NUANCE COMMUNICATIONS, INC. EMPLOYMENT AGREEMENT
Exhibit 99.1
This Agreement is made by and between Nuance Communications, Inc. (the “Company”) and Xxxx X.
Xxxxx (the “Executive”), effective as of June 23, 2009 (the “Effective Date”).
1. Duties and Scope of Employment.
(a) Positions and Duties. Executive will serve as Chairman of the Board and Chief
Executive Officer of the Company. Executive will render such business and professional services in
the performance of Executive’s duties, consistent with Executive’s position within the Company, as
shall reasonably be assigned to him by the Company’s Board of Directors (the “Board”).
(b) Board Membership. During the Employment Term (as defined below), Executive will
serve as the Chairman of the Board, subject to any required stockholder approval.
(c) Obligations. During the Employment Term, Executive will devote Executive’s full
business efforts and time to the Company. For the duration of the Employment Term, Executive
agrees not to actively engage in any other employment, occupation or consulting activity for any
direct or indirect remuneration without the prior approval of the Board of Directors of the
Company, which approval will not be unreasonably withheld, provided, however, that Executive may,
without the approval of the Board, serve in any capacity with any civic, educational or charitable
organization, or as a member of corporate Boards of Directors (but in all cases subject to
Executive’s compliance with the terms of the Confidential Information Agreement and the terms of
this Agreement).
2. Employment Term. Subject to earlier termination as provided for below, the Company
will employ Executive for an initial term of three (3) years commencing on the Effective Date. The
term of employment hereunder shall automatically extend for successive additional terms of one (1)
year each (each, a “Successive One-Year Term”) unless, at least ninety (90) days prior to the end
of the initial three (3) year term or any Successive One-Year Term, the Company or Executive gives
written notice of intent to terminate this Agreement (a “Notice of Non-Renewal”). The term of
employment under this Agreement shall include the initial three (3) year period and any extension
thereof (the “Employment Term”). If Executive’s employment terminates as a result of the receipt
of a Notice of Non-Renewal from the Company, Executive shall be entitled to the payments and
benefits under Section 5(a) of this Agreement. Notwithstanding the foregoing, Executive and the
Company acknowledge that this employment relationship may be terminated at any time prior to the
expiration of the Employment Term, upon ninety (90) days written notice to the other party, with or
without Cause or for any or no reason, at the option either of the Board or Executive and that in
the event the Company or Executive terminate Executive’s employment with the Company prior to the
end of the Employment Term, Executive only will be entitled to those payments and benefits, if any,
provided for in Section 5 of this Agreement.
3. Compensation.
(a) Base Salary. The Company will pay Executive as compensation for Executive’s
services a Base Salary at the annualized rate of $575,000 and will be reviewed, at a minimum of
once per year to ensure Executive’s total compensation is consistent with current market practices
and in line with Executive’s performance or at the next company-wide merit review whichever comes
first. The Base Salary will be paid through payroll periods that are consistent with the Company’s
normal payroll practices and will be subject to the usual, required withholding.
(b) Performance Bonus. Executive will be eligible to receive a target bonus of up to
one-hundred percent (100%) of Executive’s then Base Salary based upon the achievement of
performance criteria established within four (4) months of the start of the applicable bonus period
by the Compensation Committee of the Board, after consultation with Executive. The performance
standards will be based on the Company’s achievement of goals for proforma revenue and earnings, as
defined by the Compensation Committee of the Board. The actual percentage of Base Salary payable
as a bonus for any year will depend upon the extent to which the applicable performance criteria
have been achieved. Any bonus that actually is earned will be paid as soon as practicable (but no
later than two and one-half (21/2) months) after the end of the fiscal year for which the bonus is
earned, but only if Executive was employed with the Company through the end of such fiscal year.
(c) Equity Grants.
