Exhibit 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement is made as of December 23, 1996 by and among
Lionbridge Technologies, Inc., a Delaware corporation (the "Company"), and Xxxx
X. Xxxxx (the "Executive").
RECITALS
1. It is currently contemplated that the Company will acquire (the
"Acquisition") the international localization service business currently
conducted by Stream International Holdings, Inc. pursuant to a Stock and Asset
Purchase Agreement (the "Purchase Agreement") dated November 27, 1996, as
amended.
2. The operations of the Company following the Acquisition will be a
complex matter requiring direction and leadership in a variety of areas.
3. The Executive has certain experience and expertise that qualify him
to provide the direction and leadership required by the Company and its
subsidiaries.
4. Subject to the terms and conditions hereinafter set forth, the
Company therefore wishes to employ the Executive as its Chairman and the
Executive wishes to accept such employment.
AGREEMENT
Now, therefore, the parties hereto hereby agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions set forth in this
Agreement, the Company offers and the Executive hereby accepts employment,
effective as of the closing date (or, if applicable, the first closing date) of
the Acquisition (such date being referred to herein as the "Effective Date").
2. TERM. Subject to earlier termination as hereafter provided, the
Executive shall be employed hereunder for an original term commencing on the
Effective Date and ending on a date two (2) years from the date first set forth
above, which term shall be automatically extended thereafter for successive
terms of one year each, unless either party provides notice to the other at
least three months prior to the expiration of the original or any extension term
that this Agreement is not to be extended. The term of this Agreement, as from
time to time modified and in effect is hereafter referred to as "the term of
this Agreement" or "the term hereof." If the Purchase Agreement is terminated
prior to the closing, this Agreement shall automatically terminate and be
without further force or effect.
3. CAPACITY AND PERFORMANCE.
3.1. OFFICES. During the term hereof, the Executive shall
serve the Company as President and Chief Executive Officer of the Company. In
such capacity, the Executive will be responsible for day to day operations of
the Company. In such capacity, the Executive will be responsible for day to day
operations of the Company as well as the Company's strategic direction. In
addition, for so long as the Executive is employed by the Company and without
further compensation, if so elected or appointed from time to time, the
Executive shall serve as Chairman of the Company's Board of Directors (the
"Board") and as a director of one or more of the Company's subsidiaries. The
Executive shall be subject to the direction of, and shall have such other
powers, duties and responsibilities consistent with the Executive's position as
President and Chief Executive Officer as may from time to time be prescribed by,
the Board.
3.2. PERFORMANCE. During the term hereof, the Executive shall
be employed by the Company and shall perform and discharge (faithfully,
diligently and to the best of his ability) such duties and responsibilities on
behalf of the Company and its subsidiaries as may be designated from time to
time by the Board which are consistent with the Executive's position as
President and Chief Executive Officer. The Executive shall devote substantially
all of his time, attention and energies to the business of the Company and shall
not engage in any other business activity or activities, whether or not such
business activity is pursued for gain, profit or other pecuniary advantage,
that, in the judgment of the Board may conflict with the proper performance of
the Executive's duties under this Agreement.
4. COMPENSATION AND BENEFITS. As compensation for all services
performed by the Executive under this Agreement and subject to Section 5 hereof
and performance of the Executive's duties and of the obligations of the
Executive to the Company and its subsidiaries, pursuant to this Agreement or
otherwise:
4.1. BASE SALARY. During the term hereof the Company shall pay
the Executive a base salary at the rate of $225,000 per year, payable in
accordance with the payroll practices of the Company for its executives and
subject to increase from time to time (based on an annual review) by the Board
in its sole discretion. Such base salary, as from time to time increased, is
hereafter referred to as the "Base Salary." The Base Salary payable to the
Executive in 1996 shall be prorated for the period from the Effective Date
through December 31, 1996 and for any subsequent period of service less than one
full year.
4.2. BONUS COMPENSATION. During the term hereof, the Company
from time to time shall pay the Executive an annual bonus (the "Bonus") of up to
100% of Base Salary per year. The annual bonus in respect of 1997 operations
will be calculated and payable in accordance with the incentive bonus plan to be
determined and approved by the Board of Directors.
