Form of Agreement under Lionbridge Change of Control Plan for Tier 1 Executives
Form of Agreement under Lionbridge Change of Control Plan for Tier 1 Executives
LIONBRIDGE TECHNOLOGIES, INC.
AGREEMENT
This is an AGREEMENT entered into between Lionbridge Technologies, Inc. (the
“Company”) and (“Executive”) effective as of the day of , 200_.
WHEREAS, the Board of the Directors of the Company (the “Board”) considers it essential to the best interests of the Company and its stockholders to xxxxxx the Company’s ability to retain key management personnel; and
WHEREAS, the Board recognizes that, as it generally the case with publicly-held corporations, the possibility of a Change of Control (as defined herein) exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and
WHEREAS, the Board intends for this Agreement to provide protection for its executive officers in general, for so long as such officers remain in the employment of the Company, against the exigencies of a Change of Control, but not to otherwise provide assurance of or rights to continued employment; and
WHEREAS, should the possibility of a Change of Control arise, in addition to the Executive’s regular duties, the Executive may be called upon to assist in the assessment of such possible Change of Control, to advise management and the Board as to whether such Change of Control would be in the best interests of the Company and to take such other actions as the Board might determine to be appropriate; and
WHEREAS, this Agreement is not intended to alter the rights of the Executive in the absence of a Change of Control with respect to his or her employment by the Company or his or her compensation and benefits in connection with such employment and, accordingly, this Agreement, although taking effect as provided below, will be operative only upon a Change of Control.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:
1. Term; Employment Protection Period. The term during which this Agreement (the
“Agreement”) will be in effect (the “Term of the Agreement”) will begin on
November 2, 2006 (the “Effective Date”) and will remain in effect until terminated by a vote of the
majority of the Board of Directors. If a Change of Control (as defined in Exhibit A) occurs during
the Term of the Agreement, the Agreement will remain in effect until all obligations hereunder have
been discharged. The period starting on the date of such a Change of Control and ending on the 18
month anniversary of the Change of Control will be a “Employment Protection Period” under the terms
of this Agreement.
2. Definition of a Change of Control. “Change of Control” has the meaning set forth in Schedule A hereto.
3. Termination of Employment; Severance Benefits.
3.1 Terminability of Employment. If Executive’s employment terminates during the Employment Protection Period set forth in this Agreement following a Change of Control, the parties will be required to discharge the applicable obligations described in this Section 3 and elsewhere in this Agreement. If Executive’s employment terminates at any time other than during the applicable Employment Protection Period following a Change of Control, Executive will have no rights under the Agreement.
3.2 Termination upon Death or Disability. If Executive ceases to be an employee of the
Company as a result of death or disability, the Company will have no further obligation or
liability to Executive hereunder other than for Base Salary earned and unpaid at the date of
termination and compensation for accrued vacation, and the Term of the Agreement will end when
those amounts are paid. However, nothing in this Agreement is intended to interfere with the
rights of Executive and his family or
beneficiaries under other applicable plans, policies or arrangements of the Company. For purposes
of this Section 3.2, the Company may terminate Executive’s employment for “disability” if, because
of physical or mental incapacity, Executive is unable for a period of 90 consecutive days to
perform the material duties of his position and it is determined by a qualified physician chosen by
the Company (and, if during a Employment Protection Period, approved by the Executive or his
conservator) to be probable that such incapacity will continue for an additional 60 consecutive
days.
3.3 Termination by the Company for Cause or by Executive Without Good
Reason. If the Company terminates Executive’s employment for Cause (as defined in this
Section 3.3) or if Executive terminates his employment other than for Good Reason (as defined in
this Section 3.3), the Company will have no further obligation or liability to Executive hereunder
other than for Base Salary earned and unpaid at the date of termination and compensation for
accrued vacation, and the Term of the Agreement will end when those amounts are paid.
“Cause” means (a) willful malfeasance or gross negligence in the performance by Executive of his duties, resulting in harm to the Company, (b) fraud or dishonesty by Executive with respect to the Company, or (c) Executive’s conviction of a felony.
