EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of June 2, 1998 by and between PSC Inc., a New
York corporation ("PSC" or the "Company") and XXXXXX X. XXXXXXXXXX
("Executive").
RECITALS
PSC and Executive entered into an Employment Agreement as of June 2, 1997,
which currently will expire on June 1, 1998.
Executive has developed and implemented a comprehensive restructuring
program and a new operating plan and PSC desires to retain his unique
experience, background, ability and services.
Accordingly, the parties desire to amend in certain respects and restate in
its entirety said Employment Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained in this Agreement, the parties agree as follows:
1. Employment. PSC hereby employs the Executive as President and Chief
Executive Officer. Executive hereby accepts such employment and agrees to remain
in the employ of PSC for the Term to perform any and all reasonable and lawful
duties prescribed by PSC's Board of Directors and to abide by the terms and
conditions of this Agreement. During the Term, in good faith, Executive shall
exert all reasonable efforts to promote the interests of the Company and shall
devote substantially all of his entire working time, attention and energies to
the business of the Company.
2. Term of Employment. The term of employment under this Agreement shall
commence as of the date of this Agreement and shall terminate on December 31,
2000 (the "Initial Term"); provided, however that the term of this Agreement
shall be automatically extended for additional one year terms (each an
"Additional Term") upon the end of the Initial Term, or any successor Additional
Term unless either the Executive or the Company shall have given written notice
to the other at least seventy-five (75) days prior thereto that the term of this
Agreement shall not be so extended.
3. Compensation.
A. Base Salary. For all services to be rendered to the Company by Executive
in any capacity, including, without limitation, services as an officer, director
or member of any committee of the Board of Directors and the performance of any
duties assigned to him by the Board of Directors, PSC shall pay to Executive a
salary at the annual rate of not less than $300,000 ("Base Salary"). Base Salary
shall be payable in accordance with the customary payroll practices of PSC,
subject to such deductions and withholdings as may be required by law or agreed
to by Executive.
B. Performance Bonus. Pursuant to PSC's current Management Incentive Plan
or any successor plan, for any calendar year during the Initial Term or the
Additional Term, if any, if and to the extent PSC achieves its pre-established
performance goals for such calendar year, Executive shall be entitled to a
performance bonus for such year in an amount equal to the percentage of his then
existing Base Salary for such year set forth opposite the performance goal
percentage below:
% of Performance Goal Achieved % of Base Salary
------------------------------ ----------------
Threshold 40%
Target 60%
133% of Target 90%
150% of Target 130%
170% of Target 170%
4. Benefits. In addition to his Base Salary, Executive shall also be
entitled throughout the Term and the Additional Term, if any, to all benefits of
full time employees or officers as to which he meets the eligibility
requirements universally applicable to all employees and such other benefits as
may be accorded to other senior executives by written notification from the
Company given from time to time. The Company also agrees to pay the initiation
fee and the monthly dues associated with Executive's membership in a country
club of Executive's choice.
5. Restricted Stock. Pursuant to the Company's 1994 Stock Option Plan, on
March 25, 1998 PSC awarded Executive 37,500 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 hereto as Exhibit A. If
Executive is then an officer of the Company, on each of March 25, 1999 and March
25, 2000, PSC will award Executive 37,500 restricted Common Shares pursuant to a
Restricted Stock Award Agreement similar in form to Exhibit A, as modified to
reflect changes in dates and stock prices.
6. Confidential Information. Executive agrees that during the Initial Term
and the Additional Term, if any, and for five years thereafter, he will not,
except as required by the performance of his duties under this Agreement,
disclose or authorize anyone else to disclose or use or make known for his or
another's benefit, any confidential information or knowledge or data of the
Company, whether or not patentable or copyrightable, in any way acquired by
Executive from the inception of his employment with the Company through the
expiration of the Term (hereinafter "Confidential Information"). Confidential
Information for the purposes of this Agreement, shall include, but not be
limited to, matters not readily available to the public which are:
A. of a technical nature, such as, but not limited to, methods, know-how,
formulae, ompositions, drawings, blueprints, compounds, processes, discoveries,
machines, prototypes, inventions, computer programs;
B. of a business nature, such, as, but not limited to, information about
sales or lists of customers, prices, costs, purchasing, profits, markets,
strengths and weaknesses of products, business processes, business and marketing
plans and activities and employee personnel records;
C. pertaining to future developments, such as, but not limited to, research
and development, future marketing or merchandising plans or ideas.
