EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (“ Agreement
”) effective as of February 1, 2009, by and between INNODATA
ISOGEN, INC., a Delaware corporation (the “ Company
”), and JACK S. ABUHOFF (the “ Executive
”).
WHEREAS, the Company and the Executive wish to
continue the Executive’s employment with the Company pursuant
to the provisions of this Agreement, effective as of February 1,
2009;
NOW, THEREFORE, the parties hereby agree as
follows:
1.
Employment . The Company hereby continues to
employ the Executive as its President and Chief Executive Officer
for and during the Term of this Agreement (as set forth in
Paragraph 4). The Executive hereby accepts such
continued employment with the Company under the terms and
conditions set forth in this Agreement.
2. Duties
and Authorities of the Executive . Throughout the
Term, the Executive shall have such duties and authorities as shall
be consistent with his position as President and Chief Executive
Officer of the Company, as may be reasonably assigned to him from
time to time by the Board of Directors of the Company (the “
Board ”), and he shall report solely and directly to
the Board. At all times during the Term, the Executive
shall be the most senior executive officer of the
Company.
3. Full
Business Time . Throughout the Term, the Executive
agrees to devote substantially all of his professional time and
efforts to the performance of his duties
hereunder. Provided that such activities do not violate
any term or condition of this Agreement, or materially interfere
with the performance of his duties hereunder, or create a conflict
of interest, nothing herein shall prohibit the Executive from (a)
participating in other business activities, (b) engaging in
charitable, civic, fraternal or trade group activities, (c)
investing his personal assets in other entities or business
ventures, subject to any policies of the Company applicable to all
executive personnel of the Company, or (d) serving on the board of
directors of another entity, provided that such board service is
approved in advance in writing by the Board.
4. Term
. The term of this Agreement shall commence on February
1, 2009, and shall end when terminated pursuant to Paragraph 7 of
this Agreement (the “ Term ”).
(a) Base Compensation
. The Company shall pay the Executive an annualized base
salary (“ Base Salary ”) at the rate of Four
Hundred Twenty-Four Thousand Three Hundred Fifty Dollars
($424,350.00), subject to annual reviews by the Board, such reviews
to be coterminous with the annual reviews of the Company’s
other senior executives, but in all events such review shall occur
no later than March of each calendar year during the Term for
discretionary increases to be applicable for the twelve (12)
consecutive month period commencing on the respective next April 1
(the first such increase, if any, commencing April 1, 2010) as
determined by the Board in its sole and absolute discretion;
provided, however , that the Executive shall be entitled to
receive annual Base Salary increases at least equal to the annual
percentage change in the Consumer Price Index, for all urban
consumers for all items (U.S. City Average, Not Seasonally
Adjusted), as compiled by the Census Bureau and Bureau of Labor
Statistics and published in the Statistical Abstract of the United
States for the calendar year preceding the effective date of the
adjustment. Base Salary payments shall be paid in accordance with
the Company’s regular payroll practices, subject to deduction
for applicable U.S. federal, state and local withholding
taxes. The Executive’s Base Salary shall at no
time during the Term be reduced.
(b) Cash
Incentive Compensation . For each calendar year
during the Term, the Executive shall be eligible to receive a cash
bonus (“ Bonus ”), provided that the
Executive’s performance for the Company for such calendar
year is satisfactory (as determined by the quantitative objectives
as established below) in an amount, if any, to be determined in the
sole and absolute discretion of the Compensation Committee of the
Board (the “ Compensation Committee
”). The Bonus for each such calendar year will be
payable in accordance with the general policies and procedures for
payment of incentive compensation to senior executive personnel of
the Company; provided, however , that in no event shall such
payment be made later than the March 15 of the calendar year next
following the close of the calendar year for which such Bonus is
earned. The amount of Bonus will be conditioned on the
attainment of certain quantitative objectives established by the
Compensation Committee in its sole and absolute discretion and
communicated thereby in writing to the Executive within the first
ninety (90) days of the applicable calendar year. The
Compensation Committee will also determine and advise the Executive
in writing during such ninety (90) day period of his
“target” Bonus amount for such calendar year, which
shall not be less than sixty percent (60%) of the annual rate of
the Executive’s then Base Salary in effect for the calendar
year for which the Bonus is to be
determined. Executive’s eligibility for,
participation in, and the terms and conditions of any Bonus
hereunder shall be set forth in separate official Bonus plan
documents, the terms and conditions of which shall exclusively
govern the payment of any Bonus described in this Paragraph
5(b). Bonus payments shall be subject to deduction for
applicable U.S. federal, state and local withholding
taxes.