“Good Reason” means (i) a material reduction in the Executive’s total compensation, including but
not limited to (a) a reduction of the Executive’s base salary below the
level in effect immediately prior to the Change of Control without the Executive’s prior written
consent, (b) a reduction in the Executive’s target annual bonus opportunity below the level in
effect immediately prior to the Change of Control without the Executive’s prior written consent,
(c) discontinuation of participation in any compensation plan that is maintained following the
Change in Control in which the Executive participated immediately prior to the Change of Control
without the Executive’s prior written consent, or (d) exclusion from participating in compensation
programs that are customarily offered to senior executives, (ii) relocation of the Executive’s
principal place of work to a location more than 50 miles from its location immediately prior to the
Change of Control or (iii) change in title or responsibilities below the level in effect
immediately prior to the Change of Control without the Executive’s prior written consent.
3.4 By the Company Without Cause or By Executive for Good Reason.
(a) Entitlement to Severance Benefits. If, during the Term of the Agreement, the Company terminates Executive’s employment without Cause, or if Executive terminates his employment for Good Reason, the Company will, subject to Section 4 below, provide severance benefits to Executive as set forth below in Section 3.4(b).
(b) Severance Benefits Following a Change of Control. If the termination occurs during a Employment Protection Period, the Company will provide severance benefits to Executive as follows:
(i) The Company will pay to Executive within 30 days of the termination a lump-sum cash amount equal to 150% of sum of the Executive’s annual Base Salary in effect immediately prior to the termination (or, if his Base Salary has been reduced within 60 days of the termination or at any time after the Change of Control, his Base Salary in effect prior to the reduction) plus the Executive’s then current annual target bonus.
(ii) The Company will also pay to Executive within 30 days of the termination a pro-rata portion of his target bonus for the year of termination.
(iii) The Company will continue for a period of 18 months from the date of termination to provide Executive with family medical, disability and life insurance coverage at the level in effect immediately prior to the Change of Control. To the extent the Company is unable to provide such benefits to an Executive under its existing plans and arrangements, it will either arrange to provide the Executive with substantially similar benefits upon comparable terms or pay the Executive cash amounts equal to the Executive’s cost of obtaining such benefits.
(c) Option Acceleration. Notwithstanding any contrary provision of the plans or
arrangements under which they are granted, upon a Change of Control and irrespective of a termination of employment, (A) 50% of the options to purchase Company stock held by Executive will immediately become exercisable and the remaining 50% of the options to purchase Company stock held by Executive will become exercisable on the six month anniversary of the date of the Change of Control, and (B) all restricted stock held by Executive under restricted stock plans and arrangements.
4. Limitations on Severance Benefits.
4.1 Section 280G. The payment to the Executive under Section 3 of this Agreement shall be made without regard to whether the deductibility of such payment (or any other “parachute payments,” as that term is defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), to or for the benefit of such Executive) would be limited or precluded by Section 280G and without regard to whether such payment (or any other “parachute payments” as so defined) would subject the Executive to the federal excise tax levied on certain “excess parachute payments” under Section 4999 of the Code; provided that if the total of all “parachute payments” to or for the benefit of any Executive, after reduction for all federal, state and local taxes (including the tax described in Section 4999 of the Code, if applicable) with respect to such payments (the “Total After-Tax Payments”), would be increased by the limitation or elimination of any payment under the Change of Control Plan or any “parachute payments” under other agreements or arrangements between the Executive and the Company, then the amount payable under this Plan (or the “parachute payment” under such other agreement or arrangement as the Company and the Executive shall mutually determine) shall be reduced to the extent, and only to the extent, necessary to maximize the Total After-Tax Payments. The determination as to whether and to what extent each payment under the Change of Control Plan (or the “parachute payment” under such other agreement or arrangement) is required to be reduced in accordance with the preceding sentence shall be made at the Company’s expense by its independent certified public accounting firm. In the event of any underpayment or overpayment under the Change of Control Plan (or such other agreement or arrangement) as determined by the accounting firm, the amount of such underpayment or overpayment shall forthwith be paid to the Executive or refunded to the Company, as the case may be, with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code.
