1
EXHIBIT 10.2
SCANSOFT, INC.
XXXXXXX X. XXXXXX EMPLOYMENT AGREEMENT
This Agreement is made by and between ScanSoft, Inc. (the "Company"), and
Xxxxxxx X. Xxxxxx ("Executive") as of August 21, 2000.
1. DUTIES AND SCOPE OF EMPLOYMENT.
(a) POSITIONS AND DUTIES. Executive will serve as President and Chief
Operating Officer. Executive will render such business and professional services
in the performance of his 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") and/or its Chief Executive Officer (the "CEO"). The
period of Executive's employment under this Agreement is referred to herein as
the "Employment Term."
(b) OBLIGATIONS. During the Employment Term, Executive will devote his
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 CEO (which approval will not be
unreasonably withheld); provided, however, that Executive may, without the
approval of the CEO, 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 Section 10).
2. EMPLOYEE BENEFITS. During the Employment Term, Executive will be
eligible to participate in accordance with the terms of all Company employee
benefit plans that are applicable to other senior executives of the Company, as
such plans and terms may exist from time to time.
3. AT-WILL EMPLOYMENT. Executive and the Company agree that Executive's
employment with the Company constitutes "at-will" employment. Executive and the
Company acknowledge that this employment relationship may be terminated at any
time, upon written notice to the other party, with or without good cause or for
any or no cause, at the option either of the Company or Executive. However, as
described in this Agreement, Executive may be entitled to severance benefits
depending upon the circumstances of Executive's termination of employment.
4. COMPENSATION.
(a) BASE SALARY. During the Employment Term, the Company will pay
Executive as compensation for his services a base salary at the annualized rate
of $275,000 (the "Base Salary").
2
The Base Salary will be paid through payroll periods that are consistent with
the Company's normal payroll practices, but in all events will not be less
frequent than once per month and will be subject to the usual, required
withholding. The Compensation Committee of the Board (the "Committee") will
reevaluate the Base Salary at least annually and may increase the Base Salary in
accordance with its normal practices. The Base Salary will not be reduced
without Executive's consent.
(b) BONUSES. For each fiscal year of the Company, Executive will be
eligible to receive a target bonus of up to 45% of his then Base Salary based
upon the achievement of performance criteria specified by the Committee. The
actual amount of the bonus payable for any year will depend upon the extent to
which the applicable performance criteria have been satisfied. Any bonus that
actually is earned will be paid as soon as practicable (but no later than 2 1/2
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 the fiscal year.
(c) STOCK OPTIONS. On August 17, 2000, subject to your execution of
this Agreement, the Board approved a grant of 250,000 options at $1.3438 per
share, which shall vest in full on the first year anniversary of the grant. In
addition, at least once during each fiscal year of the Company, the Compensation
Committee will consider granting Executive an option or options to purchase
shares of the Company's common stock ("Shares") at a per Share exercise price
equal to no more than the fair market value per Share on the grant date(s) of
the option(s). The number and terms and conditions of any options granted to
Executive will be determined in the discretion of the Committee, but the
Committee generally will seek to grant options to Executive in an amount and on
terms and conditions that are at least as favorable as option grants received by
senior officers of companies comparable to the Company.
5. SEVERANCE.
(a) VOLUNTARY/INVOLUNTARY TERMINATION OTHER THAN FOR CAUSE, DEATH OR
DISABILITY. If Executive voluntarily terminates his employment with the Company
or if the Company terminates Executive's employment with the Company without his
consent and for a reason other than "Cause" (as defined below), Executive
becoming "Disabled" (as defined below) or Executive's death, then promptly
following such termination of employment, Executive will (i) be paid his then
existing Base Salary for a period of twelve (12) months following his
termination of employment, (ii) receive all accrued vacation, expense
reimbursements and any other benefits due to Executive through the date of
termination of employment in accordance with the Company's then existing
employee benefit plans and policies, (iii) have one (1) year following
termination of employment to exercise his vested Company stock options (whether
granted on, before or after the date of this Agreement), (iv) receive 100% of
his target annual bonus not later than six (6) months following his termination
of employment, (v) receive Company-paid coverage for a period of eighteen (18)
months for himself and his 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 his termination of employment, (vi) receive
such other compensation or benefits from the Company as may be required by law
(for example, under Section 4980B of the Code).
