EMPLOYMENT AGREEMENT ("Agreement"), dated as of December 20, 1999,
between The Translation Group, Ltd., a Delaware Corporation with an office at 00
Xxxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxx Xxxxxx 00000, (the "Company"), and Xxxxx X.
Xxxxxx ("Employee") residing at 00 Xxxxxxx Xx., Xxxxxxxxx, Xxxxxxxxxxxxx 00000.
WHEREAS, the Company is desirous of employing Xxxxx X. Xxxxxx to
further the business purposes of the Company; and
WHEREAS, Xxxxx X. Xxxxxx is desirous of being employed by the Company
on the terms provided herein;
NOW, THEREFORE, the Company and Xxxxx X. Xxxxxx agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ Xxxxx X. Xxxxxx on a
full time basis as Chief Executive Officer of the Company; and Xxxxx X. Xxxxxx
hereby agrees to accept such employment and perform the duties of such office
and to and be under the direction and control of the Board of Directors of the
Company. Xxxxx X. Xxxxxx shall devote his best efforts to the business of the
Company and to promoting its best interest. The Company may provide Xxxxx X.
Xxxxxx with such perquisites as may be deemed by the Company to be commensurate
with Xxxxx X. Xxxxxx'x position with the Company.
2. TERM OF EMPLOYMENT. Subject to the provisions for termination
hereinafter provided, the term of Xxxxx X. Xxxxxx'x employment hereunder shall
begin on December 20, 1999, and shall extend until December 20, 2000.
3. COMPENSATION.
(a) The Company shall pay to Xxxxx X. Xxxxxx a salary at a rate of
$150,000.00 per year, payable in accordance with the normal payroll practices of
the Company. The base salary shall be reviewed annually by the Board of
Directors of the Company who may make recommendations to the Compensation
Committee for additional increases.
(b) In addition to his base salary, Xxxxx X. Xxxxxx shall be
eligible for 200,000 incentive stock options to purchase shares of The
Translation Group, Ltd., common stock at $2.00 per share. 50,000 of these
options will vest upon the execution of this Agreement, 50,000 of these options
will vest twelve (12) months after the execution of this Agreement and the
remaining
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100,000 of these options will vest, if this Agreement is extended, eighteen (18)
months after the execution of this Agreement; and all of these options will have
a term of five (5) years and will be subject to the provisions of The
Translation Group, Ltd. 1995 Stock Option Plan and amendments thereto.
(c) All compensation payable to Xxxxx X. Xxxxxx under this
Agreement is stated in a gross amount and will be subject to all applicable
withholding taxes, or other normal payroll deductions, and any other amounts
required by law to be withheld.
4. EXPENSES.
(a) During the term of this Agreement, the Company shall reimburse
Xxxxx X. Xxxxxx for all reasonable Company related travel, entertainment and
other business expenses reasonably necessary and appropriate for the performance
of his duties hereunder, provided that Xxxxx X. Xxxxxx submits receipts and
other expense records to the Company in accordance with the Company's general
reimbursement policy then in effect for Xxxxx X. Xxxxxx and other employees of
the Company.
(b) The Company will pay Xxxxx X. Xxxxxx reasonable relocation
expenses actually incurred in connection with relocating from Massachusetts to
New Jersey and reimburse Xxxxx X. Xxxxxx for reasonable expenses in connection
with renting a temporary residence in New Jersey and commuting between New
Jersey and Massachusetts for up to seven (7) months from the day this Agreement
becomes effective. Reasonable relocation expenses may include reasonable and
customary fees associated with the sale of Xxxxx X. Xxxxxx'x home in
Massachusetts such as real estate agent fees, title fees and attorney fees and
moving company and storage expenses for up to two months.
(c) The Company agrees to provide Xxxxx X. Xxxxxx an interest-free
loan not to exceed $100,000.00 in an amount equal to a 33% down payment on a
house in connection with Xxxxx X. Xxxxxx'x relocation from Massachusetts to New
Jersey as contemplated by this Agreement. Provided that aforesaid loan shall
become due and payable in full upon the sale of aforesaid house or upon Xxxxx X.
Xxxxxx'x termination of employment with the Company, whichever is earlier.
Provided further that Xxxxx X. Xxxxxx will be responsible for any interest that
the Internal Revenue Service and/or the State of New Jersey may impute in
connection with aforesaid loan.
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(d) All expenses payable to Xxxxx X. Xxxxxx under this Agreement
are stated in gross amounts and may be subject to all applicable taxes or other
amounts required by law to be withheld.
