Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement, dated October 3, 2003, is between Glowpoint,
Inc., a Delaware corporation (the "Company"), and David Trachtenberg
("Executive").
WHEREAS, the Company wishes to employ Executive and Executive wishes to
work for Company.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. POSITION AND RESPONSIBILITIES.
1.1 Position. Executive is employed by the Company to render services to
the Company in the position of President and Chief Executive
Officer. Executive shall perform such duties and responsibilities as
are normally related to such position in accordance with the
standards of the industry and any additional duties consistent with
his position now or hereafter assigned to Executive by the Board of
Directors. Executive shall abide by the rules, regulations, and
practices of the Company as adopted or modified from time to time in
the Company's reasonable discretion.
1.2 Board of Directors. The Company shall use its best efforts to cause
the Board of Directors to appoint Executive to the temporary vacancy
on the Board. In addition, at the next annual meeting of the
stockholders, the Company shall use its best efforts to cause the
Board to nominate Executive to a position on the Board.
1.3 Other Activities. Executive shall devote his full business time,
attention and skill to perform any assigned duties, services and
responsibilities while employed by the Company, for the furtherance
of the Company's business, in a diligent, loyal and conscientious
manner. Except upon the prior written consent of the Board of
Directors, Executive will not, during the term of this Agreement:
(i) accept any other employment; or (ii) engage, directly or
indirectly, in any other business activity (whether or not pursued
for pecuniary advantage) that interferes with Executive's duties and
responsibilities hereunder or create a conflict of interest with the
Company. It shall not be a breach or violation of this Agreement for
the Executive to: (i) serve on corporate, civic or charitable boards
or committees; (ii) deliver lectures, fulfill speaking engagements
or teach at educational institutions; (iii) manage personal
investments and activities, so long as such investments and
activities do not interfere with or detract from the performance of
the Executive's responsibilities to the Company in accordance with
this Agreement and provided that the Company shall not be
responsible for providing any compensation, expense reimbursements
or any other benefits to the Executive with respect to such
activities.
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1.4 No Conflict. Executive represents and warrants that Executive's
execution of this Agreement, Executive's employment with the
Company, and the performance of Executive's proposed duties under
this Agreement shall not violate any obligations Executive may have
to any other employer, person or entity, including any obligations
with respect to proprietary or confidential information of any other
person or entity.
1.5 Commencement of Work. Executive will commence employment with the
Company no later than thirty (30) days after the date of this
Agreement.
2. COMPENSATION AND BENEFITS.
2.1 Base Salary. In consideration of the services to be rendered under
this Agreement and so long as Executive remains employed by the
Company, the Company shall pay Executive a salary equivalent to
$315,000 per year for the first year of employment, $345,000 per
year for the second year of employment, and $375,000 per year for
the third year of employment (the "Base Salary"). The Base Salary
shall be paid in accordance with the Company's regularly established
payroll practice. Executive's Base Salary shall be reduced by
withholdings required by law. Executive's Base Salary will be
reviewed from time to time in accordance with the established
procedures of the Company for adjusting salaries for similarly
situated senior level employees and may be adjusted upward in the
sole discretion of the Board of Directors.
2.2 Restricted Stock. The Company shall recommend to the Compensation
Committee ("Compensation Committee") and to the Board of Directors
(the "Board") that Executive be granted restricted stock
("Restricted Stock") in the amount of 360,000 shares of Common Stock
of the Company.
(a) Other than as expressly provided herein, the Restricted Stock shall be
forfeited if the Executive's employment with the Company is terminated for any
reason. As long as the Executive remains employed by the Company, the risk of
forfeiture will lapse with respect to 120,000 shares on each anniversary of the
commencement of the Executive's employment. The executive may, in his discretion
and subject to the satisfaction of applicable income and employment tax
withholding obligations, make an election under Section 83(b) of the Internal
Revenue Code with respect to the Restricted Stock. Executive's entitlement to
any Restricted Stock that may be approved by the Board and/or Compensation
Committee is conditioned upon Executive's signing of a separate Restricted Stock
Agreement and payment of the par value of the Restricted Stock if required.
(b) The risk of forfeiture shall lapse upon a Change in Control or Corporate
Transaction (as each is defined in the Restricted Stock Agreement) as long as
Executive remains employed by the Company on the date of the Change of Control
or Corporate Transaction; provided, however, if the surviving company of such
Change in Control or Corporate Transaction offers Executive continued employment
at an equivalent level in terms of position, compensation and benefits to that
existing immediately prior to the Change in Control or
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Corporate Transaction and the successor entity or its parent assumes the
contractual obligations with respect the Restricted Stock, such risk of
forfeiture shall not automatically lapse, but will lapse in accordance to the
schedule set forth in paragraph 2.2(a).