4.2 Section 409A. No payment that may be made pursuant to this Agreement that constitutes “nonqualified deferred compensation” within the meaning of Section 409A of the Code may be accelerated or deferred by the Company or the Executive. Notwithstanding anything herein (or in any other agreement or arrangement between the Executive and the Company) to the contrary, to the extent that any of the payments to be made hereunder constitute nonqualified deferred compensation within the meaning of Section 409A and the Executive is a “specified employee”, then upon his or her termination (as defined in Section 409A), any such payment shall be delayed until the date that is six months and one day following the Executive’s termination date if, absent such delay, such payment would be subject to penalty under Section 409A. The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any payments under the Change of Control Plan or under this Agreement are determined to constitute nonqualified deferred compensation subject to Section 409A but do not satisfy the conditions of that Section.
5. Withholding. All payments required to be made by the Company to Executive under this Agreement will be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as may be required by law.
6. Fees and Expenses. In the event of Executive’s termination of employment during a Employment Protection Period, the Company will pay any and all fees and expenses (including legal fees and other costs of arbitration or litigation) that may be incurred by Executive in enforcing his rights under this Agreement.
7. No Duty to Mitigate. Benefits payable under this Agreement as a result of termination of Executive’s employment will be considered severance pay in consideration of his past service and his continued service from the Effective Date, and his entitlement thereto will neither be governed by any duty to mitigate his damages by seeking further employment nor offset by any compensation that he may receive from other employment.
8. Confidentiality and Exclusivity. Executive agrees to maintain the confidentiality of
the Company’s (and its related entities and projects) books, records, financial information,
technical information, business plans and/or strategies, and other confidential matters unless
required to make disclosure in the performance of his duties for the Company or as a result of a
legal proceeding or other legally mandated cause. The parties recognize and agree that should the
Company be required to pursue a claim against Executive under this Section 8, the Company will
likely be required to seek
injunctive relief as well as damages at law. Accordingly, Section 10, Arbitration, will not apply
to any action by the Company against Executive for violation of this Section 8. Executive agrees
for purposes of any disputes arising under this Section 8 to submit to the exclusive jurisdiction
of the federal and state courts in the Commonwealth of
Massachusetts.
9. Arbitration. Except as otherwise provided in Section 8, any dispute or controversy
between the parties involving the construction or application of any terms, covenants or conditions
of this Agreement, or any claim arising out of or relating to this Agreement, or any claim arising
out of or relating to Executive’s employment by the Company that is not resolved within ten days by
the parties will be settled by arbitration in Boston, Massachusetts, in accordance with the rules
of the American Arbitration Association then in effect, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. The Company and Executive
agree that the
arbitrator(s) will have no authority to award punitive or exemplary damages or so-called
consequential or remote damages such as damages for emotional distress. Any decision of the
arbitrator(s) will be final and binding upon the parties. Upon request the arbitrator(s) shall
submit written findings of fact and conclusions of law. The parties agree and understand that they
hereby waive their rights to a jury trial of any dispute or controversy relating to the matters
specified above in this Section 9..
10. Rights of Survivors. If Executive dies after becoming entitled to benefits under
Section 3 following termination of employment but before all such benefits have been provided, (a)
all unpaid cash amounts will be paid to the beneficiary that has been designated by Executive in
writing (the “beneficiary”), or if none, to Executive’s estate, (b) all applicable insurance
coverage will be provided to Executive’s family as though
Executive had continued to live, and (c) any stock options that become exercisable under Section
3.4 will be exercisable by the beneficiary, or if none, the estate.
11. Successors. This Agreement will inure to and be binding upon the Company’s
successors. The Company will require any successor to all or substantially all of the business
and/or assets of the Company by sale, merger or consolidation (where the Company is not the
surviving corporation), lease or otherwise, by agreement in form and substance satisfactory to
Executive, to assume this Agreement expressly. This
Agreement is not otherwise assignable by the Company.
