EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of June 2, 1997 by and between PSC Inc., a
New York corporation ("PSC" or the "Company") and ROBERT C. STRANDBERG
("Executive").
RECITALS
PSC desires to employ Executive to devote full time to the business of
PSC, and Executive desires to be so employed.
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 June 1,
1998 (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.
(i) 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 Employee a salary at the
annual rate of not less than $240,000 ("Base Salary"). Base Salary shall be
payable in accordance with the customary payroll practices of PSC, subject to
such deductions and withholdings as may be required by law or agreed to by
Executive. Executive may, at his option, elect to receive up to 100% of his Base
Salary in the form of incentive stock options. Said options shall be granted
pursuant to the Company's 1994 Stock Option Plan, shall have an exercise price
equal to the fair market value of the Company's common shares on the date of
grant, which date shall be the effective date of the election by Executive,
shall be vested in four (4) equal installments on the last day of each quarter
(i.e., on August 31, 1997, November 30, 1997, February 28, 1998, and May 31,
1998), and shall be for a term of three (3) years from the date of grant. The
number of options to be granted shall be determined by the following formula:
[$ of Base Salary in options]
----------------------------
1/2 exercise price
Executive must notify the Company, in writing, prior to the end of the first
payroll period subsequent to the date of this Agreement whether he wishes to
make this election and the amount of his Base Salary to be received in the form
of stock options. This election is applicable only with respect to the Base
Salary to be paid to Executive during the Initial Term.
B.
Performance Bonus. Pursuant to PSC's 1997 Management Incentive Plan, for the
year ending December 31, 1997, if and to the extent PSC achieves its
pre-established performance goals for 1997, Executive shall be entitled to a
performance bonus in an amount equal to the percentage of his Base Salary for
1997 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%
In subsequent years, Executive shall be entitled to a performance bonus based
upon the performance goals and targets established for that year by the Board of
Directors.
4. Benefits. In addition to his Base Salary, Executive shall also be entitled
throughout the Term to all benefits of full time employees or officers as set
forth in the Company's Policy Manual as to which he meets the eligibility
requirements universally applicable to all employees and such other benefits as
may be accorded to executives of his rank 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. Options. Pursuant to the Company's 1994 Stock Option Plan, PSC hereby grants
Executive a stock option for 225,000 Common Shares of the Company at an exercise
price of $6.50 per share, the fair market value of the Company's Common Shares
on the date hereof, upon the terms and conditions set forth in the Option
Agreement attached hereto as Exhibit A.
6. Relocation Assistance. The Company will reimburse Executive for relocation
expenses in the manner and to the extent set forth in the memorandum entitled
"PSC Scanning, Inc., Employee Relocation Program, Effective: February 1997",
attached hereto as Exhibit B. For purposes of this Agreement, all references in
that memorandum to "PSC Scanning, Inc." shall mean "PSC Inc."; all references to
"Eugene" shall mean "Webster, NY" and all references to "Human Resources
Manager" shall mean "Chairman of the Board". In addition, the Company will
reimburse Executive for such other relocation expenses as it may deem
reasonable, including, but not limited to, those expenses set forth on Exhibit
C.
7. 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, compositions, 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.
8. 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.
9. Injunctive Relief. Executive agrees that in the event of a breach or
threatened breach by the Employee of any of the provisions of Section 7 or 8
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.
10. Severance Payment.
A. Termination of Employment - In General. In the event of the termination of
employment of Executive by the Company for any reason other than Termination for
Cause (as hereinafter defined), death, disability, or a Change in Control (as
hereinafter defined), or in the event the employment of the Executive is not
renewed after the Initial Term, the Company will continue to pay the Executive
for a period of one year following such termination or expiration of the Initial
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 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 for 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. In addition, Executive will be
immediately vested in any retirement, incentive, or option plans 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 30% 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
1997 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.
11. 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 Strandberg: To PSC:
Robert C. Strandberg PSC Inc.
55 South Main Street 675 Basket Road
Pittsford, NY 14534 Webster, NY 14580
FAX: (716) 265-6409
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.
12. 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.
13. 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.
14. 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.
15. Prior Agreements. This Agreement supersedes all previous agreements related
to the subject matter herein.
16. 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.
17. 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:
Robert S. Ehrlich
Its: Chairman of the Board
Robert C. Strandberg