NONCOMPETITION AGREEMENT
NONCOMPETITION AGREEMENT (this "Agreement") dated as of January 19, 2000,
between XXXX X. XXXXXXXX, a resident of the State of Oregon ("Shareholder"), and
PSC Inc., a New York corporation ("Purchaser").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Agreement and Plan of Merger dated as of
November 9, 1999 (the "Merger Agreement"), among Purchaser, West Acquisition
Corp., a Washington corporation and wholly-owned subsidiary of Purchaser
("Newco"), and Percon Incorporated, a Washington corporation (`Percon"), Newco
is merging (the "Merger") with and into Percon and Percon is surviving the
Merger and will continue its corporate existence under the laws of the State of
Washington.
WHEREAS, Percon's business consists of, among other things, designing,
engineering, developing, manufacturing, marketing, distributing, selling,
licensing and servicing data collection and management hardware and software
products primarily for the automatic data collection industry and the associated
goodwill developed in connection therewith ("Goodwill").
WHEREAS, following the Merger, Purchaser will own 100% of the issued and
outstanding shares of Percon.
WHEREAS, Shareholder and an affiliate of Shareholder beneficially own
approximately 16.6% of the issued and outstanding shares of Percon, is
receiving, directly or indirectly, substantial consideration in connection with
the Merger and is associated with the Goodwill such that Shareholder may be in a
position to divert the Goodwill for the benefit of a competing enterprise.
WHEREAS, to induce Purchaser to complete the Merger and to preserve the
Goodwill, it is a condition to the obligations of Purchaser under the Merger
Agreement that Shareholder enters into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. Agreements.
(a) Noncompetition. Shareholder will not, directly or indirectly, for a
period of two (2) years following the Closing Date (as defined in the Merger
Agreement) in any location worldwide.
i. engage in, continue in or carry on any business that competes with
the Business (as defined below);
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ii. own or control any Conflicting Organization (as defined below)
(other than as a holder of not more than five percent (5%) of the combined
voting power of the outstanding stock of a publicly-traded company);
iii.consult with, advise or assist in any way, whether or not for
consideration, any Conflicting Organization in any respect, including, but
not limited to, advertising or otherwise endorsing the products of any such
competitor; soliciting customers or otherwise serving as an intermediary
for any such competitor; or engaging in any form of business transaction on
other than an arm's-length basis with any such entity; or
iv. engage in any practice the purpose of which is to evade the
provisions of this covenant not to compete.
Notwithstanding the foregoing,
(x) Shareholder may engage in a business (an "Excepted Business") as
to which, and only for so long as, all of the following conditions are met:
(A) the business derives less than twenty percent (20%) of its revenues
from the resale of products and services that are Business Products (as
defined below) or other products of Purchaser and its affiliates (as
defined below) and the business does not design or manufacture Business
Products or other products of Purchaser and its affiliates; (B) the
business is not owned or controlled by any Conflicting Organization that
would be a Conflicting Organization even if it did not own or control the
Excepted Business; (C) Shareholder uses his best efforts (subject to his
obligations to such business) to cause such business to resell Business
Products of Purchaser or its affiliates and other products of Purchaser and
its affiliates in lieu of comparable products of competitors to the extent
Purchaser and/or its affiliates make such products available on competitive
terms and conditions; and (D) Shareholder obtains the consent of Purchaser
to engage in such business in advance, which consent Purchaser may not
unreasonably withhold but which Purchaser may give contingent on
Shareholder's continued compliance with the other conditions in this
paragraph. Without limitation, Shareholder's obligation to use best efforts
shall include (subject to his obligations to such business) meeting, at
Purchaser's request, with a representative of Purchaser to discuss, among
other matters, a transition schedule under which such business would
attempt to sell Business Products and other products of Purchaser and its
affiliates as an increasing percentage of such business's sales.
(y) Each covenant of Shareholder in this Section 1 shall extend for a
period of three (3) years following the Closing Date in respect of each of
the following (the "Specified Organizations"): Symbol Technologies, Inc.;
Metrologic Instruments Inc.; Telxon Corporation; Xxxxx Xxxxx Data
Collection, Inc./Hand Held Products Inc.; Intermec Technologies Corp.
(UNOVA); Teklogix Corp. and any subsidiary, joint venture or affiliate of
any of the foregoing.
For purposes of this Agreement, "affiliate" shall mean, with respect to any
entity, any other person or entity controlling, controlled by or under common
control with such entity.
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(b) Recognizing the specialized nature of the business of Percon and its
affiliates and the scope of competition, Shareholder acknowledges the geographic
scope of this covenant not to compete to be reasonable and to be coextensive
with the business of Percon and its affiliates on the date hereof. The time
period of this covenant shall be extended for any period during which
Shareholder is in breach of Section 1(a).
