Document:

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                                  EXHIBIT 10.1
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                                                                  EXECUTION COPY

                                    AGREEMENT

PAXAR CORPORATION (the "Company"), and ARTHUR HERSHAFT ("Executive") agree to
enter into this AGREEMENT dated as of July 11, 2001 as follows:

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 through
December 31, 2005 and, thereafter, to continue to obtain his advice as a member
of the Company's Board of Directors (the "Board"). In recognition of his long
and faithful service to the Company, the Company also desires to provide
Executive and his spouse with the retirement benefits specified in this
Agreement.

2.       1986 EMPLOYMENT AGREEMENT SUPERSEDED.

(a)      Executive and the Company originally entered into an Employment
         Agreement dated as of December 16, 1986, and amended as of January 1,
         1996 (as amended, the "1986 Agreement"). The parties have agreed that
         the terms and conditions set forth in this Agreement shall supersede
         any and all provisions of the 1986 Agreement and any other existing
         oral or written agreements, representations, or warranties, between
         Executive and the Company, and that such agreements shall be null and
         void and of no further force and effect, except as otherwise
         specifically provided in this Agreement.

(b)      Notwithstanding the termination of the 1986 Agreement as of the
         Effective Date, the Company shall be required to pay Executive in
         accordance with the terms of 1986 Agreement (i) any accrued but unpaid
         base salary under the 1986 Agreement for services rendered before the
         Effective Date, (ii) the amount of any compensation earned and deferred
         under the 1986 Agreement by Executive before the Effective Date, (iii)
         any earned but unpaid incentive compensation for any calendar year
         ended before the Effective Date, and (iv) any expenses required to be
         reimbursed under the 1986 Agreement that have accrued but are unpaid as
         of the Effective Date.

3.       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 January 1, 2001 (the
"Effective Date").

4.       PERIOD OF EMPLOYMENT; AGREED RETIREMENT DATE.

The parties agree that Executive's last day of employment with the Company will
be December 31, 2005, unless his employment is extended to such later date as
may be mutually agreed upon by the parties or terminated earlier in accordance
with Section 10 below. As used in this Agreement, (a) the phrase "Employment
Period" refers to Executive's period of employment

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from the Effective Date until his last day of employment and (b) the phrase
"Agreed Retirement Date" means December 31, 2005, or such later date as may be
mutually agreed upon by the parties.

5.       MEMBERSHIP ON BOARD OF DIRECTORS.

During the period ending as of the earlier of December 31, 2010 or Executive's
attainment of the Board's mandatory retirement age, 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.

6.       POSITIONS; DUTIES AND RESPONSIBILITIES.

(a)      Executive shall have the following duties and responsibilities as a
         member of the Board:

         (i)      Executive shall continue to serve as the Chairman of the Board
                  until December 31, 2003 or such other date as is mutually
                  agreed by the parties. In his capacity as Chairman, Executive
                  shall have the customary duties and responsibilities of
                  Chairman.

         (ii)     During the period commencing as of termination of Executive's
                  service as Chairman of the Board and ending on the Agreed
                  Retirement Date, Executive shall serve as Chairman of the
                  Executive Committee of the Board or in such comparable
                  position as the Board may determine. In such capacity,
                  Executive shall have such duties and responsibilities as are
                  customary for such position and such other duties and
                  responsibilities as the Board may designate from time to time.

         (iii)    During the period commencing after his Agreed Retirement Date
                  and for as long as Executive is a member of the Board,
                  Executive shall have the same duties and responsibilities as
                  other non-employee members of the Board.

(b)      Executive shall have the following positions, duties and
         responsibilities as an employee of the Company
         during the Employment Period:

         (i)      Executive shall continue to serve as the Company's Chief
                  Executive Officer until August 31, 2001 (or such earlier date
                  as is mutually agreed to by the parties). In such capacity,
                  Executive shall perform the customary duties and have the
                  customary responsibilities of such position.

         (ii)     On and after September 1, 2001 (or such earlier date as is
                  mutually agreed to by the parties), Executive shall cease to
                  serve as the Company's Chief Executive Officer and the Company
                  shall employ Executive as a senior executive officer during
                  the remainder of the Employment Period. In such capacity,
                  Executive shall report to the Board and shall have such duties
                  and responsibilities as the

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                  Board may assign from time to time consistent with Executive's
                  position as a senior executive officer.

(c)      Executive agrees to serve the Company faithfully, to devote such
         business time, attention and energies as is necessary or appropriate to
         the performance of his duties, and to perform the duties under this
         Agreement to the best of his abilities.

(d)      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.

7.       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
         annual rate in effect immediately prior to the Effective Date of this
         Agreement ("Base Salary") in accordance with the compensation policy
         applicable to the Company's senior executive officers. The Board may
         increase Executive's Base Salary from time to time in its discretion.
         The Board also may reduce Executive's Base Salary, provided that it has
         also reduced the base salaries of other senior executive officers and
         the reduction of Executive's Base Salary is comparable with that of the
         other senior executive officers. Such Base Salary shall be paid in
         accordance with the Company's standard payroll practice for senior
         executive officers.

(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 the 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. For calendar years 2001,
         2002, and 2003, 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. For calendar years 2004 and 2005,
         Executive's annual bonus award will be equal to 50% of his Base Salary
         in effect for the calendar year, if the Company achieves 100% of the
         plan targets.

(c)      STOCK OPTIONS. For calendar years 2001, 2002 and 2003, Executive shall
         participate in the Company's stock option plans and be eligible to
         receive grants under such plans in accordance with the Company's policy
         applicable to senior executive officers. Unless the Board or
         Compensation Committee provides otherwise, Executive shall not be
         eligible to receive additional grants under the stock option plans
         awarded for any periods of service beginning on and after January 1,
         2004.

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(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.

(e)      COMPANY-PROVIDED AUTOMOBILE. The Company shall continue to provide
         Executive with the full-time use of an automobile and payment of
         related expenses at the same style and level as provided to Executive
         immediately prior to the Effective Date of this Agreement.

(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.

(g)      PRIVATE OFFICE, PERSONAL ADMINISTRATIVE ASSISTANT, OTHER SERVICES AND
         SUPPORT. The Company shall furnish Executive with a private office of a
         size and with the furnishings and other appointments, an exclusive
         personal administrative assistant selected by Executive at his sole
         discretion, and such other facilities, services and staff, in each case
         at a level that is consistent with his position, duties and
         responsibilities.

8.       SUPPLEMENTAL RETIREMENT BENEFIT.

The Company shall pay Executive a supplemental retirement benefit as follows:

(a)      The supplemental retirement benefit will be an amount equal to 60% of
         Executive's Final Average Compensation. The following rules shall apply
         for purposes of determining Executive's Final Average Compensation:

         (i)      If Executive's last day of employment occurs before December
                  31, 2004, his Final Average 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 (as defined in clause (iv) below).

         (ii)     If Executive's last day of employment occurs on or after
                  December 31, 2004, but before December 31, 2005, his Final
                  Average Compensation shall be equal to the average of
                  Executive's Total Compensation for the three (3) calendar
                  years of the last six (6) full calendar years of Executive's
                  employment with the Company

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                  preceding such last day of employment in which Executive
                  earned the highest Total Compensation.

