Exhibit 10.2

 

LIONBRIDGE TECHNOLOGIES, INC.

AGREEMENT

 

This is an AGREEMENT entered into between Lionbridge Technologies, Inc. (the
“Company”) and Rory Cowan (“Executive”) effective as of the 14th day of July,
2003.

 

WHEREAS, the Board of the Directors of the Company (the “Board”) considers it
essential to the best interests of the Company and its stockholders to foster
the Company’s ability to retain key management personnel; and

 

WHEREAS, the Board recognizes that, as it generally the case with publicly-held
corporations, the possibility of a Change of Control (as defined herein) exists
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders; and

 

WHEREAS, the Board intends for this Agreement to provide protection for its
executive officers in general, for so long as such officers remain in the
employment of the Company, against the exigencies of a Change of Control, but
not to otherwise provide assurance of or rights to continued employment; and

 

WHEREAS, should the possibility of a Change of Control arise, in addition to the
Executive’s regular duties, the Executive may be called upon to assist in the
assessment of such possible Change of Control, to advise management and the
Board as to whether such Change of Control would be in the best interests of the
Company and to take such other actions as the Board might determine to be
appropriate; and

 

WHEREAS, this Agreement is not intended to alter the rights of the Executive in
the absence of a Change of Control with respect to his or her employment by the
Company or his or her compensation and benefits in connection with such
employment and, accordingly, this Agreement, although taking effect as provided
below, will be operative only upon a Change of Control.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:

 

1.    Term; Employment Protection Period.    The term during which this
Agreement (the “Agreement”) will be in effect (the “Term of the Agreement”) will
begin on July 14, 2003 (the “Effective Date”) and will remain in effect until
terminated by a vote of the majority of the Board of Directors. If a Change of
Control (as defined in Exhibit A) occurs during the Term of the Agreement, the
Agreement will remain in effect until all obligations hereunder have been
discharged. The period starting on the

 

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date of such a Change of Control and ending on the second anniversary of the
Change of Control will be a “Employment Protection Period” under the terms of
this Agreement.

 

2.    Definition of a Change of Control.    “Change of Control” has the meaning
set forth in Schedule A hereto.

 

3.    Termination of Employment; Severance Benefits.

 

3.1    Terminability of Employment.    If Executive’s employment terminates
during the Employment Protection Period set forth in this Agreement following a
Change of Control, the parties will be required to discharge the applicable
obligations described in this Section 3 and elsewhere in this Agreement. If
Executive’s employment terminates at any time other than during the applicable
Employment Protection Period following a Change of Control, Executive will have
no rights under the Agreement.

 

3.2    Termination upon Death or Disability.    If Executive ceases to be an
employee of the Company as a result of death or disability, the Company will
have no further obligation or liability to Executive hereunder other than for
Base Salary earned and unpaid at the date of termination and compensation for
accrued vacation, and the Term of the Agreement will end when those amounts are
paid. However, nothing in this Agreement is intended to interfere with the
rights of Executive and his family or beneficiaries under other applicable
plans, policies or arrangements of the Company. For purposes of this Section
3.2, the Company may terminate Executive’s employment for “disability” if,
because of physical or mental incapacity, Executive is unable for a period of 90
consecutive days to perform the material duties of his position and it is
determined by a qualified physician chosen by the Company (and, if during a
Employment Protection Period, approved by the Executive or his conservator) to
be probable that

such incapacity will continue for an additional 60 consecutive days.

 

3.3    Termination by the Company for Cause or by Executive Without Good
Reason.    If the Company terminates Executive’s employment for Cause (as
defined in this Section 3.3) or if Executive terminates his employment other
than for Good Reason (as defined in this Section 3.3), the Company will have no
further obligation or liability to Executive hereunder other than for Base
Salary earned and unpaid at the date of termination and compensation for accrued
vacation, and the Term of the Agreement will end when those amounts are paid.

 

“Cause” means (a) willful malfeasance or gross negligence in the performance by
Executive of his duties, resulting in harm to the Company, (b) fraud or
dishonesty by Executive with respect to the Company, or (c) Executive’s
conviction of a felony.

 

 

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“Good Reason” means (i) a material reduction in the Executive’s total
compensation, including but not limited to (a) a reduction of the Executive’s
base salary below the level in effect immediately prior to the Change of Control
without the Executive’s prior written consent, (b) a reduction in the
Executive’s target annual bonus opportunity below the level in effect
immediately prior to the Change of Control without the Executive’s prior written
consent, (c) discontinuation of participation in any compensation plan that is
maintained following the Change in Control in which the Executive participated
immediately prior to the Change of Control without the Executive’s prior written
consent, or (d) exclusion from participating in compensation programs that are
customarily offered to senior executives, (ii) relocation of the Executive’s
principal place of work to a location more than 50 miles from its location
immediately prior to the Change of Control or (iii) change in title or
responsibilities below the level in effect immediately prior to the Change of
Control without the Executive’s prior written consent.

 

3.4    By the Company Without Cause or By Executive for Good Reason.

 

(a)    Entitlement to Severance Benefits.    If, during the Term of the
Agreement, the Company terminates Executive’s employment without Cause, or if
Executive terminates his employment for Good Reason, the Company will, subject
to Section 4 below, provide severance benefits to Executive as set forth below
in Section 3.4(b).

 

(b)    Severance Benefits Following a Change of Control.    If the termination
occurs during a Employment Protection Period, the Company will provide severance
benefits to Executive as follows:

 

(i)    The Company will pay to Executive within 30 days of the termination a
lump-sum cash amount equal to 150% of sum of the Executive’s annual Base Salary
in effect immediately prior to the termination (or, if his Base Salary has been
reduced within 60 days of the termination or at any time after the Change of
Control, his Base Salary in effect prior to the reduction) plus the Executive’s
then current annual target bonus.

 

(ii)    The Company will also pay to Executive within 30 days of the termination
a pro-rata portion of his target bonus for the year of termination provided that
the termination occurs after June 30 and within a Employment Protection Period.

 

(iii)    The Company will continue for a period of eighteen (18) months from the
date of termination to provide Executive with family medical, disability and
life insurance coverage at the level in effect immediately prior to the Change
of Control. To the extent the Company is unable to provide such benefits to an
Executive under its existing plans and arrangements, it will either arrange to
provide the Executive with

 

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substantially similar benefits upon comparable terms or pay the Executive cash
amounts equal to the Executive’s cost of obtaining such benefits.

 

(c)    Option Acceleration.    Notwithstanding any contrary provision of the
plans or arrangements under which they are granted, upon a Change of Control and
irrespective of a termination of employment, (A) all options to purchase Company
stock held by Executive will immediately become exercisable, and (B) all
restricted stock held by Executive under restricted stock plans and arrangements
of the Company will immediately become fully vested.

 

4.    Limitations on Severance Benefits.

 

4.1    Except as provided in Section 4.2 below, the payments and benefits to
which Executive will be entitled under Section 3 of this Agreement will be
reduced to the extent necessary to prevent Executive from becoming liable for
the excise tax levied on certain “excess parachute payments” under section 4999
of the Internal Revenue Code of 1986, as amended (the “Code”). If a reduction is
made under this Section 4.1, Executive will have the right to determine which
payments and benefits will be reduced.

 

4.2    The limitations of Section 4.1 will not apply if —

 

(i)    the present value, net of all federal, state, and other income and excise
taxes, of all payments and benefits to which Executive is entitled hereunder
without such limitations, exceeds

 

(ii)    the present value, net of all federal, state, and other income and
excise taxes, of all payments and benefits to which Executive would be entitled
hereunder if such limitations applied.