4.3. STOCK/OPTIONS.
4.3.1. Simultaneously herewith, the Executive is
purchasing 701,454 shares of Series A Preferred Stock of the Company at
a purchase price of $ 1.00 per share pursuant to a Preferred Stock
Purchase Agreement dated as of the date hereof.
4.3.2. The Company shall establish the 1996 Stock
Plan (the "PLAN") for management/employees of the Company. The Company
shall grant to the Executive, pursuant to the Plan, options to purchase
a total of 2,252,293 shares of Common Stock at an exercise price of
$.10 per share. The options granted to the Executive as contemplated
hereby will become exercisable (a) 25% on the first anniversary of the
date hereof and (b) thereafter six semi-annual installments on the
18-month (12.5%), two year (12.5%), 30-month (12.5%), three year
(12.5%), 42-month (12.5%) and four year (12.5%) anniversaries of the
date hereof, subject to acceleration of vesting in accordance with the
terms of the Plan as in effect on the date of this Agreement. In the
event of (i) a merger or sale of all or substantially all of the assets
or stock of the Company following which the Executive is not the Chief
Executive Officer of the parent of the surviving entity or, if none,
the surviving entity or (ii) Advent International Corp. and/or Xxxxxx
Xxxxxxx Venture Partners, and/or each of their respective affiliated
entities, dispose of more than 50% of the aggregate amount of capital
stock owned by all them as the date the Acquisition is consummated,
then 50% of the unvested options held by the Executive at that time
shall vest and become exercisable.
4.3.3. Prior to issuing any shares or options to the
Executive, the Company may require that the Executive provide such
representations regarding the Executive's sophistication and investment
intent and other matters as the Company may reasonably request. None of
the Company's securities will be registered under applicable securities
laws for the indefinite future and there will be substantial
restrictions on resale imposed by the Company's corporate charter, the
stockholders agreement and applicable law.
4.3.4. (a) Upon any termination of the Executive's
employment or after expiration of this Agreement, the Company may, but
shall have no obligation to, repurchase at a price equal to the Fair
Market Value (as defined and determined pursuant to the Plan) up to all
of the shares issued or issuable by the Company to the Executive upon
his exercise of any vested options granted to the Executive pursuant to
Section 4.3.2. or granted by the Company to the Executive after the
date hereof.
(b) The Company shall exercise any repurchase
election pursuant to subsection (a) by notice to the Executive within
90 days of termination of the Executive's employment. Notwithstanding
anything to the contrary contained herein, the repurchase right of the
Company set forth in this Section 4.3.4 shall
terminate upon the completion of a firm commitment underwritten initial
public offering of the Company's Common Stock.
4.4. VACATIONS. During the term hereof, the Executive shall be
entitled to five (5) weeks of vacation per annum, to be taken at such times and
intervals as shall be determined by the Executive in his reasonable discretion.
The Executive may not accumulate or carry over from one calendar year to another
any unused, accrued vacation time. The Executive shall not be entitled to
compensation for vacation time not taken.
4.5. OTHER BENEFITS. During the term hereof and subject to any
contribution therefor generally required of executives of the Company, the
Executive shall be entitled to participate in all employee benefits plans (other
than any profit sharing or bonus compensation programs) from time to time
adopted by the Board and in effect for executives of the Company generally,
except to the extent such plans are in a category of benefit otherwise provided
to the Executive. Such participation shall be subject (i) the terms of the
applicable plan documents, (ii) generally applicable Company policies and (iii)
the discretion of the Board or any administrative or other committee provided
for in or contemplated by such plan. The Company may alter, modify, add to or
delete its employee benefits plans at any time as the Board, in its sole
judgment, determines to be appropriate.
4.6. BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all reasonable business expenses incurred or paid by the Executive
in the performance of his duties and responsibilities hereunder, subject to (i)
any expense policy of the Company set by the Board from time to time, and (ii)
such reasonable substantiation and documentation requirements as may be
specified by the Board from time to time. The Company shall also reimburse the
Executive for all out of pocket expenses incurred by the Executive in connection
with the formation of the Company and the Acquisition (including travel and
administrative expenses) up to a maximum of $35,000.