5. BENEFIT PLANS.
(a) During the term of Xxxxx X. Xxxxxx'x employment under this
Agreement, Xxxxx X. Xxxxxx shall be entitled to participate, to the extent he
and/or members of his family are eligible, in all employee benefit plans in
effect for employees of the Company during the term of this Agreement.
(b) During the term of Xxxxx X. Xxxxxx'x employment, Xxxxx X.
Xxxxxx shall be entitled to four weeks paid vacation, as well as paid holidays
given by the Company to its employees. Vacation time cannot be carried over and
accrued to the next year but must be taken in the year earned, unless the
Company determines, in a case of unusual and mitigating circumstances, to permit
carryover of vacation time.
(c) The Company shall purchase a term life insurance policy in the
principal amount of $500,000.00 to the beneficiary of Xxxxx X. Xxxxxx'x choice.
The above notwithstanding, in the event that Xxxxx X. Xxxxxx cannot obtain life
insurance for an unrated premium (i.e., rate surcharges due to preexisting
conditions and/or illnesses), Xxxxx X. Xxxxxx shall receive a sum equivalent to
the usual and customary premium for a man of the same age but otherwise free of
ratings in lieu of funding the life insurance policy.
6. TERMINATION.
(a) DEATH. Xxxxx X. Xxxxxx'x employment hereunder shall terminate
upon his death and all obligations of the Company to Xxxxx X. Xxxxxx will cease
as of the date of Xxxxx X. Xxxxxx'x death.
(b) DISABILITY. If, as a result of Xxxxx X. Xxxxxx'x incapacity due
to physical or mental illness then Xxxxx X. Xxxxxx shall be deemed to be
disabled. Xxxxx X. Xxxxxx'x employment hereunder shall terminate upon his
disability and all obligations of the Company to Xxxxx X. Xxxxxx will cease as
of the date of Xxxxx X. Xxxxxx'x disability. Provided that for purposes of this
subsection, "incapacity" shall mean any physical or mental illness which
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substantially interferes with Xxxxx X. Xxxxxx'x ability to fulfill his duties
under this Agreement.
(c) OTHER REASON. Any other reason other than cause under (d) below
or for reasons under (a) or (b) above.
(d) CAUSE. The Company may terminate Xxxxx X. Xxxxxx'x employment
hereunder for Cause. For the purpose of this Agreement, the Company shall have
"Cause" to terminate Xxxxx X. Xxxxxx'x employment hereunder upon (i) Xxxxx X.
Xxxxxx'x conviction or, or plea of "no contest" to, any felony; (ii) material
acts of fraud, dishonesty, misappropriation of funds or property of the Company
for Xxxxx X. Xxxxxx'x own use or embezzlement of any property of the company; or
(iii) any material breach by Xxxxx X. Xxxxxx of any specific provision of this
Agreement.
(e) NOTICE OF TERMINATION. Any termination by the Company pursuant
to subsections (b), (c) or (d) above shall be communicated by written Notice of
Termination to Xxxxx X. Xxxxxx.
(f) DATE OF TERMINATION. The effective date of termination shall be
the date Notice of Termination is given.
7. COMPENSATION UPON TERMINATION.
(a) If Xxxxx X. Xxxxxx'x employment shall be terminated pursuant to
subsection (d) above, he shall receive only his salary to the Date of
Termination.
(b) If Xxxxx X. Xxxxxx is terminated pursuant to subsections (a) or
(b) above, Xxxxx X. Xxxxxx will be entitled to receive, as severance
compensation, an amount equal to one (1) month of Xxxxx X. Xxxxxx'x annual base
salary, vested stock options as of the date of termination and one (1) month of
benefits.
(c) If Xxxxx X. Xxxxxx is terminated under subsection 6(c) above,
Xxxxx X. Xxxxxx shall be entitled to receive all salary, vested stock options
and benefits for the remainder of the term of this Agreement. The termination
salary amount will be paid as a lump sum within thirty (30) days of termination.
8. RESULTS OF XXXXX X. XXXXXX'X SERVICES. The Company will be entitled
to and will own all the results and proceeds of Xxxxx X. Xxxxxx'x services under
this Agreement, including, without limitation, all rights throughout the world
to any copyright, patent, trademark or other right
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and to all ideas, inventions, products, programs, procedures, formats, and other
materials of any kind created or developed or worked on by Xxxxx X. Xxxxxx
during his employment by the Company.