(i) Restricted Stock. Upon the execution of this Agreement, and upon determination of
the Compensation Committee of the Board that Executive’s performance has been satisfactory, the
Company will issue the Executive seven hundred and twenty four thousand nine hundred (724,900)
shares of common stock of the Company at a per share purchase price equal to the par value of the
Company’s common stock on the date of the grant. The Restricted Stock awards set forth above will
be split between 50% time based and 50% performance based. The time based shares xxxx xxxxx vest
at the end of Fiscal 2010 and the performance based shares will also vest at the end of Fiscal 2010
provided achievement of financial targets for Fiscal 2010 approved by the Board (the “Fiscal 2010
Objectives”) are met. The grants of the Restricted Stock shall be represented by, and subject to,
the terms of a Restricted Stock Agreement to be prepared in accordance with the terms herein.
(ii) Stock Options. Upon the execution of this Agreement, the Company will grant the
Executive options to acquire one million (1,000,000) shares of the Company’s common stock at an
exercise price equal to the closing fair market value as quoted on NASDAQ on the date of grant.
The Stock Option grant set forth above will vest 100% on September 30, 2010. The maximum term of
the Stock Options will be seven years. The grant of the Stock Options shall be represented by, and
subject to, the terms of a stock option agreement to be prepared in accordance with the terms
herein and the stock option plan pursuant to which they are granted.
Annually, commencing with the conclusion of Fiscal Year 2009, the Compensation Committee of
the Board will review the Executive’s grants of Restricted Stock and Stock Options. Any future
annual grants of Restricted Stock and Stock Options will be consistent with the grants in the past
and as set forth herein assuming consistent performance by the Executive and Company.
(d) Car Allowance. During the Employment Term, the Company will reimburse Executive
up to $20,000 per calendar year, net of withholding taxes, (or such greater amount as approved by
the Board or Compensation Committee, consistent with the Company’s practice with respect to other
executive officers) for use towards a car leased by the Company or via a car allowance included in
the Executive’s pay. The lease allowance is inclusive of insurance costs to cover the leased
vehicle. The Company shall make such reimbursement payments by March 15th of year
following the calendar year Executive incurred such eligible car allowance expenses.
(e) Tax & Financial Services Allowance. The Company will reimburse Executive for
reasonable professional services expenses incurred by Executive for tax, financial and/or estate
planning. The Company will reimburse Executive only for expenses that do not exceed twenty five
thousand dollars ($25,000), net of withholding taxes, per calendar year. The Company shall make
such reimbursement payments by the end of the third month following the calendar year Executive
incurred such eligible tax and financial service allowance expenses.
(f) Expenses. The Company will reimburse Executive for reasonable travel, lodging and
other expenses incurred by Executive in the furtherance of the performance of Executive’s duties
hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to
time.
4. Benefits.
(a) Employee Benefits. During the Employment Term, Executive will be entitled to
participate in the employee benefit plans currently and hereafter maintained by the Company of
general applicability to other senior executives of the Company, including, without limitation, the
Company’s group medical, dental, vision, disability, life insurance, and flexible-spending account
plans. The Company reserves the right to cancel or change the benefit plans and programs it offers
to its employees at any time.
(b) Executive Medical Benefit. During the Employment Term, the Company shall offer
Executive a supplemental enhanced executive wellness benefit, provided that the expense incurred by
the Company shall not exceed fifty thousand dollars ($50,000) per year, net of withholding taxes.
Any reimbursement made pursuant to this Section 4(b) will be paid by the Company by the end of the
third month following the calendar year Executive incurred any eligible supplement executive
medical expense. No unused benefit from one calendar year will carry forward or otherwise be
available for future calendar years.
(c) Life Insurance Policy. During the Employment Term, the Company shall continue to
pay the annual premium for an enhanced life insurance benefit equal to $1,000,000 in value. The
life insurance policy shall be a term-life policy with Executive as the owner of the policy.
(d) Long-Term Disability Policy. During the Employment Term, the Company will pay
the premiums for an enhanced long-term disability insurance policy that will provide coverage of
sixty percent (60%) of Executive’s base eligible earnings. This long-term disability policy will
be subject to Executive’s continuing to satisfy all applicable eligibility requirements imposed by
the long-term disability insurance company.
