SECOND AMENDMENT
TO
AGREEMENT
This Second Amendment is dated as of July 13, 1999 and is made in
respect of the Agreement dated as of June 2, 1998 and the First Amendment
thereto dated as of December 11, 1998 (as amended and in effect immediately
prior to the date hereof, the "Agreement") by and between PSC INC., a New York
corporation ("PSC" or the "Company"), and XXXXXX X. XXXXXXX ("Xxxxxxx").
WHEREAS, Section 4 of the Agreement provides that Xxxxxxx will be
awarded 17,500 restricted Common Shares of the Company on each of March 25, 1999
(the "1999 Award") and March 25, 2000; and
WHEREAS, the 1999 Award was not made on March 25, 1999 because of a
lack of a sufficient number of shares in the 1994 Stock Option Plan (the
"Plan"); and
WHEREAS, at the 1999 Annual Meeting held on May 12, 1999, the
shareholders of the Company approved an increase in the number of shares
allocated to the Plan and, accordingly, the 1999 Award can now be made; and
WHEREAS, Xxxxxxx has requested that equity portion of his compensation
be in the form stock options for Common Shares rather than awards of restricted
Common Shares and the Board of Directors has consented to the change; and
WHEREAS, the number of stock options that is equivalent to the number
of restricted Common Shares that otherwise would have been awarded to Xxxxxxx is
35,000 shares; and
WHEREAS, the Board of Directors has adopted a policy whereby stock
option grants to officers and directors in 1999 will be reduced by 50%; and
WHEREAS, Xxxxxxx is willing to accept a 50% reduction in the number of
stock options to be granted to him in 1999.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows
1. All of the terms used in this Second Amendment shall have the
meanings defined in the Agreement.
2. Effective as of March 25, 1999, Section 4 of the Agreement is
deleted in its entity and replaced by a new Section 4, which will read as
follows:
"4. Restricted Stock/Stock Options. Pursuant to the
Company's 1994 Stock Option Plan, on March 25, 1998 PSC
awarded Xxxxxxx 17,500 restricted Common Shares of the
Company, upon the terms and conditions and subject to the
restrictions set forth in the Restricted Stock Award Agreement
attached to the Agreement as Exhibit A. Effective as of March
25, 1999, the Company has granted Xxxxxxx, pursuant to the
Company's 1994 Stock Option Plan, a stock option for 17,500
Common Shares of the Company at an exercise price of $8.625
per share, upon the terms and conditions set forth in the
Stock Option Agreement attached hereto as Exhibit A. If
Xxxxxxx is Chairman of the Board of Directors of the Company
on March 25, 2000, PSC will xxxxx Xxxxxxx a stock option for
35,000 Common Shares pursuant to a Stock Option Agreement
similar in form to Exhibit A, as modified to reflect
appropriate changes in grant, vesting and expiration dates and
in purchase and stock performance prices. Notwithstanding the
foregoing sentence, if there is a Change in Control (as
hereinafter defined), and if Xxxxxxx becomes entitled to
receive Severance Benefits (as hereinafter defined), Xxxxxxx
will be immediately entitled to receive the stock option which
otherwise would have been granted to him on March 25, 2000,
fully vested and exercisable and at a purchase price equal to
the Fair Market Value of the Company's Common Shares on the
date preceding the date of the Change in Control."
3. Except as modified by this Second Amendment, the Agreement shall
remain in full force and effect and is hereby ratified and confirmed.
IN WITNESS WHEREOF, the parties have caused this Second Amendment to be
executed as of the day and year first above written.
PSC Inc.
By: /s/ Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx
President and
Chief Executive Officer
Xxxxxx X. Xxxxxxx
EXHIBIT A
PSC INC.
OPTION AGREEMENT PURSUANT TO
1994 STOCK OPTION PLAN
OPTION AGREEMENT, executed in duplicate as of the 13th day of July,
1999, between PSC INC., a New York corporation (the "Company"), and XXXXXX X.
XXXXXXX, Chairman of the Board of Directors of the Company (the "Optionee").
RECITALS
Optionee entered into a compensation agreement with the Company on June
2, 1998, the First Amendment to the compensation agreement on December 11, 1998
and the Second Amendment to the compensation agreement on July 13, 1999 (as so
amended, the "Compensation Agreement").