9. CONFIDENTIALITY. Xxxxx X. Xxxxxx hereby acknowledges that certain
information and materials relating to the Company, its products and the various
phases of its operations including, without limitation, trade secrets, formulas,
know-how, specifications, drawings, consumer, distributorship and supplier
lists, books, manuals and other data (collectively, "Confidential Materials"),
heretofore or hereafter obtained by or entrusted to him in the course of his
association with the Company (whether prior to or after the date hereof), is or
will be of a confidential or proprietary nature, not generally known to the
Company's competitors, and that the Company would likely be economically or
otherwise disadvantaged or harmed by the direct or indirect disclosure of any of
the Confidential Materials. Xxxxx X. Xxxxxx shall, at all times, both during and
after the term of this Agreement, hold all of the Confidential Materials in
strictest confidence and not use for his own benefit or of the benefit of any
other person or directly or indirectly disclose or suffer the disclosure of any
of the Confidential Materials to any person, firm, corporation, association or
other entity to whom any Confidential Materials have been disclosed or are
threatened to be disclosed by Xxxxx X. Xxxxxx, directly or indirectly, (other
than in the ordinary course of business of the Company), without the Company's
prior written consent. Upon the termination of Xxxxx X. Xxxxxx'x employment,
Xxxxx X. Xxxxxx shall return all Confidential Materials to the Company.
10. NON-SOLICITATION. Subject to the provisions of Section 11, during
this Agreement and for a period of two (2) years following the conclusion of
this Agreement (the "Limited Period"), Xxxxx X. Xxxxxx shall not, directly or
indirectly, (i) hire, solicit, or encourage to leave the employ of the Company
or any affiliate entity, any person employed by the Company or any affiliated
entity or (ii) participate in the solicitation of any business of any type
presently conducted or which may from time to time be conducted by the Company
or any affiliated entity during the Limited Period from any person or entity
which was, or which from time to time may be, a customer of the Company or any
affiliated entity during the Limited Period.
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11. NON-COMPETITION. During the Limited Period, Xxxxx X. Xxxxxx shall
not be engaged or interested, directly or indirectly, as an officer, director,
stockholders (excepting less than one (1%) percent interest in a publicly traded
company), employee, partner, individual proprietor, investor or consultant, or
in any other manner or capacity whatsoever, in any business that involves the
production, distribution or marketing of products or services, or otherwise
competitive with, any product or service currently, or which from time to time
may be, produced, distributed or marketed by the Company or any affiliated
entity during the Limited Period, in any place in which the Company or any
affiliated entity at the time of such termination conducts such a business,
without the prior written approval of the Company; PROVIDED, HOWEVER, that if
any provision of Section 10 or this Section 11 would be held to be unenforceable
because of the scope, duration or area of its applicability, the court making
such determination shall have the power to, and shall, modify such scope,
duration or area, or all of them, to the minimum extent necessary to make such
modified form. The above notwithstanding, Xxxxx X. Xxxxxx shall be entitled to
(I) remain on the Board of Directors of any corporations in which he currently
has such a position and (ii) advise or counsel other persons or entities,
provided, such activities are not competitive with the Company and Xxxxx X.
Xxxxxx'x name is not publicly associated with such entities or activities.
12. ENFORCEMENT OF CONFIDENTIALITY, NON-SOLICITATION AND
NON-COMPETITION AGREEMENTS. Xxxxx X. Xxxxxx hereby acknowledges that the Company
will not have an adequate remedy at law in the event of any breach by him of any
provision of Section 9, 10, or 11 of this Agreement and that the Company will
suffer irreparable damage and injury as a result of any such breach.
Accordingly, in the event of Xxxxx X. Xxxxxx'x breach or threatened breach of
any provision of Section 9, 10, or 11 of this Agreement, Xxxxx X. Xxxxxx hereby
consents to the granting of a temporary restraining order, preliminary
injunction and/or permanent injunction against him in any court of competent
jurisdiction prohibiting him from committing or continuing any such breach or
threatened breach. Notwithstanding anything herein to the contrary, Xxxxx X.
Xxxxxx shall have no obligation or liability under Sections 11 or 12 of this
Agreement upon termination of this Agreement by the Company without cause.
13. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when delivered, if personally delivered, or three (3) days
after being mailed by United States registered
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mail, return receipt requested, postage prepaid, addressed as follows:
IF TO XXXXX X. XXXXXX:
Xxxxx X. Xxxxxx
00 Xxxxxxx Xx.
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
IF TO THE COMPANY:
Xxxxxxx Xxxxxx
The Translation Group, Ltd.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
WITH A COPY TO
Xxxxxxx X. Xxxxxx, Esquire
00 X. Xxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
or to such other address as a party may have furnished to the other in writing
in accordance herewith, except that notices or change of address shall be
effective only upon receipt.
14. EXPENSES OF LITIGATION; ARBITRATION. The Company and Xxxxx X.
Xxxxxx each hereby agree that in connection with any litigation or arbitration
arising under this Agreement that proceeds to judgment or an award, the losing
party of any claim arising thereunder shall pay to the prevailing party all of
its costs and expenses incurred in connection with the prosecution or defense of
such claim including, but not limited to, any and all reasonable attorneys'
fees.