(e) Post Retirement Medical Benefit. For the period following Executive’s
retirement, but not before age 55, until such time as Executive is age 65, provided Executive is an
active full-time employee of the Company at the time of his retirement, the Company shall reimburse
Executive up to a maximum amount of two hundred and fifty thousand dollars ($250,000), net of
withholding taxes, for expenses incurred to purchase medical or health insurance during the entire
ten (10) year period. The Company shall make such reimbursement payments by the end of the third
month following the calendar year Executive incurred such eligible post-retirement medical or
health insurance expenses.
5. Severance. Except as set forth below, upon termination of employment by the
Company for any reason, other than following a Change of Control (in a termination to which Section
5(c) applies), Death or Disability, Executive shall receive payment of (a) his Base Salary, as then
in effect, through the date of termination of employment, and (b) all accrued vacation, expense
reimbursements and any other benefits (other than severance benefits, except as provided below) due
to Executive through the date of termination of employment in accordance with established Company
plans and policies or applicable law (the “Accrued Obligations”). In addition, the following will
apply:
(a) Involuntary Termination other than for Cause, Death or Disability. If Executive’s
employment with the Company is terminated (i) by the Company for a reason other than Cause (as
defined below), Executive becoming Disabled (as defined below) or Executive’s death, or (ii) by the
Executive for Good Reason, then, subject to Executive’s compliance with the provisions in Section
5(e), Executive will be entitled to receive through the term of the Severance Period: (i)
continuing payments of one and half (1 1/2) times Executive’s Base Salary, as then in effect, during
the Severance Period, to be paid periodically in accordance with the Company’s normal payroll
policies and subject to the usual, required withholding, plus one hundred percent (100%) of
Executive’s target Performance Bonus, as then in effect, during the Severance Period, to be paid
periodically in accordance with the Company’s normal payroll policies and subject to the usual,
required withholding, (ii) continued payment by the Company of the group medical, dental and vision
continuation coverage premiums for Executive and Executive’s eligible dependents under Title X of
the Consolidated Budget Reconciliation Act of 1985, as amended (“COBRA”) during the Severance
Period under the Company’s group health plans, as then in effect; (iii) continued payment of the
annual premium for the remaining term of the life insurance policy specified in Section 4(c) above;
(iv) the immediate full vesting on the termination date of Executive’s stock options and unvested
Restricted Stock that were granted prior to the August 11, 2006 and continued vesting during the
severance period for Executive’s stock options and unvested Restricted Stock granted after August
11, 2006, and (v) an extended period of time to exercise certain outstanding options granted
before August 11, 2006 (contractual term of option or expiration date) and for options granted
after August 11, 2006, a period of two (2) years or expiration date of options whichever comes
first. Outstanding options granted prior to or after the Effective Date of this Agreement shall
expire on their original expiration date.
(b) Termination due to Death or Disability. If the Executive’s employment with the
Company is terminated due to his Death or his becoming Disabled, then Executive or Executive’s
estate (as the case may be) will (i) receive an amount equal one and half (1 1/2) times Executive’s
Base Salary at the time of the death or disability plus an amount equal to (100%) of Executive’s
target Performance Bonus, as then in effect in the fiscal year ending prior to the death or
disability,
(ii) continued payment of the annual premium for the remaining term of the life
insurance policy specified in Section 4(c) above; (iii) be entitled to immediate one hundred
percent (100%) vesting of any Company stock options or Restricted Stock held by the Executive that
were unvested immediately prior to his termination of employment, (iv) an extended period of time
to exercise vested options for a period of two (2) years or until their original expiration date,
(v) receive Company-paid coverage for a period of two (2) years for Executive (if applicable) and
Executive’s eligible dependents under the Company’s health benefit plans (or, at the Company’s
option, coverage under a separate plan), providing benefits that are no less favorable than those
provided under the Company’s plans immediately prior to Executive’s death, (vi) receive the
allowance remaining under the post retiree medical benefit provided under Section 4(e), receive all
accrued vacation, expense reimbursements and any other benefits due to Executive through the date
of termination of employment in accordance with Company-provided or paid plans and policies, and
(vii) be entitled to receive all compensation and benefits from the Company for which he is
eligible under other policies or plans.