         (iii)    If Executive's last day of employment occurs on or after
                  December 31, 2005, his Final Average Compensation shall be
                  equal to the average of Executive's Total Compensation for the
                  three (3) calendar years of the last seven (7) full calendar
                  years of Executive's employment with the Company preceding
                  such last day of employment in which Executive earned the
                  highest Total Compensation.

         (iv)     "Total Compensation" means the total Base Salary and incentive
                  compensation earned by Executive for a calendar year,
                  including compensation earned in one calendar year and paid or
                  payable in a subsequent calendar year.

         It is the intention of the parties that 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)      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 the last date on which Executive is entitled to
         receive payment of Base Salary under Section 7(a) or 11(d) of this
         Agreement.

(c)      In the event of Executive's death, the Company shall pay to his
         surviving spouse until her death or such earlier date as determined in
         accordance with Section 24(f) below an amount equal to 50% of the
         supplemental retirement benefit determined under Section 8(a) above in
         equal monthly installments. Such payments will commence as soon as
         practicable following Executive's date of death.

(d)      The supplemental retirement benefit will be payable to Executive and
         his surviving spouse if Executive's employment is terminated before the
         Agreed Retirement Date, regardless of the reason for termination of
         employment.

9.       COMPENSATION AND BENEFITS FOLLOWING TERMINATION OF EMPLOYMENT.

In addition to the supplemental retirement benefit described in Section 8 above,
the Company will provide Executive and his spouse with the benefits described in
this Section 9 following termination of his employment if Executive continues in
employment until the Agreed Retirement Date or if Executive's employment is
terminated before the Agreed Retirement Date for any reason other than Cause
pursuant to Section 10(c) below:

(a)      HEALTH INSURANCE. The Company shall provide the following health
         insurance benefits to Executive and his spouse:

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         (i)      If Executive is not eligible for Medicare as of the last day
                  of his employment, the Company shall provide for Executive's
                  and his spouse's continued coverage under all Company health
                  benefit plans, programs, or arrangements, whether group or
                  individual, at a level of coverage that is at least as
                  favorable as provided to Executive during the Employment
                  Period until the date on which Executive first becomes
                  eligible for Medicare. The Company shall pay the full cost for
                  such coverage. In the event that Executive's participation in
                  any such Company plan, program, or arrangement is prohibited,
                  the Company shall arrange to provide Executive with benefits
                  substantially similar to those which Executive would have been
                  entitled to receive from the Company under such plan, program,
                  or arrangement, for such period.

         (ii)     The Company shall provide the following health insurance
                  benefits to Executive and his spouse after Executive becomes
                  eligible for Medicare:

                  (A)      The Company shall pay the full annual premium for any
                           Medicare supplemental insurance coverage selected by
                           Executive until his death.

                  (B)      The Company shall provide Executive's surviving
                           spouse (as determined in accordance with Section
                           24(f) below) with health insurance coverage (through
                           the purchase of insurance or otherwise) that is
                           substantially similar to the coverage that she would
                           have received if Executive had continued in active
                           employment until she becomes eligible for Medicare.
                           The Company shall pay the full cost of such coverage.

(b)      STOCK OPTIONS. Upon Executive's last day of employment, all outstanding
         unexercised stock options granted to Executive under the Company's
         employee stock option plans (i) shall become fully vested and
         exercisable as of his last day of employment and (ii) shall continue to
         be exercisable until the option expiration date (determined without
         regard to Executive's employment termination date).

(c)      POST EMPLOYMENT OFFICE AND OFFICE SERVICES. After Executive's last day
         of employment, whenever the Executive so requests, the Company will
         provide office space for him at a level commensurate with his status as
         the Company's former Chief Executive Officer and Chairman of the Board.
         In addition, during this period, whenever the Executive so requests,
         the Company will also provide the Executive with the services of an
         administrative assistant who, in the opinion of the Executive, is
         capable of providing services at a level equal to the administrative
         services provided to the Executive during the Employment Period. The
         Company shall have the obligation to provide such office and
         administrative services to Executive at the Company's headquarters or
         at such other Company location, acceptable to Executive, where such
         services can be provided. If, on the Executive's last day of
         employment, the Company's headquarters are located more than ten (10)
         miles from their present location, then if requested by Executive, the
         Company shall provide such office and administrative services to
         Executive at a location within such ten-mile radius acceptable to
         Executive.

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(d)      DIRECTOR'S FEES AND EXPENSES. During the period that Executive
         continues to serve as a member of the Board, the Company shall continue
         to provide Executive with the same fees, expense reimbursements and
         other benefits as are provided to other non-employee members of the
         Board.

10.      TERMINATION OF EMPLOYMENT BEFORE THE AGREED RETIREMENT DATE.

Executive's employment under this Agreement may be terminated prior to the
Agreed Retirement Date under any of the circumstances set forth in this Section
10.

(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 (the "Board") 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 6 hereof after
                  written notice thereof by the Company; or (D) breach of any of
                  the covenants set forth in Section 13 or 14 of this Agreement.

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         (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 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 BY THE COMPANY WITHOUT CAUSE. The Company may terminate
         Executive's employment under this Agreement without Cause after
         providing ninety (90) 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
         thirty (30) 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 failure by the Company to obtain an assumption of the
                  obligations of the Company under this Agreement as required by
                  Section 20(a).

(f)      TERMINATION BY EXECUTIVE OTHER THAN FOR GOOD REASON. Executive may
         terminate his employment under this Agreement for any reason other than
         "Good Reason" pursuant to Section 10(e) above after providing thirty
         (30) days' prior written notice to the Company.

(g)      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.

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11.      COMPENSATION AND BENEFITS PAYABLE FOLLOWING TERMINATION PRIOR TO THE
         AGREED RETIREMENT DATE.

In the event that Executive's employment is terminated prior to the Agreed
Retirement Date, 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)      HEALTH INSURANCE. The Company shall provide Executive's
                  surviving spouse with the health insurance benefits set forth
                  in Section 9(a)(ii)(B) above.

         (ii)     STOCK OPTIONS. All outstanding unexercised stock options
                  granted to Executive shall become fully vested and exercisable
                  as of Executive's date of death.

         (iii)    SUPPLEMENTAL RETIREMENT BENEFIT. The Company shall provide
                  Executive's surviving spouse with the supplemental retirement
                  benefit set forth in Section 8(c) above.

(b)      TOTAL DISABILITY. In the event that Executive's employment is
         terminated by reason of his Total Disability pursuant to Section 10(b)
         above:

         (i)      HEALTH INSURANCE. The Company shall provide Executive and his
                  spouse with the health insurance benefits set forth in Section
                  9(a) above.

         (ii)     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).

         (iii)    SUPPLEMENTAL RETIREMENT BENEFIT. The Company shall provide
                  Executive with the supplemental retirement benefit set forth
                  in Section 8 above and shall have no further obligations under
                  Section 5 or Section 9(c) hereof.

(c)      TERMINATION FOR CAUSE. In the event that Executive's employment is
         terminated by the Company for Cause pursuant to Section 10(c) above:

         (i)      The Company shall provide Executive with the supplemental
                  retirement benefit set forth in Section 8 above and shall have
                  no further obligations under Section 5 or Section 9 hereof.

