Exhibit 10.6
Severance and Consulting Agreement
SEVERANCE AND CONSULTING AGREEMENT
THIS SEVERANCE AND CONSULTING AGREEMENT ("Agreement"), dated as of July 15, 1997
sets forth the terms of the agreement between Xxx X. Xxxxxxx ("Employee"),
residing at 00 XxxXxxxxxx Xxxx, Xxxxxxxxx, XX 00000, and PSC Inc. ("Company"),
located at 000 Xxxxxx Xxxx, Xxxxxxx, Xxx Xxxx 00000, relating to the cessation
of Employee's employment with Company and the engagement of Employee as a
consultant. WHEREAS, Employee has been associated with the Company for many
years and has contributed to its successful growth. WHEREAS, the parties wish to
enter into this Agreement for the purpose of addressing all issues relating to
Employee's termination of employment with the Company. NOW, THEREFORE, in
consideration of the mutual covenants hereinafter described, and the Severance
Payment and other good and valuable consideration to which Employee is not
otherwise entitled, Company and Employee agree as follows:
1. Cessation of Employment. The parties agree that Employee's employment and
all positions and offices with the Company, except that as a member of the
Company's Board of Directors, will terminate on October 15, 1997
("Employment Termination Date").
2. Severance Payment and Other Consideration. The Company will pay or provide
to Employee the following amounts and benefits in consideration of the
agreements contained in Sections 3, 4, 5, 6 and 7 of this Agreement.
(a) The Company shall pay Employee severance payments ("Severance Payments")
for a period of six (6) months from the Employment Termination Date (the
"Severance Payment Period"), less applicable deductions for Federal and New
York State income tax withholdings, FICA, and Medicare Tax. Severance
payments shall be made on the normal payroll dates for the Company. The
Company will include the above sum in the Form W-2 Wage and Tax Statements
which it will issue to Employee for the 1997 and 1998 calendar years. The
aggregate amount of Employee's Severance Payments shall be equal to
Employee's current semi-annual salary ($62,500).
(b) Except as specifically provided in this Agreement, all employee benefits
shall be discontinued as of the Employment Termination Date and, except as
specifically provided in this Agreement, Employee shall not be entitled to
any other compensation bonuses or perquisites from the Company. Nothing
contained in this Agreement shall affect Employee's entitlement to benefits
under the Company's 401(k) plan (the "Plan") based upon Employee's accrued
service with the Company. For purposes of the Plan, Severance Payments will
not be included in determining Employee's benefits under the Plan.
(c) Employee heretofore has been granted stock options as set forth on the
attached Exhibit A (the "Options"), which by their terms will expire three
months after the Employment Termination Date. Some of the Options have not
fully vested. In consideration of Employee's agreement to provide
consulting services as described in Section 3, to release the Company as
described in Section 4, not to disclose confidential information as
described in Section 5 and not to compete as described in Section 6, the
Board of Directors of the Company will cause all unvested Options to
immediately vest, and shall extend the expiration date on the Options to
allow Employee to exercise any or all such Options at their set option
prices anytime on or before the last day of the Non-Competition Period (as
hereinafter defined), except, however, that no Option may be exercised
after the expiration of ten (10) years from the Date of Grant of such
Option. However, as the result of extending the period in which Employee
may exercise the options, Employee acknowledges that the Company has
advised him that the incentive stock options will become non-qualified
stock options. There is no income recognition on the exercise of incentive
stock options but, on the exercise of a non-qualified stock option,
Employee would have to recognize as taxable income in the year of exercise
an amount equal to the difference between the fair market value of Company
stock on the date of exercise and the exercise price Employee pays.
3. Consulting Services. From the Employment Termination date through the last
day of the Non-Competition Period (as hereinafter defined) (the "Consulting
Period") the Company engages Employee as an independent contractor, and not
as an employee, to render consulting services to the Company, on an
"as-needed" basis, in such matters as the Company's litigation/arbitration
with Symbol Technologies, Inc., patent applications, and in such other
related matters as may be requested from time to time by the Chief
Executive Officer of the Company, and Employee accepts such engagement.
Employee shall not have any authority to bind or act on behalf of the
Company during the Consulting Period. During the Consulting Period, the
Company shall pay Employee at Employee's current hourly rate ($60.10) for
each hour of service actually worked except that Employee will not be paid
for time spent testifying in court or at an arbitration hearing. During the
Consulting Period, Employee, shall not be entitled to any other benefits,
bonuses or perquisites from the Company. The Company shall reimburse
Employee for all reasonable expenses incurred by him in the course of
performing his duties as a consultant to the Company under this Agreement
which are consistent with the Company's policies in effect from time to
time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses. Within ten (10) days after the end of each
month, Employee shall submit to the Company an invoice, with supporting
documentation, requesting payment for consulting services and reimbursement
of business-related expenses for the prior month. Employee shall file all
tax returns and reports required to be filed by him on the basis that he is
an independent contractor, rather than an employee, as defined in Treasury
Regulation ss.31.3121(d)-1(c)(2), and Employee shall indemnify the Company
for the amount of any employment taxes paid by the Company as the result of
Employee not withholding employment taxes from any amount paid to him
hereunder.
