordance with targets and other
criteria established by the Board or the Compensation Committee for
senior executive officers of the Company. Executive's annual bonus
award will be equal to 75% of his Base Salary in effect for the
calendar year, if the Company achieves 100% of the plan targets as
established for Executive.
(c) STOCK OPTIONS. On execution of this Agreement by Executive, the Company
shall grant Executive options to purchase 125,000 shares of the
Company's common stock under and subject to the terms and conditions of
the Company's stock option plans. Thereafter, Executive shall
participate in the Company's stock option plans and be eligible to
receive additional grants under such plans in accordance with the
Company's policy applicable to senior executive officers.
(d) BENEFIT PLANS, FRINGE BENEFITS AND VACATIONS. Executive shall be
eligible to participate in or receive benefits under any pension plan,
401(k) savings plan, nonqualified deferred compensation plan,
supplemental executive retirement plan, medical and dental benefits
plan, life insurance plan, short-term and long-term disability plans,
supplemental and/or incentive compensation plans, or any other employee
benefit or fringe benefit plan, generally made available by the Company
to senior executive officers in accordance with the eligibility
requirements of such plans and subject to the terms and conditions set
forth in this Agreement. Such benefits shall include life insurance
coverage equal to three times Executive's Base Salary in effect from
time to time.
(e) AUTOMOBILE ALLOWANCE. The Company shall provide Executive with an
automobile allowance of $1,500 per month.
(f) EXPENSE REIMBURSEMENT. The Company shall promptly reimburse Executive
for the ordinary and necessary business expenses incurred by Executive
in the performance of his duties under this Agreement in accordance
with the Company's customary practices applicable to senior executive
officers.
7. SUPPLEMENTAL RETIREMENT BENEFIT.
Provided that Executive shall have been employed by the Company for a period of
five (5) years (including periods for which Executive is receiving payments as a
result of termination of his employment by the Company without Cause, as
provided in Section 8(d), or by Executive for Good Reason, as provided in
Section 8(e)), the Company shall pay Executive a supplemental retirement benefit
as follows:
(a) CALCULATION OF BENEFIT. The supplemental retirement benefit will be an
amount equal to 60% of Executive's Final Average Compensation.
Executive's "FINAL AVERAGE
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COMPENSATION" shall be equal to the average of Executive's Total
Compensation for the three (3) calendar years of the last five (5) full
calendar years of Executive's employment with the Company preceding
such last day of employment in which Executive earned the highest Total
Compensation. "TOTAL COMPENSATION" as used in the preceding sentence
means the total Base Salary and incentive compensation earned by
Executive, including compensation earned in one calendar year and paid
or payable in a subsequent calendar year, and any payments paid or
payable to Executive for a calendar year under Section 9(d) as a result
of termination of his employment by the Company without Cause or for
Good Reason. For purposes hereof, if Executive's employment is
terminated effective before February 28, 2005, by the Company without
Cause, in accordance with Section 8(d), or for Good Reason, in
accordance with Section 8(e), Executive's last day of employment shall
be deemed to be February 28, 2005. In addition, if Executive's last day
of employment occurs on December 31, then the year in which such last
day of employment occurs shall be included as a full calendar year for
purposes of determining Executive's Final Average Compensation.
(b) PAYMENT OF BENEFIT TO EXECUTIVE. The Company shall pay the supplemental
retirement benefit to Executive in equal monthly installments
commencing on the first day of the first calendar month after
Executive's 65th birthday. Executive may elect by written notice to the
Company to commence the supplemental retirement benefit prior to his
65th birthday, but no earlier than his 55th birthday, subject to a 3%
per year reduction in the percentage of his Final Average Compensation
that he is entitled to receive (e.g., if Executive elects to commence
receipt of the supplemental benefit immediately after his 64th
birthday, his supplemental retirement benefit would be equal to 57% of
his Final Average Compensation).
(c) SPOUSE'S BENEFIT IF PAYMENTS HAVE COMMENCED. In the event of
Executive's death after commencement of payments of such supplemental
retirement benefits to Executive, the Company shall pay to his
surviving spouse until her death or such earlier date as determined in
accordance with Section 22(f) below, an amount equal to 50% of the
monthly supplemental retirement benefit paid to Executive. Such
payments will commence as soon as practicable following Executive's
date of death.