         (ii)     If Executive notifies the Company in writing that he intends
                  to contest the termination for Cause, then the Company shall
                  continue to provide Executive with the compensation and
                  benefits that he would have received if he had continued in

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                  employment until the issuance of a final determination
                  pursuant to the arbitration procedure set forth in Section 17
                  below that his employment was terminated for Cause or, if
                  earlier, the date Executive ceases to contest such
                  termination. If, however, the Company is the prevailing party
                  in such arbitration or Executive ceases to contest the
                  termination after having given the required notice, then the
                  Company shall have the right to recover from Executive all
                  compensation paid to Executive under this clause (ii) and the
                  reasonable cost of all benefits provided to him under this
                  clause (ii), in each case in excess of the amounts that would
                  have otherwise been payable or provided to him under this
                  Agreement; the Company shall have the further right to set off
                  any such amounts payable by Executive against any amounts
                  payable by the Company under this Agreement.

(d)      TERMINATION BY THE COMPANY WITHOUT CAUSE OR TERMINATION BY EXECUTIVE
         FOR GOOD REASON. In the event that Executive's employment is terminated
         by the Company without Cause pursuant to Section 10(d) above or
         Executive terminates his employment for Good Reason pursuant to Section
         10(e) above:

         (i)      CONTINUATION OF COMPENSATION AND BENEFITS. The Company shall
                  continue to provide Executive the compensation and benefits
                  set forth in Section 7 above which would have been payable to
                  him if he had continued to perform his normal duties and
                  responsibilities on a full-time basis until the earlier of (i)
                  the Agreed Retirement Date or (ii) his death, subject to
                  clause (ii) below relating to the payment of annual incentive
                  compensation.

         (ii)     ANNUAL INCENTIVE COMPENSATION. The Company shall pay Executive
                  the amounts described in this clause (ii) in lieu of the
                  annual incentive compensation set forth in Section 7(b) above:

                  (A)      For each calendar year commencing after Executive's
                           last day of employment, the Company shall pay
                           Executive an amount equal to the incentive
                           compensation Executive would have earned under the
                           Company's annual incentive compensation plan for such
                           calendar year had the Company achieved 100% of such
                           plan's targets for such calendar year.

                  (B)      For the calendar year in which Executive's employment
                           is terminated, the Company shall pay Executive (I)
                           the amount determined under Section 11(f) below, plus
                           (II) an amount equal to a pro rata portion (based on
                           the number of days remaining in the calendar year
                           following Executive's last day of employment) of the
                           incentive compensation Executive would have earned
                           under the Company's incentive compensation plan for
                           such calendar year had the Company achieved 100% of
                           such plan's targets for such calendar year.

                  (C)      Payments for any calendar year under this clause (ii)
                           shall be made at the same time and in the same manner
                           as incentive compensation is paid to

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                           senior executive officers who are participants in
                           such annual incentive compensation plan.

         (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 (A) the supplemental retirement benefit
                  described in Section 8 and (B) the additional retirement
                  benefits described in Section 9 above, commencing on the
                  earlier of the Agreed Retirement Date or Executive's death.

(e)      TERMINATION BY EXECUTIVE WITHOUT GOOD REASON. In the event that
         Executive terminates his employment without Good Reason pursuant to
         Section 10(f) above Executive and his surviving spouse shall receive
         (A) the supplemental retirement benefits described in Section 8 and (B)
         the additional retirement benefits described in Section 9 above,
         commencing as of the last day of Executive's employment.

(f)      ANNUAL INCENTIVE COMPENSATION. In the event that Executive's employment
         is terminated for any reason prior to the last day of a calendar year,
         the Company shall pay Executive (or his personal representative) an
         amount equal to the pro rata portion (based on the number of days of
         employment prior to the termination date) of the annual incentive
         compensation that would have been payable to Executive if he had
         continued in employment through the end of the calendar year. Such
         amount will be paid at the same time and in the same manner as the
         annual incentive compensation for such year is paid to other senior
         executive officers.

(g)      EARNED BUT UNPAID COMPENSATION. Upon termination of Executive's
         employment under Section 10 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 is 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,

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         (i)      any benefits to which Executive may be entitled pursuant to
                  the plans, policies and arrangements referred to in Section
                  7(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.

12.      ADDITIONAL COMPENSATION FOLLOWING CHANGE OF CONTROL.

(a)      APPLICABILITY. Executive shall be entitled to the compensation and
         benefits described in this Section 12 if (i) a Change of Control (as
         hereinafter defined) occurs and (ii) on or 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 10(d) above or Executive terminates his employment for Good
         Reason pursuant to Section 10(e) above.

(b)      ADDITIONAL COMPENSATION. In addition to the compensation and benefits
         set forth in Section 11(d) 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 11(d) above;

         provided, however, that in no event shall the additional cash
         compensation payable under this Section 12(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 12(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)      Subject to the provisions of Section 12(d) the amount described in
         Section 12(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

                                 Page 12 of 22
<PAGE>   14
         expenses of the Accounting Firm shall be borne by the Company. The
         determination of the Accounting Firm of the amount payable under
         Section 12(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 12(d) to be subject to the excise tax described in Section
         12(b), the Executive shall repay excess amount to the Company within 90
         days of such final determination.

(d)      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 12(b)
         (determined without regard to 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 the
         Company that this Section 12(c) 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 8 of this
                  Agreement. Such trust shall be a grantor trust containing
                  provisions which are the same as, or are 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 8 above

(f)      DEFINITIONS. For purposes of this Section 12:

         (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

                                 Page 13 of 22
<PAGE>   15
                  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 12, the
                  Change of Control Effective Date shall mean the date
                  immediately prior to the date of such termination of
                  employment.

13.      RESTRICTIVE COVENANTS.

(a)      RESTRICTIONS. Executive covenants that, except in furtherance of his
         duties hereunder and as approved by the Board or Chief Executive
         Officer:

         (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

                                 Page 14 of 22
<PAGE>   16
                  assisting others, any employee of Company with whom Executive
                  had contact during Executive's employment with the Company.
                  For the purposes of this paragraph, "contact" means any
                  interaction whatsoever between Executive and the other
                  employee.

         (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, 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 five (5) 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 13 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 13, 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 13 is adjudicated to be invalid or unenforceable, this Section
         13 shall be deemed amended to delete therefrom the portion so
         adjudicated, such deletion to apply only with respect to the operation
         of this Section 13 in the jurisdiction in which such adjudication is
         made.

14.      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
         14(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

                                 Page 15 of 22
<PAGE>   17
         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 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,

                                 Page 16 of 22
<PAGE>   18
         disseminate, disclose, sell or offer for sale any Proprietary Property
         without the Company's prior written permission.

15.      INDEMNIFICATION.

(a)      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 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)      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)      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.

                                 Page 17 of 22
<PAGE>   19
16.      WITHHOLDING OF TAXES.

The Company shall withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local, or other taxes.

17.      ARBITRATION OF DISPUTES.

Except as provided in Section 13 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 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 23 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.