2.3 Incentive Compensation. No later than sixty (60) days after
Executive commences his employment, Executive and the Compensation
Committee will establish appropriate goals and metrics by which
Executive will be evaluated for 2004. Such goals and metrics will be
updated by the Executive and the Compensation Committee on an annual
basis thereafter. If in the opinion of the Compensation Committee,
Executive meets the mutually agreed upon goals and metrics,
Executive will receive incentive compensation in an amount
equivalent to fifty percent (50%) of his then annual base salary.
2.4 Benefits. Executive shall be eligible to participate in the benefits
made generally available by the Company to similarly-situated senior
level employees, in accordance with the benefit plans established by
the Company, and as may be amended from time to time in the
Company's sole discretion.
2.5 Life Insurance. The Company will purchase life insurance on behalf
of Executive. The life insurance policy will contain a death benefit
payable to a beneficiary selected by Executive in the amount of
$2,000,000.
2.6 Expenses. The Company shall reimburse Executive for reasonable
travel and other business expenses incurred by Executive in the
performance of Executive's duties hereunder in accordance with the
Company's expense reimbursement guidelines, as they may be amended
in the Company's sole discretion.
2.7 Car Lease and Parking. The Company will reimburse Executive up to
$750 per month that he may use to lease a car to conduct Company
business. The Company will reimburse Executive up to $500 per month
that he may use to pay for parking his leased car in New York City.
Reimbursement will be made upon presentation of receipts according
to the Company's expense reimbursement guidelines.
2.8 Vacation. Executive will be entitled to accrue four weeks of paid
vacation per year. Such vacation must be used in the year in which
it is accrued and may not be carried over from year to year.
2.9 Indemnity. Executive will be indemnified by the Company against all
claims against him related to his employment hereunder or to the
performance of his duties hereunder to the fullest extent allowed by
the laws of the State of Delaware.
3. EMPLOYMENT AND SEVERANCE.
3.1 Employment. Either the Company or Executive may terminate
Executive's employment with the Company at any time, for any reason
or no reason at all so long as they comply with the terms in this
section 3.
3.2 Termination for Cause or Voluntary Resignation. If Executive is
terminated for Cause (as defined below) or if Executive voluntarily
resigns, Executive will be
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entitled to all his Base Salary and other benefits through the last
day actually worked. Thereafter, all benefits, compensation and
perquisites of employment will cease.
3.3 Termination Without Cause, Resignation for Good Reason or Death. If
Executive is terminated without Cause (as defined below) or if
Executive Resigns for Good Reason (as defined below) or if Executive
dies, Executive shall be entitled to severance equal to one year of
his then annual Base Salary and one year of his then annual
Incentive Compensation. Such severance shall be paid as follows: the
first payment, equal to 50% of the total severance, shall be made
within 14 days of the termination date. Thereafter, the second 50%
shall be paid in four equal payments over the next four quarters
following the termination date. In the event that Executive is
terminated without Cause, or if Executive Resigns for Good Reason,
or if Executive dies, Executive will also be entitled to one year of
accelerated vesting on the Restricted Stock granted under this
Agreement, and the forfeiture provisions as to the Restricted Stock
which is subject to accelerated vesting will lift, and he will
receive continuation payments of his Car Lease and Parking (as
provided in paragraph 2.7) for a period of one year. In addition, in
the event that Executive is terminated without Cause or if Executive
Resigns for Good Reason and if Executive timely elects COBRA
coverage, the Company will pay the employee contribution portion of
the COBRA coverage on Executive's behalf for a period of up to one
year.
3.4 Definition of Cause. For purposes of this Agreement, Cause shall
mean in the judgment of the Company: (i) Executive willfully engages
in any act or omission which is in bad faith and to the detriment of
the Company; (ii) Executive exhibits unfitness for service,
dishonesty, habitual gross neglect, persistent and serious
deficiencies in performance, or gross incompetence; which conduct is
not cured within fifteen (15) days after receipt by Executive of
written notice of the conduct; (iii) Executive is convicted of a
crime; or (iv) Executive refuses or fails to act on any reasonable
and lawful directive or order from the Board of Directors, which
refusal is not cured within fifteen (15) days after receipt by the
Executive of written notice thereof. Notice of any termination for
Cause shall be given in writing to the Executive, which notice shall
set forth in reasonable detail all acts or omission upon which the
Company is relying for such termination prior to the effective date
of the termination.