4.7. MINIMUM GUARANTEED SEVERANCE. In the event Executive's
employment: with the Company terminates other than by the Company for Cause,
Executive will be entitled to twelve (12) monthly severance payments, each in an
amount equal to the Executive's monthly base compensation at the time of such
termination (i.e. 1/12th of the Base Salary).
5. TERMINATION OF EMPLOYMENT AND SEVERANCE BENEFITS. Notwithstanding
the provisions of Section 2 hereof, the Executive's employment hereunder shall
terminate prior to the expiration of the term of this Agreement under the
following circumstances:
5.1. RETIREMENT OR DEATH. In the event of the Executive's
retirement or death during the term hereof, the Executive's employment hereunder
shall immediately and automatically terminate. In the event of the Executive's
retirement after the age of sixty-five with the prior consent of the Board or
death during the term hereof, the Company shall pay to the Executive (or in the
case of death, the Executive's designated beneficiary or, if no beneficiary has
been designated by the Executive, to his estate) any Base Salary earned but
unpaid through the date of such retirement or death, any Bonus for the fiscal
year preceding the year in which such retirement or death occurs that was
earned but has not yet been paid and, at the times the Company pays it
executives bonuses in accordance with its general payroll policies, an amount
equal to that portion of any Bonus earned but unpaid during the fiscal year
of such retirement or death (pro-rated based on a formula, the denominator of
which shall be 365 and the numerator of which shall be the number of days
during the fiscal year of such retirement or death in which the Executive was
employed by the Company).
5.2. DISABILITY.
5.2.1. The Company may terminate the Executive's
employment hereunder, upon notice to the Executive, in the event that
the Executive becomes disabled during his employment hereunder through
illness, injury, accident or condition of either as physical or
psychological nature and, as a result, is unable to perform
substantially all of his duties and responsibilities hereunder for an
aggregate of ninety (90) days, whether or not consecutive, during any
period of three hundred and sixty-five (365) consecutive calendar days.
5.2.2. The Board may designate another employee to
act in the Executive's place during any period of the Executive's
disability. Notwithstanding any such designation, the Executive shall
continue to receive the Base Salary in accordance with Section 4.1 and
to receive benefits in accordance with Section 4.5, to the extent
permitted by the then-current terms of the applicable benefit plans,
until the Executive becomes eligible for disability income benefits
under any disability income plan maintained by the Executive.
5.3. BY THE COMPANY FOR CAUSE. The Company may terminate the
Executive's employment hereunder for Cause at any time upon notice to the
Executive setting forth in reasonable detail the nature of such Cause. Upon the
giving of notice of termination of the Executive's employment hereunder for
Cause, the Company shall have no further obligation or liability to the
Executive relating to the Executive's employment hereunder, or the termination
thereof, other than for Base Salary earned but unpaid through the date of
termination. Without limiting the generality of the foregoing, the Company shall
have no further obligation to pay any Bonus amounts for any year(s) in the event
of termination of employment pursuant to this Section 5.3, whether or not earned
but unpaid in respect of a fiscal year preceding the year in which such
termination occurs.
5.4. BY THE COMPANY OTHER THAN FOR CAUSE. The Company may
terminate the Executive's employment hereunder other than for Cause at any time
upon notice to the Executive. In the event of such termination, then the Company
shall pay the Executive (i) Base Salary earned but unpaid through the date of
termination plus (ii) the amounts specified in Section 4.7 plus (iii) any unpaid
portion of any Bonus for the fiscal year preceding the year in which such
termination occurs that was earned but has not been paid.
5.5. POST-AGREEMENT EMPLOYMENT. In the event the Executive
remains in the employ of the Company or any of its Affiliates following
termination of this Agreement, by the expiration of the term hereof or
otherwise, then such employment shall be at will, unless otherwise agreed in
writing.
6. EFFECT OF TERMINATION. The provisions of this Section 6 shall apply
in the event of termination due to the expiration of the term, pursuant to
Section 5 or otherwise.