18.      PAYMENT OF FEES, EXPENSES AND INTEREST.

If Executive is the prevailing party in any arbitration conducted under Section
17 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).

19.      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. Subject to Section 12(c)
above and Section 20 below, 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.

                                 Page 18 of 22
<PAGE>   20
20.      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.

(a)      COMPANY SUCCESSOR. In the event of a Change of Control, the Company
         shall require any person (or persons acting as a group) who acquires
         ownership or effective control of the Company or ownership of a
         substantial portion of the business or assets of the Company (whether
         direct or indirect, by purchase, merger, consolidation or otherwise),
         by agreement in form and substance reasonably satisfactory to
         Executive, expressly to assume and agree to perform this Agreement in
         the same manner and to the same extent as the Company would be required
         to perform it if no such Change of Control had taken place. In the
         event that the Company fails to obtain such agreement prior to or
         concurrently with the effectiveness of any such Change of Control, the
         Company shall establish an irrevocable trust fund or similar
         arrangement containing assets sufficient to assure payment of all
         obligations under this Agreement, provided that Executive's right to
         payment from such trust fund or arrangement shall be no greater than
         the right of an unsecured creditor of the Company and its affiliates.
         As used in this Agreement, the "Company" shall mean the Company as
         defined in the first sentence of this Agreement and any Person (or
         group) that acquires ownership or effective control of the Company or
         ownership of a substantial portion of the business or assets of the
         Company or which otherwise becomes bound by all the terms and
         provisions of this Agreement, whether by the terms hereof, by operation
         of law or otherwise.

(b)      ASSIGNMENT BY EXECUTIVE. 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 20 shall
         preclude Executive from designating a beneficiary or beneficiaries to
         receive any benefit payable on his death.

21.       ENTIRE AGREEMENT; AMENDMENT.

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.

                                 Page 19 of 22
<PAGE>   21
22.      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.

23.      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
         105 Corporate Park Drive
         White Plains, New York 10604
         Attention: General Counsel

To Executive:

         Arthur Hershaft
         2 Gray Oaks Lane
         Greenwich, Connecticut 06830

24.      MISCELLANEOUS.

(a)      NO SET-OFF, ETC. Except as otherwise provided in Section 11(c)(ii), 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 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.

                                 Page 20 of 22
<PAGE>   22
(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 Janet
         Hershaft, 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 and benefits provided for a
         surviving spouse under Sections 8 and 9 of this Agreement for the
         periods specified therein. However, if Janet Hershaft is not
         Executive's surviving spouse at the time of his death, for purposes of
         Sections 8 and 9 of this Agreement, Executive's surviving spouse, if
         any, shall be entitled to receive the amounts payable to and benefits
         provided for 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 Janet Hershaft would have been entitled to receive such
         payment or benefit, the date of death of such surviving spouse being
         deemed to be the last day of Janet Hershaft's 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

                                 Page 21 of 22
<PAGE>   23
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/ Leo Benatar                          /s/ Arthur Hershaft
   ------------------------------------      -----------------------------------
                                             Arthur Hershaft

Name: Leo Benatar
      ---------------------------------

Title: Chairman, Compensation Committee      Date: July 11, 2001
       --------------------------------            -----------------------------

Date: July 11, 2001
      ---------------------------------

                                 Page 22 of 22
<PAGE>   24
                                   APPENDIX A

                         DEFINITION OF CHANGE OF CONTROL

For purposes of Section 12 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

(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

                                      A-1
<PAGE>   25
         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.

                                      A-2<PAGE>   1

                                  EXHIBIT 10.2
<PAGE>   2
                                                                  EXECUTION COPY

                           STOCK REPURCHASE AGREEMENT

         STOCK REPURCHASE AGREEMENT, dated as of July 11, 2001 (this
"AGREEMENT"), by and between PAXAR CORPORATION, a New York corporation (the
"COMPANY"), and ARTHUR HERSHAFT ("EXECUTIVE").

                                    RECITALS

         Concurrently with the execution and delivery of this Agreement,
Executive and the Company are entering into an Employment Agreement, which
provides for the terms and conditions of Executive's employment and
post-employment relationship with the Company. As of the date of this Agreement,
Executive owns or has the right to acquire by exercise of employee stock options
a total of 3,866,771 shares of the Company's Common Stock, $0.10 par value
("COMMON STOCK"). By entering into this Agreement, the Company desires to
preserve the market price of its Common Stock for the benefit of the Company's
shareholders by limiting Executive's ability to sell large blocks of Common
Stock in public markets. In addition, the Company will have the ability to use
shares of Common Stock purchased from Executive to issue to other employees
covered by the Company's Stock Option Plans, Stock Purchase Plan and other
stock-based plans that the Company may adopt in the future.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

1.       GENERAL RESTRICTIONS ON TRANSFER.

         1.1 RESTRICTION ON TRANSFER. During the Term of this Agreement (as set
forth in Section 9), Executive shall not sell, assign, transfer, pledge,
hypothecate, give away or in any other manner dispose of or encumber (any such
transaction being hereinafter referred to as a "TRANSFEr") any shares of Common
Stock that he now owns or hereafter acquires, unless:

         (i)      such transfer of Common Stock is permitted by and made in
                  accordance with the requirements of this Agreement; and

         (ii)     if applicable, the proposed recipient of such Common Stock
                  delivers to the Company a written acknowledgment that the
                  Common Stock to be received in such proposed transfer is
                  subject to this Agreement and that the proposed recipient and
                  his, her or its successors in interest are and will be bound
                  hereby.
<PAGE>   3
         1.2 NON-CONFORMING TRANSFERS VOID. Any purported transfer of Common
Stock other than in accordance with this Agreement shall be null and void and of
no effect, and the Company shall not recognize any such transfer in any respect
and shall not reflect on its stock transfer register any change in record
ownership of Common Stock pursuant to any such purported transfer.

         1.3 STOP TRANSFER ORDER AND RESTRICTIVE LEGEND. In order to effectuate
this Agreement, the Company shall place a stop transfer order on its stock
transfer register against shares of Common Stock owned by Executive, and each
certificate representing Executive's shares of Common Stock hereafter issued to
Executive or any transferee of Executive's Common Stock who becomes bound by
this Agreement (a "PERMITTED TRANSFEREE") shall bear a legend in substantially
the following form upon its face or its back:

                  The shares represented by this certificate are subject to and
                  transferable only in compliance with a Stock Repurchase
                  Agreement, dated as of July __, 2001, between the issuer and
                  the record owner, a copy of which is on file with the
                  Secretary of the issuer.