(c) Confidential Information. Without limiting Shareholder's obligations in
respect of trade secrets and similar information under applicable law,
Shareholder will (i) hold Confidential Information (as defined below) in
strictest confidence and not use such Confidential Information, disclose such
Confidential Information to any person or entity or authorize any person to use
or disclose such Confidential Information without the written authorization of
Purchaser, except in connection with services Shareholder is rendering in the
normal course of his employment or consultancy (if any) with Purchaser, (ii)
comply with all policies and procedures as Purchaser may from time to time
establish to protect and preserve Confidential Information of which Shareholder
has received notice and (iii) exercise due care in safeguarding Confidential
Information against disclosure of any kind or nature, whether intentional or
unintentional, and use his best efforts to ensure the maintenance of its
confidentiality. As used herein, "Confidential Information" means any
confidential information or knowledge or data of Percon or any of its
affiliates, whether or not patentable or copyrightable, in any way acquired by
Shareholder through the date hereof including without limitation information or
knowledge (A) of a technical nature, such as, but not limited to, Trade Rights
(as defined in the Merger Agreement), methods, know-how, formulae, compositions,
drawings, blueprints, compounds, processes, discoveries, machines, manufacturing
procedures, techniques, computer databases, source codes, computer codes,
designs, programs, prototypes, inventions and computer programs; (B) of a
business nature, such as, but not limited to, information about sales or lists
of customers (including mailing lists), prices, costs, purchasing, profits,
markets, sales and marketing methods, documents, records, contract forms,
computer disks containing data and other materials and information relating to
the products, services or business of Percon and affiliates, strengths and
weaknesses of products, business processes, business and marketing plans and
activities and employee personnel records; (C) information pertaining to future
developments, such as, but not limited to, research and development and future
marketing or merchandising plans or ideas; or (D) of or pertaining to the
customers and vendors that Shareholder learns or has learned as a consequence of
his ownership of or employment with Percon and as to which Percon and/or any of
its affiliates has an obligation of secrecy; provided, however, that
Confidential Information shall not include information that is or becomes
publicly available other than through breach by Shareholder of his obligations
hereunder..
(d) Customers. As an independent obligation of Shareholder, Shareholder
will not, on behalf of a Conflicting Organization, during the two-year period
following the Closing Date, be connected in any way with the solicitation of any
then current or potential customers of Percon or any of its affiliates who were
such customers prior to the date hereof.
(e) Employees. For a period of two years after the date hereof, Shareholder
will not, other than on behalf of Purchaser or any of its affiliates, employ,
induce to leave the employ of Percon or any affiliate of Percon, or associate as
a partner, member or otherwise in a direct, material business relationship with
(i) any employee, consultant or sales representative of Percon or any affiliate
of Percon, (ii) any person who shall have been an employee, consultant or sales
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representative of Percon or any affiliate of Percon within the one-year period
prior to the date hereof or (iii) any person who shall have been an employee,
consultant or sales representative of Percon or any affiliate of Percon at any
time during the one year after the date hereof who became known to Shareholder
prior to the date hereof by virtue of his relationship with Percon or any
affiliate of Percon. This paragraph shall not apply to employees whose duties
are secretarial or clerical or to employees whose employment Percon or any
affiliate of Percon has terminated after the date hereof.
(f) Conflicting Organizations. The term "Conflicting Organization" means
any person (including Shareholder as sole proprietor), entity, corporation,
partnership, joint venture or other organization, or the part or division of any
diversified organization, engaged in or planning or attempting to become engaged
in the Business (as defined below). Without limitation, each of the Specified
Organizations shall be deemed a Conflicting Organization. The term "Business"
means the design, engineering, development, manufacture, marketing,
distribution, sale, license and/or service of Business Products (as defined
below). The term "Business Products" means: (i) radio frequency and batch
portable data collection terminals, (ii) fixed station and integrated decoders,
(iii) hand-held or fixed laser, CCD or image scanners, (iv) warehouse management
and fixed asset management application software, and (v) products that are being
developed, manufactured, marketed, distributed, sold, licensed or serviced by
Percon or any affiliate of Percon as of the date hereof or are within the actual
or demonstrably anticipated research or development of Percon or any affiliate
of Percon as of the date hereof.
(g) Severability. The parties intend that the covenants of Shareholder
contained in this Section 1 shall be construed as a series of separate
covenants, one for each city, county or other political subdivision of the State
of Oregon and of each and every other State of the United States, or any other
country in the world, including France, each of which is deemed to be separately
named herein, where Percon or any of its affiliates is developing,
manufacturing, marketing, distributing, selling, licensing and/or servicing
products or attempting to do any of the foregoing as of the date hereof, each
for a series of one-year periods within the time span of the covenants contained
in this Section 1. Except for geographic coverage and periods of effectiveness,
each such separate covenant shall be identical in terms to the covenants
contained in this Section 1. If in any judicial proceeding a court shall refuse
to enforce any of the separate covenants deemed included in this Section 1, then
such unenforceable covenants shall be deemed eliminated for the purpose of that
proceeding to the extent necessary to permit the remaining separate covenants to
be enforced. It is the agreement of the parties that the maximum protection
available under the law within the foregoing limits shall be provided to
Purchaser and that if the restrictions hereby imposed are deemed by a court to
be unreasonably broad in time, territory or scope, then this Section 1 shall be
construed to impose only such restrictions as are not unreasonable.