6.1. PAYMENT IN FULL. Payment by the Company of any Base
Salary, Bonus and other amounts and contributions to the cost of the Executive's
continued participation in the Company's benefits plans that may be due the
Executive under the applicable termination provision of Section 5 shall
constitute the entire obligation of the Company to the Executive, except that
nothing in this Section 6.1 is intended or shall be construed to affect the
rights and obligations of the Company and its Affiliates, on the one hand, and
the Executive, on the other, with respect to any loans, stock pledge
arrangements, option plans or other agreements to the extent said rights or
obligations survive termination of employment under the provision of documents
relating thereto. Acceptance by the Executive of performance by the Company
shall constitute full settlement of any claim that the Executive might otherwise
assert against the Company, its Affiliates or any of their respective
shareholders, partners, directors, officers, employees or agents relating to
such termination.
6.2. TERMINATION OF BENEFITS. Except for medical and dental
insurance coverage continued pursuant to Section 5.2 hereof and any right of
continuation of health coverage to the extent provided by Sections 601 through
608 of ERISA, benefits shall terminate pursuant to the terms of the applicable
benefit plans based on the date of termination of the Executive's employment
without regard to any continuation of Base Salary or other payments to the
Executive following such date of termination pursuant to Section 5.
6.3. SURVIVAL OF CERTAIN PROVISIONS. Provisions of this
Agreement shall survive any termination if so provided herein or if necessary or
desirable fully to accomplish the purposes of such provision, including, without
limitation, the obligations of the Executive under the terms of the
Non-Competition Agreement (the "Non-Competition Agreement") and the Employee
Non-Disclosure and Developments Agreement (the "Non-Disclosure Agreement"), of
even date herewith, by and between the Executive and the Company. The obligation
of the Company to make payments to or on behalf of the Executive under Sections
4.7 or 5.4 hereof is expressly conditioned upon the Executive's continued full
performance of obligations under the terms of the Non-Competition Agreement and
the Non-Disclsoure Agreement. The Executive recognizes that, except as expressly
provided in Section 4.7 or 5.4, no compensation is earned after termination of
employment.
7. CONFLICTING AGREEMENTS. The Executive hereby represents and warrants
that the execution of this Agreement and the performance of his obligations
hereunder will not breach or be in conflict with any other agreement to which or
by which the Executive is a party or is bound and that the Executive is not now
subject to any covenants against competition or
similar covenants that would affect the performance of his obligations
hereunder. The Executive will not disclose to or use on behalf of the Company or
any of its Affiliates any proprietary information of a third party without such
party's consent.
8. DEFINITIONS. Capitalized terms not defined herein shall have the
meanings assigned to them in the Purchase Agreement; and the following terms
shall have the following meanings:
8.1. AFFILIATES. "Affiliates" means all persons and entities
directly or indirectly controlling, controlled by or under common control with
the Company.
8.2. CAUSE. The following events or conditions shall
constitute "Cause" for termination: (i) fraud, embezzlement or other act of
dishonesty by the Executive that causes material injury to the Company or any of
its Affiliates, (ii) conviction of, or plea of nolo contendere to, any felony
involving dishonesty or moral turpitude, or (iii) a failure by the Executive to
take or refrain from taking any corporate action consistent with his duties as
the President and Chief Executive Officer as specified in written directions of
the Board following receipt by the Executive of such written directions which
such failure is not cured within 30 days after written notice that failure to
take or refrain from taking such action shall constitute "Cause" for purposes
hereof.
8.3. ERISA. "ERISA" means the federal Employee Retirement
Income Security Act of 1974 or any successor statute, and the rules and
regulations thereunder, and in the case of any referenced section thereof any
successor section thereto, collectively and as from time to time amended and in
effect.
8.4. PERSON. "Person" means an individual, a corporation, an
association, a partnership, a limited liability company, an estate, a trust and
any other entity or organization.
9. WITHHOLDING. All payments made by the Company under this Agreement
shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law. In addition, the Company shall be entitled to
reduce any payments by the Company of Base Salary or Bonus under this Agreement
by the amount of any tax or other amounts required to be withheld by the Company
under applicable law with respect to deemed compensation arising out of or
related to imputed interest on any loans by the Company to the Executive.