Immediately upon termination of Executive's services, Executive shall
deliver to the Company all originals and copies of everything in his possession
or under his control which embodies or contains any Confidential Information,
including, without limitation, all documents, correspondence, specifications,
blueprints, notebooks, reports, sketches, formulae, computer programs, computer
discs, prototypes, price lists, customer lists or information, samples and all
other materials.
Confidential Information shall not include information which (i) is
published or otherwise becomes generally available to the public other than by a
breach of confidentiality, or (ii) Employee can show by documentation was
properly in his possession prior to his employment with the Company, or (iii)
becomes available to Employee from an independent source without breach of this
Agreement or violation of law, or (iv) is independently developed by Employee
without the use of the Company's Confidential Information.
7. Covenant Not to Compete
A. In light of the special and unique services that have been and will be
furnished to the Company by Executive and the Confidential Information that has
been and will be disclosed to him during his employment, Executive agrees that
during the Initial Term and the Additional Term, if any, and for a period of
twenty-four (24) months thereafter (the "Non-Competition Period"), he will not,
without the written consent of the Company, directly or indirectly, whether as
principal, agent, officer, director, consultant, employee, partner, stockholder
or owner of or in any capacity with any corporation, partnership, business,
firm, individual company or any entity located any where in the world engage in,
or assist another to engage in, any work or activity in any way competitive with
the Business of the Company (as hereinafter defined). However, nothing herein
shall prevent Executive from owning not more than five percent (5%) of the
outstanding publicly traded shares of common stock of a corporation, as to which
corporation Executive has no relationship other than as a shareholder. In
addition, during the Non-Competition Period, Executive will not, directly or
indirectly, (a) induce or attempt to induce any officer or employee of the
Company to leave the employ of the Company, or in any way interfere with the
relationship between the Company and any officer, employee, director or
shareholder thereof, (b) hire directly or through another entity any person who
is an employee of the Company on the date of termination of employment of
Executive, or (c) induce or attempt to induce any customer, dealer, supplier or
licensee to cease doing business with the Company, or in any way interfere with
the relationship between any such customer, dealer, supplier or licensee and the
Company.
Executive specifically agrees that because of his special expertise and the
special and unique services that he will be furnishing the Company, and because
of the Confidential Information that has been acquired by him or that will be
disclosed to him during his employment with the Company, the above stated
geographic areas and time period, in and during which he will not compete with
the Company, are reasonable in scope and duration and are necessary to afford
the Company just and adequate protection against the irreparable damage which
would result to the Company from any activities prohibited by this Section.
B. If Executive in any way breaches the obligations specified in this
Section, the Company shall have the right, in addition to any other remedies
available to it, to terminate the further payment of any amounts due or the
further provisions of any benefits under Sections 3 and 4 hereof.
C. If any provision hereof is found to be unreasonably broad, it shall
nevertheless be enforceable to the extent reasonably necessary for the
protection of the Company and to carry out to the fullest extent the parties'
mutual intent in entering into this Agreement, which intent is that the
provisions of this Section will be strictly enforced as agreed to.
D. For purposes of this Agreement, the "Business of the Company" is the
development, manufacturing and marketing of technologies, products and services
for the automatic identification and keyless data entry industry, and includes,
but is not limited to, products, services, applications, systems and
technologies relating to bar coded data, magnetic stripe encoded data, radio
frequency communications of bar coded or related data, optical character
recognition, machine vision as applied to the recognition of bar coded data and
electronic interchange of bar coded or related data. The Business of the Company
shall also include any business in which the Company is actually engaged or as
to which it is doing research and development during Executive's employment with
the Company. Notwithstanding anything to the contrary in the preceding two
sentences, Business of the Company shall not include the manufacturing, design,
engineering, distributing, marketing, selling or reselling of thermal or thermal
transfer bar code printers, bar code verifiers or labeling media and ribbons
used in connection with thermal bar code printers.
8. Injunctive Relief. Executive agrees that in the event of a breach or
threatened breach by the Employee of any of the provisions of Sections 6 or 7
hereof, the Company shall be entitled to an injunction restraining the Executive
from such breach or threatened breach without posting any bond or other
security. Nothing herein, however, shall be construed as prohibiting the Company
from pursuing, in conjunction with an injunction or otherwise, any other
remedies available to the Company for such breach or threatened breach,
including the recovery of damages from the Executive.
