EXHIBIT 10.17
SETTLEMENT AGREEMENT
This Settlement Agreement is made and entered into this 1st day of June, 2004 by
and between Symbol Technologies, Inc. ("Symbol" or the "Company") and Xxxxxx
Xxxxxx ("Xxxxxx").
WHEREAS, the Company and Xxxxxx have been named as parties in various civil
actions brought by Symbol shareholders asserting claims regarding the period of
time when Xxxxxx was serving as Chairman and/or Chief Executive Officer of the
Company;
WHEREAS, the Company indicates that it has been threatened with proceedings by
the United States Securities and Exchange Commission and the United States
Attorney's Office (collectively, the "Government") regarding that same period of
time;
WHEREAS, the Company has moved to dismiss a claim purportedly brought on behalf
of Symbol against Xxxxxx and others in a proceeding commenced in the Court of
Chancery of the State of Delaware entitled Xxxxxxx Xxxx v. Tomo Razmilovic, et
al., No. 122-N (the "Derivative Action");
WHEREAS, the Company has agreed in principle to resolve several of the purported
class action litigations in the United States District Court, Eastern District
of New York, entitled In re: Symbol Technologies Securities Litigation,
02-CIV-1383 (LDW); Xxxxxx Xxxxx v. Symbol Technologies, Inc., et al., 03-CV-1394
(LDW); and Xxxxxx Xxxxxxx v. Symbol Technologies, Inc. et al., 03-CV-2208 (LDW)
(collectively, the "Class Action"), and hopes to resolve the claims of the
Government;
WHEREAS, the Company and the plaintiffs in the Class Action have entered into a
Stipulation and Agreement of Settlement dated May 24, 2004 (the "Class
Settlement");
WHEREAS, the Class Settlement states that the Class will provide a release to
Xxxxxx in return for a cash payment from him of $4 million and his signing of
the Class Settlement by June 1, 2004;
WHEREAS, the Company and Xxxxxx believe that they have claims against one
another;
WHEREAS, the Company and Xxxxxx deny liability for all such claims;
WHEREAS, by the Separation, Release and Employment Agreement dated July 7, 2003
between Xxxxxx and the Company, Xxxxxx forfeited substantial consideration in
the form of compensation, options and benefits;
WHEREAS, the Company and Xxxxxx wish to resolve and settle all remaining issues
between them; and
WHEREAS, the Company's Board of Directors, being fully informed of the facts and
circumstances, has determined in the exercise of its reasonable business
judgment that this settlement is fair and reasonable and in the best interests
of the Company;
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NOW, THEREFORE, in consideration of the mutual undertakings set forth herein and
for other good and valuable consideration, receipt of which is hereby
acknowledged, the parties stipulate and agree as follows:
1. STRUCTURE OF THIS AGREEMENT
This Agreement, other than Paragraphs 2(b), 3(c), and 4(a)(3)(i), is conditioned
upon the dismissal of the Derivative Action with respect to Xxxxxx, as described
below in this paragraph, or the delivery of a release of Xxxxxx and an agreement
in the Derivative Action, as described in paragraph 5(c) below, without payment
or consideration by Xxxxxx in addition to that identified herein. Paragraphs
2(b), 3(c), and 4(a)(3)(i) are binding immediately upon execution of this
Agreement and are not in any way conditioned on any subsequent event. The
Effective Date of the paragraphs of this Agreement other than paragraphs 2(b),
3(c), and 4(a)(3)(i) shall be the earlier of the date of the (i) entry of a
final, non-appealable order or judgment dismissing the Derivative Action with
prejudice with respect to Xxxxxx, or (ii) delivery of a release of Xxxxxx and an
agreement, as described in paragraph 5(c) below (the "Effective Date"). The
Company shall exercise reasonable efforts (not including the payment of money)
to obtain such dismissal as soon as reasonably practicable.