In accordance with the provisions of the Compensation Agreement and the
1994 Stock Option Plan of the Company (the "Plan"), the Compensation Committee
of the Board of Directors of the Company has authorized the execution and
delivery of this Agreement as partial compensation for the performance of
Optionee's duties as Chairman of the Board on the terms and conditions herein
set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. Grant of Option. Subject to all the terms and conditions of the Plan
and this Agreement, the Company hereby grants to the Optionee as of March 25,
1999 (the "Date of Grant") a nonstatutory stock option ("Option") to purchase
17,500 common shares of the Company (such number being subject to adjustment as
provided in Section 8), $.01 par value, on the terms and conditions herein set
forth.
2. Purchase Price. The purchase price per common share covered
by this Option shall be $8.625.
3. Vesting and Exercise. This Option shall vest and be exercisable as
follows:
(a) with respect to 8,750 shares:
2,188 on March 25, 2000
2,187 on March 25, 2001
2,188 on March 25, 2002
2,187 on Xxxxx 00, 0000
(x) with respect to 8,750 shares:
2,916 shares at such time as the Fair Market
Value (as defined in the Plan) of the
Company's common shares equals or exceeds
$11.47 per share for 7 consecutive days at
any time subsequent to the Date of Grant
2,917 shares at such time as the Fair Market
Value of the Company's common shares equals
or exceeds $13.53 per share for 7
consecutive days at any time subsequent to
the Date of Grant
2,917 shares at such time as the Fair Market
Value of the Company's common shares equals
or exceeds $15.70 per share for 7
consecutive days at any time subsequent to
the Date of Grant
(c) Notwithstanding that the Fair Market Value of the
Company's common shares does not reach the specified
performance goals in (b) above, this Option will be
fully exercisable after December 1, 2003.
(d) This Option may not be exercised after five (5) years
from the Date of Grant (March 25, 2004).
4. Method of Exercising Option. The Optionee may exercise the Option
granted to Optionee by giving written notice to the Company which shall state
the election to exercise the Option and the number of shares with respect to
which the Option is being exercised. The written notice shall be signed by the
person exercising the Option, shall be delivered to the Company at its principal
executive office, and shall be accompanied by payment equal to the full purchase
price for the shares which are exercised. The purchase price of each share
purchased upon exercise of the Option shall be paid in full (a) in cash at the
time of exercise, (b) with common shares of the Company owned by the Optionee,
(c) by delivering to the Company (i) irrevocable instructions to deliver the
stock certificates representing the shares for which the Option is being
exercised, directly to a broker, and (ii) instructions to the broker to sell
such shares and promptly deliver to the Company the portion of the proceeds
equal to the total purchase price, or (d) in any combination thereof. For
purposes of making payment in common shares of the Company, such shares shall be
valued at their Fair Market Value (as defined in the Plan) on the date of
exercise of the Option and shall have been held by the Optionee for a period of
at least six (6) months. Such notice shall be given on the form attached hereto
and designated as Exhibit A. In the event the Option shall be exercised pursuant
to Section 6(b) hereof by any person or persons other than the Optionee, such
notice shall be accompanied by appropriate proof of the right of such person or
persons to exercise the Option.
5. Non-Transferability of Option Rights. This Option shall not be
transferable by the Optionee except by will or by the laws of descent and
distribution. During the life of the Optionee, the Option shall be exercisable
only by Optionee. More particularly (but without limiting the generality of the
foregoing), the Option may not be assigned, transferred (except as provided
above), pledged, or hypothecated in any way, shall not be assignable by
operation of law, and shall not be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation, or other
disposition of the Option contrary to the provisions hereof, and the levy of any
execution, attachment, or similar process upon the Option, shall be null and
void and without effect.
6. Termination of Chairmanship or Death
(a) If the Optionee's position as Chairman of the Board shall
terminate for cause, this Option shall cease to be exercisable on the date of
such termination.
(b) If Optionee's position as Chairman of the Board shall
terminate because of death or Disability (as defined in the Plan), or if
Optionee shall die after termination of his position as Chairman of the Board
but while Optionee could have exercised this Option, this Option may be
exercised, to the extent that the Optionee was entitled to do so at the date of
termination of his position as Chairman of the Board, at any time, or from time
to time, within one (1) year after the date of death or termination of his
position as Chairman of the Board because of Disability, but in no event later
than the expiration date specified pursuant to Section 3. In the case of death,
exercise may be made by the Optionee's Designated Beneficiary (as defined in the
Plan).
(c) If Optionee's position as Chairman of the Board shall
terminate for any reason other than cause, death, Disability, or Change in
Control (as defined in the Compensation Agreement), Optionee shall be entitled
to exercise this Option to the extent that the Option has vested and become
exercisable pursuant to Section 3 above, at any time, or from time to time so
long as Optionee continues to serve as a director of the Company or within three
months after the date of termination of his directorship, but in no event later
than the expiration date specified pursuant to Section 3.