2.       OPTION.

         2.1 EXECUTIVE'S OPTION TO SELL. Subject to the limitations and
restrictions on transfer elsewhere in this Agreement, Executive shall have the
right and option (the "OPTION") to sell to the Company, and upon Executive's
exercise of the Option as herein provided, the Company shall purchase from
Executive, during any Rolling 12-Month Period (as hereinafter defined) during
the Term of this Agreement a number of shares of Common Stock equal to the sum
of (i) 400,000 shares plus (ii) that number of shares representing the excess of
(x) the total number of shares of Common Stock that Executive had the right to
sell to the Company pursuant to the exercise of his Option prior to the
commencement of the Rolling 12-Month Period applicable to such exercise over (y)
the number of shares of Common Stock Executive actually sold to the Company
pursuant to the Exercise of his Option during such period. For purposes of this
Agreement, a "ROLLING 12-MONTH PERIOD" shall mean (i) each period of twelve (12)
consecutive months during the Term of this Agreement, and (ii) each period
shorter than twelve (12) months commencing on the date hereof and ending on the
Exercise Date referred to in Section 2.5 or on the day before the beginning of
each Rolling 12-Month Period commencing after the first anniversary of this
Agreement. A new Rolling 12-Month Period shall begin on each day of the Term and
end on the day before the corresponding day of the next year.

         2.2 MINIMUM AND MAXIMUM PUT SHARES. Anything in Section 2.1 to the
contrary notwithstanding, the Company shall have no obligation to purchase any
shares of Common Stock from Executive upon his exercise of his Option to the
extent that:

         (i)      the number of shares that Executive desires to sell to the
                  Company upon exercise of his Option plus all other shares of
                  Common Stock that the Company purchased from Executive
                  pursuant to exercises of his Option during the Rolling
                  12-Month Period applicable to such exercise of his

                                       2
<PAGE>   4
                  Option exceeds 800,000 shares of Common Stock; or

         (ii)     the number of shares that Executive desires to sell to the
                  Company upon exercise of his Option is less than 200,000
                  shares of Common Stock.

         2.3 ADJUSTMENTS TO SHARES SUBJECT TO THIS AGREEMENT. In case the
Company shall at any time after the date hereof (i) declare a dividend or make a
distribution on the outstanding Common Stock payable in shares of its capital
stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock by reclassification of the Common Stock (other than
a change in par value, or from par value to no par value, or from no par value
to par value, but including any such reclassification in connection with the
consolidation or merger of the Company with or into another corporation (other
than a merger in which the Company is the continuing corporation and which does
not result in any reclassification or change of the then outstanding shares of
Common Stock or other capital stock that the Company is required to purchase
under this Agreement)), then, in each case, the number of shares of Common Stock
that the Company shall be required to purchase upon Executive's exercise of his
Option as well as the number of shares of Common Stock that Executive or his
Permitted Transferees (each, a "HOLDER") are permitted to transfer hereunder, at
the time of the record date for such dividend or at the effective date of such
subdivision, combination or reclassification, shall be proportionately adjusted
so that after such time each Holder shall be entitled to transfer the aggregate
number and kind of shares that, if such transfer had been effected immediately
prior to such time, such Holder would have transferred upon such exercise and
immediately thereafter been entitled to transfer by virtue of such dividend,
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed above occurs.

         2.4 EFFECT OF REORGANIZATIONS. In case of any consolidation or merger
of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the surviving or continuing corporation
and which does not result in any reclassification of the outstanding shares of
Common Stock or the conversion of such outstanding shares of Common Stock into
shares of other stock or other securities or property), or in case of any sale,
lease or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety (such
actions being hereinafter collectively referred to as "REORGANIZATIONS"), the
successor to the Company shall thereafter be obligated to purchase upon exercise
of Executive's Option and a Holder shall have the right to transfer (in lieu of
the number of shares of Common Stock theretofore required to be purchased or
permitted to be transferred) the kind and amount of shares of stock or other
securities or other property that was deliverable upon such Reorganization to a
holder of the number of shares of Common Stock before Executive's exercise of
his Option or upon a Holder's transfer. In case of any Reorganization,
appropriate adjustment, as determined in good faith by the Board of Directors of
the Company, shall be made in the application of the provisions herein set forth
with respect to the rights and interests of Executive and his Permitted
Transferees so that the provisions set forth herein shall thereafter be
applicable, as nearly as possible, in relation to any shares or other property
thereafter required to be purchased upon Executive's exercise of his Option or
permitted to be transferred by a Holder. Any such adjustment shall be made by
and set forth in a supplemental agreement between the Company, or

                                       3
<PAGE>   5
any successor thereto as provided in Section 10.2, and Executive and his
Permitted Transferees, and shall for all purposes hereof conclusively be deemed
to be an appropriate adjustment. The Company shall not effect any such
Reorganization unless upon or prior to the consummation thereof the successor
corporation, or if the Company shall be the surviving corporation in any such
Reorganization and is not the issuer of the shares of stock or other securities
or property to be delivered to holders of shares of the Common Stock outstanding
at the effective time thereof, then such issuer, shall assume by written
instrument the obligation to purchase from Executive or any other person bound
by the terms of this Agreement such shares of stock, securities, or other
property as Executive or such other person shall be entitled to sell in
accordance with the terms of this Agreement. The above provisions of this
Section 2.4 shall similarly apply to successive reclassifications and changes of
shares of Common Stock and to successive consolidations, mergers, sales, leases,
or conveyances.

         2.5 EXERCISE OF OPTION. Executive may exercise his Option by delivering
to the Company at its office at 105 Corporate Park Drive, White Plains, New York
10604, or at such other place as the Company may designate in writing, prior to
5:00 p.m. local time on any day of a Window Period (as hereinafter defined)
occurring during the Term of this Agreement (the "EXERCISE DATE"), a completed
and signed "NOTICE OF EXERCISE" substantially in the form of EXHIBIT A hereto,
together with one or more certificates representing the number of shares of
Common Stock as to which Executive's Option is being exercised (the "PUT
SHARES") and one or more stock powers duly executed in blank with Executive's
signature medallion guaranteed. For purposes of this Agreement, the "WINDOW
PERIOD" shall be the period commencing on the third (3rd) trading day after the
public announcement of the Company's financial results for the preceding fiscal
quarter and ending at the close of business on the twelfth (12th) trading day
after such public announcement or such other period as the Company shall adopt
during which the Company's executive officers may purchase or sell shares of
Common Stock in public markets.

         2.6 PURCHASE PRICE AND EXERCISE PRICE. The aggregate "PURCHASE PRICE"
payable by the Corporation for the Put Shares shall be equal to (x) the number
of Put Shares, multiplied by (y) the Exercise Price. The "EXERCISE PRICE" shall
be equal to the average of the closing sale prices for the Common Stock (or
other security, as applicable) during the period of seven (7) trading days ended
on the trading day immediately preceding the Exercise Date. The closing sale
price for any security as of any date shall be the last closing trade price for
such security on the New York Stock Exchange as reported by Bloomberg, or, if
the New York Stock Exchange is not the principal securities exchange or trading
market for such security, the last closing trade price of such security on the
principal securities exchange or trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing trade price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no
last closing trade price is reported for such security by Bloomberg, the last
closing bid price of such security as reported by Bloomberg, or, if no last
closing bid price is reported for such security by Bloomberg, the average of the
bid prices of any market makers for such security as reported in the "pink
sheets" by the National Quotation Bureau, Inc.

         2.7 PAYMENT OF PURCHASE PRICE. The Company shall pay the Purchase Price
to Executive by delivery of a certified or bank check in the amount of the
Purchase Price or by wire

                                       4
<PAGE>   6
transfer of immediately available funds in the amount of the Purchase Price to
such account as Executive shall designate in writing, such delivery or wire
transfer to be made not later than the close of business on the third (3rd)
business day after the Exercise Date.