3.5 Definition of Resignation for Good Reason. For purposes of this
Agreement, Resignation for Good Reason shall mean if Executive
resigns because: (i) there has been a diminution in his Base Salary;
(ii) he is required to be based in an office that is more than 75
miles from the current location of the office; or (iii) he is
assigned duties that are materially inconsistent with his position
as Chief Executive Officer; (iv) there is a material diminution of
his status, office, title or reporting requirements; or (v) the
company fails to pay money or otherwise fails to provide benefits
owed under this Agreement.
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4. TERMINATION OBLIGATIONS.
4.1 Return of Property. Executive agrees that all property (including
without limitation all equipment, tangible proprietary information,
documents, records, notes, contracts and computer-generated
materials) furnished to or created or prepared by Executive incident
to Executive's employment belongs to the Company and shall be
promptly returned to the Company upon termination of Executive's
employment.
4.2 Cooperation. Following any termination of employment, Executive
shall cooperate with the Company in the winding up of pending work
on behalf of the Company and the orderly transfer of work to other
employees. Executive shall also cooperate with the Company in the
defense of any action brought by any third party against the Company
that relates to Executive's employment by the Company. In the event
that the Executive is asked to perform work pursuant to this
paragraph, he shall be compensated at his then reasonable hourly
rate for consulting services, together with reasonable expenses.
5. INVENTIONS AND PROPRIETARY INFORMATION; PROHIBITION ON THIRD PARTY
INFORMATION.
5.1 Proprietary Information. Executive hereby covenants, agrees and
acknowledges as follows:
(a) The Company is engaged in a continuous program of research, design,
development, production, marketing and servicing with respect to its business.
(b) Executive's employment hereunder creates a relationship of confidence and
trust between Executive and the Company with respect to certain information
pertaining to the business of the Company or pertaining to the business of any
customer of the Company which may be made known to the Executive by the Company
or by any customer of the Company or learned by the Executive during the period
of Executive's employment by the Company.
(c) The Company possesses and will continue to possess information that has been
created, discovered or developed by, or otherwise becomes known to it
(including, without limitation, information created, discovered or developed by,
or made known to, Executive during the period of Executive's employment or
arising out of Executive's employment and which pertains to the Company's actual
or contemplated business, products, intellectual property or processes) or in
which property rights have been or may be assigned or otherwise conveyed to the
Company, which information has commercial value in the business in which the
Company is engaged and is treated by the Company as confidential.
(d) Any and all inventions, products, discoveries, improvements, processes,
manufacturing, marketing and services methods or techniques, formulae, designs,
styles, specifications, data bases, computer programs (whether in source code or
object code), know-how, strategies and data, whether or not patentable or
registrable under copyright or similar statutes, made, developed or created by
Executive (whether at the request or suggestion of the Company or otherwise,
whether alone or in conjunction with others, and whether during regular
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hours of work or otherwise) during the period of Executive's employment by the
Company which pertains to the Company's actual or contemplated business,
products, intellectual property or processes (collectively hereinafter referred
to as "Developments"), shall be the sole property of the Company and will be
promptly and fully disclosed by Executive to the Board without any additional
compensation therefore, including, without limitation, all papers, drawings,
models, data, documents and other material pertaining to or in any way relating
to any Developments made, developed or created by Executive as aforesaid. The
Company shall own all right, title and interest in and to the Developments and
such Developments shall be considered "works made for hire" for the Company
under US Copyright Law. If any of the Developments are held for any reason not
to be "works made for hire" for the Company or if ownership of all right, title
and interest in and to the Developments has not vested exclusively and
immediately in the Company upon creation, Executive irrevocably assigns, without
further consideration, any and all right, title and interest in and to the
Developments to the Company, including any and all moral rights, and "shop
rights" in the Developments recognized by applicable law. Executive irrevocably
agrees to execute any document requested by the Company to give effect to this
Section 5.1 such as assignment of invention or other general assignments of
intellectual property rights, without additional compensation therefore.
(e) Executive will keep confidential and will hold for the Company's sole
benefit any Development which is to be the exclusive property of the Company
under this Section 5.1 irrespective of whether any patent, copyright, trademark
or other right or protection is issued in connection therewith.