4. Release. (a) Employee agrees that the terms set forth in his Agreement are
in full satisfaction of all obligations the Company has to Employee known
and unknown. Employee does hereby irrevocably and unconditionally release
the Company, its affiliates, officers, directors, employees, agents,
representatives, successors and assigns from any and all claims demands and
liabilities whatsoever, including but not limited to any claims in contract
or tort and any claims in connection with Employee's employment with the
Company, the termination of that employment, or pursuant to any federal,
state or local employment laws, regulations, executive orders or other
requirements, as well as the common law, including the Age Discrimination
in Employment Act. In exchange for the benefits being accorded to Employee
under this Agreement, it is Employee's intent to provide to the Company the
broadest release of claims and liabilities that may be provided by law.
This Agreement shall not be construed as an admission by the Company that
it has acted wrongfully with respect to the Employee.
(b) The Company does hereby irrevocably and unconditionally release Employee,
his heirs, executors, administrators and assigns from any and all claims,
demands, or liabilities whatsoever which the Company had or may now have in
any way related to or arising out of his employment and its termination,
provided, however, that Company does not release any claim of any conduct
now unknown to the Company that may have been undertaken in bad faith.
5. Non-disclosure of Confidential and Proprietary Information and Return of
Company Property.
(a) Employee acknowledges that Employee's work as an employee of the Company
has exposed him to Confidential Information of the Company. "Confidential
Information" includes, but is not limited to, matters which are not readily
available to the public which are:
(i) Of a technical nature, such as, but not limited to, methods,
know-how, formulae, compositions, drawings, blueprints,
compounds, processes, discoveries, machines, inventions,
computer programs and similar items;
(ii)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 information about employees personnel records,
salary and benefits data, and personnel practices;
(iii) Pertaining to future developments, such as, but not limited
to, research and development, future marketing or
merchandising plans or ideas.
(b) Employee represents and agrees that he has not, and for a period of five
years after the Employment Termination Date, or for so long as he is a
director of the Company, whichever period is longer, that he will not,
directly or indirectly, except to the extent required by law: (1) reveal,
divulge, make known, sell, exchange, give away, or otherwise dispose of, to
any person, firm, or corporation, any Confidential Information of the
Company or its business, whether the same shall or may have been designed,
developed, or originated by the Employee or otherwise; or (2) reveal,
divulge, or make known to any person, firm or corporation, the name of the
Company's customers. This obligation shall not apply to information which
(i) is acquired from a third party who, to the best of Employee's
knowledge, is not in default of any obligation to the Company in disclosing
such information, or (ii) is already in the public domain or known to
Company's competitors or the public generally or that becomes available to
the public generally or the Company's competitors other than as a result of
Employee's breach of this Agreement. All records (whether in hard copy or
digital form), books and computer discs relating in any manner whatsoever
to the Company shall be the exclusive property of the Company regardless of
who actually prepared the original record or book. Employee represents that
he did not copy or cause to have copied any such records or books except in
the ordinary course of business.
(c) Employee agrees to return within ten (10) days after Employment Termination
Date, any keys, computers, equipment, cellular phones, pagers, Company
credit cards and any other Company property in his possession not
previously returned, any confidential or proprietary data or information
concerning the business and activities of the Company, its manner of
operation, plans, processes, or methods of obtaining business and/or
customers or any other data or information, including personnel and salary
information and personnel practices, manuals, handbooks, documents,
records, monies, and securities belonging to the Company, and other
confidential and proprietary articles and material, which Employee acquired
or has used in the course of, or as incident to, his employment with the
Company. Employee agrees that any charges to the cellular phones or Company
credit cards which are not authorized Company business expenses may be
deducted by the Company from any amounts due to Employee hereunder.
Notwithstanding the foregoing, Company agrees that Employee may retain the
Macintosh laptop computer which he has been using and the Company further
agrees that all of Employee's notebooks, when returned, will be preserved
until such time as in the opinion of Company's outside patent counsel they
are no longer needed. When necessary to assist Employee in the performance
of his consulting duties described in Section 3, he will be afforded access
to the said notebooks with the said patent counsel.