12. Subsidiaries. For purposes of this Agreement, employment by a corporation or other entity that is controlled directly or indirectly by the Company will be deemed to be employment by the Company. Thus, references in the Agreement to “Company” include such corporations or other entities where appropriate in the context.
13. Amendment or Modification; Waiver. This Agreement may not be amended unless agreed to in writing by Executive and the Company. No waiver by either party of any breach of this Agreement will be deemed a waiver of a subsequent breach.
14. Severability. In the event that any provision of this Agreement is determined to be invalid or unenforceable, the remaining provisions shall remain in full force and effect to the fullest extent permitted by law.
15. Controlling Law. This Agreement will be controlled and interpreted pursuant to Massachusetts law.
16. Superseded Agreement. This Agreement supersedes and replaces in their entirety provisions related to severance payments due to a change in control, and option acceleration in the event of a change in control, as set forth in the Change of Control Agreement between Executive and the Company dated July 17, 2003.
17. Notices. Any notices required or permitted to be sent under this Agreement are to be delivered by hand or mailed by registered or certified mail, return receipt requested, and addressed as follows:
If to the Company:
Lionbridge Technologies, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
If to Executive:
Either party may change its address for receiving notices by giving notice to the other party.
In witness whereof, the parties hereto have executed this Agreement as of the date first set forth above.
[Executive]
LIONBRIDGE TECHNOLOGIES, INC.
By:
Xxxx X. Xxxxx
President and Chief Executive Officer
Exhibit A
“Change of Control” means the occurrence of any of the following events:
(1) any Person becomes the owner of 25% or more of the Company’s Common Stock and a majority of the members of the Board of Directors make a determination that a change of control has occurred; or
(2) individuals who, as of the Effective Date, constitute the Board of Directors of the Company
(the “Continuing Directors”) cease for any reason to constitute at least a majority of such Board;
provided, however, that any individual becoming a director after the Effective Date whose election
or nomination for election by the Company’s shareholders, was approved by a vote of at least a
majority of the Continuing Directors will be deemed to be a Continuing Director, but excluding for
this purpose any such individual whose initial assumption of office occurs as a result of either an
actual or
threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Securities and Exchange Act of 1934 (the “Exchange Act”)) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(3) approval by the shareholders of the Company of a reorganization, merger,
consolidation or other transaction that will result in the transfer of ownership of more than 50%
of the Company’s Common Stock; or
(4) liquidation or dissolution of the Company or sale of substantially all of the Company’s assets.
In addition, for purposes of this definition the following terms have the meanings set forth below:
“Common Stock” means the then outstanding Common Stock of the Company plus,
for purposes of determining the stock ownership of any Person, the number of unissued shares of
Common Stock which such Person has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) upon the exercise of conversion rights, exchange
rights, warrants or options or otherwise. Notwithstanding the foregoing, the term Common Stock
does not include shares of preferred stock or convertible debt or options or warrants to acquire
shares of Common Stock (including any shares of Common Stock issued or issuable upon the conversion
or exercise thereof) to the extent that the Board expressly so determines in any future transaction
or
transactions.
A Person will be deemed to be the “owner” of any Common Stock of which such Person would be the “beneficial owner,” as such term is defined in Rule 13d-3 promulgated by the Securities and Exchange Commission under the Exchange Act.
“Person” has the meaning used in Section 13(d) of the Exchange Act, except that “Person” does not include (i) the Executive, an Executive Related Party, or any group of which the Executive or Executive Related Party is a member, or (ii) the Company or a wholly owned subsidiary of the Company or an employee benefit plan (or related trust) of the Company or of a wholly owned subsidiary.
An “Executive Related Party” means any affiliate or associate of the Executive other than the Company or a subsidiary of the Company. The terms “affiliate” and “associate” have the meanings given in Rule 12b-2 under the Exchange Act; the term “registrant” in the definition of “associate” means, in this case, the Company.