(c) Change of Control Benefits. If, within twelve (12) months following a Change of
Control, Executive’s employment with the Company is terminated for a reason other than (i) Cause,
(ii) Executive becoming Disabled or (iii) Executive’s death, or if the Executive terminates his
employment with the Company for Good Reason, then, subject to Executive’s compliance with the
provisions in Section 5(e), Executive will be entitled to receive the severance payments and
benefits set forth in Section 5(a) and the post retiree medical benefit provided under Section
4(e); provided, however Executive shall receive (i) two (2.0) times his Base Salary as then in
effect, (ii) plus an amount equal to two (2.0) times his bonus in the fiscal year ending prior to
the Change in Control, and (iii) immediate 100% acceleration of any unvested options or awards,
rather than continued vesting over the severance period.
(d) Other Termination. If the Executive terminates employment with the Company other
than for Good Reason (as defined), or if Executive’s employment with the Company is terminated for
Cause, then Executive will receive payment of the Accrued Obligations but he shall not be entitled
to any other compensation or benefits (including, without limitation, accelerated vesting of stock
options and unvested Restricted Stock) from the Company, except to the extent provided under the
applicable stock option agreement(s), Company benefit plans or as may be required by law (for
example, under COBRA).
(e) Conditions to Receive Severance Package. Except for the Accrued Obligations, the
applicable provisions of the Option Plan and Option Agreement, and other payments to which
Executive may be entitled by law, the severance payments, continued benefits, continued vesting,
vesting acceleration and the ability to exercise stock options described in this Section 5 will be
provided to Executive if the following conditions are satisfied: (i) Executive complies with all
surviving provisions of the Confidential Information Agreement, any confidentiality or proprietary
rights agreement signed by Executive and the non-competition provisions set forth herein; and (ii)
Executive executes and delivers to the Company, and does not revoke, a full general release, in a
form acceptable to the Company and Executive, releasing all claims, known or unknown, that
Executive may have against the Company, and any subsidiary or related entity, their officers,
directors, employees and agents, arising out of or any way related to Executive’s employment or
termination of employment with the Company.
(f) Cause. For purposes of this Agreement, “Cause” means Executive’s employment with
the Company is terminated after a majority of the Board has found any of the following to exist:
(i) that Executive has been convicted of a felony in connection with the performance of his
obligations to the Company or which adversely affects the Executive’s ability to perform such
obligations; (ii) a breach of any duty of loyalty owed to the Company by Executive, or the
usurpation of any Company corporate opportunity by Executive, that has a material detrimental
effect on the Company’s reputation or business; (iii) the commission by the Executive of an act of
fraud or embezzlement which results in loss, damage or injury to the Company, whether directly or
indirectly; (iii) a material disclosure of the Company’s confidential or proprietary information
by the Executive which violates the terms of the Confidential Information Agreement; or (iv)
Executive’s continued substantial willful nonperformance (except by reason of Disability) of his
employment duties after Executive has received a written demand for performance by the Board and
has failed to cure such nonperformance within 15 business days of receiving such notice.
(g) Change of Control. For the purposes of this Agreement, a “Change of Control”
means the occurrence of any of the following events, but only to the extent such event constitutes
a “change in control event” for purposes of Section 409A: (i) any “person” (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the
“beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities
of the Company representing 50% or more of the total voting power represented by the Company’s then
outstanding voting securities; or (ii) a change in the composition of the Board occurring within a
one-year period, as a result of which fewer than a majority of the directors are Incumbent
Directors (“Incumbent Directors” will mean directors who either (A) are members of the Board as of
the Effective Date, or (B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Board at the time of such election or nomination
(but will not include an individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to the Company)); or (iii) the date
of the consummation of a merger or consolidation of the Company with any other corporation that has
been approved by the stockholders of the Company, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity outstanding immediately after such merger or
consolidation; or (iv) the date of the consummation of the sale or disposition by the Company of
all or substantially all the Company’s assets.
(h) Disabled. For purposes of this Agreement, “Disabled” means Executive being unable
to perform the principal functions of his duties due to a medically certifiable physical or mental
impairment, but only if such inability has lasted or is reasonably expected to last for at least
six months. Whether Executive is Disabled will be determined by a third party administrator of the
Company’s long-term disability program.