6. Noncompetition/Non-Solicitation. As further consideration for the benefits
provided in this Agreement and in light of the special and unique services
that have been and will be furnished to the Company by Employee, and the
Confidential Information that has been disclosed to Employee by the Company
during Employee's relationship with the Company, Employee agrees that for a
period of eighteen (18) months from the Employment Termination Date, or for
so long as he is a member of the Board of Directors of the Company,
whichever period is longer, (the "Non-Competition Period") Employee will
not, without the written consent of the Company, directly or indirectly,
whether as a 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
anywhere 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 Employee from
owning not more than five percent (5%) of the outstanding publicly traded
shares of common stock of a corporation, as to which corporation Employee
has no relationship other than stockholder. Company acknowledges that Lucid
Technologies Inc. ("Lucid") has not to date been competitive with the
Business of the Company as hereinafter defined. In addition, during the
Non-Competition Period, Employee 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 stockholder
thereof, or (b) hire directly or through another entity any person who was
an employee of the Company on the Employment Termination Date, 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.
Employee specifically agrees that because of Employee's special expertise
and the special and unique services that Employee has been and will be
furnishing the Company, and because the Confidential Information that has been
acquired by Employee or has been disclosed to Employee during the Employee's
employment, the above stated geographic areas and time period during which
Employee will not compete 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.
For purposes of this section, 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 strip 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 Company agrees that
Lucid's ballot reading technology is not to be deemed "optical character
recognition" within the meaning of the preceding sentence. 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 the Employee's
employment with the Company.
7. Statements to Third Parties.
Employee agrees not to criticize, denigrate, or disparage Company, its officers,
directors, managers, supervisors, or employees, or otherwise engage in any
conduct which directly or indirectly impugns or reflects negatively on the
reputation or integrity of the Company, or any of such individuals, or tends to
expose the Company, or any of such individuals, to hatred, ridicule, or
contempt, and Employee represents that he has not done so. Notwithstanding the
foregoing and for so long as Employee is a director of the Company he may, in
communications with other directors, criticize the Company's personnel or
activities as may be appropriate in fulfilling his responsibilities.
8. Continued Cooperation. Employee agrees to cooperate with Company with
respect to matters that arose during or related to his employment,
including but not limited to, cooperation in connection with any litigation
or governmental investigation or regulatory or other proceeding which may
have arisen or which may arise following the execution of this Agreement.
As part of the cooperation agreed to herein, Employee shall provide
complete and truthful information to the Company and their attorneys with
respect to any matter arising during or related to Employee's employment.
Specifically, Employee shall make himself reasonably available to meet with
Company personnel and attorneys and shall provide to Company and their
attorneys any and all documentary or other physical evidence pertinent to
such matter. Employee agrees to execute and deliver to the Company any and
all agreements, instruments and other documents necessary or desirable to
accomplish or to carry out the provisions of this Severance and Consulting
Agreement, including without limitation, the assignment and transfer, to
perfect the title, and/or to obtain and promote the right to the Company's
exclusive enjoyment of any improvements, inventions, ideas, suggestions and
discoveries made or developed by Employee while in the employ of the
Company. Notwithstanding the foregoing, the Company acknowledges that it
has no claim to the patent applications described on Exhibit B to this
Agreement despite the fact that they were discoveries made or developed by
Employee while in the employ of the Company. Employee agrees when
reasonably requested by the Company, to testify in any legal proceedings on
behalf of the Company and to sign all lawful papers and execute and sign
any original, additional, provisional or reissue applications for letters
patent with respect to such improvements, inventions, ideas, suggestions
and discoveries which may be necessary or desirable to accomplish the
foregoing, and to do all lawful acts to aid the Company to obtain and
enforce protection of their improvements, inventions, ideas, suggestions
and discoveries in any and all countries. If requested to do so, Employee
will be provided reasonable out of pocket expenses incurred in providing
such testimony or assistance. Finally, Employee shall promptly notify the
Company, within three business days, of his receipt from any third party or
governmental entity of a request for testimony and/or documents, whether by
legal process or otherwise, relating to any matter arising during or
relating to Employee's employment. Employee agrees that his cooperation
hereunder is an integral part of this Severance Agreement.
9. Arbitration of Claims. Any controversy or claim arising out of relating to
this Agreement, or the breach thereof, shall be settled by final and
binding arbitration initiated by either party in accordance with the Rules
of the American Arbitration Association, and judgment upon the award
rendered by the arbitration may be entered in any court with jurisdiction.