(a) Xxxxx X. Xxxxxx represents to the best of his knowledge that
Lernout & Hauspie Speech Products ("L & H") will not assert its rights under the
"Invention, Non-Disclosure and Non-Competition Agreement" dated June 10, 1998,
between Xxxxx X. Xxxxxx and L & H ("Non-Competition Agreement") to adversely
challenge this Agreement and those things contemplated herein. However, if
during the term of this Agreement L & H does assert its rights under said
Non-Competition Agreement the Company will indemnify Xxxxx X. Xxxxxx against
loss of unearned and unpaid salary under this Agreement and will pay all costs
and expenses which
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Xxxxx X. Xxxxxx incurs arising out of a breach of said Non-Competition
Agreement. Provided that the Company shall in its sole discretion have the right
to resolve, settle and otherwise control all aspects of any litigation commenced
by L & H against Xxxxx X. Xxxxxx arising from said Non- Competition Agreement.
Provided further that Xxxxx X. Xxxxxx will promptly seek alternative employment
and avail himself to the benefits of paragraph 4(c) of said Non-Competition
Agreement, and the Company shall be entitled to a credit for all compensation
earned by way of alternative employment and/or benefits paid under aforesaid
paragraph 4(c).
15. ARBITRATION. Any and all controversies, claims or disputes arising
out of or relating to this Agreement, or the breach thereof (other than as
covered in Section 12), shall be solely and exclusively settled by arbitration
in accordance with the Commercial Arbitration Rules then in effect (the
"Arbitration Rules") of the American Arbitration Association ("AAA"). The
arbitration shall take place in Haddonfield, New Jersey, and the arbitrator
shall be appointed by the mutual consent of the parties. The arbitrator
appointed by the parties or such panel, as the case may be, is sometimes
referred to herein as the "Arbitrator." Each party hereby irrevocably consents
to the sole and exclusive jurisdiction and venue of the state and Federal courts
located in the State of New Jersey in connection with any matter arising out of
the foregoing arbitration or this Agreement, including but not limited to
confirmation of the award rendered by the Arbitrator and enforcement thereof by
entry of judgment thereon or by any other legal remedy. Service of process in
connection with any such arbitration or any proceeding to enforce an arbitration
award may be made in the manner set forth in Section 13 of this Agreement or in
any other manner permitted by applicable law.
16. MISCELLANEOUS.
(a) This Agreement sets forth the entire understanding between the
parties as to the subject matter hereof and supersedes all prior agreements,
arrangements and understandings, written or oral, between them as to such
subject matter. There have been no promises, statements, representations or
other inducements to this Agreement other than as set forth herein.
(b) This Agreement may not be amended, nor may any provision be
modified or waived, except by an instrument duly executed by both parties.
(c) Either party's failure at any time to require performance of
any of the terms, provisions or conditions hereof shall not affect such party's
right thereafter to enforce this Agreement or be deemed a waiver of any
succeeding breach.
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(d) Paragraph headings contained in this Agreement have been
inserted for convenience or reference only, are not to be considered a part of
this Agreement and shall not affect the interpretation of any provision hereof.
(e) This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey applicable to contracts made and to be
wholly performed within said State.
(f) This Agreement shall be binding upon and inure to the benefit
of the Company and its successors and assigns, including without limitation, any
corporation which may acquire all or substantially all of the Company's assets
and business or with or into which the Company may be consolidated or merged.
This Agreement calls for the provision of personal services and, accordingly,
shall not be assignable by Xxxxx X. Xxxxxx. However, the restrictions of Section
9 shall be binding upon Xxxxx X. Xxxxxx'x heirs, executors, administrators and
legal representatives. Provided that all of Xxxxx X. Xxxxxx'x incentive stock
options, to the extent the same are not already vested, shall fully vest in the
event that any corporation acquires all or substantially all of the Company's
assets and business including a consolidation or merger.
(g) If any provision of this Agreement or the application of any
provision to this Agreement is declared to be illegal, invalid or otherwise
unenforceable by a court of competent jurisdiction, the remainder of this
Agreement shall not be affected except to the extent necessary to delete such
illegal, invalid or unenforceable provision, unless such declaration shall
substantially impair the benefit of the remaining portions of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the Company and
Xxxxx X. Xxxxxx as of the date first written above.
THE TRANSLATION GROUP, LTD. EMPLOYEE
BY:________________________ BY:_______________________________
Name: Xxxxx X. Xxxxxx, Employee
Title:
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