(d) SPOUSE'S BENEFIT IF PAYMENTS HAVE NOT COMMENCED. In the event of
Executive's death before commencement of payments of the supplemental
retirement benefit, commencing on the first day of the first calendar
month after Executive would have attained age 65, the Company shall pay
Executive's surviving spouse, until her death or such earlier date as
determined in accordance with Section 22(f) below, in equal monthly
installments an amount equal to 50% of the supplemental retirement
benefit that would have been payable to Executive. Executive's
surviving spouse may elect by written notice to the Company to commence
the supplemental retirement benefit prior to the date on which
Executive would have attained age 65, but not earlier than the date on
which Executive would have attained age 55, subject to a 3% per year
reduction in percentage of Executive's Final Average Compensation that
she is entitled to receive (e.g., if
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Executive's surviving spouse elects to commence payment of the
supplemental retirement benefit immediately after Executive would have
attained age 64, the supplemental retirement benefit would be equal to
27% of Executive's Final Average Compensation).
8. TERMINATION OF EMPLOYMENT.
Executive's employment under this Agreement may be terminated under any of the
circumstances set forth in this Section 8.
(a) DEATH. Executive's employment shall terminate upon Executive's death.
(b) TOTAL DISABILITY. The Company may terminate Executive's employment upon
his becoming "Totally Disabled." For purposes of this Agreement,
Executive shall be "Totally Disabled" if Executive is physically or
mentally incapacitated so as to render Executive incapable of
performing his usual and customary duties under this Agreement without
reasonable accommodation. Executive's receipt of disability benefits
under the Company's long-term disability benefits plan (the "LTD Plan")
or receipt of Social Security disability benefits shall be deemed
conclusive evidence of Total Disability for purpose of this Agreement;
provided, however, that in the absence of Executive's receipt of such
long-term disability benefits or Social Security benefits, the
Company's Board of Directors may, in its reasonable discretion (but
based upon appropriate medical evidence), determine that Executive is
Totally Disabled.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
Executive's employment for "CAUSE". Such termination shall be effective
as of the date specified in the written notice of termination provided
to Executive.
(i) For purposes of this Agreement, the term "CAUSE" shall mean
any of the following: (A) conviction (including conviction on
a nolo contendere plea) of (I) a crime involving the
commission by Executive of a felony or (II) a criminal act
intended to result directly or indirectly in substantial gain
or personal enrichment to Executive at the expense of the
Company, but excluding any such conviction that results solely
from Executive's title or position with the Company and is not
based on his personal conduct; or (B) willful misconduct or
gross negligence in connection with the business of the
Company or an affiliate occurring after the Effective Date of
this Agreement that results in material damage to the Company
or the affiliate or to their respective businesses, whether
monetary or otherwise; or (C) persistent failure to observe or
perform Executive's duties and responsibilities or to comply
with Company policies as set forth in Section 5 hereof after
written notice thereof by the Company; or (D) breach of any of
the covenants set forth in Section 11 or Section 12 of this
Agreement.
(ii) Executive's employment shall in no event be considered to have
been terminated by the Company for Cause if the act or failure
to act upon which such termination
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is based was done or omitted to be done as a result of bad
judgment or negligence on Executive's part.
(iii) Any determination of Cause under this Agreement shall be made
by resolution duly adopted by the affirmative vote of all of
the non-employee members of the Board at a meeting of the
Board called and held for that purpose. Executive shall be
provided with reasonable notice of such meeting and shall be
given the opportunity to be heard before such vote is taken by
the Board.
(d) TERMINATION DURING THE INITIAL TERM BY THE COMPANY WITHOUT CAUSE. The
Company may terminate Executive's employment under this Agreement
without Cause effective at any time before February 28, 2005, after
providing sixty (60) days' prior written notice of termination to
Executive.
(e) TERMINATION BY EXECUTIVE FOR GOOD REASON. Executive may terminate his
employment under this Agreement for "GOOD REASON" after providing sixty
(60) days' written notice to the Company. Termination of employment by
Executive for "GOOD REASON" shall be deemed to have occurred if
Executive terminates his employment following the occurrence of any of
the following:
(i) The Company's failure to comply with its obligations under
this Agreement in any material respect if such failure
continues for thirty (30) days after notice in writing from
Executive specifying such failure.
(ii) The assignment to Executive of any duties inconsistent with
the position of Chief Executive Officer (or such other
position as he shall hold at the time of such assignment) or
any significant adverse alteration in the nature or status of
Executive's responsibilities or the conditions of his
employment as Chief Executive Officer (or such other position
as he shall hold at the time of such alteration).
(f) TERMINATION DURING THE INITIAL TERM BY EXECUTIVE OTHER THAN FOR GOOD
REASON. Executive may terminate his employment under this Agreement
effective at any time before February 28, 2005, for any reason other
than "Good Reason" pursuant to Section 8(e) above, after providing
sixty (60) days' prior written notice to the Company.
(g) TERMINATION DURING THE EXTENSION TERM BY THE COMPANY WITHOUT CAUSE. The
Company may terminate Executive's employment under this Agreement
without Cause effective on or after February 28, 2005, after providing
sixty (60) days' prior written notice of termination to Executive.
