EMPLOYMENT AGREEMENT
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Employment Agreement ("Agreement") dated as of August 19, 1997 by and between
INNODATA CORPORATION, a Delaware corporation with an office at 00 Xxxxxxxx
Xxxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Company"), and XXXX X. XXXXXXX, with a
residence at 000 Xxxx 00xx Xxxxxx, Xxx. 0, Xxx Xxxx, XX 00000 (the
"Executive").
W I T N E S E T H
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1. Employment. The Company hereby employs Executive as President and CEO
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of the Company for and during the term hereof. In a separate letter, the
Chairman of the Board has committed to vote shares owned and controlled by him
toward Executive continuing to serve as Director of the Company for and during
the term hereof. The Executive hereby accepts employment under the terms and
conditions set forth in this Agreement.
2. Duties of Executive. The Executive shall have such duties, consistent
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with his office, as may be reasonably assigned to him from time to time by the
Board of Directors, and he shall report directly to the Board of Directors.
3. Full Business Time. The Executive agrees to devote his full business
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time and services to the faithful performance of his duties hereunder. During
the term of his employment, Executive shall engage in no other business
activities whatsoever during normal working hours and shall perform his
services from the premises of the Company.
4. Term. The term of this Agreement shall commence on September 15,
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1997 and end on September 14, 2000. Either party may elect to terminate as of
September 15 of any year by giving written notice to the other party prior to
May 15 of that year. If the Company terminates Executive's employment as of
September 15 of any year, then Executive will continue to receive his base
salary at the rate then in effect through November 15 of that year.
5. Compensation.
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(a) The Company shall pay the Executive a base annual salary at the rate
of $200,000 per annum.
(b) Mutually agreed-upon goals and expectations for each six month period
shall be established in writing within 30 days of the commencement of the term
hereof and thereafter in conjunction with semi-annual reviews conducted by May
15 and September 1 of each year commencing in 1998. Bonuses, if any, will be
at the discretion of the Board.
(c) Salary payments shall be made in monthly payroll installments. Salary
and bonus payments, if any, shall be subject to deduction for applicable U.S.
Federal, State and local withholding taxes.
(d) Upon signing of this Agreement, Executive will be granted five-year
options, exercisable upon the earliest to occur of (i) five years after date
of grant; (ii) the date the market price is at least $2.50 for ten consecutive
trading days; or (iii) in the event of a sale of the Company as contemplated
in Subparagraph (g) hereof in which the sale price is above $2.50 per share,
to purchase 30,000 shares of the Company's Common Stock at $1.00 per share;
50,000 at $2.00 per share; 70,000 at $3.00 per share; 90,000 at $4.00 per
share; and 100,000 at $7.00 per share.
(e) (i) On each December 31 during the term of this Agreement, the
Company shall grant to the Executive a five-year option to purchase 31,000
shares of the Company's Common Stock at the lowest market price of a share of
Common Stock during the 60 days preceding such date of grant.
(ii) Options granted hereunder shall be Nonstatutory. The vesting and
other provisions and restrictions of such options shall conform to the option
award letter contained as Exhibit A hereto (which provides that such options
shall be subject to the same terms and conditions as if it were granted under
the Company's 1995 Stock Option Plan (a copy of which is attached as Exhibit B
hereto).
(f) An automobile allowance of $1,300 per month during the term of the
Agreement.
(g) In the event a sale of the Company (third party or parties in a series
of related transactions acquires more than 50% of Company) is made while
Executive is employed or within the 90 day period after termination of
employment (including termination due to death or disability, but specifically
not including termination "for cause"), Executive will receive $50,000 for
each full dollar of sale price above $2.00 per share.
6. Employment Benefits.
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(a) While he is an employee of the Company, the Company shall provide the
Executive and all dependents of the Executive with group medical and dental
insurance in amounts of coverage available to senior executives of the Company
with participation paid on the same terms as other senior executives. However,
if the Executive does not meet the requirements of the Company's insurance
underwriters, the Company will not provide such insurance but will instead pay
to the Executive an amount equal to the premium which the Company would have
paid had the Executive met such requirements and had he participated in such
insurance on the same terms as other senior executives
(b) The Executive shall be entitled to a paid vacation each year during
the term of this Agreement equivalent to four weeks of time, which vacation
shall be taken by the Executive in accordance with the business requirements
of the Company at the time and its personnel policies then in effect relative
to this subject. Two week's vacation per year may be carried over from one
year to the next.
(c) The Executive shall be entitled to 401(k) participation to the extent
such participation is made available to other senior executives, and he shall
also be entitled to whatever perquisites and pension, benefit and retirement
plans are made available to any senior officer of the Company.
(d) The Executive shall be entitled to reimbursement for his normal travel
expenses on behalf of the Company and for travel for Executive's wife and
child where trip is overseas and for a duration exceeding two weeks, and at
other times when he reasonably elects to have them accompany him.
