1
EXHIBIT 10.28
EMPLOYMENT AGREEMENT BETWEEN PICTURETEL CORPORATION
AND XXXXX XXXXX
June 19, 2000
Xx. Xxxxx Xxxxx
00 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Dear Lew:
On behalf of PictureTel Corporation (the "Company"), I am very pleased to offer
you an opportunity to immediately join our Company as the President and Chief
Operating Officer and a Corporate Officer of the Company reporting directly to
me.
The cash compensation in the offered position will be composed of two elements:
an annual base salary and an annual bonus opportunity under PictureTel's
Management Incentive Plan. The base salary for the position will be paid at the
biweekly rate of $10,769.23 (the equivalent of $280,000.00 annually based on 26
biweekly pay periods in the year). The offered base salary will be the minimum
paid while employed with the Company. As President and an Officer of the
Company, a full performance and compensation (salary, bonus, and equity) review
is completed by the Compensation Committee of the Board during the quarter
immediately following the close of each fiscal year and recommendations acted
upon as appropriate.
The payment of a bonus under the Management Incentive Plan is predicated on the
Company's achievement of the annual revenue and profitability objectives
established at the start of the fiscal year and your performance in meeting your
Individual Goals for the year. The bonus opportunity will be 0%-60% of base
salary for full performance in meeting the objectives for the year, but may
range up to 120% of base salary for performance in excess of the plan. The
bonus, if any, is determined and paid in the first quarter following the close
of the fiscal year.
The Company will offer you a cash sign-on bonus in the aggregate amount of
$100,000.00; to be paid as follows: $50,000.00 on July 1, 2000; $50,000.00 on
January 1, 2001. If you voluntarily terminate your employment with the Company
before the payment of all the sign-on bonus installments, those installments
remaining to be paid will be forfeited.
Effective immediately, the Company will put in place a special Executive Bonus
Program. You and the executive team will be eligible for bonus payments (the
amounts to be determined) for enhancing shareholder value by increasing the
Company's stock price to or above $10.00 per share for a period of no less than
thirty (30) consecutive trading days.
In addition, we will recommend to the Compensation Committee of the Board of
Directors that you be granted an option to purchase 300,000 shares of the Common
Stock of the Company ("Option"). The Option will vest over a four (4) year
period, with the first twelve and one-half (12.50) percent of the Option vesting
six (6) months following the date the option grant is approved and six and one-
quarter (6.25) percent of the Option vesting each full three (3) month period
thereafter. The purchase price of the Option will be determined by the
Compensation Committee on the day your option grant is approved and will be the
closing price as quoted on the National Market System of NASDAQ on that date.
Vesting shall be conditional on your continued full-time employment with the
company. All other conditions applicable to the Option shall be set forth in a
Stock Option Agreement representing the Option (which shall follow the terms of
the 1999 PictureTel Equity Plan) and such Stock Option Agreement shall be
delivered immediately following the day the Option is approved. As President,
additional option grants are subject to the annual total compensation review
discussed above.
2
In the event that your employment with the Company is involuntarily terminated
for any reason other than for Cause, you will be entitled to receive a
continuation of your then current base salary plus 50% of the then current
annual bonus target for a period of twelve (12) months ("Severance Period"). For
purposes of this letter, "Cause" shall be defined as and be limited to
conviction of a felony or willful misconduct or gross negligence in the
performance of duties which result in material harm to PictureTel. During the
Severance Period, the Company will maintain your eligibility to participate in
the Company's group medical and dental plans and will continue to contribute its
share of the costs of such plans at the same level as active employees. If you
wish to continue your medical and dental insurance coverage beyond the Severance
Period, you may do so for up to a total of eighteen (18) months (inclusive of
the Severance Period) pursuant to your rights under the Consolidated Budget
Reconciliation Act ("COBRA"). If you elect to continue coverage beyond the
Severance Period, you will be responsible for paying the full cost of the
coverage.
Further, the Company will enter into a separate Change in Control Agreement
("CIC Agreement") which will provide you with certain benefits in the event of
an involuntary termination due to a change in control. The CIC Agreement will
include certain triggering events and provide, but not be limited to, severance
equal to the sum of (a) your then current base salary, plus (b) the highest
bonus paid in the three years preceding the triggering events, paid over a
consecutive twenty-four (24) month period. The full acceleration of all unvested
stock options in the event of a change in control is to be specifically covered
in the Stock Option Agreement and will not be included in the CIC Agreement. The
CIC Agreement will be executed concurrently with your acceptance of our
employment offer and the commencement of work with the Company. In the event any
deal is concluded before the end of the calendar year 2000, the provisions of
the CIC Agreement will apply.
As an employee of the Company you will be entitled to participate in our medical
insurance benefit programs. We offer two options: (1) a competitive medical and
dental plan through Blue Cross Blue Shield of Massachusetts, or (2) membership
in the Harvard - Pilgrim Community Health Plan, a Health Maintenance
Organization. You will be responsible for a portion of the premium cost, with
payment arranged through payroll deductions. A Section 125 reimbursement plan to
help with daycare and non-reimbursed medical expenses is available at your
election, also through payroll deductions. In addition, the Company provides
long-term disability, accidental death and dismemberment, and life insurance
coverage (life benefit equal to two (2) times your annual salary). The premiums
for the disability and life insurance are paid one hundred (100) percent by the
Company. Finally, the Company offers a 401(k) Retirement Plan and a Section 423
Employee Stock Purchase Plan to all employees upon their becoming service
eligible. You will be entitled to paid holidays and vacation in accordance with
Company Policy.
This offer is contingent on your providing proof of eligibility for employment.
On your first day of employment, please bring with you either: (a) a valid U.S.
Passport, or (b) a birth certificate and a driver's license, or (c) an original
Social Security card and a driver's license.
Please indicate your acceptance of this offer and your anticipated start date by
completing and signing the enclosed copy of this letter, the PictureTel
Application for Employment, and the Proprietary Information Agreement. Please
return all signed documents to Xxxxx Xxxxxxxxx as soon as practical.
If you have any questions regarding this offer, please do not hesitate to call
Xxxxx or me. We look forward to your joining and being an important member of
our team.
Sincerely,
Xxxxxx Xxxx
Chairman, President and
Chief Executive Officer
ACCEPTED: ____________________________ Date: ____________
SS#: ________________ Anticipated Start Date: ________________