3.       LIMITATIONS ON THE COMPANY'S OBLIGATION TO PURCHASE PUT SHARES.

         3.1 LIMITATIONS ON PURCHASE OBLIGATION. Anything in Section 2 to the
contrary notwithstanding and subject to Sections 3.2 and 7.3 hereof, the Company
shall have no obligation to purchase any Put Shares from Executive under this
Agreement if, after giving effect to the purchase of such Put Shares:

         (i)      the total Purchase Price of such Put Shares, when added to the
                  total Purchase Price of all Put Shares purchased by the
                  Company during the preceding twelve (12) month period, would
                  exceed twenty-five percent (25%) of the Company's Cash Flow
                  (as hereinafter defined) for the four (4) consecutive fiscal
                  quarters of the Company ended immediately before the Exercise
                  Date; or

         (ii)     the purchase of such Put Shares would cause the Company to
                  violate any covenant or agreement to which it may then be
                  subject, including any covenant in any loan agreement; or

         (iii)    the purchase of such Put Shares would result in a violation by
                  the Company of Section 513 of the New York Business
                  Corporation Law (Purchase, Redemption and Certain other
                  Transactions by a Corporation With Respect To Its Own Shares).

For purposes of this Agreement, "CASH FLOW" means the Company's earnings before
interest, taxes, depreciation and amortization (EBITDA) minus the Company's
capital expenditures, in each case determined on a consolidated basis in
accordance with United States generally accepted accounting principles
consistently applied.

         3.2 OBLIGATIONS NOTWITHSTANDING LIMITATIONS. If the Company is not
obligated to purchase Put Shares due to the applicability of Section 3.1, the
Company shall continue to be obligated to purchase all Put Shares that it has
the ability to purchase without exceeding the limitations of Section 3.1,
without regard to the minimum number of shares required to be subject to the
exercise of any Option as provided in clause (ii) of Section 2.2.

4.       RIGHT OF FIRST REFUSAL.

         4.1 NOTICE OF BONA FIDE OFFER. If Executive receives a bona fide offer
to purchase any shares of Common Stock (a "BONA FIDE OFFER") and desires to sell
such shares pursuant to such Bona Fide Offer, Executive shall first deliver to
the Company at its office at 105 Corporate Park Drive, White Plains, New York
10604, or at such other place as the Company may designate in writing, a Notice
of Bona Fide Offer substantially in the form of EXHIBIT B hereto, accompanied by
a duplicate original of a written Bona Fide Offer setting forth the name of the

                                       5
<PAGE>   7
proposed transferee and all other terms and conditions of the proposed transfer
and signed by the proposed transferee (who shall not be an affiliate (as defined
in Rule 405 of the Securities Act of 1933) of Executive or a relative of
Executive by blood or marriage). The Notice of Bona Fide Offer shall constitute
an offer to sell the shares of Common Stock subject to such Bona Fide Offer to
the Company on the same terms and conditions set forth in the Bona Fide Offer.
The Company shall have the right to accept Executive's offer to sell his shares
of Common Stock by delivery of a written Notice of Acceptance substantially in
the form of EXHIBIT C hereto to Executive not later than 5:00 p.m. on the third
(3rd) business day following delivery of the Notice of Bona Fide Offer. If the
Company accepts Executive's offer, Executive shall sell his shares to the
Company, and the Company shall purchase such shares from Executive, upon the
terms and conditions and at the price specified in the Bona Fide Offer.

         4.2 RIGHT TO SELL PURSUANT TO BONA FIDE OFFER. If the Company does not
deliver a Notice of Acceptance to Executive in accordance with Section 4.1 above
with respect to all Common Stock offered by Executive, Executive shall have the
right to sell all, but not less than all, of the shares of Common Stock offered
pursuant to the Notice of Bona Fide Offer to the third party designated in and
pursuant to the terms of the Bona Fide Offer for a period of ten (10) business
days after expiration of the Company's option to purchase such shares under
Subsection 4.1 (the "UNRESTRICTED PERIOD"), subject to compliance with all
federal and state securities laws. If Executive does not sell all of such shares
of Common Stock during the Unrestricted Period, then Executive's right to
transfer such Common Stock pursuant to the terms of the Bona Fide Offer shall
expire, and any subsequent proposed transfer of such shares Common Stock shall
again be subject to the obligations of this Agreement.

         4.3 SHARES SOLD NOT PUT SHARES. Shares of Common Stock offered and sold
to the Company or any third party pursuant to this Section 4 shall not be
considered Put Shares for purposes of this Agreement.

5.       SALE OF OPTION SHARES.

         Executive shall have the right to sell any shares of Common Stock that
Executive acquires or has the right to acquire during the Term of this Agreement
pursuant to the exercise of employee stock options granted by the Company to
Executive (such shares being referred to herein as "OPTION SHARES") in any
manner permitted by federal and state securities laws, including sales pursuant
to Rule 144 under the Securities Act of 1933 or pursuant to a resale prospectus
contained in an effective Registration Statement on Form S-8. Executive's right
to sell such Option Shares under this Section 5 shall be in addition to his
right to sell such Option Shares to the Company pursuant to the exercise of his
Option under Section 2. Option Shares that Executive sells in accordance with
this Section 5 shall not be considered Put Shares for purposes of this
Agreement.

6.       PLEDGE OF SHARES.

         6.1 RIGHT TO PLEDGE SHARES. Subject to this Section 6, Executive shall
have the right to pledge, hypothecate, encumber or otherwise grant a security
interest in (a "PLEDGE") up to 800,000 shares of Common Stock as collateral
security for a loan or loans by a financial

                                       6
<PAGE>   8
institution (the "PLEDGEE"). Concurrently with any Pledge of Common Stock, the
Pledgee shall agree in writing to be bound by and to sell any shares of Common
Stock pledged to it (such shares being referred to herein as "PLEDGED SHARES")
only in accordance with this Agreement.

         6.2 SALE OF PLEDGED SHARES. The Pledgee shall give written notice to
the Company not later than five (5) business days prior to any sale of Pledged
Shares by the Pledgee or for Executive's account, which notice shall specify the
amount of the loan and any other obligations to be satisfied by a sale of the
Pledged Shares. Such notice shall constitute an offer by the Pledgee to sell all
or any part of such Pledged Shares to the Company for cash at the Exercise Price
on the date of the Pledgee's notice. The Company may accept such offer with
respect to all or any part of the shares so offered by giving the Pledgee a
notice of acceptance specifying the number of shares the Company will purchase
and the total purchase price thereof. Not later than three (3) business days
after receipt of such notice of acceptance, the Pledgee shall deliver one or
more certificates representing the Pledged Shares to be purchased by the Company
together with a stock power medallion guaranteed against delivery of a certified
or bank check in payment of the total purchase price thereof. The Pledgee shall
release such Pledged Shares from all other liens, claims and encumbrances of any
nature whatsoever in favor of the Pledgee and shall otherwise transfer such
Pledged Shares to the Company free of all liens, claims and encumbrances of any
nature whatsoever. If the Company does not purchase all Pledged Shares so
offered, the Pledgee shall have the right to sell any Pledged Shares offered to
the Company but not purchased by it to any person in any legal manner without
any further right or interest of the Company in or to such Pledged Shares.