(c)
Equity-Based and other Incentive Compensation
. The Executive shall be granted stock options and/or
other equity and/or non-equity based awards and incentives under
the Company’s incentive plans from time to time, and any of
such awards which are stock options shall be “incentive stock
options” (within the meaning of Section 422(b) of the
Internal Revenue Code of 1986, as amended (the “ Code
”)), to the maximum extent permissible under Section 422(d)
of the Code. The types and amounts of such grants shall
be determined by the Compensation Committee in its sole and
absolute discretion; provided , however , that any
such award which is a stock option shall provide for an exercise
price equal to the fair market value at the time of the grant of
the underlying shares subject thereto, and the terms of any stock
option or other incentive award shall be at least equivalent to the
terms of any stock option or other incentive award, as applicable,
granted to the next highest ranking executive of the Company, at
the time of any grant to the Executive. The
Executive’s eligibility for participation, and the terms and
conditions of any awards hereunder shall be set forth in separate
official incentive plan documents, the terms and conditions of
which shall exclusively govern the award, vesting, exercise and all
other aspects of the awards described in this Paragraph
5(c). As provided in Paragraph 7(f)(iii)(D), or upon the
occurrence of a “Change of Control” (as defined below),
all then outstanding stock options and all other equity-based or
non-equity-based compensation awards, rights or entitlements
theretofore granted or awarded to the Executive by the Company,
including but not limited to those awarded to the Executive under
this Paragraph 5(c), shall automatically and immediately become
fully vested and, as applicable, exercisable and relieved of any
and all otherwise applicable transfer restrictions, lock-up or
performance requirements and other restrictions and/or
contingencies of any kind. For purposes of this Agreement, a
“Change of Control” shall be deemed to have occurred as
of the earliest of any of the following to occur during the
Term:
(i) The closing
of a transaction by the Company or any person (other than the
Company, any subsidiary of the Company or any employee benefit plan
of the Company or of any subsidiary of the Company) (a “
Person ”), together with all “affiliates and
“associates” (within the meanings of such terms under
Rule 12b-2 of the Securities Exchange Act of 1934, as amended) (the
“ Exchange Act ”) of such Person, shall be the
beneficial owner of thirty percent (30%) or more of the
Company’s then outstanding voting stock (“
Beneficial Ownership ”);
(ii) A change in
the constituency of the Board such that, during any period of
thirty-six (36) consecutive months, at least a majority of the
entire Board shall not consist of Incumbent
Directors. For purposes of this Paragraph 5(c)(ii),
“ Incumbent Directors ” shall mean individuals
who at the beginning of such thirty-six (36) month period
constitute the Board, unless the election or nomination for
election by the shareholders of the Company of each such new
director was approved by a vote of a majority of the Incumbent
Directors;
(iii) The closing
of a transaction involving the merger, consolidation, share
exchange or similar transaction between the Company and any other
corporation other than a transaction which results in the
Company’s voting stock immediately prior to the consummation
of such transaction continuing to represent (either by remaining
outstanding or by being converted into voting stock of the
surviving entity) at least two-thirds (2/3rds) of the combined
voting power of the Company’s or such surviving
entity’s outstanding voting stock immediately after such
transaction; or
(iv) The closing of a
transaction involving the sale or disposition by the Company (in
one transaction or a series of transactions) of all or
substantially all of the Company’s assets; or
(v) A plan of
liquidation or dissolution of the Company goes into
effect.