(h) TERMINATION DURING THE EXTENSION TERM BY EXECUTIVE OTHER THAN FOR GOOD
REASON. Executive may terminate his employment under this Agreement for
any reason effective
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on or after February 28, 2005, for any reason other than "Good Reason"
pursuant to Section 8(e) above, after providing sixty (60) days' prior
written notice to the Company.
(i) NOTICE OF TERMINATION. Any termination by the Company or by Executive
under this Agreement shall be communicated by notice of termination to
the other party hereto. For purposes of this Agreement, a Notice of
Termination shall mean a notice in writing which shall indicate the
specific termination provision in this Agreement relied upon to
terminate Executive's employment and, if applicable, shall set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment under the provision so
indicated.
9. COMPENSATION AND BENEFITS PAYABLE FOLLOWING TERMINATION OF EMPLOYMENT.
In the event that Executive's employment is terminated during the Employment
Period, Executive (or his surviving spouse, beneficiary or estate, as the case
may be) shall receive the following compensation and benefits:
(a) DEATH. In the event that Executive's employment is terminated by reason
of his death:
(i) STOCK OPTIONS. All outstanding unexercised stock options
granted to Executive under the Company's stock option plan
shall become fully vested and exercisable as of Executive's
date of death.
(ii) SUPPLEMENTAL RETIREMENT BENEFIT. Provided that such
termination of employment as a result of Executive's death
occurs on or after February 28, 2005, the Company shall
provide Executive's surviving spouse with the supplemental
retirement benefit in accordance with in Section 7 above.
(b) TOTAL DISABILITY. In the event that Executive's employment is
terminated by reason of his Total Disability pursuant to Section 8(b)
above:
(i) STOCK OPTIONS. All outstanding unexercised stock options
granted to Executive under the Company's stock option plans
(A) shall become fully vested and exercisable as of his
employment termination date and (B) shall continue to be
exercisable until the option expiration date (determined
without regard to Executive's employment termination).
(ii) SUPPLEMENTAL RETIREMENT BENEFIT. Provided that such
termination of employment as a result of his Total Disability
occurs on or after February 28, 2005, the Company shall
provide Executive and his spouse with the supplemental
retirement benefit in accordance with Section 7 above.
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(c) TERMINATION FOR CAUSE. In the event that Executive's employment is
terminated on or after February 28, 2005, by the Company for Cause
pursuant to Section 8(c) above, the Company shall provide Executive
with the supplemental retirement benefit in accordance with Section 7
above.
(c) TERMINATION DURING INITIAL TERM BY THE COMPANY WITHOUT CAUSE OR BY
EXECUTIVE FOR GOOD REASON. In the event that Executive's employment is
terminated effective before February 28, 2005, by the Company without
Cause, pursuant to Section 8(d) above or by Executive for Good Reason,
pursuant to Section 8(e) above:
(i) CONTINUATION OF COMPENSATION. The Company shall continue to
pay Executive his Base Salary as in effect when the notice of
termination is given until the later of (A) February 28, 2005,
or (B) two years after the last day of the Employment Period;
provided, however, that such compensation and benefits shall
terminate upon Executive's death; and provided, further, that
the amount of such payments shall be reduced dollar-for-dollar
by all compensation the Executive earns during the period such
payments are to be made, including, without limitation,
compensation earned for services rendered as a consultant,
partner or member of any business organization.
(ii) CONTINUATION OF BENEFITS. The Company shall continue to
provide Executive with the benefits set forth in Section 6
above until February 28, 2005; provided, however, that such
benefits shall terminate on Executive's death or employment
before such date.
(iii) STOCK OPTIONS. All outstanding unexercised stock options
granted to Executive under the Company's stock option plans
(A) shall become fully vested and exercisable as of his
employment termination date and (B) shall continue to be
exercisable until the option expiration date (determined
without regard to Executive's employment termination).
(iv) SPECIAL RETIREMENT BENEFITS. Executive and his surviving
spouse will receive the supplemental retirement benefit in
accordance with Section 7.
(e) TERMINATION DURING EXTENSION TERM BY THE COMPANY WITHOUT CAUSE OR BY
EXECUTIVE FOR GOOD REASON. In the event that the Company terminates
this Agreement effective on or after February 28, 2005, without Cause,
pursuant to Section 8(g) above, or Executive terminates his employment
for Good Reason, pursuant to Section 8(f) above:
(i) SEVERANCE PAYMENTS. The Company shall pay executive his Base
Salary as in effect when the notice of termination is given in
equal monthly installments until the earlier of (A) two years
after the last day of the Employment Period or (B) February
28, 2010; provided, however, that such payments shall
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terminate on Executive's death; and provided, further, that
the amount of such payments shall be reduced dollar-for-dollar
by all compensation the Executive earns during the period such
payments are to be made, including, without limitation,
compensation earned for services rendered as a consultant,
partner or member of any business organization.