         6.3 PLEDGED SHARES SOLD DEEMED PUT SHARES. Pledged Shares offered and
sold to the Company or to any other person by the Pledgee shall be deemed to be
Put Shares for purposes of this Agreement.

7.       SALES BY EXECUTIVE'S ESTATE AND ESTATE TRANSFEREES.

         7.1 TRANSFERS BY PERSONAL REPRESENTATIVES AFTER EXECUTIVE'S DEATH.
Except as otherwise provided in this Section 7, if Executive dies during the
Term of this Agreement, transfers of his shares of Common Stock by his personal
representatives and by any person who receives shares of Common Stock from his
estate (each, an "ESTATE TRANSFEREE") shall continue to be subject to the terms
of this Agreement.

         7.2 TRANSFEREES TO BE BOUND. Executive's personal representatives may
transfer shares of Common Stock to the Estate Transferees, provided that such
personal representatives and Estate Transferees of such shares satisfy the
following conditions:

                  (i) before or concurrently with submitting any shares of
         Common Stock to the Company's transfer agent for transfer upon the its
         stock transfer books, the personal representatives shall notify the
         Company of the number of shares to be transferred, the name and address
         of each Estate Transferee to whom such shares are to be transferred,
         the total number of shares that the personal representatives hold or
         have transferred from Executive's estate, and the percentage of all
         shares so held or transferred represented by the shares to be
         transferred to each such Estate Transferee; and

                                       7
<PAGE>   9
                  (ii) as a condition to delivery of certificates representing
         the Common Stock to an Estate Transferee, such Estate Transferee shall
         agree in writing to be bound by the terms of this Agreement.

         7.3 MAXIMUM SHARES SUBJECT TO OPTION IN FIRST 12 MONTHS AFTER DEATH.
During the first twelve (12) months after Executive's death, Executive's
personal representatives shall have the right to sell up to a total of 800,000
shares of Common Stock to the Company pursuant to the exercise of the Option
under Section 2 hereof, and the limitation set forth in clause (i) of Section
3.1 shall not be effective to restrict such sales.

         7.4 COMPANY RIGHT OF FIRST OFFER. If Executive's personal
representatives determine in the exercise of their reasonable discretion that in
order to pay estate, inheritance or similar taxes arising as a result of
Executive's death ("ESTATE TAXES"), they need to sell shares of Common Stock in
excess of the shares they are entitled to sell to the Company pursuant to
Section 7.3 above, they shall so inform the Company in writing specifying the
dollar amount required to pay such taxes and the number of shares of Common
Stock they will be required to sell at the Exercise Price on the date of such
notice in order to pay such taxes. Such notice shall constitute an offer by
Executive's personal representatives to sell all or any part of such shares to
the Company for cash at the Exercise Price per share specified therein. The
Company may accept such offer with respect to all or any part of the shares so
offered by giving Executive's personal representatives a notice of acceptance
specifying the number of shares the Company will purchase and the total purchase
price thereof not later than two (2) business days after its receipt of the
personal representatives' notice. Not later than three (3) business days after
receipt of such notice of acceptance, Executive's personal representatives shall
deliver to the Company one or more certificates representing the shares to be
purchased by the Company together with a stock power medallion guaranteed
against delivery of a certified or bank check in payment of the total purchase
price thereof or payment by wire transfer of immediately available funds in the
amount of the total purchase price to such account as executive's personal
representatives shall designate in writing. Executive's personal representatives
shall transfer such shares free of all liens, claims and encumbrances of any
nature whatsoever. If the Company does not purchase all shares so offered,
Executive's personal representatives shall have the right to sell (i) any shares
offered to the Company but not purchased by it and (ii) any additional shares of
Common Stock Executive's personal representatives determine are required to be
sold in order to pay Estate Taxes, to any person in any legal manner without any
further right or interest of the Company in or to such shares.

         7.5 SALES BY ESTATE TRANSFEREES. Subject to this Section 7.5, after the
date on which an Estate Transferee shall have received shares of Common Stock
from Executive's estate (such shares being referred to herein as "TRANSFERRED
SHARES") and shall have agreed to be bound by the terms of this Agreement in
accordance with Section 7.1 (such date being referred to herein as the
"DISTRIBUTION DATE"), an Estate Transferee shall have the right to sell up to
one-third (1/3) of the Transferred Shares in each of the first three (3) years
after the Distribution Date; provided, however, that if the Executive
establishes either an inter vivos trust or a trust under his Will having his
surviving spouse as the sole income beneficiary (such trust being referred to
herein as

                                       8
<PAGE>   10
the "MARITAL TRUST"), then the Marital Trust shall have the right to sell up to
one-half (1/2) of the Transferred Shares in each of the first two (2) years
after the Distribution Date. Such right shall be cumulative, such that an Estate
Transferee may sell in subsequent years any Transferred Shares such Estate
Transferee had the right to sell, but did not sell, in prior years. In addition,
if an Estate Transferee is required to sell any Transferred Shares in order to
comply with or satisfy any law, rule, order, judgment or similar legal
obligation, including sales required to comply with provisions of the Internal
Revenue Code and New York State Estates, Powers and Trusts Law applicable to
private foundations, such Estate Transferee may sell additional Transferred
Shares to satisfy such obligation. Any Estate Transferee that desires to sell
Transferred Shares that he, she or it has the right to sell under this Section
7.5 shall give not less than five (5) business days' prior notice of such Estate
Transferee's intention to sell specifying the number of Transferred Shares such
Estate Transferee desires to sell. Such notice shall constitute an offer by such
Estate Transferee to sell all or any part of such Transferred Shares to the
Company for cash at the Exercise Price per share on the date of the notice. The
Company may accept such offer with respect to all or any part of the Transferred
Shares so offered by giving such Estate Transferee a notice of acceptance
specifying the number of Transferred Shares the Company will purchase and the
total purchase price thereof. Not later than three (3) business days after
receipt of such notice of acceptance, such Estate Transferee shall deliver to
the Company one or more certificates representing the Transferred Shares to be
purchased by the Company together with a stock power medallion guaranteed
against delivery of a certified or bank check in payment of the total purchase
price thereof or payment by wire transfer of immediately available funds in the
amount of the total purchase price to such account as such Estate Transferee
shall designate in writing. Such Estate Transferee shall transfer such
Transferred Shares free of all liens, claims and encumbrances of any nature
whatsoever. If the Company does not purchase all Transferred Shares so offered,
such Estate Transferee shall have the right to sell any Transferred Shares
offered to the Company but not purchased by it to any person in any legal manner
without any further right or interest of the Company in or to such Transferred
Shares.

         7.6 TERMINATION OF WINDOW PERIOD RESTRICTIONS. Executive's personal
representatives shall have the right to exercise the Option at any time after
Executive's death without regard to the Window Period set forth in Section 2.5,
provided that the person exercising the Option is not himself or herself an
executive officer of the Company subject to limitations on the sale and purchase
of Common Stock during Window Periods.