 

4.3    Determinations under this Section 4 will be made by the firm of certified
public accountants then serving as the Company’s auditor unless Executive has
reasonable objections to the use of that firm, in which case the determinations
will be made by a comparable firm chosen by Executive after consultation with
the Company. The determinations of such firm will be binding upon the Company
and Executive.

 

5.    Withholding.    All payments required to be made by the Company to
Executive under this Agreement will be subject to the withholding of such
amounts, if any, relating to tax and other payroll deductions as may be required
by law.

 

6.    Fees and Expenses.    In the event of Executive’s termination of
employment during a Employment Protection Period, the Company will pay any and
all fees and expenses (including legal fees and other costs of arbitration or

 

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litigation) that may be incurred by Executive in enforcing his rights under this
Agreement.

 

7.    No Duty to Mitigate.    Benefits payable under this Agreement as a result
of termination of Executive’s employment will be considered severance pay in
consideration of his past service and his continued service from the Effective
Date, and his entitlement thereto will neither be governed by any duty to
mitigate his damages by seeking further employment nor offset by any
compensation that he may receive from other employment.

 

8.    Confidentiality and Exclusivity.    Executive agrees to maintain the
confidentiality of the Company’s (and its related entities and projects) books,
records, financial information, technical information, business plans and/or
strategies, and other confidential matters unless required to make disclosure in
the performance of his duties for the Company or as a result of a legal
proceeding or other legally mandated cause. The parties recognize and agree that
should the Company be required to pursue a claim against Executive under this
Section 8, the Company will likely be required to seek injunctive relief as well
as damages at law. Accordingly, Section 10, Arbitration, will not apply to any
action by the Company against Executive for violation of this Section 8.
Executive agrees for purposes of any disputes arising under this Section 8 to
submit to the exclusive jurisdiction of the federal and state courts in the
Commonwealth of Massachusetts.

 

9.    Arbitration.    Except as otherwise provided in Section 8, any dispute or
controversy between the parties involving the construction or application of any
terms, covenants or conditions of this Agreement, or any claim arising out of or
relating to this Agreement, or any claim arising out of or relating to
Executive’s employment by the Company that is not resolved within ten days by
the parties will be settled by arbitration in Boston, Massachusetts, in
accordance with the rules of the American Arbitration Association then in
effect, and judgment upon the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof. The Company and Executive agree that
the arbitrator(s) will have no authority to award punitive or exemplary damages
or so-called consequential or remote damages such as damages for emotional
distress. Any decision of the arbitrator(s) will be final and binding upon the
parties. Upon request the arbitrator(s) shall submit written findings of fact
and conclusions of law. The parties agree and understand that they hereby waive
their rights to a jury trial of any dispute or controversy relating to the
matters specified above in this Section 9.

 

10.    Rights of Survivors.    If Executive dies after becoming entitled to
benefits under Section 3 following termination of employment but before all such
benefits have been provided, (a) all unpaid cash amounts will be paid

 

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to the beneficiary that has been designated by Executive in writing (the
“beneficiary”), or if none, to Executive’s estate, (b) all applicable insurance
coverage will be provided to Executive’s family as though Executive had
continued to live, and (c) any stock options that become exercisable under
Section 3.4 will be exercisable by the beneficiary, or if none, the estate.

 

11.    Successors.    This Agreement will inure to and be binding upon the
Company’s successors. The Company will require any successor to all or
substantially all of the business and/or assets of the Company by sale, merger
or consolidation (where the Company is not the surviving corporation), lease or
otherwise, by agreement in form and substance satisfactory to Executive, to
assume this Agreement expressly. This Agreement is not otherwise assignable by
the Company.

 

12.    Subsidiaries.    For purposes of this Agreement, employment by a
corporation or other entity that is controlled directly or indirectly by the
Company will be deemed to be employment by the Company. Thus, references in the
Agreement to “Company” include such corporations or other entities where
appropriate in the context.

 

13.    Amendment or Modification; Waiver.    This Agreement may not be amended
unless agreed to in writing by Executive and the Company. No waiver by either
party of any breach of this Agreement will be deemed a waiver of a subsequent
breach.

 

14.    Severability.    In the event that any provision of this Agreement is
determined to be invalid or unenforceable, the remaining provisions shall remain
in full force and effect to the fullest extent permitted by law.

 

15.    Controlling Law.    This Agreement will be controlled and interpreted
pursuant to Massachusetts law.

 

16.    Superseded Agreement.    This Agreement supersedes provisions related to
severance payments due to a change in control, and option acceleration in the
event of a change in control, as set forth in the Employment Agreement between
Executive and the Company dated as of December 23, 1996.

 

17.    Notices.    Any notices required or permitted to be sent under this
Agreement are to be delivered by hand or mailed by registered or certified mail,
return receipt requested, and addressed as follows:

 

If to the Company:

 

Lionbridge Technologies, Inc.

950 Winter Street, Suite 2410

Waltham, MA 02451

 

 

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If to Executive:

 

Rory J. Cowan

 

[home address]

 

Either party may change its address for receiving notices by giving notice to
the other party.

 

In witness whereof, the parties hereto have executed this Agreement as of the
date first set forth above.

 

   

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[Executive]

     

 

LIONBRIDGE TECHNOLOGIES, INC.

 

    By:  

 

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Exhibit A

 

“Change of Control” means the occurrence of any of the following events:

 

(1) any Person becomes the owner of 25% or more of the Company’s Common Stock
and a majority of the members of the Board of Directors make a determination
that a change of control has occurred; or

 

(2) individuals who, as of the Effective Date, constitute the Board of Directors
of the Company (the “Continuing Directors”) cease for any reason to constitute
at least a majority of such Board; provided, however, that any individual
becoming a director after the Effective Date whose election or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the Continuing Directors will be deemed to be a Continuing Director,
but excluding for this purpose any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities and Exchange Act of 1934 (the “Exchange Act”)) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board; or

 

(3) approval by the shareholders of the Company of a reorganization, merger,
consolidation or other transaction that will result in the transfer of ownership
of more than 50% of the Company’s Common Stock; or

 

(4) liquidation or dissolution of the Company or sale of substantially all of
the Company’s assets.

 

In addition, for purposes of this definition the following terms have the
meanings set forth below:

 

“Common Stock” means the then outstanding Common Stock of the Company plus, for
purposes of determining the stock ownership of any Person, the number of
unissued shares of Common Stock which such Person has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise. Notwithstanding the foregoing, the term Common Stock does
not include shares of preferred stock or convertible debt or options or warrants
to acquire shares of Common Stock (including any shares of Common Stock issued
or issuable upon the conversion or exercise thereof) to the extent that the
Board expressly so determines in any future transaction or transactions.

 

 

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A Person will be deemed to be the “owner” of any Common Stock of which such
Person would be the “beneficial owner,” as such term is defined in Rule 13d-3
promulgated by the Securities and Exchange Commission under the Exchange Act.

 

“Person” has the meaning used in Section 13(d) of the Exchange Act, except that
“Person” does not include (i) the Executive, an Executive Related Party, or any
group of which the Executive or Executive Related Party is a member, or (ii) the
Company or a wholly owned subsidiary of the Company or an employee benefit plan
(or related trust) of the Company or of a wholly owned subsidiary.

 

An “Executive Related Party” means any affiliate or associate of the Executive
other than the Company or a subsidiary of the Company. The terms “affiliate” and
“associate” have the meanings given in Rule 12b-2 under the Exchange Act; the
term “registrant” in the definition of “associate” means, in this case, the
Company.

 

 

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LIONBRIDGE TECHNOLOGIES, INC.

