Exhibit 99.1
TERMINATION AGREEMENT
This Termination Agreement (the "Agreement") is entered into as of
March 5, 2002 by and between ScanSoft, Inc., a Delaware corporation
("ScanSoft"), and Xxxxxx Xxxxxx ("Xxxxxx").
RECITALS
A. ScanSoft and Xxxxxx are parties to that certain Non-Competition and
Consulting Agreement, dated January 15, 2000 (the "Consulting Agreement").
B. The parties desire to accelerate the payment date for the cash bonus
pursuant to the Consulting Agreement and otherwise amend the payment schedule as
set forth below and to terminate the Consulting Agreement on the terms and
conditions set forth herein.
In consideration of the mutual covenants and agreements contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Payment of Consideration; Termination of Options.
(a) Section 2(a) of the Consulting Agreement. Section 2(a) of
the Consulting Agreement shall be amended so that the calculation of the Cash
Bonus shall be as of February 12, 2002. In full payment and satisfaction of the
Cash Bonus calculated as of February 12, 2002, (i) no later than one (1)
business day after the date of this Agreement, ScanSoft shall deliver to Xxxxxx
One Million Dollars ($1,000,000) by wire transfer, per Xxxxxx'x instructions;
and (ii) ScanSoft shall make eight consecutive quarterly payments to Xxxxxx in
accordance with the following schedule (the "Deferred Payments"): May 15, 2002;
August 15, 2002; November 15, 2002; February 15, 2003; May 15, 2003; August 15,
2003; November 15, 2003; and February 15, 2004. Each Deferred Payment shall be
in the amount of Four Hundred Nine Thousand Five Hundred Twenty-Nine Dollars
($409,529.00). By February 15, 2004, all outstanding Deferred Payments shall be
due and payable in full. Any Deferred Payment not made when due, whether on a
stated payment date, by acceleration or otherwise, shall bear interest at six
percent (6%) per annum. Any Deferred Payment may be prepaid in whole or in part
at any time, without premium or penalty.
(b) Events of Default. In the event that ScanSoft shall fail
to pay when due any Deferred Payment, then if such payment is not made within
five (5) business days of the due date, then Xxxxxx may, on five (5) business
days notice to ScanSoft, declare all of the Deferred Payments to be immediately
due and payable, unless ScanSoft cures the default prior to the expiration of
such five (5) business day notice period. In addition, in the event that (i)
ScanSoft files any petition or action for relief under any bankruptcy,
reorganization, insolvency or moratorium law or any other law for the relief of,
or relating to, debtors, now or hereafter in effect, or makes any assignment for
the benefit of creditors or takes any corporate action in furtherance of any of
the foregoing, (ii) an involuntary petition is filed against ScanSoft (unless
1.
such petition is dismissed or discharged within sixty (60) days under any
bankruptcy statute now or hereafter in effect, or a custodian, receiver,
trustee, assignee for the benefit of creditors (or other similar official) is
appointed to take possession, custody or control of any property of ScanSoft, or
(iii) there is a sale, lease or other disposition of all or substantially all of
the assets of ScanSoft; or a consolidation or merger of ScanSoft with or into
any other corporation or other entity or person; or any other corporate
reorganization in which the stockholders of ScanSoft immediately prior to such
consolidation, merger or reorganization, own less then 50% of ScanSoft's
outstanding voting power of the surviving entity, or its parent, following the
consolidation, merger or reorganization; or any transaction or series of related
transactions involving a person or entity, or a group of affiliated persons or
entities, in which in excess of fifty percent (50%) of ScanSoft's outstanding
voting power is transferred, then Xxxxxx may declare all of the Deferred
Payments to be immediately due and payable (except that, upon the occurrence of
an event described in clause (i) or (ii) above, all of the Deferred Payments
shall automatically be immediately due and payable).
(c) Section 2(d) of the Consulting Agreement. Section 2(d) of
the Consulting Agreement shall be amended so that the exercise period applicable
to Xxxxxx'x stock options referenced in Section 2(d) of the Consulting Agreement
(the "Options") shall be amended such that the last day the Options could be
exercised is the date of this Agreement. From and after that date, all such
outstanding and unexercised Options shall be deemed cancelled, terminated and of
no further force and effect. All other outstanding stock options issued by
ScanSoft to Xxxxxx shall remain in full force and effect, exercisable in
accordance with their terms.
2. Termination of Consulting Agreement. Effective as of the date of
Xxxxxx'x receipt of the $1,000,000 referred to in Section 1(a) above, the
Consulting Agreement is terminated, and all provisions of the Consulting
Agreement shall be null and void and of no further force and effect.
3. Release.
(a) ScanSoft and Xxxxxx, on behalf of themselves and each of
their past, present and future predecessors in interest, successors in interest,
assigns, insurers, parent companies, subsidiaries, officers, directors,
stockholders, partners, employees, agents, investors, and attorneys, and any
persons acting in concert with them (collectively, "Releasors"), hereby fully
and forever mutually release and discharge one another and their respective
Releasors from any and all claims, demands, liens, agreements, contracts,
covenants, debts, costs, expenses, damages, judgments, orders, and liabilities
of whatever kind or nature, in law, equity, or otherwise, whether now known or
unknown, vested or contingent, suspected or unsuspected, and whether or not
concealed or hidden, which have existed, or which do exist, which arise out of,
or are in any way connected with, the Consulting Agreement or any of the
transactions contemplated thereby (collectively, the "Claims"), other than
Claims arising in connection with this Agreement. This release and discharge
shall include, without in any way limiting the generality of the foregoing
language, any and all Claims pursuant to any federal, state, or local law or
cause of action, including any and all Claims connected with the transactions,
occurrences, acts, or omissions which were, or might, or could have been alleged
in connection with the Consulting Agreement, other than Claims arising in
connection with this Agreement and
2.
the transactions contemplated hereby, and including without limitation any and
all Claims for breach of contract (both express and implied), breach of a
covenant of good faith and fair dealing (both express and implied), fraudulent
inducement, negligent or intentional interference with contract or prospective
economic advantage; provided further however, that this Section 3 shall not in
any way release any claims, demands, liens, agreements, covenants, debts, costs,
expenses, damages, judgments, orders and liabilities arising in any way in
connection with the Xxxxxx Xxxxxx Executive Compensation and Benefits
Continuation Agreement, dated as of December 28, 1994, between Xxxxxx and Caere
Corporation (the "Compensation Agreement"), which shall remain in full force and
effect.