(ii) SPECIAL RETIREMENT BENEFITS. Executive and his surviving
spouse will receive the supplemental retirement benefit in
accordance with Section 7 above.
(f) TERMINATION DURING EXTENSION TERM BY EXECUTIVE OTHER THAN FOR GOOD
REASON. In the event that Executive terminates this Agreement other
than for Good Reason effective on or after February 28, 2005, pursuant
to Section 8(h) above, Executive and his surviving spouse shall receive
the supplemental retirement benefit in accordance with Section 7 above.
(g) EARNED BUT UNPAID COMPENSATION. Upon termination of Executive's
employment under Section 8 hereof, the Company shall pay Executive (or
his personal representative) any accrued but unpaid Base Salary for
services rendered to the date of termination, the amount of any
compensation previously earned and deferred by Executive, any earned
but unpaid incentive compensation for any calendar year ended prior to
the year in which his employment terminates, any accrued but unpaid
expenses required to be reimbursed under this Agreement, and any
vacation accrued to the date of the termination. The Company shall pay
all of the foregoing amounts, except for earned but unpaid incentive
compensation, within 30 days after the date of termination; earned but
unpaid incentive compensation for any calendar year ended prior to the
year in which Executive's employment terminates shall be paid at the
same time as the Company pays incentive compensation to its other
senior executives.
(h) OTHER COMPENSATION AND BENEFITS. Except as may otherwise be provided
under this Agreement,
(i) Any benefits to which Executive may be entitled pursuant to
the plans, policies and arrangements referred to in Section
6(d) above shall be determined and paid in accordance with the
terms of such plans, policies and arrangements; and
(ii) Executive shall have no right to receive any other
compensation, or to participate in any other plan, arrangement
or benefit, with respect to future periods after such
termination or resignation.
10. ADDITIONAL COMPENSATION FOLLOWING CHANGE OF CONTROL.
(a) APPLICABILITY. Executive shall be entitled to the compensation and
benefits described in this Section 10 if (i) a Change of Control (as
hereinafter defined) occurs and (ii) on or
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within three years after the Change of Control Effective Date (as
hereinafter defined), Executive's employment is terminated by the
Company without Cause pursuant to Section 8(d) or Section 8(g) above or
Executive terminates his employment for Good Reason pursuant to Section
8(f) above.
(b) ADDITIONAL COMPENSATION. In addition to the compensation and benefits
set forth in Section 9(d) or Section 9(e) above, the Company shall pay
Executive an amount equal to the excess (if any) of:
(i) the product of (A) 2.99 TIMES (B) the sum of (I) an amount
equal to Executive's annual rate of Base Salary at the rate in
effect immediately prior his employment termination date and
(II) the amount of annual incentive compensation that the
Executive would have received had the Company achieved 100% of
the Company's incentive compensation plan targets for the
calendar year in which his employment termination date occurs;
over
(ii) the amount payable under Section 9(d) or Section 9(e) above;
provided, however, that in no event shall the additional cash
compensation payable under this Section 10(b) exceed an amount equal to
one dollar ($1) less than the amount that would trigger the excise tax
payable under Section 4999 of the Internal Revenue Code with respect to
"excess parachute payments," as defined in Section 280G of the Code, it
being the intention of the parties that the Company shall have no
obligation to make any payment under this Section 10(b) to Executive
upon termination of his employment that would result in the requirement
to pay such excise tax. Such additional cash compensation shall be
payable to Executive in a single lump sum within thirty (30) days after
his employment termination.
(c) DETERMINATION OF PAYMENT. Subject to the provisions of Section 10(d)
the amount described in Section 10(b) shall be initially determined by
a certified public accounting firm designated by the Company and agreed
to by Executive (the "Accounting Firm") which determination shall
provide detailed supporting calculations both to the Company and
Executive. All fees and expenses of the Accounting Firm shall be borne
by the Company. The determination of the Accounting Firm of the amount
payable under Section 10(b) shall be binding on the Company and
Executive, and no greater amount shall be owed by the Company.
Notwithstanding the preceding sentence, if any amount is finally
determined pursuant to Section 10(d) to be subject to the excise tax
described in Section 10(b), the Executive shall repay excess amount to
the Company within 90 days of such final determination.