7. Termination. Notwithstanding any other provision in this Agreement:
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(a) Death. If the Executive dies during the term of this Agreement, this
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Agreement shall automatically terminate as of the date of the Executive's
death.
(b) Disability. If the Executive is unable to perform his duties
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hereunder as a result of any physical or mental disability which continues (i)
for 90 consecutive days or (ii) for 120 days in any 365 day period, then the
Company may terminate this Agreement upon 30 days' written notice to
Executive, provided that Executive's salary shall continue until the earlier
to occur of (x) the date on which he commences receiving disability insurance
(if any), or (y) 90 days after the date of termination.
(c) Termination by the Company for Cause. The Company may by action of
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the Board (of which the Executive shall have not less than 15 days' prior
notice and at which the Executive, but not his attorney, shall be entitled to
be heard) terminate the Executive's employment for cause. Termination "for
cause" shall mean termination upon written notification to the Executive for
one or more of the following reasons:
(i) Conviction by a court of competent jurisdiction in the United States
of a felony or a crime involving the Company; or
(ii) Persistent and willful refusal to perform duties or willful
misconduct with respect to obligations under this Agreement, after notice to
the Executive of the particular details thereof and a period of thirty (30)
days to correct such refusal or misconduct, and the failure of such refusal or
misconduct to be cured at the end of such period, provided that no such cure
period shall apply if such refusal or misconduct is not susceptible to cure,
and provided further that if any such refusal or misconduct is not susceptible
to cure within such 30-day period such period shall be extended for not more
than 180 additional days provided that during such period the Executive is
diligently prosecuting such cure.
(d) Upon resignation of Executive or upon each termination aforesaid,
Executive or his estate shall be entitled to receive his base salary to the
date of resignation or termination and any amounts owed under Paragraph 5(g)
hereof.
(e) (i) The Company may terminate this Agreement without cause at any
time, provided that Executive shall be entitled to receive (1) the greater of
(i) his then current monthly base salary in normal payroll installments
throughout the balance of the then current term of this Agreement as if he
were still employed and (ii) his then current monthly base salary in normal
payroll installments for six months after date of termination as if he were
still employed, and (2) COBRA insurance throughout the balance of the then
current term of this Agreement will be provided by the Company under the same
financial terms as similar insurance is provided under Paragraph 6(a) during
the term hereof.
(ii) The Executive is deemed to have been terminated without cause if the
Company breaches any of its material obligations under this Agreement, if the
Company purports to terminate this Agreement when not permitted hereunder, if
the Company reduces Executive's compensation below the amount provided for in
this Agreement, or if the Company assigns to the Executive duties which are
not consistent with his office set forth in Section 1, but in each case only
if within 90 days after the occurrence of such action or event, Executive
gives notice to the Company of his intention to terminate his employment
hereunder, the Company does not revoke or cure any such action or event within
60 days after the date of such notice, and Executive resigns his employment
within 30 days thereafter.
8. Confidentiality Agreement and Ownership of Information.
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(a) During Executive's employment and for three years after Executive's
employment (except, during the course of his employment, if in furtherance of
the Company's business):
(i) Executive will not disclose to any person or entity, without the
Company's prior consent, any confidential or proprietary information, whether
prepared by him or others.
(ii) Executive will not directly or indirectly use any such information
other than as directed by the Company in writing.
(iii) Executive will not remove confidential or proprietary information
from the premises of the Company without the prior written consent of the
Company.
(b) (i) Upon termination of his employment for whatever reason, with
or without cause, Executive will promptly deliver to the Company all originals
and copies (whether in note, memo or other document form or on video, audio or
computer tapes or discs or otherwise) of (1) confidential or proprietary
information that is in his possession, custody or control, whether prepared by
him or others, and (2) all records, designs, patents, plans, manuals,
memoranda, lists and other property delivered to Executive by or on behalf of
the Company or by its customers (including, but not limited to, custo-mers
obtained for the Company by Executive), and all records com-piled by the
Executive which pertain to the business of the Company, whether or not
confidential. All such material shall be and remain the property of the
Company and shall be subject at all times to its discretion and control.
(ii) Information shall not be deemed confidential if:
(A) such information was available to the public prior to disclosure
thereof by Executive, or
(B) such information shall, other than by an act or omission on
Executive's part, be or become available to the public or lawfully made
available by a third party without restrictions as to disclosure.
(iii) Confidential information may be disclosed where required by law,
provided that Executive first gives to the Company not less than 15 days'
prior notice of such disclosure and affords to the Company the reasonable
opportunity to obtain protective or similar orders, where available.
9. Non-Compete Provisions
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(a) During the Limitation Period (as hereinafter defined), Executive will
not anywhere in the world directly or indirectly be employed by (i) any person
or entity in a division or other department which competes to any material
extent with the business the Company shall be conducting at the time of
termination or (ii) any person or entity the major business of which is
competitive with the Company, nor will Executive directly or indirectly own
any interest in any such person or entity or render to it any consulting,
brokerage, contracting, or other services. The foregoing shall not prohibit
Executive from owning not in excess of 2% of the outstanding stock of any
company which is a reporting company under the Securities Act of 1934.
