Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (“ Agreement
”) effective as of the date of execution (the
“Effective Date”) by and between INNODATA ISOGEN, INC.,
a Delaware corporation (the “ Company ”), and
O’NEIL NALAVADI (the “ Executive
”).
WHEREAS, the Company and the Executive wish to
enter into an agreement as to the terms of the Executive’s
employment with the Company;
NOW, THEREFORE, the parties hereby agree as
follows:
1.
Employment
. As of the Effective Date, the Company hereby agrees to
employ the Executive as its Senior Vice President and Chief
Financial Officer for and during the Term of this Agreement (as set
forth in Paragraph 4). The Executive hereby accepts such
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 Senior Vice President and Chief Financial Officer of
the Company, as may be reasonably assigned to him from time to time
by the Chief Executive Officer of the Company (the “
CEO ”), and he shall report solely and directly to the
CEO.
3.
Full
Business Time and Location . Throughout the Term,
the Executive agrees to devote 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) engaging in charitable, civic, fraternal or trade group
activities, (b) 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 (c)
serving on the board of directors of another entity, provided that
such board service is approved in advance in writing by the
Company’s Board of Directors (the “ Board
”). Throughout the Term of this Agreement, the
Executive shall provide his services for the Company hereunder for
(i) three (3) weeks per calendar month in the Company’s
Hackensack, New Jersey headquarters and at the Company’s
facility locations, as needed, and (ii) one (1) week per calendar
month in El Dorado Hills, California.
4.
Term . The term of
this Agreement shall commence on November 9, 2009, and shall end on
November 8, 2012 (the “ Term ”) unless
terminated earlier pursuant to this Agreement. In the event that
the Executive's employment with the Company continues beyond the
Term of this Agreement without the parties executing a new written
agreement, nothing herein shall be construed as an automatic,
constructive renewal of this Agreement for any specified term. By
not later than May 8, 2012, the Company shall notify the Executive
in writing in accordance with Paragraph 13(a) whether the Company
intends to extend the Term. If the Company provides a notice of
non-extension on or before May 8, 2012, the Executive’s
employment with the Company shall terminate at the end of the
Term. If the Company does provide such a notice of
non-extension, but does so after May 8, 2012, or if the Company and
the Executive do not execute a new employment agreement prior to
the end of the Term, then the Company shall continue to employ the
Executive for a period of six (6) months from the date on which
such notice is provided or upon which the Term ends, as applicable,
and the Executive shall be an employee-at-will of the Company
during any part of such period that extends past the end of the
Term; provided, however, that alternatively and at the sole
discretion of the Company, in lieu of continuing the Executive's
employment with the Company for all or part of such period that
extends past the end of the Term, the Company may continue to pay
the Executive his Base Salary, in the same amounts and at the same
times as if his employment with the Company had not terminated, and
provide the Executive with continued coverage under the
Company’s group medical and dental insurance, in each case
for such six (6) month period or applicable portion
thereof.
(a)
Base Compensation . The Company shall pay the
Executive an annualized base salary (“ Base Salary
”) at the rate of Two Hundred Forty Thousand Dollars
($240,000.00), 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, 2011) as
determined by the Board in its sole and absolute
discretion. The Executive’s Base Salary shall at
no time during the Term of this Agreement be reduced.
(b)
Cash Incentive Compensation . For each calendar
year during the Term, the Executive shall be eligible to receive a
cash bonus (“ Bonus ”) in an amount, if any, to
be determined pursuant to the terms of a written Bonus plan for
such calendar year, which, for all calendar years, shall provide
for a target Bonus equal to thirty percent (30%) of the
Executive’s Base Salary in effect at the beginning of such
calendar year. The Bonus for each such calendar year
will be payable in accordance with the terms of the Bonus plan
applicable to such calendar year; 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 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). Notwithstanding anything to the contrary
contained herein, for the portion of the Term of this Agreement
ending on December 31, 2009, the Executive’s Bonus shall not
be less than Thirty Thousand Dollars ($30,000.00).