(a) Throughout
his employment during the Term, the Company shall provide the
Executive and all of his dependents with group medical and dental
insurance in amounts of coverage available to senior executives of
the Company with employee payment obligations on the same terms as
such other senior executives. However, if the Executive
does not meet the requirements of the Company’s insurance
underwriters, which requirements shall be uniformly applicable to
all of the Company’s senior executive personnel, the Company
shall not provide the Executive with such insurance but, in lieu
thereof, the Company shall pay to the Executive the amounts it
would otherwise have paid for the insurance premiums on the
Executive’s behalf had the Executive met such requirements,
which amounts, if any, shall be paid at the same time as
the insurance premiums would have been paid by the Company if the
Executive had been covered under such insurance.
(b)
The Executive shall be entitled to four (4) weeks paid vacation for
each twelve (12) consecutive-month period occurring during the
Term, which vacation shall be taken by the Executive in accordance
with the reasonable business requirements of the
Company. Two (2) weeks of vacation time per each twelve
(12) consecutive-month period may be carried over from one period
to the next. The Executive’s vacation shall accrue
at the rate of one (1) week per calendar quarter during the
Term.
The Executive shall be entitled to payment for any accrued,
but unused vacation, upon the termination of his employment with
the Company; provided that in no event shall the amount of such
payment exceed payment for six (6) weeks of accrued, but unused,
vacation. Such amount shall be paid in a single lump sum
as soon as practicable following the Executive’s termination
of employment with the Company, but in no event later than ninety
(90) days following such termination.
(c)
Throughout the Term, the Executive shall be entitled to participate
in all welfare benefit and tax-qualified and nonqualified
retirement plans maintained by the Company, to the extent that such
participation is made available to other senior executives of the
Company, and he shall also be entitled to all other perquisites and
pension, welfare benefits and retirement benefits which are made
available to any senior officer of the Company. In
addition, subject to the Executive’s ability to satisfy any
reasonably applicable medical requirements, throughout the Term,
solely at its own expense, the Company shall pay for a Five Million
Dollar ($5,000,000.00) term life insurance policy on the
Executive’s life (the Executive shall determine the
beneficiary/beneficiaries under such coverage and the
Executive’s insurance trust shall be the owner of such policy
at all times) and long-term disability coverage for the Executive
providing at least sixty-six and two-thirds percent (66-2/3%) of
Base Salary until the Executive attains age sixty-five (65), and
that is non-cancelable and guaranteed renewable. The
Executive’s eligibility for, participation in, and the terms
and conditions of such plans shall be set forth in separate
official plan documents, the terms and conditions of which shall
exclusively govern.
(d)
Throughout the Term, the Executive shall be entitled to prompt
reimbursement for his expenses incurred in the performance of his
employment for the Company under this Agreement; provided ,
however , that (i) the amount of such expenses eligible for
reimbursement during a calendar year shall not affect the amount of
expenses eligible for reimbursement in any other calendar year, and
(ii) in no event shall any eligible expense reimbursement be paid
later than the last day of the calendar year following the calendar
year in which the expense was incurred.
(e)
During the Term, the Executive shall be entitled to reimbursement
for an annual executive health assessment of one (1) to three (3)
days by a provider of his choice; provided, however ,
that
(i)
in no event shall reimbursement under this Paragraph 6(e) exceed
Five Thousand Dollars ($5,000.00) per annum, without prior written
approval from the Compensation Committee,
(ii)
the amount of expenses eligible for reimbursement under this
Paragraph 6(e) during a calendar year shall not affect the amount
of expenses eligible for reimbursement under this Paragraph 6(e) in
any other calendar year, and
(iii)
in no event shall any eligible expense reimbursement under this
Paragraph 6(e) be paid later than the last day of the calendar year
following the calendar year in which the expense was
incurred.
7.