         7.7 TERMINATION OF RESTRICTIONS ON ESTATE TRANSFEREES. All restrictions
imposed by this Agreement on the right of Estate Transferees to transfer
Transferred Shares shall end three (3) years after the Distribution Date in the
case of all Estate Transferees other than the Marital Trust and two (2) years
after the Distribution Date in the case of the Marital Trust.

8.       GIFTS.

         8.1 GIFTS TO FAMILY TRUSTS. Anything in this Agreement to the contrary
notwithstanding, Executive may transfer his shares of Common Stock to a trust
exclusively for his benefit and/or the benefit of his spouse and/or children
and/or grandchildren; provided, however, that the trustee of such trust shall
agree in writing to be bound by the terms of this Agreement; and provided,
further, that notwithstanding such transfer, during his lifetime,

                                       9
<PAGE>   11
Executive shall be deemed to continue to be the owner of such shares for
purposes of this Agreement. After Executive's death, for purposes of this
Agreement, the trustees and/or beneficiaries of any such trust shall be deemed
to be Estate Transferees, the shares held by such trustees and/or beneficiaries
shall be deemed to be Transferred Shares, the date of Executive's death shall be
deemed to be the Distribution Date with respect to such shares, and such
trustees and/or beneficiaries shall have the right to sell such shares only in
accordance with the terms of Section 7.5 hereof.

         8.2 EXCLUDED GIFTS. Anything in this Agreement to the contrary
notwithstanding, Executive may transfer up to a total of One Hundred Thousand
(100,000) shares of Common Stock during any Rolling 12-Month Period to members
of his immediate family or charitable organizations exempt from taxation under
Section 501 of the Internal Revenue Code of 1986, as amended, or any applicable
successor provision without first complying with the restrictions on transfer
set forth in this Agreement.

9.       TERM.

         9.1 TERM. The Term of this Agreement shall commence as of the date
hereof and shall end on the earlier of (i) July 1, 2013, or (ii) the date on
which all shares of Common Stock owned by Executive shall have been transferred
without any further restriction under this Agreement.

         9.2 TERMINATION AFTER CHANGE OF CONTROL. Anything in Section 8.1 to the
contrary notwithstanding, Executive may terminate this Agreement by giving
written notice of termination at any time within six (6) months after a Change
of Control (as defined in Executive's Employment Agreement) of the Company.

10.      MISCELLANEOUS.

         10.1 ARBITRATION. 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 rules of the American Arbitration Association then in
effect. 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 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 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.

                                       10
<PAGE>   12
         10.2 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, personal representatives, successors and assigns. In
the event of a Change of Control, the Company shall require any person (or
persons acting as a group) who acquires ownership or effective control of the
Company or ownership of a substantial portion of the business or assets of the
Company (whether direct or indirect, by purchase, merger, consolidation or
otherwise), by agreement in form and substance reasonably satisfactory to
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent as the Company would be required to perform it if
no such Change of Control had taken place. As used in this Agreement, the
"Company" shall mean the Company as defined in the heading of this Agreement and
any person (or group) that acquires ownership or effective control of the
Company or ownership of a substantial portion of the business or assets of the
Company or that otherwise becomes bound by all the terms and provisions of this
Agreement, whether by the terms hereof, by operation of law or otherwise.

         10.3 INTEGRATED AGREEMENT; AMENDMENTS. 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 purchase of Executive's shares of Common Stock. It may
not be amended except by a written agreement signed by both parties.

         10.4 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.

         10.5 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 by hand or sent by facsimile and
confirmed by next-day delivery of such notice by Express Mail, Federal Express
or other recognized overnight delivery service, to those persons listed below at
their following respective addresses and fax numbers or at such other address
and fax number as each may specify by notice to the others.

To the Company:

                  Paxar Corporation
                  105 Corporate Park Drive
                  White Plains, New York 10604
                  Attention: General Counsel
                  Fax: 914-967-6860

To Executive:

                  Arthur Hershaft
                  2 Gray Oaks Lane
                  Greenwich, Connecticut 06830
                  Fax:  203-629-0552

                                       11
<PAGE>   13
         As part of his, her or its agreement to be bound by this Agreement,
each Permitted Transferee shall provide the Company in writing with an address
and fax number for notice hereunder.

         10.6 NO 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 of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.

         10.7 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.

         10.8 HEADINGS. Section headings are used herein for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.

         10.9 NUMBER AND GENDER. Whenever the context so requires, the use of
the singular shall be deemed to include the plural and vice versa, and the use
of one gender shall include all other genders, as appropriate.

         10.10 COUNTERPART EXECUTION. 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

                                       12
<PAGE>   14
         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year set forth above.

PAXAR CORPORATION                              EXECUTIVE

By:    /s/ Leo Benatar                         /s/ Arthur Hershaft
       --------------------------------        --------------------------------
                                               Arthur Hershaft
Name:  Leo Benatar

Title: Chairman, Compensation Committee        Date:   July 11, 2001

Date:  July 11, 2001

                                       13
<PAGE>   15
                                                                       EXHIBIT A

                               NOTICE OF EXERCISE

To: Paxar Corporation

         (1) The undersigned hereby elects to sell ________ shares of Common
Stock OF Paxar Corporation (the "Shares") pursuant to the terms of the Stock
Repurchase Agreement between Paxar and the undersigned, and tenders herewith
certificates representing such shares of Common Stock, together with a Stock
Power duly executed by the undersigned and medallion guaranteed.

         (2) The Exercise Price for the Shares, as determined in accordance with
Section 2.6 of the Stock Repurchase Agreement, is: $_____________.

         (3) The Purchase Price for the Shares, as determined in accordance with
Section 2.6 of the Stock Repurchase Agreement, is: $_____________.

         (4) Please pay the Purchase Price in the manner specified below:

         ___ By check payable to the order of the undersigned.

         ___ By wire transfer in accordance with the following instructions:

Dated:
      ______________________

                                            ____________________________________
                                            Signature

                                       14
<PAGE>   16
                                                                       EXHIBIT B

                            NOTICE OF BONA FIDE OFFER

To: Paxar Corporation

         (1)      The undersigned has received a bona fide offer to purchase
                  _______ shares of Paxar Common Stock in accordance with the
                  signed offer attached hereto.

         (2)      The purchase price per share is $_________ and the total
                  purchase price is $__________.

         (3)      The method of payment is:

Dated:______________________

                                            ____________________________________
                                            Signature

                                       15
<PAGE>   17
                                                                       EXHIBIT C

                              NOTICE OF ACCEPTANCE

To:_______________________

         (1)      Paxar Corporation hereby accepts your offer to sell
                  ___________ shares of Paxar Common Stock pursuant to your
                  Notice of Bona Fide Offer dated ____________.

         (2)      The total purchase price for the shares is:
                  $____________________.

         (3)      Payment will be effected in the manner specified in your
                  Notice of Bona Fide Offer upon Paxar's receipt of the
                  certificates representing your shares and a stock power
                  executed by you and medallion guaranteed.

Dated:_____________________             Paxar Corporation

                                        By:__________________________________

                                           __________________________________
                                           Name

                                           __________________________________
                                           Title

                                       16

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