(b) Each party represents and warrants on its behalf, and on
behalf of its Releasors, that it is fully entitled to give this release.
(c) Each party acknowledges on its behalf, and on behalf of
its Releasors, that it has been advised by legal counsel and is familiar with
the provisions of Section 1542 of the California Civil Code 1542, which provides
as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM, MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
Each Releasor hereby waives and relinquishes all rights and
benefits that it may have under Section 1542 of the California Civil Code, or
the law of any other state or jurisdiction, or common law principle, to the same
or similar effect.
4. Governing Law. This Agreement shall be governed by the laws of the
State of California without regard to the conflicts of laws principles thereof.
5. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and neither party shall be liable or bound to the other in any manner by
any oral or written representations, warranties, covenants and agreements with
respect to the subject matter hereof except as specifically set forth herein.
Each party expressly represents and warrants that it is not relying on any oral
or written representations, warranties, covenants or agreements outside of this
Agreement.
6. Amendment and Waiver. This Agreement may be amended or modified only
upon the written consent of Xxxxxx and ScanSoft. The obligations of ScanSoft and
the rights of Xxxxxx under this Agreement may be waived only with the written
consent of Xxxxxx.
7. Severability. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
3.
8. Counterparts. This Agreement may be executed in counterparts, which
taken together will constitute one and the same Agreement.
9. Attorney Fees. In the event that any suit or action is instituted
under or in relation to this Agreement, including without limitation to enforce
any provision in this Agreement, Xxxxxx shall be entitled to recover from
ScanSoft all fees, costs and expenses of enforcing any right of Xxxxxx under or
with respect to this Agreement, including without limitation, such reasonable
fees and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals. In addition, ScanSoft
hereby agrees to promptly reimburse Xxxxxx, up to a maximum amount of $10,000,
for one-half (1/2) of the reasonable and documented legal fees Xxxxxx incurs or
has incurred in connection with the negotiation and execution of this Agreement.
10. Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective successors, assigns, heirs, executors, and administrators.
11. Headings; Titles. The titles of the sections of this Agreement are
for convenience of reference only and are not to be considered in construing
this Agreement.
12. Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed electronic mail or facsimile if
sent during normal business hours, if not, then on the next business day; (c)
five (5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (d) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the party
to be notified at the address as set forth on the signature page hereof or at
such other address as such party may designate by ten (10) days advance written
notice to the other party hereto.
13. Acceleration of the Deferred Payments; Taxes. ScanSoft and Xxxxxx
agree that under applicable law, the Deferred Payments do not constitute income
to Xxxxxx until paid and that the payments provided for in this Agreement do not
constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"). ScanSoft and Xxxxxx
agree not to take any position inconsistent with the preceding sentence in any
return, information statement or other filing made with the Internal Revenue
Service or a state tax authority (collectively, the "IRS"). Nevertheless, in the
event that the IRS asserts that Xxxxxx is required to pay any federal or state
income taxes on any of the Deferred Payments prior to the time when such
Deferred Payment is due to be paid to Xxxxxx by ScanSoft, then all unpaid
Deferred Payments will become immediately due and payable. In the event that the
IRS asserts that the payments provided for in this Agreement constitute
"parachute payments" within the meaning of Section 280G of the Code, and will be
subject to the excise tax imposed by Section 4999 of the Code, then Xxxxxx shall
receive (i) a payment from ScanSoft sufficient to pay such excise tax, and (ii)
an additional payment from ScanSoft sufficient to pay the income, employment,
excise and any other taxes arising from the payments made by ScanSoft to or for
the benefit of Xxxxxx pursuant to Section 13(i) above, so that Xxxxxx shall be
fully reimbursed for
4.
any excise tax and any taxes associated with the payments to reimburse Xxxxxx
for such excise tax. In the event that the excise tax initially determined by
the IRS later is increased or decreased by the IRS or a court of competent
jurisdiction, ScanSoft and Xxxxxx agree to promptly make such additional
payment, including interest and any tax penalties, to the other party as is
appropriate in accordance with this Section 13 to ensure that the net economic
effect to Xxxxxx under this Section, on an after-tax basis, is as if the Code
Section 4999 excise tax did not apply to Xxxxxx. Notwithstanding the above or
anything to the contrary contained in this Agreement, ScanSoft's obligation to
make payments to Xxxxxx pursuant to (i) and (ii) of this Section 13 shall not
exceed in the aggregate $800,000.
IN WITNESS WHEREOF, the parties have executed this Termination
Agreement as of the date first set forth above.
SCANSOFT, INC.
By: /s/ XXXXXXX X. XXXXXX /s/ XXXXXX XXXXXX
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Xxxxxx Xxxxxx
Name: Xxxxxxx X. Xxxxxx
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Title: SVP & CFO
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Address: 0 Xxxxxxxxxx Xxxxx Address: 000 Xxxx Xxxxx Xxxxx
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Xxxxxxx, XX 00000 Xxx Xxxxx, XX 00000
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