9. Severance Payment.
A. Termination of Employment - In General. In the event of the termination
of employment of Executive by the Company prior to the expiration of the Term
for any reason other than Termination for Cause (as hereinafter defined), death,
disability, or a Change in Control (as hereinafter defined), the Company will
continue to pay the Executive for a period of one year following such
termination or expiration of the Initial Term or any Additional Term an amount
equal to the Executive's Base Salary at the annual rate then in effect. Such
amount shall be payable bi-weekly. In addition, the Company will provide
Executive with Executive's then current health, dental, life and accidental
death and dismemberment insurance benefits for a period of one year following
such termination. In the event of Executive's death while receiving severance
payments hereunder, all remaining severance installment payments otherwise
payable to Executive hereunder will be paid in the same amounts and in the same
manner to Executive's heirs and legal representatives. All payments made to
Executive hereunder will be subject to all applicable employment and withholding
taxes.
B. Termination of Employment - Change in Control. In the event Executive
terminates his employment for any reason within 90 days after the occurrence of
a Change in Control (as hereinafter defined) of the Company or in the event of
the termination of employment of Executive within the two year period following
a Change in Control (as hereinafter defined) of the Company, and such
termination is (i) by the Company for any reason other than Termination for
Cause (as hereinafter defined), death or disability, or (ii) by the Executive
for "Good Reason" (as hereinafter defined), the Company will pay the Executive
over a period of three years following such termination an amount equal to the
product of the sum of (x) Executive's Base Salary at the annual rate then in
effect and (y) the highest annual bonus paid to Executive under the Company's
current Management Incentive Plan or any successor plan in the three full fiscal
years preceding termination multiplied by 2.9. Such amount shall be payable
bi-weekly. In addition, Executive will be immediately vested in any retirement,
incentive, restricted stock, or option plans or agreements then in effect and
the Company will continue to provide Executive with Executive's then current
health, dental, life and accidental death and dismemberment insurance benefits
for a period of three years. All payments made to Executive hereunder will be
subject to all applicable employment and withholding taxes.
C. Limitations. Notwithstanding anything in this Section to the contrary,
the maximum amount of cash and other benefits payable (whether on a current or
deferred basis and whether or not includible in income for income tax purposes)
under this Section (the "Severance Benefits") shall be limited to the extent
necessary to avoid causing any portion of such Severance Benefits, or any other
payment in the nature of compensation to the Executive, to be treated as a
"parachute payment" within the meaning of Section 280G(b)(2) of the Internal
Revenue Code of 1986, as amended. Any adjustment required to satisfy the
limitation described in the preceding sentence shall be accomplished first by
reducing any cash payments that would otherwise be made to the Executive and
then, if further reductions are necessary, by adjusting other benefits as
determined by the Company.
D. Certain Definitions.
Change in Control. A "Change in Control" shall be deemed to have occurred
(i) on the date that any person or group deemed a person under Sections 3(a)(9)
and 13(d)(3) of the Securities Exchange Act of 1934, other than the Company, in
a transaction or series of transactions, has become the beneficial owner,
directly or indirectly (with beneficial ownership as determined as provided in
Rule 13d-3, or any successor rule under such Act), of 20% or more of the
outstanding voting securities of the Company; or (ii) on the date on which one
third or more of the members of the Board of Directors shall consist of persons
other than Current Directors (for these purposes, a "Current Director" shall
mean any member of the Board of Directors elected at or continuing in office
after, the 1998 Annual Meeting of Shareholders, any successor of a Current
Director who has been approved by a majority of the Current Directors then on
the Board, and any other person who has been approved by a majority of the
Current Directors then on the Board); or (iii) on the date of approval of (x)
the merger or consolidation of the Company with another corporation where the
shareholders of the Company, immediately prior to the merger or consolidation,
would not beneficially own, immediately after the merger or consolidation,
shares entitling such shareholders to 50% or more of all votes (without
consideration of the rights of any class of stock to elect directors by a
separate class vote) to which all shareholders of the corporation would be
entitled in the election of directors or where the members of the Board of
Directors of the Company, immediately prior to the merger or consolidation,
would not immediately after the merger or consolidation, constitute a majority
of the Board of Directors of the corporation issuing cash or securities in the
merger or consolidation or (y) on the date of approval of the sale or other
disposition of all or substantially all the assets of the Company.