7. General Restriction. This Option shall be subject to the requirement
that if at any time the Board of Directors in its discretion shall determine
that the listing, registration or qualification of the shares subject to such
Option on any securities exchange or under any state or federal law, or the
consent or approval of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the granting of such Option or the
issuance or purchase of shares thereunder, such Option may not be exercised in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board of Directors.
8. Option Adjustments. In the event of a stock dividend, stock split or
other change in corporate structure or capitalization affecting the common
shares or any other transaction (including, without limitation, an extraordinary
cash dividend) which, in the determination of the Compensation Committee (the
"Committee") of the Board of Directors, affects the common shares such that an
adjustment is required in order to preserve the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall equitably
adjust any or all of (i) the number and kind of shares subject to this Option,
and (ii) the purchase price with respect to the foregoing, provided that the
number of shares subject to this Option shall always be a whole number. In the
event of any tender offer or exchange offer (other than an offer by the Company)
for the Company's common shares, or a dissolution or liquidation of the Company,
or a merger or consolidation or similar transaction in which the Company is not
the surviving company, or a sale, exchange or other disposition of all or
substantially all of the Company assets, or a Change in Control of the Company
(as defined in the Compensation Agreement), Optionee shall automatically become
fully vested in this Option and this Option shall become fully exercisable.
9. Amendment to this Option Agreement. The Committee may modify or
amend this Option if it determines, in its sole discretion, that amendment is
necessary or advisable in the light of any addition to or change in the Internal
Revenue Code or in the regulations issued thereunder, or any federal or state
securities laws or other law or regulation, which change occurs after the Date
of Grant of this Option and by its terms applies to this Option. No amendment of
this Option, however, may, without the consent of the Optionee, make any changes
which would adversely effect the rights of such Optionee.
10. Notices. Notices hereunder shall be in writing and if to the
Company shall be delivered personally to the Secretary of the Company or mailed
to its principal office, 000 Xxxxxx Xxxx, X.X. Xxx 000, Xxxxxxx, Xxx Xxxx 00000,
addressed to the attention of the Secretary and, if to the Optionee, shall be
delivered personally or mailed to the Optionee at Optionee's address as the same
appears on the records of the Company.
11. Interpretations of this Agreement. All decisions and
interpretations made by the Committee with regard to any question arising
hereunder or under the Plan shall be binding and conclusive on the Company and
the Optionee. The Option granted hereunder, and the common shares which may be
issued upon exercise thereof, are subject to the provisions of the Plan. In the
event there is any inconsistency between the provisions of this Agreement and
those of the Plan, the provisions of the Plan shall govern.
12. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and the successors and assigns of the Company and,
to the extent provided in Section 6, to the personal representatives, legatees
and heirs of the Optionee.
IN WITNESS WHEREOF, the Company has caused this Option Agreement to be
executed on the day and year first above written.
PSC INC.
By /s/ Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx
President and Chief Executive Officer
ATTEST:
/s/ Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx, Secretary
ACCEPTANCE
I, XXXXXX X. XXXXXXX, hereby certify that I have read and fully
understand the foregoing Stock Option Agreement. I acknowledge that I have been
apprised that it is the intent of the Company that Optionees obtain and retain
an equity interest in the Company. I hereby execute this Agreement to indicate
my acceptance of this Option and my intent to comply with the terms thereof.
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Optionee
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Xxxxxx Xxxxxxx
------------------------------------
Xxxx Xxxxx Zip
EXHIBIT A
_________________, 19__
PSC Inc.
000 Xxxxxx Xxxx
X.X. Xxx 000
Xxxxxxx, Xxx Xxxx 00000
Attention: Secretary
Dear Sir:
This is to notify you that I hereby elect to exercise my option rights
to common shares of PSC Inc. (the "Company") granted under the Option Agreement
(the "Agreement"), dated , 19__, issued to me pursuant to the 1994 Stock Option
Plan (the "Plan"). The purchase price pursuant to such Agreement, as adjusted,
is $____________ per share or $__________ in the aggregate.
In payment of the full purchase price, I enclose (please complete as
appropriate):
(a) my check in the sum of $__________
(b) __________ common shares of the Company owned by me free of
any liens or encumbrances and having a fair market value of
$_________
(c) an authorization letter which gives irrevocable instructions
to the Company to deliver the stock certificates representing
the shares for which the option is being exercised directly to
_____________ (name and address of broker) together with a
copy of the instructions to _______________ (name of broker)
to sell such shares and promptly deliver to the Company the
portion of the proceeds equal to the total purchase price and
withholding taxes due, if any.
Very truly yours,
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Optionee's Signature