AGREEMENT

 

This is an AGREEMENT entered into between Lionbridge Technologies, Inc. (the
“Company”) and Stephen J. Lifshatz (“Executive”) effective as of the 14th day of
July, 2003.

 

WHEREAS, the Board of the Directors of the Company (the “Board”) considers it
essential to the best interests of the Company and its stockholders to foster
the Company’s ability to retain key management personnel; and

 

WHEREAS, the Board recognizes that, as it generally the case with publicly-held
corporations, the possibility of a Change of Control (as defined herein) exists
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders; and

 

WHEREAS, the Board intends for this Agreement to provide protection for its
executive officers in general, for so long as such officers remain in the
employment of the Company, against the exigencies of a Change of Control, but
not to otherwise provide assurance of or rights to continued employment; and

 

WHEREAS, should the possibility of a Change of Control arise, in addition to the
Executive’s regular duties, the Executive may be called upon to assist in the
assessment of such possible Change of Control, to advise management and the
Board as to whether such Change of Control would be in the best interests of the
Company and to take such other actions as the Board might determine to be
appropriate; and

 

WHEREAS, this Agreement is not intended to alter the rights of the Executive in
the absence of a Change of Control with respect to his or her employment by the
Company or his or her compensation and benefits in connection with such
employment and, accordingly, this Agreement, although taking effect as provided
below, will be operative only upon a Change of Control.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:

 

1.    Term; Employment Protection Period.    The term during which this
Agreement (the “Agreement”) will be in effect (the “Term of the Agreement”) will
begin on July 14, 2003 (the “Effective Date”) and will remain in effect until
terminated by a vote of the majority of the Board of Directors. If a Change of
Control (as defined in Exhibit A) occurs during the Term of the Agreement, the
Agreement will remain in effect until all obligations hereunder have been
discharged. The period starting on the date of such a Change of Control and
ending on the second anniversary of the Change of Control will be a “Employment
Protection Period” under the terms of this Agreement.

 

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3.    Definition of a Change of Control.    “Change of Control” has the meaning
set forth in Schedule A hereto.

 

3.    Termination of Employment; Severance Benefits.

 

3.1    Terminability of Employment.    If Executive’s employment terminates
during the Employment Protection Period set forth in this Agreement following a
Change of Control, the parties will be required to discharge the applicable
obligations described in this Section 3 and elsewhere in this Agreement. If
Executive’s employment terminates at any time other than during the applicable
Employment Protection Period following a Change of Control, Executive will have
no rights under the Agreement.

 

3.2    Termination upon Death or Disability.    If Executive ceases to be an
employee of the Company as a result of death or disability, the Company will
have no further obligation or liability to Executive hereunder other than for
Base Salary earned and unpaid at the date of termination and compensation for
accrued vacation, and the Term of the Agreement will end when those amounts are
paid. However, nothing in this Agreement is intended to interfere with the
rights of Executive and his family or beneficiaries under other applicable
plans, policies or arrangements of the Company. For purposes of this Section
3.2, the Company may terminate Executive’s employment for “disability” if,
because of physical or mental incapacity, Executive is unable for a period of 90
consecutive days to perform the material duties of his position and it is
determined by a qualified physician chosen by the Company (and, if during a
Employment Protection Period, approved by the Executive or his conservator) to
be probable that such incapacity will continue for an additional 60 consecutive
days.

 

3.3    Termination by the Company for Cause or by Executive Without Good
Reason.    If the Company terminates Executive’s employment for Cause (as
defined in this Section 3.3) or if Executive terminates his employment other
than for Good Reason (as defined in this Section 3.3), the Company will have no
further obligation or liability to Executive hereunder other than for Base
Salary earned and unpaid at the date of termination and compensation for accrued
vacation, and the Term of the Agreement will end when those amounts are paid.

 

“Cause” means (a) willful malfeasance or gross negligence in the performance by
Executive of his duties, resulting in harm to the Company, (b) fraud or
dishonesty by Executive with respect to the Company, or (c) Executive’s
conviction of a felony.

 

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“Good Reason” means (i) a material reduction in the Executive’s total
compensation, including but not limited to (a) a reduction of the Executive’s
base salary below the level in effect immediately prior to the Change of Control
without the Executive’s prior written consent, (b) a reduction in the
Executive’s target annual bonus opportunity below the level in effect
immediately prior to the Change of Control without the Executive’s prior written
consent, (c) discontinuation of participation in any compensation plan that is
maintained following the Change in Control in which the Executive participated
immediately prior to the Change of Control without the Executive’s prior written
consent, or (d) exclusion from participating in compensation programs that are
customarily offered to senior executives, (ii) relocation of the Executive’s
principal place of work to a location more than 50 miles from its location
immediately prior to the Change of Control or (iii) change in title or
responsibilities below the level in effect immediately prior to the Change of
Control without the Executive’s prior written consent.

 

3.4    By the Company Without Cause or By Executive for Good Reason.

 

(a) Entitlement to Severance Benefits. If, during the Term of the Agreement, the
Company terminates Executive’s employment without Cause, or if Executive
terminates his employment for Good Reason, the Company will, subject to Section
4 below, provide severance benefits to Executive as set forth below in Section
3.4(b).

 

(b) Severance Benefits Following a Change of Control. If the termination occurs
during a Employment Protection Period, the Company will provide severance
benefits to Executive as follows:

 

(i) The Company will pay to Executive within 30 days of the termination a
lump-sum cash amount equal to 150% of sum of the Executive’s annual Base Salary
in effect immediately prior to the termination (or, if his Base Salary has been
reduced within 60 days of the termination or at any time after the Change of
Control, his Base Salary in effect prior to the reduction) plus the Executive’s
then current annual target bonus.

 

(ii) The Company will also pay to Executive within 30 days of the termination a
pro-rata portion of his target bonus for the year of termination provided that
the termination occurs after June 30 and within a Employment Protection Period.

 

(iii) The Company will continue for a period of eighteen (18) months from the
date of termination to provide Executive with family medical, disability and
life insurance coverage at the level in effect immediately prior to the Change
of Control. To the extent the Company is unable to provide such benefits to an
Executive under its existing plans and arrangements, it will either arrange to
provide the Executive with substantially similar benefits upon comparable terms
or pay the Executive cash amounts equal to the Executive’s cost of obtaining
such benefits.

 

 

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(c) Option Acceleration. Notwithstanding any contrary provision of the plans or
arrangements under which they are granted, upon a Change of Control and
irrespective of a termination of employment, (A) 50% of the options to purchase
Company stock held by Executive will immediately become exercisable and the
remaining 50% of the options to purchase Company stock held by Executive will
become exercisable on the six month anniversary of the date of the Change of
Control, and (B) all restricted stock held by Executive under restricted stock
plans and arrangements of the Company will immediately become fully vested.

 

4.    Limitations on Severance Benefits.

 

4.1    Except as provided in Section 4.2 below, the payments and benefits to
which Executive will be entitled under Section 3 of this Agreement will be
reduced to the extent necessary to prevent Executive from becoming liable for
the excise tax levied on certain “excess parachute payments” under section 4999
of the Internal Revenue Code of 1986, as amended (the “Code”). If a reduction is
made under this Section 4.1, Executive will have the right to determine which
payments and benefits will be reduced.

 

4.2    The limitations of Section 4.1 will not apply if —

 

(i) the present value, net of all federal, state, and other income and excise
taxes, of all payments and benefits to which Executive is entitled hereunder
without such limitations, exceeds

 

(ii) the present value, net of all federal, state, and other income and excise
taxes, of all payments and benefits to which Executive would be entitled
hereunder if such limitations applied.

 

4.3    Determinations under this Section 4 will be made by the firm of certified
public accountants then serving as the Company’s auditor unless Executive has
reasonable objections to the use of that firm, in which case the determinations
will be made by a comparable firm chosen by Executive after consultation with
the Company. The determinations of such firm will be binding upon the Company
and Executive.

 

5.    Withholding.    All payments required to be made by the Company to
Executive under this Agreement will be subject to the withholding of such
amounts, if any, relating to tax and other payroll deductions as may be required
by law.

 

 

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6.    Fees and Expenses.    In the event of Executive’s termination of
employment during a Employment Protection Period, the Company will pay any and
all fees and expenses (including legal fees and other costs of arbitration or
litigation) that may be incurred by Executive in enforcing his rights under this
Agreement.

 

7.    No Duty to Mitigate.    Benefits payable under this Agreement as a result
of termination of Executive’s employment will be considered severance pay in
consideration of his past service and his continued service from the Effective
Date, and his entitlement thereto will neither be governed by any duty to
mitigate his damages by seeking further employment nor offset by any
compensation that he may receive from other employment.

 

8.    Confidentiality and Exclusivity.    Executive agrees to maintain the
confidentiality of the Company’s (and its related entities and projects) books,
records, financial information, technical information, business plans and/or
strategies, and other confidential matters unless required to make disclosure in
the performance of his duties for the Company or as a result of a legal
proceeding or other legally mandated cause. The parties recognize and agree that
should the Company be required to pursue a claim against Executive under this
Section 8, the Company will likely be required to seek injunctive relief as well
as damages at law. Accordingly, Section 10, Arbitration, will not apply to any
action by the Company against Executive for violation of this Section 8.
Executive agrees for purposes of any disputes arising under this Section 8 to
submit to the exclusive jurisdiction of the federal and state courts in the
Commonwealth of Massachusetts.

 

9.    Arbitration.    Except as otherwise provided in Section 8, any dispute or
controversy between the parties involving the construction or application of any
terms, covenants or conditions of this Agreement, or any claim arising out of or
relating to this Agreement, or any claim arising out of or relating to
Executive’s employment by the Company that is not resolved within ten days by
the parties will be settled by arbitration in Boston, Massachusetts, in
accordance with the rules of the American Arbitration Association then in
effect, and judgment upon the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof. The Company and Executive agree that
the arbitrator(s) will have no authority to award punitive or exemplary damages
or so-called consequential or remote damages such as damages for emotional
distress. Any decision of the arbitrator(s) will be final and binding upon the
parties. Upon request the arbitrator(s) shall submit written findings of fact
and conclusions of law. The parties agree and understand that they hereby waive
their rights to a jury trial of any dispute or controversy relating to the
matters specified above in this Section 9.

 

 

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10.    Rights of Survivors.    If Executive dies after becoming entitled to
benefits under Section 3 following termination of employment but before all such
benefits have been provided, (a) all unpaid cash amounts will be paid to the
beneficiary that has been designated by Executive in writing (the
“beneficiary”), or if none, to Executive’s estate, (b) all applicable insurance
coverage will be provided to Executive’s family as though Executive had
continued to live, and (c) any stock options that become exercisable under
Section 3.4 will be exercisable by the beneficiary, or if none, the estate.

 

11.    Successors.    This Agreement will inure to and be binding upon the
Company’s successors. The Company will require any successor to all or
substantially all of the business and/or assets of the Company by sale, merger
or consolidation (where the Company is not the surviving corporation), lease or
otherwise, by agreement in form and substance satisfactory to Executive, to
assume this Agreement expressly. This Agreement is not otherwise assignable by
the Company.

 

12.    Subsidiaries.    For purposes of this Agreement, employment by a
corporation or other entity that is controlled directly or indirectly by the
Company will be deemed to be employment by the Company. Thus, references in the
Agreement to “Company” include such corporations or other entities where
appropriate in the context.

 

13.    Amendment or Modification; Waiver.    This Agreement may not be amended
unless agreed to in writing by Executive and the Company. No waiver by either
party of any breach of this Agreement will be deemed a waiver of a subsequent
breach.

 

14.    Severability.    In the event that any provision of this Agreement is
determined to be invalid or unenforceable, the remaining provisions shall remain
in full force and effect to the fullest extent permitted by law.

 

15.    Controlling Law.    This Agreement will be controlled and interpreted
pursuant to Massachusetts law.

 

16.    Superseded Agreement.    This Agreement supersedes provisions related to
severance payments due to a change in control, and option acceleration in the
event of a change in control, as set forth in the Employment Agreement between
Executive and the Company dated as of December 23, 1996.

 

17.    Notices.    Any notices required or permitted to be sent under this
Agreement are to be delivered by hand or mailed by registered or certified mail,
return receipt requested, and addressed as follows:

 

If to the Company:

 

Lionbridge Technologies, Inc.

 

15

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950 Winter Street, Suite 2410

Waltham, MA 02451

 

If to Executive:

 

Stephen J. Lifshatz

[home address]

 

Either party may change its address for receiving notices by giving notice to
the other party.

 

In witness whereof, the parties hereto have executed this Agreement as of the
date first set forth above.

 

 

   

--------------------------------------------------------------------------------

Stephen J. Lifshatz

     

 

LIONBRIDGE TECHNOLOGIES, INC.

 

    By:  

 

--------------------------------------------------------------------------------

         

 

16

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Exhibit A

 

“Change of Control” means the occurrence of any of the following events:

 

(1) any Person becomes the owner of 25% or more of the Company’s Common Stock
and a majority of the members of the Board of Directors make a determination
that a change of control has occurred; or

 

(2) individuals who, as of the Effective Date, constitute the Board of Directors
of the Company (the “Continuing Directors”) cease for any reason to constitute
at least a majority of such Board; provided, however, that any individual
becoming a director after the Effective Date whose election or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the Continuing Directors will be deemed to be a Continuing Director,
but excluding for this purpose any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities and Exchange Act of 1934 (the “Exchange Act”)) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board; or

 

(3) approval by the shareholders of the Company of a reorganization, merger,
consolidation or other transaction that will result in the transfer of ownership
of more than 50% of the Company’s Common Stock; or

 

(4) liquidation or dissolution of the Company or sale of substantially all of
the Company’s assets.

 

In addition, for purposes of this definition the following terms have the
meanings set forth below:

 

“Common Stock” means the then outstanding Common Stock of the Company plus, for
purposes of determining the stock ownership of any Person, the number of
unissued shares of Common Stock which such Person has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise. Notwithstanding the foregoing, the term Common Stock does
not include shares of preferred stock or convertible debt or options or warrants
to acquire shares of Common Stock (including any shares of Common Stock issued
or issuable upon the conversion or exercise thereof) to the extent that the
Board expressly so determines in any future transaction or transactions.

 

17

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A Person will be deemed to be the “owner” of any Common Stock of which such
Person would be the “beneficial owner,” as such term is defined in Rule 13d-3
promulgated by the Securities and Exchange Commission under the Exchange Act.

 

“Person” has the meaning used in Section 13(d) of the Exchange Act, except that
“Person” does not include (i) the Executive, an Executive Related Party, or any
group of which the Executive or Executive Related Party is a member, or (ii) the
Company or a wholly owned subsidiary of the Company or an employee benefit plan
(or related trust) of the Company or of a wholly owned subsidiary.

 

An “Executive Related Party” means any affiliate or associate of the Executive
other than the Company or a subsidiary of the Company. The terms “affiliate” and
“associate” have the meanings given in Rule 12b-2 under the Exchange Act; the
term “registrant” in the definition of “associate” means, in this case, the
Company.

 

 

18

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LIONBRIDGE TECHNOLOGIES, INC.