(d) NOTIFICATION OF CLAIMS BY IRS. Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by Executive of the additional
tax described in Section 10(b) (determined without regard to
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the repayment obligation of the Executive). Such notification shall be
given as soon as practicable, but no later than ten (10) business days,
after Executive is informed in writing of such claim and whether
Executive chooses to defend such claim at his own cost and expense or
desires the Company to defend such claim. If Executive notifies the
Company that he desires the Company to defend such claim, then the
Company shall defend such claim at its cost and expense. If Executive
elects to have the Company defend such claim, Executive shall apprise
the Company of the notice of such claim and (i) give the Company any
information reasonably requested by the Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request from time to time; and (iii) cooperate
with the Company in good faith in order to effectively contest such
claim.
(e) ESTABLISHMENT OF TRUST. In the event that Executive notifies that
Company that this Section 10(e) is to become effective, the Company
shall, as soon as possible, but in no event later than five (5)
business days after receipt of notice, take the following actions:
(i) The Company shall establish an irrevocable trust for the
purpose of providing funds for the payment of the supplemental
retirement benefits payable pursuant to Section 7 of this
Agreement. Such trust shall be a grantor trust containing
provisions, which are the same as, or similar to, the
provisions contained in the model "rabbi trust" set forth in
IRS Revenue Procedure 92-64. The Company shall pay all costs
relating to the establishment and maintenance of the trust and
the investment of funds held in such trust.
(ii) The Company shall make an irrevocable contribution to the
Trust in an amount that is sufficient to pay Executive (and
his surviving spouse) the supplemental retirement benefits
pursuant to Section 7 above.
(f) DEFINITIONS. For purposes of this Section 10:
(i) "Change of Control" shall have the meaning set forth in
Appendix A attached to this Agreement.
(ii) "Change of Control Effective Date" means the date on which a
Change of Control occurs, provided that if (A) a Change of
Control occurs, (B) Executive's employment with the Company is
terminated prior to the date on which the Change of Control
occurs, and (C) such termination (I) was at the request of a
third party who has taken steps reasonably calculated to
effect a Change of Control or (II) otherwise arose in
connection or in anticipation of a Change of Control, then for
all purposes under this Section 10, the Change of Control
Effective Date shall mean the date immediately prior to the
date of such termination of employment.
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11. RESTRICTIVE COVENANTS.
(a) RESTRICTIONS. Executive covenants that, except in furtherance of his
duties hereunder and as approved by the Board:
(i) COMPETITIVE ACTIVITY. During the Restricted Period (as
hereinafter defined), Executive shall not directly or
indirectly, own any interest in, participate or engage in,
assist, render any services (including advisory services) to,
become associated with, work for, serve (in any capacity
whatsoever, including, without limitation, as an employee,
consultant, advisor, agent, independent contractor, officer or
director) or otherwise become in any way or manner connected
with the ownership, management, operation, or control of, any
business, firm, corporation, partnership, trust or other
business or governmental entity (collectively, together with
any individual, a "Person") that engages in, or assists others
in engaging in or conducting, any business that deals,
directly or indirectly, in products or services similar to or
competitive with the Company's product line or services
anywhere in the world that the Company does business as of
Executive's last day of employment; provided, however, that
the restrictions set forth above shall not be deemed to
exclude the Executive from acting as director of a corporation
for the benefit of the Company with the consent of the Board;
and provided, further, that the restrictions set forth above
shall not be deemed to prohibit Executive from owning or
acquiring securities issued by any corporation whose
securities are listed on a national securities exchange or are
quoted on Nasdaq or the OTC Bulletin Board, provided that the
Executive at no time owns, directly or indirectly,
beneficially or otherwise, one (1%) percent or more of any
class of any such corporation's outstanding capital stock.
(ii) NON-SOLICITATION OF CUSTOMERS. During the Restricted Period,
Executive shall not knowingly provide or solicit to provide to
any Person any goods or services that are competitive with
those provided by the Company or that would be competitive
with the goods or services that the Company has planned to
provide. The term "customer" shall mean any Person to whom the
Company has provided goods and services during the last five
(5) years of Executive's employment by the Company.
(iii) NON-SOLICITATION OF COMPANY PERSONNEL. During the Restricted
Period, Executive will not solicit for employment, or attempt
to solicit, directly or by assisting others, any employee of
Company.
(iv) PROTECTED INFORMATION. Executive shall not divulge to others,
nor shall he use at any time during the Restricted Period or
thereafter, any confidential or trade secret information
obtained by him during the course of his employment with the
Company, including information relating to sales, salesmen,
sales volume or strategy, customers, formulas, processes,
methods, machines, manufactures,
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compositions, ideas, improvements or inventions belonging to
or relating to the business of the Company, or its subsidiary
or affiliated companies.