(i) Good Reason. For purposes of this Agreement, “Good Reason” means (i) without the
Executive’s consent, a significant reduction of the Executive’s duties, position, reporting status,
or
responsibilities relative to the Executive’s duties, position, reporting status, or
responsibilities in effect immediately prior to such reduction, or the removal of the Executive
from such position, duties and responsibilities or change in reporting status, unless the Executive
is provided with
comparable duties, position and responsibilities or reporting status; also a
reduction in duties, position, reporting status or responsibilities by virtue of the Company being
acquired and made part of a larger entity will constitute “Good Reason” unless the Executive
remains in his position as Chief Executive Officer of a publicly traded company that conducts
substantially the same core operations, business and activities as were conducted by the Company
prior to any such acquisition or similar corporate transaction; (ii) without the Executive’s
consent, a substantial reduction, by the Board of the Executive’s Base Salary as in effect
immediately prior to such reduction (unless such reduction is part of an overall Company effort
that effects similarly situated senior executives of the Company); (iii) without the Executive’s
consent, the requirement that Executive relocate his principal place of employment more than fifty
(50) miles from the current location of the Company’s principal executive offices; (iv) a material
breach by the Company of this Agreement; and (iv) failure of Executive to be nominated as a Board
member. Executive will not resign for Good Reason without first providing the Company with written
notice of the acts or omissions constituting the grounds for “Good Reason” within ninety (90) days
of the initial existence of the grounds for “Good Reason” and, if such grounds are susceptible to
cure, a reasonable cure period of not less than thirty (30) days following the date of such notice.
Any resignation for Good Reason must occur within two years of the initial existence of the
grounds constituting Good Reason.
(j) Severance Period. For purposes of this Agreement, “Severance Period” means the
period beginning on the date of Executive’s termination of employment with the Company and ending
on the date eighteen (18) months later for all reasons other than a termination following a Change
of Control. “Severance Period” for a termination following a Change of Control means the period
beginning on the date of Executive’s termination of employment with the Company and ending on the
date twenty-four (24) months later.
6. Confidential Information. Executive agrees to continue to comply with any
agreement Executive has entered into with the Company regarding confidential information and/or
invention assignment (the “Confidential Information Agreement”).
7. Assignment. This Agreement will be binding upon and inure to the benefit of (a)
the heirs, executors and legal representatives of Executive upon Executive’s death. None of the
rights of Executive to receive any form of compensation payable pursuant to this Agreement may be
assigned or transferred except by will, trust, or the laws of descent and distribution. Any other
attempted assignment, transfer, conveyance or other disposition of Executive’s right to
compensation or other benefits will be null and void.
8. Indemnification. Subject to applicable law, Executive will be provided
indemnification but on terms no less favorable than provided to any other Company executive officer
and subject to the terms of any separate written indemnification agreement as well as the Company’s
charter.
9. Notices. All notices, requests, demands and other communications called for
hereunder will be in writing and will be deemed given (i) on the date of delivery if delivered
personally, (ii) one (1) day after being sent by a well established commercial overnight service,
or (iii) four (4) days after being mailed by registered or certified mail, return receipt
requested, prepaid and addressed to the
parties or their successors at the following addresses, or at such other addresses as the
parties may later designate in writing:
If to the Company:
Nuance Communications, Inc.
Xxx Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Vice President – Human Resources & Operations
Xxx Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Vice President – Human Resources & Operations
If to Executive:
at the last residential address known by the Company.
10. Severability. In the event that any provision hereof becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue
in full force and effect without said provision.
11. Original Agreement. Executive previously entered into an employment agreement
with the Company on August 11, 2003, as amended from time to time (the “Original Agreement”).
Executive and the Company agree that this Agreement will supersede and replace the Original
Agreement and any of it amendments in their entirety.