2. PAYMENT
x. Xxxxxx agrees to pay, in cash and surrendered Company stock options, a total
value of $14.1 million. The $14.1 million is comprised of the following:
x. Xxxxxx shall pay $4 million in cash in settlement of the claims made against
him in the Class Action. As described in paragraph 7(a)(ii) of the Class
Settlement, such payment shall be made by wire transfer in accordance with
directions from Lead Counsel in the Class action, within five business days
after entry of the Preliminary Approval Order of the Class Settlement. Xxxxxx'x
obligation to pay the $4 million described in this paragraph is not conditioned
upon any subsequent event identified in this Settlement Agreement, and Xxxxxx
will have no rights to reimbursement of the $4 million from the Company or its
insurance policies (including its directors and officers policies) regardless of
whether the remaining provisions of this Agreement become effective.
x. Xxxxxx agrees to remit to the Company, care of its General Counsel, Xxxxx
Xxxx, Esq., the sum of $7.2 million in cash via wire transfer or certified check
payable to Symbol Technologies, Inc., within three (3) business days of the
Effective Date.
d. Subject to paragraph 2(e) below, within three (3) business days of the
Effective Date, Xxxxxx agrees to forfeit and return to the Company, and to make
no objection to the Company's cancellation of, certain Company stock, options
(the "Forfeited Options"). The Forfeited Options shall be valued in the
aggregate at $2.9 million, calculated as of May 26, 2004. Such Forfeited Options
shall be valued by using Black-Scholes methodology and using the closing market
price of Symbol stock on May 26, 2004 ($14.94); volatility of 59 percent; and a
remaining term based on an expiration date of July 1, 2004. Xxxxxx shall pick
the precise Forfeited Options to be so forfeited, so long as they are valued as
described in this paragraph, and shall deliver a list of such options to Symbol
through its counsel no later than June 8, 2004.
x. Xxxxxx shall retain the right to exercise the Forfeited Options until July 1,
2004 (or the Effective Date, if earlier than July 1, 2004). The net shares
acquired by Xxxxxx from any such
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exercise (the "Net Shares") shall be held in escrow. The Net Shares shall equal
the number of shares of the Company's stock that are purchased by the exercise
of the Forfeited Options reduced by the number of shares of the Company's stock
that are needed to pay for the exercise price, or, in the event that Xxxxxx
elects to use cash to pay for the exercise price, the number of shares of the
Company's stock that would have been used to pay for the exercise price had
Xxxxxx elected to use shares (e.g., if Xxxxxx was exercising 200 options with a
strike price of $10, and the closing price for the Company's stock was $20 per
share, the Net Shares would be 100 shares). If the Effective Date has not
occurred by July 1, 2004, Xxxxxx shall exercise the Forfeited Options
outstanding on that date that have an exercise price that is less than the
Company's closing price on that date. No other Forfeited Options shall be
exercised. In that event, within three (3) business days of the Effective Date,
Xxxxxx shall, at his sole discretion, (i) transfer ownership of the Net Shares
held in escrow to the Company, or (ii) pay $2.9 million in cash to the Company.
The Company agrees to accept either the Net Shares or $2.9 million in cash in
lieu of the Forfeited Options. In the event that Xxxxxx elects to pay $2.9
million in cash to the Company, the Net Shares held in escrow shall be returned
to Xxxxxx.
3. RELEASES
x. Xxxxxx, on behalf of himself as well as his heirs, executors, administrators,
predecessors, successors and assigns, in consideration of the matters described
in this Agreement, does hereby, as of the Effective Date, remise, release,
acquit and forever discharge the Company and its parents, subsidiaries,
affiliates and divisions, and their respective current and former owners,
partners, officers, directors, representatives, agents, employees, and
attorneys, as well as the heirs, executors, administrators, predecessors,
successors, and assigns of any of them (the "Company Releases"), of and from any
and all manner of claims, causes of action, suits, debts, dues, accounts, bonds,
covenants, contracts, agreements, judgments, and demands whatsoever in law or in
equity, whether such claims, causes or action, suits, debts, dues, accounts,
bonds, covenants, contracts, agreements, judgments and demands be presently
known or unknown, suspected or unsuspected, whether based in contract, tort, or
statute (collectively, "Claims"), whether they be directly, indirectly,
nominally or beneficially, possessed or claimed by any of them, which Xxxxxx has
had, now has, or which he, his heirs, executors, administrators, successors or
assigns, or any of them, hereafter can, shall or may have against the Company
Releases, for or by reason of any cause, matter or thing whatsoever, from the
beginning of the world to this date, except for claims (i) arising out of a
breach of this Agreement, and (ii) for advancement and indemnity under the
Company's Charter, By-laws, and Delaware law, subject to the limitations set
forth in Section 4, below.