Either party may apply to any court with jurisdiction to seek injunctive
relief to maintain the status quo until the matter is resolved by the
arbitrator. The arbitration shall be conducted in Rochester, New York by an
arbitrator selected from a panel of arbitrators of the American Arbitration
Association. All fees and expenses of the arbitration shall be borne by the
parties equally, and each party shall bear the expense of their own
counsel, experts, witnesses and the preparation and presentation of proof
in any arbitration. In view of the nature of Employee's employment, the
Confidential Information which Employee received during the course of his
employment, and his position with the Company, Employee agrees that Company
would be irreparably harmed by any violation or threatened violation of
this Agreement, or any of the terms thereof, and therefore, in addition to
any other remedies which may be available to it, Company shall be entitled
to any injunction, without the necessity of posting bond, prohibiting
Employee from committing any violation or threatened violation of this
Agreement in a proceeding in either the Supreme Court of the State of New
York sitting in Monroe County or in the U.S. District Court for the Western
District of New York and Employee hereby consents to the jurisdiction of
said tribunals.
10. Notices, Consents, Requests or Other Communications. All notices, consents,
requests or other communications to the Company under this Agreement shall
be in writing and delivered by first class mail, postage prepaid, to the
Company at the above address to the attention of the Vice President of
Human Resources or at such other address of or to the attention of such
other officer or individual at the Company as may be designated in writing
by the Company from time to time. All notices to Employee under this
Agreement shall be in writing and delivered by first class mail, postage
prepaid, to Employee at the address set forth above or such other address
as may be designated in writing by Employee from time to time.
11. Construction, Severability and Applicable Law.
(a) All understandings and agreements previously made by and
between the parties are merged in this Agreement, which fully and
completely expresses the agreement of the parties. This Agreement
may not be changed or terminated and none of its provisions may be
modified or waived, except in writing signed by both parties to
this Agreement.
(b) If any covenant or provision or part thereof contained in this
Agreement is determined to be void or unenforceable in whole or in
part, it shall not be deemed to affect or impair the validity of
any other covenant or part thereof or provision of this Agreement.
To the extent any provision is held invalid or unenforceable for
being too broad or extensive, it is the intention of the parties
that the court enforce such provision to the limits of proper
scope or breadth. Each of the provisions contained herein is
hereby declared to be a separate and distinct covenant severable
one from the other, and Company shall be entitled to enforce each
such covenant to the fullest extent permitted by law, in equity or
otherwise, notwithstanding that any other or others of such
covenants may not be enforceable, and in all other respects, this
Agreement shall remain in fully force and effect.
(c) This Agreement shall be governed and construed in accordance
with the laws of New York State.
12. Review and Revocation Periods. Employee acknowledges and agrees that he has
been advised to seek the advice of legal counsel before executing this
Agreement, that he fully understands the terms of this Agreement, that he
has entered into this Agreement knowingly, voluntarily, and without threat
or duress, that he has received this Agreement on October 24, 1997, and has
had twenty-one (21) days to consider its terms prior to signing it, and
that he may revoke this Agreement in writing within seven (7) days from the
date that he signs it.
13. Miscellaneous. The following provisions shall apply to this Agreement:
(a) The section headings contained in this Agreement have been
prepared for convenience of reference only and shall not control,
affect the meaning, or be taken as an interpretation of any
provision of this Agreement.
(b) Several copies of this Agreement may be executed by the
parties, each of which shall be deemed an original for all
purposes, and all of which together shall constitute but one and
the same instrument.
(c) If in one or more instances either party fails to insist that
the other party perform any of the terms of this Agreement, this
failure shall not be construed as a waiver by such party of any
past, present, or future right granted under this Agreement, and
the obligations of both parties under this Agreement shall
continue in fully force and effect.
13. Binding Effect. This Agreement shall be binding upon and will inure to the
benefit of the parties, their heirs, distributees, legal representatives,
transferees, successors, and assigns.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement.
PSC Inc.
Xxxxxx X. Xxxxxxxxxx Xxx X. Xxxxxxx
President and CEO
EXHIBIT A
Xxx X. Xxxxxxx
Option Schedule
Date of Grant No. of Shares Vesting Dates Exercise Price Expiration Date*
------------- ------------- ------------- -------------- ----------------
2/27/89 25,000 2/27/89 $1.00 4/15/99
9/1/92 10,000 9/1/95 $11.00 4/15/99
4/28/93 20,000 10/28/96 $6.25 4/15/99
1/7/94 16,000 1/7/97 $5.75 4/15/99
5/3/95 46,453 7/13/95 $8.88 4/15/99
1/12/96 4,375 1/12/97 $7.875 4/15/99
1/12/96 4,375 1/12/98 $7.875 4/15/99
1/12/96 4,375 1/12/99 $7.875 4/15/99
-------
TOTAL 130,578
*BUT NO LATER THAN TEN (10) YEARS FROM DATE OF GRANT