(b) During the Limitation Period, Executive will not anywhere directly or
indirectly (whether as an owner, partner, employee, consultant, broker,
contractor or otherwise, and whether personally or through other persons)
approve, solicit or retain, or assist in the employment or retention (whether
as an employee, consultant or otherwise) of, any person who was an employee of
the Company at any time during the 90-day period preceding the termination of
Executive's employment.
(c) The "Limitation Period" means the period during which Executive is
actually employed by the Company or compensated as such (but not including any
time during which Executive is being paid compensation in the nature of
severence as contemplated under Paragraph 4 or Paragraph 7 (e)) and the
following number of months:
(i) two months after initial year of this Agreement if employment is
terminated by the Company prior to May 15, 1998;
(ii) six months if the Executive's employment is terminated by his
resignation or "for cause" at any time prior to September 15, 1998; and
(iii) 12 months if the Executive's employment is terminated after
September 15, 1998 by his resignation or if Executive is dismissed "for
cause."
(d) Since monetary damages may be inadequate and the Company will be
irreparably damaged if the provisions of Section 8 and this Section 9 are not
specifically enforced, the Company shall be entitled, among other remedies to
an injunction restraining any violation of any such provision (without any
bond or other security being required) by Executive and by any person or
entity to whom Executive provides or proposes to provide any services in
violation of such provision.
(e) If any provision contained in this Section is determined to be void,
illegal or unenforceable, in whole or in part, then the other provisions
contained herein shall remain in full force and effect as if the provision
which was determined to be void, illegal, or unenforceable had not been
contained herein. The courts enforcing this Section shall be entitled to
modify the duration and scope of any restriction contained herein to the
extent such restriction would otherwise be unenforceable, and such restriction
as modified shall be enforced.
10. Inventions. Executive shall disclose promptly to the Company any and
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all inventions, improve-ments and valuable discoveries, whether patentable or
not, which are conceived or made by Executive solely or jointly with another
during his employment and which are related to the business or activities of
the Company or which Executive conceives as a direct result of his employment
by the Company, and Executive hereby assigns and agrees to assign all his
interests therein to the Company or its nominee. Whenever request-ed to do so
by the Company, Executive shall execute any and all applications, assignments
or other instruments that the Company shall deem necessary to apply for and
obtain Letters Patent of the United States or any foreign country or to
otherwise protect the Company's interest therein.
11. Use of General Abilities. Nothing contained in this Agreement shall
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restrict Executive after the termination of his employment under this
Agreement from using his general business, organizational and financial
abilities, and the exertion of his efforts, in the prosecution and development
of any business, so long as the specific non-compete and other provisions of
this Agreement are not thereby violated.
12. General Provisions
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(a) Notices. All notices, requests, consents, and other communications
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under this Agreement shall be in writing and shall be deemed to have been
delivered (i) on the date personally delivered or (ii) one day after properly
sent by Federal Express, addressed to the respective parties at their address
set forth above. Either party hereto may designate a different address by
providing written notice of such new address to the other party hereto as
provided above. A copy of each notice to Executive shall be forwarded to
Xxxxxx X. Xxxxxxx, Esq., Xxxx & Xxxxxxx, 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000. A copy of each notice to the Company shall be forwarded to
Xxxxx X. Xxxxxx, Esq., at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. All such
copies shall be given in the manner provided for notices in this Section.
(b) Severability. If any provision contained in this Agreement is
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determined to be void, illegal or unenforceable, in whole or in part, then the
other provisions contained herein shall remain in full force and effect as if
the provision which was determined to be void, illegal, or unenforceable had
not been contained herein.
(c) Waiver, Modification and Integration. The waiver by any party hereto
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of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach of any party. This instrument
contains the entire agreement of the parties concerning employment and
supersedes any and all other agreements, either oral or in writing, between
the parties hereto with respect to the employment of the Executive by the
Company and contains all of the covenants and agreements between the parties
with respect to such employment in any manner whatsoever. This Agreement may
not be modified, altered or amended except by written agreement of all the
parties hereto.
(d) Binding Effect. This Agreement shall be binding upon and inure to the
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benefit of the Company and its successors and permitted assigns, and upon the
Executive, his heirs and his executors and administrators. Executive shall not
be entitled to assign his duties hereunder.
(e) Jurisdiction, Etc. All disputes hereunder shall be exclusively
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determined and resolved by the American Arbitration Association in New York
City or by other mutually agreeable arbitration panels. Service of process
shall be effective when forwarded in the manner provided for notices
hereunder. Trial by jury is waived. The prevailing party in any dispute shall
be entitled to recover reasonable attorney's fees and costs.
(f) Governing Law. This Agreement shall be governed by and construed in
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accordance the laws of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
INNODATA CORPORATION
By: __________________________
Its: Chairman of the Board
_____________________________
Xxxx X. Xxxxxxx