(f) Executive also agrees that Executive will not, without the prior approval of
the Board use for Executive's benefit or disclose at any time during Executive's
employment by the Company, or thereafter, except to the extent required by the
performance by Executive of Executive's duties, any information obtained or
developed by Executive while in the employ of the Company with respect to any
Developments or with respect to any customers, clients, suppliers, products,
services, prices, executives, financial affairs, or methods of design,
distribution, marketing, service, procurement or manufacture of the Company or
any confidential matter, except information which at the time is generally known
to the public other than as a result of disclosure by Executive not permitted
hereunder. Notwithstanding the foregoing, the following will not constitute
confidential information for purposes of this Agreement: (i) information which
is or becomes publicly available other than as a result of disclosure by the
Executive; (ii) information designated in writing by the Company as no longer
confidential, or (iii) information known by Executive as of the date of this
Agreement and identified as such in writing to the Board. Executive will comply
with all intellectual property disclosure policies established by the Company
from time to time with respect to the Company's confidential information,
including without respect to Developments.
5.2 Non-Disclosure of Third Party Information. Executive represents and
warrants and covenants that Executive shall not disclose to the
Company, or use, or induce the Company to use, any proprietary
information or trade secrets of others at any time, including but
not limited to any proprietary information or trade secrets of any
former employer, if any; and Executive acknowledges and agrees that
any violation of this provision shall be grounds for Executive's
immediate termination and could subject Executive to substantial
civil liabilities and criminal penalties. Executive further
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specifically and expressly acknowledges that no officer or other
employee or representative of the Company has requested or
instructed Executive to disclose or use any such third party
proprietary information or trade secrets.
5.3 Injunctive Relief. Executive acknowledges and agrees that a remedy
at law for any breach or threatened breach of the provisions of this
Section 5 would be inadequate and, therefore, agrees that the
Company shall be entitled to injunctive relief in addition to any
other available rights and remedies in case of any such breach or
threatened breach.
6. LIMITED AGREEMENT NOT TO COMPETE OR SOLICIT.
6.1 Non-Competition. During the term of this Agreement, and for one (1)
year after the termination of Executive's employment with the
Company for any reason, unless mutually agreed otherwise by the
Executive and the Company, Executive shall not, directly or
indirectly, work as an employee, consultant, agent, principal,
partner, manager, officer, or director for any person or entity who
or which engages in a substantially similar business as the Company.
For purposes of this Agreement the Company is currently engaged in
the business of designing, developing, manufacturing or selling
video communication equipment and services.
6.2 Non-Solicitation. Executive shall not, during his employment and for
a period of one (1) year immediately after termination of his
employment, for any reason, either directly or indirectly: (a) call
on or solicit for similar services, or, encourage or take away any
of the Company's customers or potential customers about whom
Executive became aware or with whom Executive had contact as a
result of Executive's employment with the Company, either for
benefit of Executive or for any other person or entity; or (b)
solicit, induce, recruit, or encourage any of the Company's
employees or contractors to leave the employ of the Company or cease
providing services to the Company on behalf of the Executive or on
behalf of any other person or entity; or (c) hire for himself or any
other person or entity any employee who was employed or engaged by
the Company within six months prior to the termination of
Executive's employment.
6.3 Limitations; Remedies. The Executive further agrees that the
limitations set forth in this Section 6 (including, without
limitation, any time or territorial limitations) are reasonable and
properly required for the adequate protection of the businesses of
the Company. If any of the restrictions contained in Sections 6.1
and 6.2 are deemed by a court or arbitrator to be unenforceable by
reason of the extent, duration or geographic scope thereof, or
otherwise, then the parties agree that such court or arbitrator may
modify such restriction to the extent necessary to render it
enforceable and enforce such restriction in its modified form. The
Executive acknowledges and agrees that a remedy at law for any
breach or threatened breach of the provisions of this Section 6
would be inadequate and, therefore, agrees that the Company shall be
entitled to injunctive relief in addition to any other available
rights and remedies in cases of any such breach or threatened
breach.
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7. ALTERNATIVE DISPUTE RESOLUTION.
The Company and Executive mutually agree that any controversy or claim
arising out of or relating to this Agreement or the breach thereof, or any other
dispute between the parties arising from or related to Executive's employment
with the Company, shall be submitted to mediation before a mutually agreeable
mediator. In the event mediation is unsuccessful in resolving the claim or
controversy, such claim or controversy shall be resolved by arbitration
Company and Executive agree that arbitration shall be held in New York,
New York, before a mutually agreed upon single arbitrator licensed to practice
law. The arbitrator shall have authority to award or grant legal, equitable, and
declaratory relief. Such arbitration shall be final and binding on the parties.
If the parties are unable to agree on an arbitrator, the matter may be submitted
to the American Arbitration Association solely for appointment of an arbitrator.