(h) Compensation. In consideration of the agreement of Shareholder set
forth above, Purchaser shall pay to Shareholder in cash $18,750 per calendar
quarter over the eight (8)-quarter period commencing on the date hereof. The
initial such payment shall be made on the date that is the three (3) month
anniversary of the date hereof, with the remaining seven (7) payments being made
on the same day of each successive third month thereafter. If Purchaser shall
default in the obligation to make such payments to Shareholder, then Shareholder
shall be released from his obligations set forth in this Section 1. Subject to
the foregoing, the covenants of Shareholder in this Section 1 shall be deemed
independent covenants and be enforceable against Shareholder without regard to
the breach by Purchaser of any other provision of this Agreement or any
provision of the Merger Agreement or any other agreement.
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2. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Oregon, without reference to conflict of
law principles of any jurisdiction (including without limitation Oregon) which
would result in the application of the domestic substantive laws of any other
jurisdiction.
3. Successors and Assigns. Purchaser may sell,assign or otherwise transfer
the covenants of Shareholder herein, in whole or in part, to any person or
entity that purchases all or substantially all of the business of Percon. The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon any such purchaser, assignee or transferee, whether or not for
valuable consideration.
4. Equitable Relief for Violations. Shareholder agrees that the provisions
and restrictions contained in this Agreement are necessary to protect the
legitimate continuing interests of Purchaser in acquiring Percon pursuant to the
Merger Agreement, that any violation or breach of these provisions will result
in irreparable injury to Purchaser for which a remedy at law would be inadequate
and that, in addition to any relief at law that may be available to Purchaser
for such violation or breach and regardless of any other provision contained in
this Agreement, Purchaser shall be entitled to injunctive and other equitable
relief without posting any bond or other security. Nothing herein, however,
shall be construed as prohibiting Purchaser from pursuing, in conjunction with
an injunction or otherwise, any other remedies available to Purchaser for such
breach or threatened breach, including the recovery of damages from Shareholder.
5. Severability. If any term of this Agreement or the application thereof
is held invalid or unenforceable, then the validity or unenforceability shall
not affect any other term of this Agreement. This Agreement shall be enforced to
the broadest extent possible under the law.
6. Notices.All notices given in connection with this Agreement shall be in
writing and shall be delivered either by personal delivery, by certified or
registered mail, return receipt requested, or by a recognized express courier or
delivery service, addressed to the parties hereto at the following addresses:
(a) If to Shareholder, to:
Xx. Xxxx X. Xxxxxxxx
000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
with a copy to:
Xxxxxxx Coie LLP
0000 X.X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000-0000
Attention: Xxx X. Xxxxxx
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(b) If to Purchaser, to:
PSC Inc.
000 Xxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. XxXxxxxx
with a copy to:
Xxxxxxx X. Quick
Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxx.
Xxxxxxxxx, Xxxxxxxxx 00000
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. If notice is personally delivered, such communication shall be deemed
delivered upon actual receipt; if sent by express courier or delivery service
pursuant to this paragraph, such communication shall be deemed delivered upon
actual receipt or, if the addressee fails or refuses to accept delivery, as of
the date of such failure or refusal; and if sent by U.S. mail pursuant to this
paragraph, such communication shall be deemed delivered as of the date of
delivery indicated on the receipt issued by the relevant postal service, or, if
the addressee fails or refuses to accept delivery, as of the date of such
failure or refusal.
7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same agreement.
8. 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.
9. Captions. All headings and captions are for convenience of reference
only and are not part of this Agreement, and shall have no effect on the
construction or interpretation of this Agreement or any section, subsection,
clause, or provisions hereof.
10. Amendment. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
11. Exclusive Agreement; No Third-Party Beneficiaries. Subject to the terms
of any employment or consulting agreement that may give rise to independent
obligations to Purchaser or others, this Agreement and the Merger Agreement
constitute the sole understanding of the parties with respect to the subject
matter hereof. The parties hereto intend to confer upon Purchaser and upon any
affiliates of Purchaser any and all rights and remedies in connection with
Shareholder's covenants contained herein. This Agreement shall be binding upon
and inure to the benefit of Purchaser, its successors and assigns and
Shareholder and his heirs, executors, administrators and legal representatives.
Subject to the foregoing and to Section 3, nothing contained herein shall be
deemed to confer upon any other person any right or remedy under or by reason of
this Agreement.
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12. Taxes. Shareholder has sole responsibility for the payment of state and
federal income tax upon any payments made by PSC to Shareholder under this
Agreement, which payments shall be subject to withholding to the extent required
by applicable law.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
PSC INC.
By:
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Its:
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Xxxx X. Xxxxxxxx
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