(v) NON-DISPARAGEMENT. Executive covenants and agrees that during
the Restricted Period or at any time thereafter, Executive
shall not, directly or indirectly, in public or private,
deprecate, impugn, disparage, or make any remarks that would
tend to or be construed to tend to defame the Company or any
of its employees, members of its board of directors or agents,
nor shall Executive assist any other person, firm or company
in so doing.
(b) DEFINITION OF "RESTRICTED PERIOD." For purposes of this Agreement, the
term "Restricted Period" shall mean the Employment Period and the
period of three (3) years after the end of the Employment Period.
(c) ENFORCEMENT OF COVENANTS. Executive acknowledges that his breach of any
of the restrictive covenants contained in this Section 11 may cause
irreparable damage to the Company for which remedies at law would be
inadequate. Accordingly, if Executive breaches or threatens to breach
any of the provisions of this Section 11, the Company shall be entitled
to appropriate injunctive relief, including, without limitation,
preliminary and permanent injunctions, in any court of competent
jurisdiction, restraining Executive from taking any action prohibited
hereby. This remedy shall be in addition to all other remedies
available to the Company at law or in equity. If any portion of this
Section 11 is adjudicated to be invalid or unenforceable, this Section
11 shall be deemed amended to delete therefrom the portion so
adjudicated, such deletion to apply only with respect to the operation
of this Section 11 in the jurisdiction in which such adjudication is
made.
12. PROPRIETARY PROPERTY.
(a) OWNERSHIP OF PROPRIETARY PROPERTY. Executive agrees that any and all
inventions, discoveries, investigations, know-how, trade secrets and
developments or improvements in technology (collectively "Inventions")
as well as any and all Proprietary Information (as defined in Section
12(b)) created, developed, conceived of or discovered during the
Employment Period (i) by Executive (solely or jointly with others)
either (A) in the course of his employment or engagement, on the
Company's time or with the Company's materials or facilities, or (B)
relating to any subject matter with which his work for the Company is
or may be concerned or to any business in which the Company or any of
its subsidiaries or affiliated companies is involved, regardless of how
or when he shall have created, developed, conceived, or discovered such
Inventions or Proprietary Information (collectively, "Proprietary
Property"), or (ii) by or for the Company, or (iii) by any independent
Person and thereafter acquired by
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the Company, and which are within the Executive's knowledge or
possession in the case of (i) above or that come into the Executive's
knowledge or possession during the Restricted Period in the case of
(ii) or (iii) above, shall be, if created, developed, conceived of or
discovered by the Executive, promptly disclosed to the Company, or
shall be, if otherwise developed or acquired by the Company, received
by Executive as an employee, consultant or retiree of the Company and
not in any way for his own benefit. Executive shall neither have nor
obtain any right, title or interest in or to such Proprietary Property
unless and until the Company shall expressly and in writing waive the
rights that it has therein and thereto under the provisions of this
Section. With respect to any and all Proprietary Property that is
invented, created, written, developed, furnished or produced by
Executive, or suggested by Executive to the Company, during the
Employment Period, Executive does hereby agree that all such
Proprietary Property shall be the exclusive property of the Company,
and that the Executive shall neither have nor retain any right, title
or interest, of any kind therein and thereto or in and to any results
or proceeds therefrom. At any time, whether during or after the
Employment Period, the Executive will, upon the request and at the
expense of the Company, (A) obtain patents or copyrights on, or (B)
permit the Company to patent or copyright, any such Proprietary
Property, whichever (A) or (B) is appropriate, and/or (C) execute,
acknowledge and deliver any and all assignments, instruments of
transfer, or other documents, that the Company deems necessary or
appropriate to transfer to and vest in the Company all right, title and
interest in and to such Proprietary Property and to evidence the
Company's ownership of such Proprietary Property, including, without
limitation, taking all steps necessary to enable the Company to publish
or protect said Proprietary Property by patents or otherwise in any and
all countries and to render all such assistance as the Company may
require in any patent office proceeding or litigation involving said
Proprietary Property. Executive shall not, without limitation as to
time or place, use any Proprietary Property except on Company business,
during or after the Employment Period, nor disclose the same to any
other Person or individual except for disclosure on Company business or
as may be required by law.
(b) DEFINITION OF PROPRIETARY INFORMATION. As used in this Agreement,
"Proprietary Information" means any information about the affairs of
the Company or any of its subsidiaries or affiliates, including,
without limitation, trade secrets, trade "know-how", inventions,
customer lists, client lists, business plans, operational methods,
pricing policies, marketing plans, sales plans, identity of suppliers,
trading positions, sales, profits or other financial information, which
is confidential to the Company or any of its subsidiaries or affiliates
or is not generally known in the relevant trade, regardless of whether
Executive developed such information.