Termination for Cause. The Company shall have the right to terminate the
services of Executive at any time without further liability or obligations to
Executive if: (i) Executive has failed or refused to perform such services as
may reasonably be delegated or assigned to Executive, consistent with the
Executive's position, by the Board of Directors, (ii) Executive has been grossly
negligent in connection with the performance of Executive's duties, (iii)
Executive has committed acts involving dishonesty, willful misconduct, breach of
fiduciary duty, fraud, or any similar offense which materially affects
Executive's ability to perform Executive's duties for the Company or may
materially adversely affect the Company, or (iv) Executive has been convicted of
a felony.
Termination of the services of Executive for Cause shall not be effective
unless and until acted upon by the Board of Directors and unless and until
written notice shall have been given to Executive which notice shall include
identification with specificity of each and every factual basis or incident upon
which the termination is based. Notwithstanding the preceding sentence, in
connection with the termination of the services of Executive for Cause under
section (i) above, the Board of Directors shall take no action until the
Executive has been provided written notice of the services Executive has failed
or refused to perform and such failure or refusal remains unremedied for 30 days
after Executive has received such notice.
Good Reason. Good Reason shall mean the occurrence or existence of any of
the following with respect to Executive: (i) Executive's annual rate of salary
is reduced from the annual rate then currently in effect or Executive's other
employee benefits are in the aggregate materially reduced from those then
currently in effect (unless such reduction of employee benefits applies to
employees of the Company generally), or (ii) Executive's place of employment is
moved more than 25 miles from its then current location, or (iii) Executive's
title is changed or he is assigned duties that are demeaning or are otherwise
materially inconsistent with the duties then currently performed by Executive.
Before Executive may terminate his employment for Good Reason, Executive
must notify the Company in writing of his intention to terminate and the Company
shall have 15 days after receiving such written notice to remedy the situation,
if possible.
10. Notices. All notices given in connection with this Agreement shall be
in writing and shall be delivered either by personal delivery, by telegram,
telex, telecopy or similar facsimile means, by certified or registered mail,
return receipt requested, or by express courier or delivery services, addressed
to the parties hereto at the following addresses:
To Xxxxxxxxxx: To PSC:
Xxxxxx X. Xxxxxxxxxx PSC Inc.
0000 Xxxx Xxxxxx 000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000 Xxxxxxx, XX 00000
FAX: (000) 000-0000
or at such other address and number as either party shall have previously
designated by written notice given to the other party in the manner hereinabove
set forth. Notice shall be deemed given when received, if sent by telegram,
telex, telecopy or similar facsimile means (confirmation of such receipt by
confirmed facsimile transmission being deemed receipt of communications sent by
telex, telecopy or other facsimile means); and when delivered and receipted for
(or upon the date of attempted delivery where delivery is refused), if
hand-delivered, sent by express courier or delivery services, or sent by
certified or registered mail, return receipt requested.
11. Waiver. Any waiver of a breach of any of the terms of this Agreement
shall not operate as a waiver of any other breach of such terms or of any other
terms, nor shall failure to enforce any term hereof operate as a waiver of any
such term or of any other term.
12. Severability. If any term of this Agreement or the application thereof
is held invalid or unenforceable, the validity or unenforceability shall not
effect any other term of this Agreement which can be given effect without the
invalid or unenforceable term.
13. Governing Law; Venue. This Agreement shall be construed and enforced in
accordance with and governed by the internal laws of the State of New York,
without reference to conflict of law principles of any jurisdiction (including
without limitation New York) which would result in the application of the
domestic substantive laws of any other jurisdiction. The parties consent to the
exclusive jurisdiction of the Supreme Court of New York, Monroe County or of the
United States District Court for the Western District of New York for any legal
action instituted by any party against any other with respect to the subject
matter hereof.
14. Prior Agreements. This Agreement supersedes all previous agreements
related to the subject matter herein.
15. Termination of Obligations. Executive agrees that in the event his
employment with the Company is terminated for any reason, that he will meet with
a representative of the Company and discuss, among other matters, the provisions
of this Agreement and the Executive's obligations hereunder.
16. Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof. This Agreement may not be
amended or changed except by a writing signed by both parties.
IN WITNESS WHEREOF, Executive has executed this Agreement and the Company
has caused this Agreement to be executed as of the date set forth above.
PSC INC.
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Its: Chairman of the Board
/s/ Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx
