EMPLOYMENT AGREEMENT
Exhibit 10.1
This Employment Agreement (this “Agreement”), dated as of August 7, 2003, is entered into between Viewpoint Corporation, a Delaware Corporation with its principal office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, X.X. 00000 (“Viewpoint”), and Xxxxx X. Xxxxx (“Executive”).
(i) | Annual Bonuses. Viewpoint and Executive will negotiate in good faith to develop an annual performance-based incentive bonus program for Executive individually or for Executive as a participant in an incentive compensation plan for senior executives. | |||
(ii) | Profitability-Based Bonuses. Executive shall be eligible to receive the following bonuses: |
(A) | The first time Viewpoint achieves Profitability (as defined below) during the Term of Employment for a fiscal quarterly period, if at all, Viewpoint will pay to Executive a bonus of $100,000 within thirty (30) days following Viewpoint’s announcement of its financial results for such quarter. | |||
(B) | The first time Viewpoint achieves Profitability for two (2) consecutive fiscal quarters during the Term of Employment, if at all, Viewpoint will pay to Executive a bonus of $130,000 within thirty (30) days following Viewpoint’s announcement of its financial results for such second such quarter. | |||
(C) | For purposes of this Section 2(c)(ii), “Profitability” means positive earnings per share calculated before interest, depreciation, amortization, non-cash stock-based compensation charges, and impairment of goodwill and other intangible assets but after accrual for performance-based any bonus(es) described in this Section 2(c). |
(i) | During the Term of Employment, Viewpoint shall maintain directors and officers insurance (“D&O Insurance”) in a liability amount of no less than $15,000,000 and shall cause Executive to be named as an additional insured under such policy. Viewpoint also agrees to obtain tail coverage for Executive with respect to said D&O Insurance for no less than three (3) years after cessation of Executive’s employment. | |||
(ii) | Viewpoint shall defend, indemnify and hold Executive harmless, to the fullest extent permitted by law and by Viewpoint’s by-laws, against all claims that arise from or out of, or are related to Executive’s actions or inactions while employed with Viewpoint (including attorneys’ fees, judgments, fines, defense costs and amounts paid in any settlement). For the avoidance of doubt, the foregoing indemnification will be provided with respect to all times during which Executive served as a director or officer of Viewpoint, regardless of whether any claim covered by this Section 2(j)(ii) is asserted during the Term of Employment or after Executive’s employment ceases. |
(i) | Viewpoint will pay to Executive an amount equal to two (2) times Executive’s then current Base Salary, which shall be payable in a lump sum, and | |||
(ii) | One hundred percent (100%) of the unvested portion of the Option and all other options, if any, granted to Executive during the Term of Employment, will immediately vest and will remain exercisable by Executive for three (3) months following the effective date of termination (the “Termination Date”). | |||
(iii) | In addition, unless otherwise prohibited by the terms of the applicable plans, Viewpoint shall reimburse Executive for, or pay on Executive’s behalf, the premiums necessary to continue Executive’s participation in Viewpoint’s welfare benefit plans for one (1) year following the Termination Date, including, without limitation, all medical, prescription, dental, disability, group life, accidental death and travel accident insurance plans and programs maintained by Viewpoint, at the level provided to Executive immediately prior to the Change in Control; provided, however, that if Executive becomes covered under any plans of another employer that provide substantially similar coverage, the coverage provided by Viewpoint pursuant to this Subsection 3(a)(iii) will cease. |
(iv) | In addition to the foregoing, Executive will be entitled to continue his coverage under the above plans to the extent required by the Consolidated Omnibus Budget Reconciliation Act of 1985 “COBRA”) commencing on the first (1st) anniversary of the Termination Date. |
(b) Termination With Cause or Without Good Reason. If, at any time during the Term of Employment, Viewpoint terminates Executive’s employment with Cause, or if Executive terminates his employment with Viewpoint without Good Reason, Viewpoint will have no obligation to make any payments to Executive under this Agreement, and the unvested portion of the Option and all other options, if any, granted to Executive at any time before such termination will be forfeited and will not vest and will not be exercisable at any time by Executive. | ||
(c) Termination in Connection with a Change in Control of Viewpoint. If, at any time within one (1) year following a Change in Control of Viewpoint, Executive’s employment is terminated by Viewpoint (or its successor, as the case may be) without Cause, or by Executive for Good Reason, then |
(i) | Executive shall be entitled to a lump sum amount, in cash and payable within ten (10) days following the Termination Date, equal to two (2) times Executive’s Base Salary, | |||
(ii) | One hundred percent (100%) of the unvested portion of the Option and all other options, if any, granted to Executive at any time before such termination will immediately vest and will remain exercisable by Executive for three (3) months following the Termination Date, and | |||
(iii) | Unless otherwise prohibited by the terms of the applicable plans, Executive shall be entitled to continued participation in Viewpoint’s welfare benefit plans for one (1) year following the Termination Date, including, without limitation, all medical, prescription, dental, disability, group life, accidental death and travel accident insurance plans and programs of Viewpoint, at the level provided to Executive immediately prior to the Change in Control; provided, however, that if Executive becomes eligible for coverage under any plans of another employer that provide substantially similar coverage, the coverage provided by Viewpoint pursuant to this Subsection 3(c)(ii)(C) will cease. In addition to the foregoing, Executive will be entitled to continue his coverage under the above plans to the extent required by COBRA commencing on the first (1st) anniversary of the Termination Date. |
compliance with Section 12; provided, however, that if Viewpoint does not make such election, Section 12 shall be null and void and without further effect. |
(a) “Cause” means the occurrence of any of the following: |
(i) | the willful and continuing refusal of Executive to follow the lawful directives of the Board, provided that such directives are consistent with Executive’s title and position, | |||
(ii) | conduct that is intentional and known by Executive to be materially harmful or potentially materially harmful to Viewpoint’s best interest, | |||
(iii) | gross negligence in the performance of, or willful disregard of, Executive’s obligations hereunder, | |||
(iv) | Executive’s conviction of any felony, or | |||
(v) | Executive’s commission of any act of dishonesty or moral turpitude which, in the good faith opinion of the Board, is materially detrimental to Viewpoint; |
provided, however, that in the event of a termination due to one or more of the reasons set forth in clauses (a)(i), (ii) and/or (iii), Executive shall be provided with a period of five (5) business days from the date Viewpoint gives notice of such termination to effectively cure or remedy such reason or reasons (unless such cure or remedy is not possible). |
(b) | “Good Reason” means the occurrence of any of the following: |
(i) | any material breach by Viewpoint of its obligations under this Agreement, | |||
(ii) | relocation of the Executive’s principal place of employment from the City of New York, without the Executive’s consent, | |||
(iii) | a significant diminution of Executive’s duties as set forth in Section 1 without Executive’s consent, or | |||
(iv) | a failure by Viewpoint to obtain a written agreement from any successor or assign of Viewpoint to assume the material obligations under this Agreement upon a Change in Control; |
provided, however, that in the event of a termination for Good Reason, Viewpoint shall be provided with a period of five (5) business days from the date Executive gives notice of such termination to effectively cure or remedy such reason or reasons; and if Viewpoint fails to cure or remedy the reason or reasons for termination, Executive’s Good Reason termination shall be effective as of the date the notice was given. |
(c) | “Change in Control of Viewpoint” means and includes each of the following: |
(i) | the acquisition, in one or more transactions, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) by any person or any group of persons who constitute a group (within the meaning of Section 13d-3 of the Exchange Act) of any securities of Viewpoint such that, as a result |
of such acquisition, such person or group beneficially owns (within the meaning of Rule 13d-3 of the Exchange Act), directly or indirectly, more than fifty percent (50%) of Viewpoint’s outstanding voting securities entitled to vote on a regular basis for a majority of the members of the Board; | ||||
(ii) | the consummation of any merger or any other business combination, in one or more transactions, including, but not limited to a sale of all or substantially all of the assets of Viewpoint, other than a transaction immediately following which the shareholders of Viewpoint who owned shares immediately prior to the transaction continue to own, by virtue of their prior ownership of Viewpoint shares, at least fifty percent (50%) of the voting power, directly or indirectly, of the surviving corporation in any such merger or business combination; or | |||
(iii) | the consummation of a plan of complete liquidation of Viewpoint. |
(a) He has carefully read this Agreement in its entirety; | ||
(b) He understands the terms and conditions contained herein; | ||
(c) He has had the opportunity to review this Agreement with legal counsel of his own choosing and has not relied on any statements made by Viewpoint or its legal counsel as to the meaning of any term or condition contained herein or in deciding whether to enter into this Agreement; and | ||
(d) He is entering into this Agreement knowingly and voluntarily. |
EXECUTIVE | VIEWPOINT CORPORATION | |
/s/ Xxxxx X. Xxxxx | /s/ Xxxxxx X. Xxxx | |
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Xxxxx X. Xxxxx | By: Xxxxxx X. Xxxx | |
Chief Executive Officer |