AGREEMENT

 

This is an AGREEMENT entered into between Lionbridge Technologies, Inc. (the
“Company”) and Myriam Martin-Kail (“Executive”) effective as of the 14th day of
July, 2003.

 

WHEREAS, the Board of the Directors of the Company (the “Board”) considers it
essential to the best interests of the Company and its stockholders to foster
the Company’s ability to retain key management personnel; and

 

WHEREAS, the Board recognizes that, as it generally the case with publicly-held
corporations, the possibility of a Change of Control (as defined herein) exists
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders; and

 

WHEREAS, the Board intends for this Agreement to provide protection for its
executive officers in general, for so long as such officers remain in the
employment of the Company, against the exigencies of a Change of Control, but
not to otherwise provide assurance of or rights to continued employment; and

 

WHEREAS, should the possibility of a Change of Control arise, in addition to the
Executive’s regular duties, the Executive may be called upon to assist in the
assessment of such possible Change of Control, to advise management and the
Board as to whether such Change of Control would be in the best interests of the
Company and to take such other actions as the Board might determine to be
appropriate; and

 

WHEREAS, this Agreement is not intended to alter the rights of the Executive in
the absence of a Change of Control with respect to his or her employment by the
Company or his or her compensation and benefits in connection with such
employment and, accordingly, this Agreement, although taking effect as provided
below, will be operative only upon a Change of Control.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:

 

1.    Term; Employment Protection Period.    The term during which this
Agreement (the “Agreement”) will be in effect (the “Term of the Agreement”) will
begin on July 14, 2003 (the “Effective Date”) and will remain in effect until
terminated by a vote of the majority of the Board of Directors. If a Change of
Control (as defined in Exhibit A) occurs during the Term of the Agreement, the
Agreement will remain in effect until all obligations hereunder have been
discharged. The period starting on the date of such a Change of Control and
ending on the second anniversary of the Change of Control will be a “Employment
Protection Period” under the terms of this Agreement.

 

19

--------------------------------------------------------------------------------

4.    Definition of a Change of Control.    “Change of Control” has the meaning
set forth in Schedule A hereto.

 

3.    Termination of Employment; Severance Benefits.

 

3.1    Terminability of Employment.    If Executive’s employment terminates
during the Employment Protection Period set forth in this Agreement following a
Change of Control, the parties will be required to discharge the applicable
obligations described in this Section 3 and elsewhere in this Agreement. If
Executive’s employment terminates at any time other than during the applicable
Employment Protection Period following a Change of Control, Executive will have
no rights under the Agreement.

 

3.2    Termination upon Death or Disability.    If Executive ceases to be an
employee of the Company as a result of death or disability, the Company will
have no further obligation or liability to Executive hereunder other than for
Base Salary earned and unpaid at the date of termination and compensation for
accrued vacation, and the Term of the Agreement will end when those amounts are
paid. However, nothing in this Agreement is intended to interfere with the
rights of Executive and his family or beneficiaries under other applicable
plans, policies or arrangements of the Company. For purposes of this Section
3.2, the Company may terminate Executive’s employment for “disability” if,
because of physical or mental incapacity, Executive is unable for a period of 90
consecutive days to perform the material duties of his position and it is
determined by a qualified physician chosen by the Company (and, if during a
Employment Protection Period, approved by the Executive or his conservator) to
be probable that such incapacity will continue for an additional 60 consecutive
days.

 

3.3    Termination by the Company for Cause or by Executive Without Good
Reason.    If the Company terminates Executive’s employment for Cause (as
defined in this Section 3.3) or if Executive terminates his employment other
than for Good Reason (as defined in this Section 3.3), the Company will have no
further obligation or liability to Executive hereunder other than for Base
Salary earned and unpaid at the date of termination and compensation for accrued
vacation, and the Term of the Agreement will end when those amounts are paid.

 

“Cause” means (a) willful malfeasance or gross negligence in the performance by
Executive of his duties, resulting in harm to the Company, (b) fraud or
dishonesty by Executive with respect to the Company, or (c) Executive’s
conviction of a felony.

 

 

20

--------------------------------------------------------------------------------

“Good Reason” means (i) a material reduction in the Executive’s total
compensation, including but not limited to (a) a reduction of the Executive’s
base salary below the level in effect immediately prior to the Change of Control
without the Executive’s prior written consent, (b) a reduction in the
Executive’s target annual bonus opportunity below the level in effect
immediately prior to the Change of Control without the Executive’s prior written
consent, (c) discontinuation of participation in any compensation plan that is
maintained following the Change in Control in which the Executive participated
immediately prior to the Change of Control without the Executive’s prior written
consent, or (d) exclusion from participating in compensation programs that are
customarily offered to senior executives, (ii) relocation of the Executive’s
principal place of work to a location more than 50 miles from its location
immediately prior to the Change of Control or (iii) change in title or
responsibilities below the level in effect immediately prior to the Change of
Control without the Executive’s prior written consent.

 

3.4    By the Company Without Cause or By Executive for Good Reason.

 

(a) Entitlement to Severance Benefits. If, during the Term of the Agreement, the
Company terminates Executive’s employment without Cause, or if Executive
terminates his employment for Good Reason, the Company will, subject to Section
4 below, provide severance benefits to Executive as set forth below in Section
3.4(b).

 

(b) Severance Benefits Following a Change of Control. If the termination occurs
during a Employment Protection Period, the Company will provide severance
benefits to Executive as follows:

 

(i) The Company will pay to Executive within 30 days of the termination a
lump-sum cash amount equal to 100% of sum of the Executive’s annual Base Salary
in effect immediately prior to the termination (or, if his Base Salary has been
reduced within 60 days of the termination or at any time after the Change of
Control, his Base Salary in effect prior to the reduction) plus the Executive’s
then current annual target bonus.

 

(ii) The Company will also pay to Executive within 30 days of the termination a
pro-rata portion of his target bonus for the year of termination provided that
the termination occurs after June 30 and within a Employment Protection Period.

 

(iii) The Company will continue for a period of twelve (12) months from the date
of termination to provide Executive with family medical, disability and life
insurance coverage at the level in effect immediately prior to the Change of
Control. To the extent the Company is unable to provide such benefits to an
Executive under its existing plans and arrangements, it will either arrange to
provide the Executive with substantially similar benefits upon comparable terms
or pay the Executive cash amounts equal to the Executive’s cost of obtaining
such benefits.

 

 

21

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(c) Option Acceleration. Notwithstanding any contrary provision of the plans or
arrangements under which they are granted, upon a Change of Control and
irrespective of a termination of employment, (A) 50% of the options to purchase
Company stock held by Executive will immediately become exercisable and the
remaining 50% of the options to purchase Company stock held by Executive will
become exercisable on the six month anniversary of the date of the Change of
Control, and (B) all restricted stock held by Executive under restricted stock
plans and arrangements of the Company will immediately become fully vested.

 

4.    Limitations on Severance Benefits.

 

4.1 Except as provided in Section 4.2 below, the payments and benefits to which
Executive will be entitled under Section 3 of this Agreement will be reduced to
the extent necessary to prevent Executive from becoming liable for the excise
tax levied on certain “excess parachute payments” under section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”). If a reduction is made
under this Section 4.1, Executive will have the right to determine which
payments and benefits will be reduced.

 

4.2 The limitations of Section 4.1 will not apply if —

 

(i) the present value, net of all federal, state, and other income and excise
taxes, of all payments and benefits to which Executive is entitled hereunder
without such limitations, exceeds

 

(ii) the present value, net of all federal, state, and other income and excise
taxes, of all payments and benefits to which Executive would be entitled
hereunder if such limitations applied.