b. The Company, on behalf of itself and its parents, subsidiaries, affiliates
and divisions, and their respective current owners, partners, officers,
directors, representatives, agents, employees and attorneys, as well as the
heirs, executors, administrators, predecessors, successors, and assigns of any
of them, in consideration of the matters described in this Agreement, does
hereby, as of the later of the Effective Date or its receipt of the
consideration identified in paragraphs 2(c)-(e), remise, release, acquit and
forever discharge Xxxxxx and his heirs, executors, administrators, agents,
employees, attorneys, representatives, predecessors, successors, and assigns of
any of them (the "Xxxxxx Releasees"), of and from any and all Claims, whether
they be directly, indirectly, nominally or beneficially, possessed or claimed by
any of them, which the Company has had, now has, or which its successors or
assigns, or any of them, hereafter can, shall or may have against the Xxxxxx
Releasees, for or by reason of any cause, matter or thing whatsoever, from the
beginning of the world to this date, except for (i) claims
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arising out of a breach of this Agreement and (ii) defenses to any right to
advancement or indemnification asserted by Xxxxxx, and any obligations of Xxxxxx
resulting from his assertion of any such right, including the signing of an
appropriate undertaking, whether under Symbol's Charter, By-laws or Delaware
law, or the undertaking signed by Xxxxxx dated January 15, 2004. Nothing herein
shall be deemed to release any claim that Symbol may have against any person or
entity other than the Xxxxxx Releasees, including other former or current
directors, officers or employees of the Company, or the Company's former
auditors.
c. The Class Settlement, to which Xxxxxx has agreed to contribute $4 million
pursuant to paragraph 2(b) of this Agreement, provides for a release of Xxxxxx
by the Class Plaintiffs in connection with the matters entitled In re: Symbol
Technologies Securities Litigation, 02-CIV-1383 (LDW); Xxxxxx Xxxxx v. Symbol
Technologies, Inc., et al., 03-CV. 1394 (LDW); and Xxxxxx Xxxxxxx v. Symbol
Technologies, Inc. et al., 03-CV-2208 (LDW). Xxxxxx agrees to enable his release
by making the payment described in paragraph 2(b) of this Agreement and by
timely signing the Class Settlement by June 1, 2004 as required by the terms of
the Class Settlement.
4.INDEMNITY AND ADVANCEMENT
x. Xxxxxx agrees to the following limitations on any indemnity and advancement
right that he has against the Company. Other than the limitations described
below, Xxxxxx shall be indemnified as provided by the Company's Charter,
By-laws, and Delaware law:
(1) Xxxxxx shall not make any claim against any of the Company's insurance
policies (including its directors and officers policies) with respect to the
alleged financial fraud at the Company or the accounting matters related to the
Company's restatement.
(2) Symbol shall have no obligation whatsoever to Xxxxxx of advancement or
indemnification of costs, expenses, fees, fines, judgments, penalties or
anything else, however described, with respect to any civil, administrative or
criminal proceeding or investigation of or against Xxxxxx by any federal, state
or local government agency or entity, except to the extent that that such
federal, state or local government agency or entity is acting in its capacity as
a Company shareholder.
(3) Any indemnity to Xxxxxx for attorneys' fees and expenses actually incurred
through the date of the signing of this Agreement in connection with the alleged
financial fraud at the Company or the accounting matters related to the
Company's restatement is limited to a maximum of $500,000. The Company agrees to
indemnify Xxxxxx in that amount subject to proof of payment and the indemnity
shall be paid directly to Xxxxxx as follows: (i) $100,000 cash within twenty
(20) days of the Company's receipt of said proof of payment, and (ii) $400,000
cash within three (3) business of the Effective Date, without further review by
the Company except to confirm that such fees and expenses relate to the alleged
financial fraud or the accounting matters related to the Company's restatement.