-2-
3
(b) TERMINATION DUE TO DEATH OR DISABILITY. If 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 the Base
Salary through the date of termination of employment, (ii) be entitled to
immediate vesting of 50% of any Company stock options held by Executive that
were unvested immediately prior to his termination of employment (whether the
options were granted on, before or after the date of this Agreement), (iii)
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, (iv) 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 (v) not be entitled to any other compensation or
benefits from the Company except to the extent required by law (for example,
under Section 4980B of the Code). For purposes of clause (ii) of the preceding
sentence, the options having the lowest exercise price(s) shall become vested.
(c) INVOLUNTARY TERMINATION FOR CAUSE. If the Company terminates
Executive's employment with the Company for Cause, then Executive will (i)
receive the Base Salary through the date of termination of employment, (ii)
receive all accrued vacation, expense reimbursements and any other benefits due
to Executive through the date of termination of employment in accordance with
established Company plans and policies, and (iii) not be entitled to any other
compensation or benefits (including, without limitation, accelerated vesting of
stock options) from the Company except to the extent provided under the
applicable stock option agreement(s) or as may be required by law (for example,
under Section 4980B of the Code).
(d) CAUSE. For purposes of this Agreement, "Cause" means intentional
misconduct that has a material adverse effect on the Company. Misconduct by
Executive will be considered Cause only if Executive has received written notice
from the CEO of the misconduct and Executive has not cured the misconduct within
fifteen (15) business days of his receipt of the notice.
(e) DISABLED. For purposes of this Agreement, "Disabled" means
Executive being unable to perform the principal functions of his duties due to a
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 shall be determined by the Committee based on evidence provided by one
or more physicians selected by the Committee.
6. 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 and (b) any successor of the Company. Any such successor of
the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. 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 or the laws of descent
and distribution.
-3-
4
Any other attempted assignment, transfer, conveyance or other disposition of
Executive's right to compensation or other benefits will be null and void.
7. NOTICES. All notices, requests, demands and other communications called
for hereunder shall be in writing and shall 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:
ScanSoft, Inc.
0 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
ATTN: Chairman and Chief Executive Officer
If to Executive:
at the last residential address known by the Company.
8. 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.
9. NON-COMPETITION AND NON-SOLICITATION. For a period beginning on the
Effective Date and ending one year after the Executive ceases to be employed by
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 any business
activity anywhere in the United States that is directly competitive with the
principal markets, products and services of the Company at the time of
Executive's termination; PROVIDED, HOWEVER, that it will not be a violation of
this Section 10(a) for Executive to own (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; (ii) not solicit, induce or influence any person to leave employment
with the Company; (iii) not directly or indirectly solicit business from any of
the Company's customers and users on behalf of any business that directly
competes with the principal business of the Company.
10. ENTIRE AGREEMENT. This Agreement represents the entire agreement and
understanding between the Company and Executive concerning Executive's
employment relationship with the Company, and supersedes and replaces any and
all prior agreements and understandings concerning Executive's employment
relationship with the Company.
11. ARBITRATION AND EQUITABLE RELIEF.
-4-
5
(a) Except as provided in Section 12(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 or about Peabody,
Massachusetts, in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association (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 will apply Massachusetts law to the merits of any
dispute or claim, without reference to rules of conflict of law. Executive
hereby expressly consents to the personal jurisdiction of the state and federal
courts located in Massachusetts 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 and Executive each will separately pay its counsel fees
and expenses.
(d) The Company or 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 and trade secrets agreement between the Company and
Executive, without breach of this arbitration agreement and without abridgement
of the powers of the arbitrator.
(e) Executive understands that nothing in Section 12 modifies
Executive's at-will status. Either the Company or Executive can terminate the
employment relationship at any time, with or without cause.
(f) EXECUTIVE HAS READ AND UNDERSTANDS SECTION 12, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE
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
EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES
RELATING TO ALL ASPECTS OF THE EMPLOYER/EXECUTIVE 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
-5-
6
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 MASSACHUSETTS; AND
(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND
REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
12. NO ORAL MODIFICATION, CANCELLATION OR DISCHARGE. This Agreement may be
changed or terminated only in writing (signed by Executive and the Company).
13. 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.
14. GOVERNING LAW. This Agreement will be governed by the laws of the State
of Massachusetts (with the exception of its conflict of laws provisions).
15. EFFECTIVE DATE. This Agreement is effective August 21, 2000.
16. 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.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
respective dates set forth below:
EXECUTIVE
/s/ Date: As of August 21, 2000
------------------------------
Xxxxxxx X. Xxxxxx
SCANSOFT, INC.
/s/ Date: As of August 21, 2000
------------------------------
Xxxx X. Xxxxx
Chairman and Chief Executive Officer
-6-