12. Non-Competition, and Non-Solicitation. For a period beginning on the Effective
Date and ending 18 months after the Executive ceases to be employed by the Company (or 24 months
following termination of Executive’s employment if such termination occurs within twelve months
following a Change of Control of the Company), Executive, directly or indirectly, whether as
employee, owner, sole proprietor, partner, director, member, consultant, agent, founder,
co-venturer or otherwise, will: (i) not engage, participate or invest in a company whose primary
business is competitive with the Company; (ii) not engage, participate or invest in a large
Information Technology (“IT”) company, such as Microsoft or IBM, in a position in which his
principal involvement would be in the business of speech recognition software; (iii) not solicit,
induce or influence any person to leave employment with the Company; (iv) not directly or
indirectly solicit business from any of the Company’s customers and users on behalf of any company
defined in Section 12(i) or (ii), above. Nothing in this Agreement shall prohibit the Executive
from owning (as a passive investment): (A) not more than two percent of any class of publicly
traded securities of any entity or (B) not more than five percent of any class of non-publicly
traded securities of any entity.
13. Non Disparagement. Following the date Executive ceases to be employed by the
Company, Executive will not disparage in any way the Company, its Officers, directors, employees,
investors, shareholders, administrators, affiliates, divisions, subsidiaries, predecessor or
successor corporations, or assigns, and will refrain from any defamation, libel or slander of any
of those parties, and any tortious interference with the contracts, relationships and prospective
economic advantage of any of those parties. Likewise, following the date Executive ceases to be
employed by the Company, its officers, directors, employees, administrators, and affiliates, will
not disparage, except as otherwise required by law, in any way the Executive, and will refrain from
any defamation, libel or slander of the Executive, and, subject to provisions of Section 12 of this Agreement, will
refrain from any tortious interference with the contracts, relationships and prospective economic
advantage of the Executive.
14. Entire Agreement. This Agreement, together with the Confidential Information
Agreement and the Company’s organizational documents, represents the entire agreement and
understanding between the Company and Executive concerning the subject matter herein and
Executive’s employment relationship with the Company, and supersedes and replaces any and all prior
or contemporaneous agreements and understandings whether written or oral between the Executive and
the Company.
15. Arbitration and Equitable Relief.
(a) Except as provided in Section 15(d) below, Executive and the Company agree that to the
extent permitted by law, any dispute or controversy arising out of, relating to, or in connection
with this Agreement, or the interpretation, validity, construction, performance, breach, or
termination thereof will be settled by arbitration to be held in either (at the Executive’s
election which must be made within one day of notice of any such action) San Francisco, California,
or Boston, Massachusetts, in accordance with the procedures then in effect of the Judicial
Arbitration & Mediation Services, Inc. (“JAMS”) (the “Rules”). The arbitrator may grant
injunctions or other relief in such dispute or controversy. The decision of the arbitrator will be
final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the
arbitrator’s decision in any court having jurisdiction.
(b) The arbitrator and/or any state or federal court will apply Massachusetts law to the
merits of any dispute or claim, without reference to rules of conflict of law. Executive hereby
agrees that he will not challenge the enforceability of the non-competition clause as set forth
herein based solely upon the fact that Executive has a residence in California. Executive hereby
expressly consents to the personal jurisdiction of the state and federal courts located in either
California or Massachusetts (at the Executive’s election which must be made within one day of
notice of any such action) for any action or proceeding arising from or relating to this Agreement
and/or relating to any arbitration in which the parties are participants.
(c) The Company will pay the direct costs and expenses of the arbitration. The Company will
also reimburse Executive’s fees and expenses as incurred monthly, including reasonable attorneys’
fees in connection with any dispute arising out of this agreement, provided Executive prevails on
at least one material issue in such dispute, or provided an arbitrator does not determine that
Executive’s legal positions were frivolous or without legal foundation. In the event Executive
does not so prevail or in the event of such determination, Executive will repay to the Company any
amounts previously reimbursed by it, and Executive will reimburse the Company for its fees and
expenses, including reasonable attorneys’ fees, incurred in connection with the dispute.
(d) Both the Company and the Executive may apply to any court of competent jurisdiction for a
temporary restraining order, preliminary injunction, or other interim or conservatory relief, as
necessary to enforce the provisions of the Confidential Information Agreement between Executive and
the Company and/or Section 13 of this Agreement, without breach of this arbitration agreement and
without abridgement of the powers of the arbitrator.