 

4.3 Determinations under this Section 4 will be made by the firm of certified
public accountants then serving as the Company’s auditor unless Executive has
reasonable objections to the use of that firm, in which case the determinations
will be made by a comparable firm chosen by Executive after consultation with
the Company. The determinations of such firm will be binding upon the Company
and Executive.

 

5.    Withholding.    All payments required to be made by the Company to
Executive under this Agreement will be subject to the withholding of such
amounts, if any, relating to tax and other payroll deductions as may be required
by law.

 

 

22

--------------------------------------------------------------------------------

6.    Fees and Expenses.    In the event of Executive’s termination of
employment during a Employment Protection Period, the Company will pay any and
all fees and expenses (including legal fees and other costs of arbitration or
litigation) that may be incurred by Executive in enforcing his rights under this
Agreement.

 

7.    No Duty to Mitigate.    Benefits payable under this Agreement as a result
of termination of Executive’s employment will be considered severance pay in
consideration of his past service and his continued service from the Effective
Date, and his entitlement thereto will neither be governed by any duty to
mitigate his damages by seeking further employment nor offset by any
compensation that he may receive from other employment.

 

8.    Confidentiality and Exclusivity.    Executive agrees to maintain the
confidentiality of the Company’s (and its related entities and projects) books,
records, financial information, technical information, business plans and/or
strategies, and other confidential matters unless required to make disclosure in
the performance of his duties for the Company or as a result of a legal
proceeding or other legally mandated cause. The parties recognize and agree that
should the Company be required to pursue a claim against Executive under this
Section 8, the Company will likely be required to seek injunctive relief as well
as damages at law. Accordingly, Section 10, Arbitration, will not apply to any
action by the Company against Executive for violation of this Section 8.
Executive agrees for purposes of any disputes arising under this Section 8 to
submit to the exclusive jurisdiction of the federal and state courts in the
Commonwealth of Massachusetts.

 

9.    Arbitration.    Except as otherwise provided in Section 8, any dispute or
controversy between the parties involving the construction or application of any
terms, covenants or conditions of this Agreement, or any claim arising out of or
relating to this Agreement, or any claim arising out of or relating to
Executive’s employment by the Company that is not resolved within ten days by
the parties will be settled by arbitration in Boston, Massachusetts, in
accordance with the rules of the American Arbitration Association then in
effect, and judgment upon the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof. The Company and Executive agree that
the arbitrator(s) will have no authority to award punitive or exemplary damages
or so-called consequential or remote damages such as damages for emotional
distress. Any decision of the arbitrator(s) will be final and binding upon the
parties. Upon request the arbitrator(s) shall submit written findings of fact
and conclusions of law. The parties agree and understand that they hereby waive
their rights to a jury trial of any dispute or controversy relating to the
matters specified above in this Section 9.

 

 

23

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10.    Rights of Survivors.    If Executive dies after becoming entitled to
benefits under Section 3 following termination of employment but before all such
benefits have been provided, (a) all unpaid cash amounts will be paid to the
beneficiary that has been designated by Executive in writing (the
“beneficiary”), or if none, to Executive’s estate, (b) all applicable insurance
coverage will be provided to Executive’s family as though Executive had
continued to live, and (c) any stock options that become exercisable under
Section 3.4 will be exercisable by the beneficiary, or if none, the estate.

 

11.    Successors.    This Agreement will inure to and be binding upon the
Company’s successors. The Company will require any successor to all or
substantially all of the business and/or assets of the Company by sale, merger
or consolidation (where the Company is not the surviving corporation), lease or
otherwise, by agreement in form and substance satisfactory to Executive, to
assume this Agreement expressly. This Agreement is not otherwise assignable by
the Company.

 

12.    Subsidiaries.    For purposes of this Agreement, employment by a
corporation or other entity that is controlled directly or indirectly by the
Company will be deemed to be employment by the Company. Thus, references in the
Agreement to “Company” include such corporations or other entities where
appropriate in the context.

 

13.    Amendment or Modification; Waiver.    This Agreement may not be amended
unless agreed to in writing by Executive and the Company. No waiver by either
party of any breach of this Agreement will be deemed a waiver of a subsequent
breach.

 

14.    Severability.    In the event that any provision of this Agreement is
determined to be invalid or unenforceable, the remaining provisions shall remain
in full force and effect to the fullest extent permitted by law.

 

15.    Controlling Law.    This Agreement will be controlled and interpreted
pursuant to Massachusetts law.

 

16.    Superseded Agreement.    This Agreement supersedes provisions related to
severance payments due to a change in control, and option acceleration in the
event of a change in control, as set forth in the Employment Agreement between
Executive and the Company dated as of December 23, 1996.

 

17.    Notices.    Any notices required or permitted to be sent under this
Agreement are to be delivered by hand or mailed by registered or certified mail,
return receipt requested, and addressed as follows:

 

If to the Company:

 

Lionbridge Technologies, Inc.

 

24

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950 Winter Street, Suite 2410

Waltham, MA 02451

 

If to Executive:

 

Myriam Martin-Kail

 

[home address]

 

Either party may change its address for receiving notices by giving notice to
the other party.

 

In witness whereof, the parties hereto have executed this Agreement as of the
date first set forth above.

 

   

--------------------------------------------------------------------------------

Myriam Martin-Kail

     

 

LIONBRIDGE TECHNOLOGIES, INC.

 

    By:  

 

--------------------------------------------------------------------------------

         

 

 

 

25

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Exhibit A

 

“Change of Control” means the occurrence of any of the following events:

 

(1) any Person becomes the owner of 25% or more of the Company’s Common Stock
and a majority of the members of the Board of Directors make a determination
that a change of control has occurred; or

 

(2) individuals who, as of the Effective Date, constitute the Board of Directors
of the Company (the “Continuing Directors”) cease for any reason to constitute
at least a majority of such Board; provided, however, that any individual
becoming a director after the Effective Date whose election or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the Continuing Directors will be deemed to be a Continuing Director,
but excluding for this purpose any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities and Exchange Act of 1934 (the “Exchange Act”)) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board; or

 

(3) approval by the shareholders of the Company of a reorganization, merger,
consolidation or other transaction that will result in the transfer of ownership
of more than 50% of the Company’s Common Stock; or

 

(4) liquidation or dissolution of the Company or sale of substantially all of
the Company’s assets.

 

In addition, for purposes of this definition the following terms have the
meanings set forth below:

 

“Common Stock” means the then outstanding Common Stock of the Company plus, for
purposes of determining the stock ownership of any Person, the number of
unissued shares of Common Stock which such Person has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise. Notwithstanding the foregoing, the term Common Stock does
not include shares of preferred stock or convertible debt or options or warrants
to acquire shares of Common Stock (including any shares of Common Stock issued
or issuable upon the conversion or exercise thereof) to the extent that the
Board expressly so determines in any future transaction or transactions.

 

 

26

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A Person will be deemed to be the “owner” of any Common Stock of which such
Person would be the “beneficial

owner,” as such term is defined in Rule 13d-3 promulgated by the Securities and
Exchange Commission under the Exchange Act.

 

“Person” has the meaning used in Section 13(d) of the Exchange Act, except that
“Person” does not include (i) the Executive, an Executive Related Party, or any
group of which the Executive or Executive Related Party is a member, or (ii) the
Company or a wholly owned subsidiary of the Company or an employee benefit plan
(or related trust) of the Company or of a wholly owned subsidiary.

 

An “Executive Related Party” means any affiliate or associate of the Executive
other than the Company or a subsidiary of the Company. The terms “affiliate” and
“associate” have the meanings given in Rule 12b-2 under the Exchange Act; the
term “registrant” in the definition of “associate” means, in this case, the
Company.