(4) Any indemnity right of Xxxxxx for any matter in connection with the alleged
financial fraud at the Company or the accounting matters related to the
Company's restatement is capped in the aggregate (i.e. all such indemnity
matters added together) at and shall not exceed $2.5 million. The $500,000
indemnity payment referred to in paragraph 4(a)(3) above shall not count against
the $2.5 million cap.
b. The Company, through counsel of its selection, shall continue to defend
Xxxxxx in connection with the litigation in the United States District Court,
Eastern District of New York, entitled Xxxxx Xxxxxxxxx v. Symbol Technologies,
Inc., et al., 03-CV-2034, and such defense will
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be at no cost to Xxxxxx. Xxxxxx agrees that it will not be a conflict of
interest for a single firm to represent him and the Company in this regard and
Xxxxxx waives any claim that the law firm representing him and the Company may
be barred from representing the Company in any matter.
c. The Company agrees that any settlement it reaches with any former employee,
officer or director of the Company concerning in any way the alleged financial
fraud at the Company or the accounting matters related to the Company's
restatement shall include a release and bar for Xxxxxx for any matter relating
to the alleged financial fraud at the Company or the accounting matters related
to the Company's restatement.
x. Xxxxxx shall, in connection with any claim for advancement or indemnification
of fees or expenses pursuant to this Paragraph, submit such invoices to the
Company's General Counsel. Xxxxxx acknowledges that the limitations identified
in paragraph 4(a) above on rights he may have to indemnity and advancement
constitute legal waivers of such rights to the extent of, and in accordance
with, the limitations set forth in paragraph 4(a).
5. MISCELLANEOUS
x. Xxxxxx shall have the right to make a public statement concerning this
Settlement Agreement, and shall provide to the Company an advance copy of any
such public statement no later than twenty-four (24) hours prior to its
issuance. The Company shall provide to Xxxxxx an advance copy of any public
statement (or portion thereof) concerning Xxxxxx no later than twenty-four (24)
hours prior to its issuance.
b. The parties shall be free to waive any conditions to this Agreement and to
accelerate the Effective Date on such conditions as they mutually may agree to
in the form of a writing signed by representatives of both parties.
c. The Company can accelerate the Effective Date by rendering to Xxxxxx a
release of Xxxxxx in the Derivative Action and an agreement to waive any
limitation provided for herein on any right to advancement and indemnification
that Xxxxxx would otherwise have with respect to the Derivative Action.
d. In the event that the Company is unsuccessful in obtaining a final,
non-appealable order or judgment dismissing the Derivative Action with prejudice
with respect to Xxxxxx, by whatever means, and the Company does not elect to
accelerate the Effective Date pursuant to paragraph 5(c), the following shall
occur:
(1) The Net Shares described in paragraph 2(e) shall be returned to Xxxxxx;
(2) All the releases and obligations described in this Agreement will not become
effective except for paragraphs 2(b), 3(c), and 4(a)(3)(i).
e. This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof, and may be modified only by a written
instrument duly executed by each party, and supersedes all prior agreements or
understandings between the parties.
f. Each of the parties hereto agrees that any claim arising under this Agreement
in favor of, or against, any party may be asserted and filed only in any federal
or state court located in the State of New York; and each of the parties agrees
to submit to the jurisdiction of the federal or state courts located in the
State of New York in any action or proceedings arising out of or relating to
this Agreement.
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g. The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns,
transferees, heirs and executors.
h. Each of the parties hereto represents and warrants that it has full authority
to enter this Agreement and perform the duties assumed hereunder, and that the
persons signing this Agreement on behalf of each party have the authority to
bind that party.
i. This Agreement may be executed in counterparts, which, taken together, shall
constitute the Agreement.
j. This Agreement shall be governed by the laws of the State of New York,
without giving effect to conflicts of law principles.
k. The section headings contained in this Agreement are solely for the purpose
of reference, are not part of the Agreement of the parties and shall not in any
way affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, Symbol Technologies, Inc. and Xxxxxx Xxxxxx have signed and
acknowledged this Settlement Agreement as of the day and year written above.
SYMBOL TECHNOLOGIES, INC.
By: /s/ XXXXXXX X. XXXX
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Name: Xxxxxxx X. Xxxx
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(Please Print)
Title: Pres./CEO
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/s/ XXXXXX XXXXXX
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Xxxxxx Xxxxxx
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