(e) EMPLOYEE HAS READ AND UNDERSTANDS SECTION 15, WHICH DISCUSSES ARBITRATION. EMPLOYEE
UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EMPLOYEE AGREES TO THE EXTENT PERMITTED BY LAW, TO
SUBMIT
ANY FUTURE CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE
INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH, OR TERMINATION THEREOF TO BINDING
ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE’S RIGHT TO A JURY
TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:
(i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS
AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED;
NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL
MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC
ADVANTAGE; AND DEFAMATION;
(ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING,
BUT NOT LIMITED TO, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, AND
ANY LAW OF THE STATE OF CALIFORNIA; AND
(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT
OR EMPLOYMENT DISCRIMINATION.
16. No Oral Modification, Cancellation or Discharge. This Agreement may be changed or
terminated only in writing (signed by Executive and the Company).
17. Withholding. The Company is authorized to withhold, or cause to be withheld, from
any payment or benefit under this Agreement the full amount of any applicable withholding taxes.
18. Governing Law. This Agreement will be governed by the laws of the Commonwealth of
Massachusetts (with the exception of its conflict of laws provisions).
19. Acknowledgment. Executive acknowledges that he has had the opportunity to discuss
this matter with and obtain advice from his private attorney, has had sufficient time to, and has
carefully read and fully understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.
20. Attorneys’ Fees. Executive shall be reimbursed his reasonable attorneys’ fees
incurred with respect to the negotiation of this Agreement.
21. Code Section 409A.
(a) Notwithstanding anything to the contrary in this Agreement, no Deferred Compensation
Separation Benefits (as defined below) will become payable under this Agreement until Executive has
a “separation from service” within the meaning of Section 409A of the Code, and any proposed or
final regulations and guidance promulgated thereunder (“Section 409A”). Further, if Executive is a
“specified employee” within the meaning of Section 409A at the time of
Executive’s termination
(other than due to death), and the severance payable to Executive, if any, pursuant to this
Agreement, when considered together with any other severance payments or separation benefits, are
considered deferred compensation under Section 409A (together, the “Deferred Compensation
Separation Benefits”), such Deferred Compensation Separation Payments that are otherwise payable
within the first six (6) months following Executive’s termination of employment will become payable
on the first payroll date that occurs on or after the date six (6) months and one (1) day following
the date of Executive’s termination of employment. All subsequent Deferred Compensation Separation
Benefits, if any, will be payable in accordance with the payment schedule applicable to each
payment or benefit. Notwithstanding anything herein to the contrary, if Executive dies following
his termination but prior to the six (6) month anniversary of his termination, then any payments
delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively
practicable after the date of Executive’s death and all other Deferred Compensation Separation
Benefits will be payable in accordance with the payment schedule applicable to each payment or
benefit. Each payment and benefit payable under this Agreement is intended to constitute separate
payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.
(b) Any amount paid under this Agreement that satisfies the requirements of the “short-term
deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations shall not constitute
Deferred Compensation Separation Benefits for purposes of Section 21(a) above.
(c) Any amount paid under this Agreement that qualifies as a payment made as a result of an
involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury
Regulations that does not exceed the Section 409A Limit (as defined below) shall not constitute
Deferred Compensation Separation Benefits for purposes of Section 21(a) above. For purposes of
this Section 21(c), “Section 409A Limit” will mean the lesser of two (2) times: (i) Executive’s
annualized compensation based upon the annual rate of pay paid to Executive during the Company’s
taxable year preceding the Company’s taxable year of Executive’s termination of employment as
determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1); or (ii) the maximum amount that may
be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the
year in which Executive’s employment is terminated.
(d) The foregoing provisions are intended to comply with the requirements of Section 409A so
that none of the severance payments and benefits to be provided hereunder will be subject to the
additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so
comply. The Company and Executive agree to work together in good faith to consider amendments to
this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to
avoid imposition of any additional tax or income recognition prior to actual payment to Executive
under Section 409A.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the respective dates set
forth below:
EXECUTIVE
/s/ Xxxx X. Xxxxx
|
Date June 23, 2009 | |
Chairman and Chief Executive Officer |
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COMPANY |
||
/s/ Xxxxxx Xxxxxxxxxxx
|
Date June 23, 2009 | |
Chairman of the Compensation Committee of |
||
The Board of Directors |