 

 

27

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LIONBRIDGE TECHNOLOGIES, INC.

 

AGREEMENT

 

This is an AGREEMENT entered into between Lionbridge Technologies, Inc. (the
“Company”) and Paula Shannon (“Executive”) effective as of the 14th day of July,
2003.

 

WHEREAS, the Board of the Directors of the Company (the “Board”) considers it
essential to the best interests of the Company and its stockholders to foster
the Company’s ability to retain key management personnel; and

 

WHEREAS, the Board recognizes that, as it generally the case with publicly-held
corporations, the possibility of a Change of Control (as defined herein) exists
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders; and

 

WHEREAS, the Board intends for this Agreement to provide protection for its
executive officers in general, for so long as such officers remain in the
employment of the Company, against the exigencies of a Change of Control, but
not to otherwise provide assurance of or rights to continued employment; and

 

WHEREAS, should the possibility of a Change of Control arise, in addition to the
Executive’s regular duties, the Executive may be called upon to assist in the
assessment of such possible Change of Control, to advise management and the
Board as to whether such Change of Control would be in the best interests of the
Company and to take such other actions as the Board might determine to be
appropriate; and

 

WHEREAS, this Agreement is not intended to alter the rights of the Executive in
the absence of a Change of Control with respect to his or her employment by the
Company or his or her compensation and benefits in connection with such
employment and, accordingly, this Agreement, although taking effect as provided
below, will be operative only upon a Change of Control.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:

 

1.    Term; Employment Protection Period.    The term during which this
Agreement (the “Agreement”) will be in effect (the “Term of the Agreement”) will
begin on July 14, 2003 (the “Effective Date”) and will remain in effect until
terminated by a vote of the majority of the Board of Directors. If a Change of
Control (as defined in Exhibit A) occurs during the Term of the Agreement, the
Agreement will remain in effect until all obligations hereunder have been
discharged. The period starting on the date of such a Change of Control and
ending on the second anniversary of the Change of Control will be a “Employment
Protection Period” under the terms of this Agreement.

 

 

28

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5.    Definition of a Change of Control.    “Change of Control” has the meaning
set forth in Schedule A hereto.

 

3.    Termination of Employment; Severance Benefits.

 

3.1    Terminability of Employment.    If Executive’s employment terminates
during the Employment Protection Period set forth in this Agreement following a
Change of Control, the parties will be required to discharge the applicable
obligations described in this Section 3 and elsewhere in this Agreement. If
Executive’s employment terminates at

any time other than during the applicable Employment Protection Period following
a Change of Control, Executive will have no rights under the Agreement.

 

3.2    Termination upon Death or Disability.    If Executive ceases to be an
employee of the Company as a result of death or disability, the Company will
have no further obligation or liability to Executive hereunder other than for
Base Salary earned and unpaid at the date of termination and compensation for
accrued vacation, and the Term of the Agreement will end when those amounts are
paid. However, nothing in this Agreement is intended to interfere with the
rights of Executive and his family or beneficiaries under other applicable
plans, policies or arrangements of the Company. For purposes of this Section
3.2, the Company may terminate Executive’s employment for “disability” if,
because of physical or mental incapacity, Executive is unable for a period of 90
consecutive days to perform the material duties of his position and it is
determined by a qualified physician chosen by the Company (and, if during a
Employment Protection Period, approved by the Executive or his conservator) to
be probable that such incapacity will continue for an additional 60 consecutive
days.

 

3.3    Termination by the Company for Cause or by Executive Without Good
Reason.    If the Company terminates Executive’s employment for Cause (as
defined in this Section 3.3) or if Executive terminates his employment other
than for Good Reason (as defined in this Section 3.3), the Company will have no
further obligation or liability to Executive hereunder other than for Base
Salary earned and unpaid at the date of termination and compensation for accrued
vacation, and the Term of the Agreement will end when those amounts are paid.

 

“Cause” means (a) willful malfeasance or gross negligence in the performance by
Executive of his duties, resulting in harm to the Company, (b) fraud or
dishonesty by Executive with respect to the Company, or (c) Executive’s
conviction of a felony.

 

 

29

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“Good Reason” means (i) a material reduction in the Executive’s total
compensation, including but not limited to (a) a reduction of the Executive’s
base salary below the level in effect immediately prior to the Change of Control
without the Executive’s prior written consent, (b) a reduction in the
Executive’s target annual bonus opportunity below the level in effect
immediately prior to the Change of Control without the Executive’s prior written
consent, (c) discontinuation of participation in any compensation plan that is
maintained following the Change in Control in which the Executive participated
immediately prior to the Change of Control without the Executive’s prior written
consent, or (d) exclusion from participating in compensation programs that are
customarily offered to senior executives, (ii) relocation of the Executive’s
principal place of work to a location more than 50 miles from its location
immediately prior to the Change of Control or (iii) change in title or
responsibilities below the level in effect immediately prior to the Change of
Control without the Executive’s prior written consent.

 

3.4    By the Company Without Cause or By Executive for Good Reason.

 

(a)    Entitlement to Severance Benefits.    If, during the Term of the
Agreement, the Company terminates Executive’s employment without Cause, or if
Executive terminates his employment for Good Reason, the Company will, subject
to Section 4 below, provide severance benefits to Executive as set forth below
in Section 3.4(b).

 

(b)    Severance Benefits Following a Change of Control.    If the termination
occurs during a Employment Protection Period, the Company will provide severance
benefits to Executive as follows:

 

(i) The Company will pay to Executive within 30 days of the termination a
lump-sum cash amount equal to 100% of sum of the Executive’s annual Base Salary
in effect immediately prior to the termination (or, if his Base Salary has been
reduced within 60 days of the termination or at any time after the Change of
Control, his Base Salary in effect prior to the reduction) plus the Executive’s
then current annual target bonus.

 

(ii) The Company will also pay to Executive within 30 days of the termination a
pro-rata portion of his target bonus for the year of termination provided that
the termination occurs after June 30 and within a Employment Protection Period.

 

(iii) The Company will continue for a period of twelve (12) months from the date
of termination to provide Executive with family medical, disability and life
insurance coverage at the level in effect immediately prior to the Change of
Control. To the extent the Company is unable to provide such benefits to an
Executive under its existing plans and arrangements, it will either arrange to
provide the Executive with substantially similar benefits upon comparable terms
or pay the Executive cash amounts equal to the Executive’s cost of obtaining
such benefits.

 

 

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(c)    Option Acceleration.    Notwithstanding any contrary provision of the
plans or arrangements under which they are granted, upon a Change of Control and
irrespective of a termination of employment, (A) 50% of the options to purchase
Company stock held by Executive will immediately become exercisable and the
remaining 50% of the options to purchase Company stock held by Executive will
become exercisable on the six month anniversary of the date of the Change of
Control, and (B) all restricted stock held by Executive under restricted stock
plans and arrangements of the Company will immediately become fully vested.

 

4.    Limitations on Severance Benefits.

 

4.1 Except as provided in Section 4.2 below, the payments and benefits to which
Executive will be entitled under Section 3 of this Agreement will be reduced to
the extent necessary to prevent Executive from becoming liable for the excise
tax levied on certain “excess parachute payments” under section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”). If a reduction is made
under this Section 4.1, Executive will have the right to determine which
payments and benefits will be reduced.

 

4.2 The limitations of Section 4.1 will not apply if —

 

(i) the present value, net of all federal, state, and other income and excise
taxes, of all payments and benefits to which Executive is entitled hereunder
without such limitations, exceeds

 

(ii) the present value, net of all federal, state, and other income and excise
taxes, of all payments and benefits to which Executive would be entitled
hereunder if such limitations applied.