10. MISCELLANEOUS.
10.1. ASSIGNMENT. Neither the Company nor the Executive may
make any assignment of this Agreement or any interest herein (provided, however,
that nothing contained herein shall be construed to place any limitation or
restriction on the transfer of the Company' s Common Stock in addition to any
restrictions set forth in the Company's Restated Certificate of Incorporation or
any stockholder agreement applicable to the holders of such
shares), by operation of law or otherwise, without the prior written consent of
the other; provided, however, that the Company may assign its rights and
obligations under this Agreement without the consent of the Executive in the
event that the Company shall hereafter affect a reorganization, consolidate
with, or merge into, any other Person or transfer all or substantially all of
its properties or assets to any other Person, in which event such other person
shall be deemed the "Company" hereunder for all purposes. This agreement shall
inure to the benefit of and be binding upon the Company and the Executive, and
their respective successors, executors, administrators, heirs and permitted
assigns.
10.2. SEVERABILITY. If any portion or provision of this
Agreement shall to any extent be declared illegal or unenforceable by a court of
competent jurisdiction, then the application of such provision in such
circumstances shall be deemed modified to permit its enforcement to the maximum
extent permitted by law, and both the application of such portion or provision
in circumstances other than those as to which it is so declared illegal or
unenforceable and the remainder of this Agreement shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
10.3. WAIVER; AMENDMENT. No waiver or any provision hereof
shall be effective unless made in writing and signed by the waiving party. The
failure of either party to require the performance of any term or obligation of
this Agreement, or the waiver by either party of any breach of this Agreement,
shall not prevent any subsequent enforcement of such term or obligation or be
deemed a waiver of any subsequent breach. This Agreement may be amended or
modified only by a written instrument signed by the Executive and the Company.
10.4. NOTICES. Any and all notices, requests, demands and
other communications provided for by this Agreement shall be in writing and
shall be effective when delivered in person or two business days after being
deposited in the United States mail, postage prepaid, registered or certified,
and addressed (a) in the case of the Executive, to:
Xx. Xxxx X. Xxxxx
President
Lionbridge Technologies, Inc.
000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
or, (b) in the case of the Company, at its principal place of business and to
the attention of Board of Directors; or to such other address as either party
may specify by notice to the other.
10.5. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the terms and conditions of the
Executive's employment and, except as otherwise provided herein, supersedes all
prior communications, agreements
and understandings, written or oral, with the Company or any of its Affiliates
or predecessors with respect to the terms and conditions of the Executive's
employment.
10.6. HEADINGS. The headings and captions in this Agreement
are for convenience only and in no way define or describe the scope or content
of any provision of this Agreement.
10.7. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be original and both of which together shall
constitute one and the same instrument.
10.8. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic substantive laws of The Commonwealth
of Massachusetts without giving effect to any choice or conflict of laws
provision or rule that would cause the application of the domestic substantive
laws of any other jurisdiction.
10.9. CONSENT TO JURISDICTION. Each of the Company and the
Executive, by its or his execution hereof, (i) hereby irrevocably submits to the
exclusive jurisdiction of the state courts of The Commonwealth of Massachusetts
for the purpose of any claim or action arising out of or based upon this
Agreement or relating to the subject matter hereof, (ii) hereby waives, to the
extent not prohibited by applicable law, and agrees not to assert by way of
motion, as a defense or otherwise, in any such claim or action, any claim that
it is not subject personally to the jurisdiction of the above-named courts, that
its property is exempt or immune from attachment or execution, that any such
proceeding brought in the above-named courts is improper, or that this Agreement
or the subject matter hereof may not be enforced in or by such court, and (iii)
hereby agrees not to commence any claim or action arising out of or based upon
this Agreement or relating to the subject matter hereof other than before the
above-named courts nor to make any motion or take any other action seeking or
intending to cause the transfer or removal of any such claim or action to any
court other than the above-named courts whether on the grounds of inconvenient
forum or otherwise. Each of the Company and the Executive hereby consents to
service of process in any such proceeding in any manner permitted by
Massachusetts law, and agrees that service of process by registered or certified
mail, return receipt requested, at its address specified pursuant to Section
10.4 hereof is reasonably calculated to give actual notice.
IN WITNESS WHEREOF, this Agreement has been executed by the Company, by
its duly authorized representative, and by the Executive, as of the date first
above written.
THE COMPANY
LIONBRIDGE TECHNOLOGIES, INC.
By:
-----------------------------
Name:
----------------------------
Title: President
THE EXECUTIVE
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Xxxx X. Xxxxx