Termination . Notwithstanding any other provision in this
Agreement, during the Term:
(a)
Death . If the Executive dies, this Agreement
shall automatically terminate as of the date of the
Executive’s death.
(b)
Disability . If the Executive is unable to
perform his duties hereunder as a result of any physical or mental
disability (i) which continues for one hundred and eighty (180)
consecutive days or (ii) for two hundred and forty-five (245) days
in any three hundred and sixty-five (365) consecutive-day period,
then the Company may terminate the Executive’s employment
under this Agreement upon thirty (30) days’ written notice to
the Executive, provided that the Executive’s Base Salary and
Bonus shall continue to accrue ratably and be payable for the
ninety (90) day-period commencing immediately after the date of the
Executive’s termination of employment with the Company. Any
Bonus paid to the Executive under this Paragraph 7(b) shall be
prorated based upon Executive’s active duty with the Company
and conditioned on the attainment of the quantitative objectives
established by the Compensation Committee in accordance with
Paragraph 5(b).
(c)
Termination by the Company for Cause . The
Company may by action of the Board (of which action the Executive
shall have not less than fifteen (15) days’ prior written
notice and at which Board meeting the Executive shall be entitled
to be heard), terminate the Executive’s employment with the
Company for Cause. Termination for Cause shall mean
termination by the Company upon written notification to the
Executive on account of one or more of the following
reasons:
(i)
The Executive’s conviction by a court of competent
jurisdiction in the United States of a felony or a crime (including
a nolo contendere plea) which materially and adversely affects the
Company, including, in the good faith determination of the Company
fraud, dishonesty or moral turpitude;
(ii)
The Executive’s willful refusal to perform his lawful duties
under this Agreement or his willful misconduct with respect to such
duties, after prior written notice to the Executive of the
particular details thereof and a period of thirty (30) days has
elapsed for the Executive to reasonably correct such refusal or
misconduct, and the Executive’s failure to reasonably cure
such refusal or misconduct by the end of such period;
provided , however , that no such cure period shall
apply if the Board reasonably determines in good faith that such
refusal or misconduct is not susceptible to reasonable cure; and
provided , further , that if any such refusal or
misconduct is determined by the Board in good faith to not be
susceptible to reasonable cure within such thirty (30) day period,
such period shall be extended for not more than one hundred and
eighty (180) additional days provided that during such period the
Executive diligently prosecutes such reasonable cure; or
(iii) The
Executive’s material breach of any of the covenants set forth
in Paragraphs 8, 9 and 10 of this Agreement.
(d)
Resignation by the Executive . The Executive may
terminate this Agreement by tendering his written resignation to
the Board upon not less than sixty (60) days advance
notice.
(e)
Termination Payments . (i) In addition to
any other payments and continued benefits pursuant to Paragraph
7(f), upon the Executive’s resignation from employment with
the Company pursuant to Paragraph 7(d), or upon termination of his
employment with the Company by reason of his death or his
disability pursuant to Paragraph 7(a) or 7(b), the Executive or his
estate shall be entitled to receive his Base Salary, a pro rata
portion of any Bonus for which he is eligible under Paragraph 5(b),
based upon the Executive’s performance of his objectives
through the date of his resignation or termination, and the
reimbursement of all of his incurred but unreimbursed reasonable
business expenses as provided under Paragraph 6(d), in each case to
the date of the Executive’s resignation or termination. Any
such Bonus shall be payable within thirty (30) days of the date of
the Executive’s resignation or termination by reason of his
death, or within one hundred twenty (120)) days of the date of the
Executive’s termination by reason of his disability;
provided , however , that all such amounts shall be
paid to the Executive not later than March 15 of the calendar year
next following the close of the calendar year for which such Bonus
is earned.
(ii)
Upon the Executive’s termination for Cause pursuant to
Paragraph 7(c), the Executive shall be entitled to receive his Base
Salary and reimbursement of all incurred and unreimbursed expenses
as provided under Paragraph 6(d), in each case to the date of the
Executive’s termination. In the event that the
Executive is terminated for Cause pursuant to Paragraph 7(c), the
Executive shall not be entitled to receive any Bonus under
Paragraph 5(b) (on a pro rata or other basis).