(c) DISCLOSURE OF PROPRIETARY PROPERTY. During the Employment Period and
thereafter, the Executive will not, directly or indirectly, lecture
upon, publish articles concerning, use, disseminate, disclose, sell or
offer for sale any Proprietary Property without the Company's prior
written permission.
13. INDEMNIFICATION.
(a) INDEMNIFICATION AND PROCEDURE. The Company agrees that if the Executive
is made a party, or is threatened to be made a party, to any action,
suit or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of the fact that he is
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or was a director, officer or employee of the Company or is or was
serving at the request of the Company as a director, officer, member,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, including services with respect to employee
benefits plans, whether or not the basis of such Proceeding is the
Executive's alleged action in an official capacity while serving as a
director, officer, employee or agent, the Executive shall be
indemnified and held harmless by the Company to the fullest extent
legally permitted or authorized by the Company's certificate of
incorporation or bylaws or resolutions of the Board or, if greater, by
the laws of the Company's state of incorporation against all cost,
expense, liability and loss (including without limitation, attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by
the Executive in connection therewith, and such indemnification shall
continue as to the Executive even if he has ceased to be a director,
member, employee or agent of the Company or other entity and shall
inure to the benefit of the Executive's heirs, executors and
administrators. The Company shall advance the Executive all reasonable
costs and expenses incurred by him in connection with a Proceeding
within twenty (20) days after receipt by the Company of a written
request for such advance. Such request shall include an undertaking by
the Executive to repay the amount of such advance if it shall
ultimately be determined that he is not entitled to be indemnified
against such costs and expenses.
(b) NO PRESUMPTION. Neither the failure of the Company (including its
Board, independent legal counsel or shareholders) to have made a
determination prior to the commencement of any Proceeding concerning
payment of amounts claimed by the Executive under paragraph (a) above
that indemnification of the Executive is proper because he has met the
applicable standard of conduct, nor a determination by the Company
(including its Board, independent legal counsel or shareholders) that
the Executive has not met such applicable standard of conduct, shall
create a presumption that the Executive has not met the applicable
standard of conduct.
(c) D&O LIABILITY INSURANCE. The Company shall continue and maintain a
directors' and officers' liability insurance policy covering the
Executive to the extent the Company provides such coverage for its
other senior executive officers.
14. WITHHOLDING OF TAXES.
The Company shall withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local, or other taxes.
15. ARBITRATION OF DISPUTES.
Except as provided in Section 11 above, any dispute, controversy or claim
arising out of or pursuant to this Agreement or the breach hereof shall be
settled by arbitration in the City of New York, State of New York. Such
arbitration shall be effected by arbitrators selected as hereinafter provided
and shall be conducted in accordance with the National Rules for the Resolution
of
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Employment Disputes, existing at the date thereof, of the American Arbitration
Association. The dispute, controversy or claim shall be submitted to three
arbitrators, one arbitrator to be selected by the Company, one arbitrator to be
selected by the Executive and the third arbitrator to be selected by the two so
selected by the Company and the Executive, or if they cannot agree on a third,
by the American Arbitration Association. In the event that either the Company or
the Executive within one (1) month after notification of any demand for
arbitration hereunder, shall not have selected its arbitrator and given notice
thereof to the other party in accordance with the terms of Section 21 of this
Agreement, the arbitrator for such party shall be selected by the American
Arbitration Association. Meetings of the arbitrators shall be held in New York,
New York, or at such other place or places as may be agreed upon by the parties
and the arbitrators. The results of final determination of any such arbitration
proceedings shall be binding on the parties hereto and a judgment may be entered
in any court having jurisdiction.
16. PAYMENT OF FEES, EXPENSES AND INTEREST.
If Executive is the prevailing party in any arbitration conducted under Section
15 hereof, the Company shall promptly reimburse Executive for all fees and
expenses (including legal, consultants' and other professional fees and
expenses) incurred by Executive in connection with such arbitration. In
addition, the Company shall pay Executive interest on any delayed payment under
this Agreement at the applicable federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code (or any successor to such section).
17. NO CLAIM AGAINST ASSETS.
Nothing in this Agreement shall be construed as giving Executive any claim
against any specific assets of the Company or as imposing any trustee
relationship upon the Company in respect of Executive. Except as otherwise
provided in Section 10 (e), above, the Company shall not be required to
establish a special or separate fund or to segregate any of its assets in order
to provide for the satisfaction of its obligations under this Agreement.
Executive's rights under this Agreement shall be limited to those of an
unsecured general creditor of the Company and its affiliates.
18. SUCCESSORS AND ASSIGNMENT.
Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. The rights and benefits of
Executive under this Agreement are personal to him and no such right or benefit
shall be subject to voluntary or involuntary alienation, assignment or transfer;
provided, however, that nothing in this Section 18 shall preclude Executive from
designating a beneficiary or beneficiaries to receive any benefit payable on his
death.