 

4.3 Determinations under this Section 4 will be made by the firm of certified
public accountants then serving as the Company’s auditor unless Executive has
reasonable objections to the use of that firm, in which case the determinations
will be made by a comparable firm chosen by Executive after consultation with
the Company. The determinations of such firm will be binding upon the Company
and Executive.

 

5.    Withholding.    All payments required to be made by the Company to
Executive under this Agreement will be subject to the withholding of such
amounts, if any, relating to tax and other payroll deductions as may be required
by law.

 

 

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6.    Fees and Expenses.    In the event of Executive’s termination of
employment during a Employment Protection Period, the Company will pay any and
all fees and expenses (including legal fees and other costs of arbitration or
litigation) that may be incurred by Executive in enforcing his rights under this
Agreement.

 

7.    No Duty to Mitigate.    Benefits payable under this Agreement as a result
of termination of Executive’s employment will be considered severance pay in
consideration of his past service and his continued service from the Effective
Date, and his entitlement thereto will neither be governed by any duty to
mitigate his damages by seeking further employment nor offset by any
compensation that he may receive from other employment.

 

8.    Confidentiality and Exclusivity.    Executive agrees to maintain the
confidentiality of the Company’s (and its related entities and projects) books,
records, financial information, technical information, business plans and/or
strategies, and other confidential matters unless required to make disclosure in
the performance of his duties for the Company or as a result of a legal
proceeding or other legally mandated cause. The parties recognize and agree that
should the Company be required to pursue a claim against Executive under this
Section 8, the Company will likely be required to seek injunctive relief as well
as damages at law. Accordingly, Section 10, Arbitration, will not apply to any
action by the Company against Executive for violation of this Section 8.
Executive agrees for purposes of any disputes arising under this Section 8 to
submit to the exclusive jurisdiction of the federal and state courts in the
Commonwealth of Massachusetts.

 

9.    Arbitration.    Except as otherwise provided in Section 8, any dispute or
controversy between the parties involving the construction or application of any
terms, covenants or conditions of this Agreement, or any claim arising out of or
relating to this Agreement, or any claim arising out of or relating to
Executive’s employment by the Company that is not resolved within ten days by
the parties will be settled by arbitration in Boston, Massachusetts, in
accordance with the rules of the American Arbitration Association then in
effect, and judgment upon the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof. The Company and Executive agree that
the arbitrator(s) will have no authority to award punitive or exemplary damages
or so-called consequential or remote damages such as damages for emotional
distress. Any decision of the arbitrator(s) will be final and binding upon the
parties. Upon request the arbitrator(s) shall submit written findings of fact
and conclusions of law. The parties agree and understand that they hereby waive
their rights to a jury trial of any dispute or controversy relating to the
matters specified above in this Section 9.

 

 

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10.    Rights of Survivors.    If Executive dies after becoming entitled to
benefits under Section 3 following termination of employment but before all such
benefits have been provided, (a) all unpaid cash amounts will be paid to the
beneficiary that has been designated by Executive in writing (the
“beneficiary”), or if none, to Executive’s estate, (b) all applicable insurance
coverage will be provided to Executive’s family as though Executive had
continued to live, and (c) any stock options that become exercisable under
Section 3.4 will be exercisable by the beneficiary, or if none, the estate.

 

11.    Successors.    This Agreement will inure to and be binding upon the
Company’s successors. The Company will require any successor to all or
substantially all of the business and/or assets of the Company by sale, merger
or consolidation (where the Company is not the surviving corporation), lease or
otherwise, by agreement in form and substance satisfactory to Executive, to
assume this Agreement expressly. This Agreement is not otherwise assignable by
the Company.

 

12.    Subsidiaries.    For purposes of this Agreement, employment by a
corporation or other entity that is controlled directly or indirectly by the
Company will be deemed to be employment by the Company. Thus, references in the
Agreement to “Company” include such corporations or other entities where
appropriate in the context.

 

13.    Amendment or Modification; Waiver.    This Agreement may not be amended
unless agreed to in writing by Executive and the Company. No waiver by either
party of any breach of this Agreement will be deemed a waiver of a subsequent
breach.

 

14.    Severability.    In the event that any provision of this Agreement is
determined to be invalid or unenforceable, the remaining provisions shall remain
in full force and effect to the fullest extent permitted by law.

 

15.    Controlling Law.    This Agreement will be controlled and interpreted
pursuant to Massachusetts law.

 

16.    Superseded Agreement.    This Agreement supersedes provisions related to
severance payments due to a change in control, and option acceleration in the
event of a change in control, as set forth in the Employment Agreement between
Executive and the Company dated as of December 23, 1996.

 

17.    Notices.    Any notices required or permitted to be sent under this
Agreement are to be delivered by hand or mailed by registered or certified mail,
return receipt requested, and addressed as follows:

 

If to the Company:

 

Lionbridge Technologies, Inc.

 

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950 Winter Street, Suite 2410

Waltham, MA 02451

 

If to Executive:

 

Paula Shannon

[home address]

 

Either party may change its address for receiving notices by giving notice to
the other party.

 

In witness whereof, the parties hereto have executed this Agreement as of the
date first set forth above.

 

   

--------------------------------------------------------------------------------

Paula Shannon

     

 

LIONBRIDGE TECHNOLOGIES, INC.

 

    By:  

 

--------------------------------------------------------------------------------

         

 

 

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Exhibit A

 

“Change of Control” means the occurrence of any of the following events:

 

(1) any Person becomes the owner of 25% or more of the Company’s Common Stock
and a majority of the members of the Board of Directors make a determination
that a change of control has occurred; or

 

(2) individuals who, as of the Effective Date, constitute the Board of Directors
of the Company (the “Continuing Directors”) cease for any reason to constitute
at least a majority of such Board; provided, however, that any individual
becoming a director after the Effective Date whose election or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the Continuing Directors will be deemed to be a Continuing Director,
but excluding for this purpose any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities and Exchange Act of 1934 (the “Exchange Act”)) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board; or

 

(3) approval by the shareholders of the Company of a reorganization, merger,
consolidation or other transaction that will result in the transfer of ownership
of more than 50% of the Company’s Common Stock; or

 

(4) liquidation or dissolution of the Company or sale of substantially all of
the Company’s assets.

 

In addition, for purposes of this definition the following terms have the
meanings set forth below:

 

“Common Stock” means the then outstanding Common Stock of the Company plus, for
purposes of determining the stock ownership of any Person, the number of
unissued shares of Common Stock which such Person has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise. Notwithstanding the foregoing, the term Common Stock does
not include shares of preferred stock or convertible debt or options or warrants
to acquire shares of Common Stock (including any shares of Common Stock issued
or issuable upon the conversion or exercise thereof) to the extent that the
Board expressly so determines in any future transaction or transactions.

 

 

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A Person will be deemed to be the “owner” of any Common Stock of which such
Person would be the “beneficial owner,” as such term is defined in Rule 13d-3
promulgated by the Securities and Exchange Commission under the Exchange Act.

 

“Person” has the meaning used in Section 13(d) of the Exchange Act, except that
“Person” does not include (i) the Executive, an Executive Related Party, or any
group of which the Executive or Executive Related Party is a member, or (ii) the
Company or a wholly owned subsidiary of the Company or an employee benefit plan
(or related trust) of the Company or of a wholly owned subsidiary.

 

An “Executive Related Party” means any affiliate or associate of the Executive
other than the Company or a subsidiary of the Company. The terms “affiliate” and
“associate” have the meanings given in Rule 12b-2 under the Exchange Act; the
term “registrant” in the definition of “associate” means, in this case, the
Company.

 

 

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