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 may 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. The types and amounts of such grants shall be
determined by the Compensation Committee of the Board 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. 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). Subject to the authority of the Compensation
Committee of the Board, the Company shall, as soon as reasonably
practicable following the beginning of the Term of this Agreement,
(a) grant an “incentive stock option” (within the
meaning of Section 422(b) of the Internal Revenue Code of 1986, as
amended (the “ Code ”)) to the Executive for one
hundred thousand (100,000) shares of the Company’s common
stock, which option shall become exercisable at the rate of
twenty-five percent (25%) per year of the Executive’s
continued employment by the Company following the grant date of
said option to the Executive, and (b) award the Executive shares of
the Company's common stock, equal in number to the lesser of (i)
the number of such shares having an aggregate fair market value of
Two Hundred Thirty Thousand Dollars ($230,000), or (ii) Forty
Thousand (40,000) of such shares, determined as of the end of
trading on the last trading day to occur immediately prior to the
date of the award of such shares, which shares shall be subject to
transfer restrictions and forfeitability provisions, such transfer
restrictions and forfeitability provisions to lapse at the rate of
twenty-five percent (25%) per year of the Executive’s
continued employment with the Company following the award date of
said restricted shares to the Executive. Notwithstanding
anything in this Agreement to the contrary, 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 of
this Agreement:
(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;
(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 of this Agreement, 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.
(b) The
Executive shall be entitled to four (4) weeks paid vacation for
each twelve (12) consecutive-month period occurring during the Term
of this Agreement, 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 of this Agreement, 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.
(d) Throughout
the Term of this Agreement, the Executive shall be entitled to
prompt reimbursement for his reasonable expenses incurred in the
performance of his employment for the Company under this Agreement,
including but not limited to the Executive’s reasonable
expenses incurred in connection with (i) his travel between
California and New Jersey, (ii) a furnished corporate apartment for
the Executive in New Jersey and (iii) his use of a leased Company
automobile in New Jersey, all such expenses referred to in clauses
(i) through (iii) to be limited in the aggregate to Forty Thousand
Dollars ($40,000.00) for each twelve (12) consecutive month period
beginning on the first day of the Term of this Agreement and the
annual anniversaries thereof; 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.
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 of a felony by a court of competent
jurisdiction in the United States;
(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 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, Earned Bonus
(as herein defined) 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. “Earned Bonus” shall mean
any payments under the applicable incentive plan in respect of
which all conditions and contingencies under such plan shall have
been met at such time.
(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.
(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), 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 CEO,
shall no longer permit the Executive to work from El Dorado Hills,
California approximately one (1) week per calendar month in as
provided in Paragraph 3, 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
his Base Salary as in effect immediately prior to his termination
and any amount of Earned Bonus, such amount to be paid in
substantially equal payments for the twelve (12) 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 within twelve (12) months following the
occurrence of a Change of Control, an amount equal to two hundred
percent (200%) of his Base Salary as in effect immediately prior to
his termination and two hundred percent (200%) of any amount of
Earned Bonus, 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.
(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 twelve (12) 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
twenty-four (24) month period immediately following the date of the
Executive’s termination and, if the maximum COBRA coverage
period is shorter than the applicable twelve (12) or twenty-four
(24) 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 twelve (12) or
twenty-four (24) month continuation period;
(C) If
the Executive’s employment with the Company is not terminated
coincident with or after the occurrence of a Change of Control,
effective as of the date of the termination of the
Executive’s employment with the Company, cause twenty-five
percent (25%) of all Company stock options and all other Company
equity and non equity-based awards and incentives and/or related
compensation rights or entitlements theretofore granted or awarded
to the Executive, including but not limited to those awards and
incentives referred to in Paragraph 5(c) but exclusive of any
Bonus, to become vested (if no
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