19. ENTIRE AGREEMENT; AMENDMENT.
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This Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Executive and the Company or any of its
subsidiaries or affiliated entities relating to the terms of Executive's
employment. It may not be amended except by a written agreement signed by both
parties.
20. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York applicable to agreements made and to be performed in that
State, without regard to its conflict of laws provisions.
21. NOTICES.
Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those persons listed below at
their following respective addresses or at such other address as each may
specify by notice to the others:
To the Company:
Paxar Corporation
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: General Counsel
To Executive:
Xxxx Xxxxxxxx
000 Xxxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
22. MISCELLANEOUS.
(a) NO SET-OFF, ETC. Except as otherwise provided in Section 9(d)(i) and
Section 9(e)(i), the Company's obligation to make the payments provided
for in this Agreement and otherwise perform its obligations under this
Agreement shall not be affected by any set-off, counterclaim,
recoupment, defense, or other claim, right, or action that the Company
may have against Executive.
(b) WAIVER. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver
thereof or deprive that party
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of the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement.
(c) SEVERABILITY. If any term or provision of this Agreement is declared
illegal or unenforceable by any court of competent jurisdiction and
cannot be modified to be enforceable, such term or provision shall
immediately become null and void, leaving the remainder of this
Agreement in full force and effect.
(d) HEADINGS. Section headings are used herein for convenience of reference
only and shall not affect the meaning of any provision of this
Agreement.
(e) RULES OF CONSTRUCTION. Whenever the context so requires, the use of the
singular shall be deemed to include the plural and vice versa.
(f) TERM OF PAYMENTS TO AND BENEFITS FOR SURVIVING SPOUSE. If Xxxxxx
Xxxxxxxx, Executive's spouse on the date of this Agreement, is
Executive's surviving spouse at the time of his death, then she shall
be entitled to receive the payments to a surviving spouse under Section
7 of this Agreement for the periods specified therein. However, if
Xxxxxx Xxxxxxxx is not Executive's surviving spouse at the time of his
death, for purposes of Section 7 of this Agreement, Executive's
surviving spouse, if any, shall be entitled to receive the amounts
payable to a surviving spouse under this Agreement until the earlier of
(i) the date of such surviving spouse's death or (ii) the last date on
which Xxxxxx Xxxxxxxx would have been entitled to receive such payment,
the date of death of such surviving spouse being deemed to be the last
day of Xxxxxx Xxxxxxxx'x life expectancy used by the Company for
purposes of preparing the Company's financial statements to determine
the accrual of the Company's expenses resulting from such payments and
benefits.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, and such counterparts will together constitute but one
Agreement.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year set forth below.
PAXAR CORPORATION EXECUTIVE
By: /s/ Xxx Xxxxxxx /s/ Xxxx Xxxxxxxx
------------------ ------------------
Name: Xxx Xxxxxxx Xxxx Xxxxxxxx
Title: Director, for the Board of Directors
Date: October 5, 2001 Date: October 4, 2001
--------------- ---------------
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APPENDIX A
DEFINITION OF CHANGE OF CONTROL
For purposes of Section 10 of this Agreement, "Change of Control" means:
(a) The acquisition by any individual, entity, or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or
more of either (1) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (2) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this clause (A), the following acquisitions of stock shall
not result in a Change of Control: (1) any acquisition directly from
the Company, (2) any acquisition by the Company, (3) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company, or (4) any
acquisition by any corporation pursuant to a transaction that complies
with clauses (1), (2), and (3) of subsection (c) of this definition; or
(b) Individuals who, as of the date hereof, constitute the Company's Board
of Directors (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Company's Board of Directors; provided,
however, that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election, by the Company's
shareholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Company's Board of Directors; or
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(c) Consummation of a reorganization, merger, or consolidation or sale or
other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless following such
Business Combination, (1) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of, respectively, the
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination, including, without limitation, a
corporation that as a result of such transaction owns the Company or
all or substantially all of the Company's assets either directly or
through one or more subsidiaries (any such corporation being referred
to herein as a "Resulting Corporation"), in substantially the same
proportions as their ownership of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be,
immediately prior to such Business Combination, (2) no Person
(excluding any employee benefit plan (or related trust) of the Company
or a Resulting Corporation) beneficially owns, directly or indirectly,
30% or more of, respectively, the outstanding shares of common stock of
the Resulting Corporation or the combined voting power of the then
outstanding voting securities of such Resulting Corporation except to
the extent that such ownership existed prior to the Business
Combination, and (3) at least a majority of the members of the board of
directors of the Resulting Corporation were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.
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