(f)
Severance Benefit . (i) The Executive
will receive the payments and continued benefits described in
Paragraph 7(f) (iii) if:
(A)
The Company terminates the Executive’s employment under this
Agreement at any time other than for death pursuant to
Paragraph 7(a), for disability pursuant to Paragraph 7(b) or for
Cause pursuant to Paragraph 7(c), or the Executive resigns from his
employment with the Company for Good Reason in accordance with
Paragraph 7(f)(ii); and
(B)
The Executive executes a separation agreement and general release
substantially similar to the separation agreement and release
attached hereto as Exhibit “A” upon his termination of
employment with the Company.
(ii)
For all purposes of this Agreement, including but not limited to
the Executive’s entitlement to the payments and continued
benefits pursuant to this Paragraph 7(f), the Executive shall be
entitled to resign from his employment with the Company for “
Good Reason ” if (A) the Company breaches any of its
material obligations under this Agreement, (B) without the
Executive’s prior written consent, the Company materially
relocates the Executive’s regular office location (by more
than fifty (50) miles from its location as of the date hereof), or
(C) the Company assigns duties to the Executive which represent a
material diminution of his authorities, duties or responsibilities
or requires him to report to any person or entity other than the
Board, but in each case only if within ninety (90) days after the
occurrence of such action or event, the Executive gives notice to
the Company of his intention to terminate his employment hereunder
unless the Company takes appropriate action to reasonably cure the
Executive’s otherwise Good Reason, the Company does not
reasonably cure any such action or event within thirty (30) days
after the date of such notice, and the Executive resigns his
employment within thirty (30) days thereafter.
(I)
If the Executive’s employment with the Company is terminated
prior to the occurrence of a Change of Control, an amount equal to
two hundred percent (200%) of (a) his Base Salary as in effect
immediately prior to his termination, and (b) the greater of the
Executive’s most recently declared Bonus or the average of
the Executive’s three (3) most recently declared Bonuses, in
each case as of the date of his termination, such amount to be paid
in substantially equal payments for the twenty-four (24) month
period immediately following the date of his termination, at the
same times he would have received his Base Salary had his
employment with the Company not terminated; or
(II)
If the Executive’s employment with the Company is terminated
coincident with or following the occurrence of a Change of Control,
a lump sum payment within (30) days of the date of his termination,
equal to three hundred percent (300%) of (a) his Base Salary as in
effect immediately prior to his termination, and (b) the greater of
the Executive’s most recently declared Bonus or the average
of the Executive’s three (3) most recently declared Bonuses,
in each case as of the date of his termination.
(B)
Continue to maintain the Executive’s (and as applicable, his
dependents’) medical benefits and dental benefits as if the
Executive had continued in active employment with the Company until
the earlier of the end of the maximum applicable COBRA
coverage period or (i) if the Executive’s employment with the
Company is terminated prior to the occurrence of a Change of
Control, for the twenty-four (24) month period immediately
following the date of the Executive’s termination, or (ii) if
the Executive’s employment with the Company is terminated
coincident with or following the occurrence of a Change of Control,
for the thirty-six (36) month period immediately following the date
of the Executive’s termination and, if the maximum COBRA
coverage period is shorter than the applicable twenty-four (24) or
thirty-six (36) month continuation period, pay the Executive
monthly an amount equal to the monthly cost charged by the Company
for COBRA coverage during the period beginning upon the expiration
of the maximum COBRA coverage period and the end of the applicable
twenty-four (24) or thirty-six (36) month continuation
period;
(C)
Continue to maintain the Executive’s term life insurance
coverage and long-term disability insurance until (i) if the
Executive’s employment with the Company is terminated prior
to the occurrence of a Change of Control, the end of the
twenty-