The claims covered by this Agreement ("Arbitrable Claims") include, but
are not limited to, claims for wages or other compensation due; claims for
breach of any contract (including this Agreement) or covenant (express or
implied); tort claims; claims for discrimination (including, but not limited to,
race, sex, religion, national origin, age, marital status, medical condition, or
disability); claims for benefits (except where an employee benefit or pension
plan specifies that its claims procedure shall culminate in an arbitration
procedure different from this one); and claims for violation of any federal,
state, or other law, statute, regulation, or ordinance, except claims excluded
in the following paragraph. The parties hereby waive any rights they may have to
trial by jury in regard to Arbitrable Claims.
Claims Executive may have for Workers' Compensation State disability or
unemployment compensation benefits are not covered by this Agreement. Also not
covered is either party's right to obtain provisional remedies, or interim
relief from a court of competent jurisdiction.
Arbitration under this Agreement shall be the exclusive remedy for all
Arbitrable Claims. This agreement to mediate and arbitrate survives termination
of Executive's employment.
8. AMENDMENTS; WAIVERS; REMEDIES.
This Agreement may not be amended or waived except by a writing signed by
Executive and by a duly authorized representative of the Company. Failure to
exercise any right under this Agreement shall not constitute a waiver of such
right. Any waiver of any breach of this Agreement shall not operate as a waiver
of any subsequent breaches. All rights or remedies specified for a party herein
shall be cumulative and in addition to all other rights and remedies of the
party hereunder or under applicable law.
9. ASSIGNMENT; BINDING EFFECT.
9.1 Assignment. The performance of Executive is personal hereunder, and
Executive agrees that Executive shall have no right to assign and
shall not assign or purport to assign any rights or obligations
under this Agreement. This Agreement may be
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assigned or transferred by the Company; and nothing in this
Agreement shall prevent the consolidation, merger or sale of the
Company or a sale of any or all or substantially all of its assets.
9.2 Binding Effect. Subject to the foregoing restriction on assignment
by Executive, this Agreement shall inure to the benefit of and be
binding upon each of the parties; the affiliates, officers,
directors, agents, successors and assigns of the Company; and the
heirs, devisees, spouses, legal representatives and successors of
Executive.
10. SEVERABILITY.
If any provision of this Agreement shall be held by a court or arbitrator
to be invalid, unenforceable, or void, such provision shall be enforced to the
fullest extent permitted by law, and the remainder of this Agreement shall
remain in full force and effect. In the event that the time period or scope of
any provision is declared by a court or arbitrator of competent jurisdiction to
exceed the maximum time period or scope that such court or arbitrator deems
enforceable, then such court or arbitrator shall reduce the time period or scope
to the maximum time period or scope permitted by law.
11. TAXES.
All amounts paid under this Agreement (including without limitation Base
Salary) shall be reduced by all applicable state and federal tax withholdings
and any other withholdings required by any applicable jurisdiction.
12. GOVERNING LAW.
The validity, interpretation, enforceability, and performance of this
Agreement shall be governed by and construed in accordance with the laws of the
State of New Jersey, without regard to New Jersey conflict of laws principles.
13. INTERPRETATION.
This Agreement shall be construed as a whole, according to its fair
meaning, and not in favor of or against any party. Sections and section headings
contained in this Agreement are for reference purposes only, and shall not
affect in any manner the meaning or interpretation of this Agreement. Whenever
the context requires, references to the singular shall include the plural and
the plural the singular.
14. OBLIGATIONS SURVIVE TERMINATION OF EMPLOYMENT.
Executive agrees that any and all of Executive's obligations under this
agreement, shall survive the termination of employment and the termination of
this Agreement.
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15. AUTHORITY.
Each party represents and warrants that such party has the right, power
and authority to enter into and execute this Agreement and to perform and
discharge all of the obligations hereunder; and that this Agreement constitutes
the valid and legally binding agreement and obligation of such party and is
enforceable in accordance with its terms.
16. ENTIRE AGREEMENT.
This Agreement is the final, complete and exclusive agreement of the
parties with respect to the subject matter hereof and supersedes and merges all
prior or contemporaneous representations, discussions, proposals, negotiations,
conditions, communications and agreements, whether written or oral, between the
parties relating to the subject matter hereof and all past courses of dealing or
industry custom.
Executive acknowledges Executive has had the opportunity to consult legal
counsel concerning this agreement, that Executive has read and understands the
agreement, that Executive is fully aware of its legal effect, and that Executive
has entered into it freely based on Executive's own judgment and not on any
representations or promises other than those contained in this agreement.
In Witness Whereof, the parties have duly executed this Agreement as of
the date first written above.
Glowpoint, Inc. David C. Trachtenberg
/s/ Richard Reiss /s/ David C. Trachtenberg
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