Exhibit 10.1
EMPLOYMENT
AGREEMENT
This Employment Agreement (the
“Agreement” ) is made and entered into as of
November 1, 2008 ( “Effective Date” ) by
and between PLATO Learning, Inc., a Delaware corporation
headquartered in Minneapolis, Minnesota (the
“Company” ) , and Vincent Riera (
“Executive” ).
WITNESSETH
THAT :
WHEREAS, the Company wishes to offer
Executive employment and Executive wishes to accept employment from
the Company, pursuant to the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of
the premises and the mutual covenants hereinafter set forth, the
Company and Executive hereby agree as follows:
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1.
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Employment . The Company hereby agrees
to employ Executive to perform the duties set forth in
Section 3 hereof, and Executive hereby accepts such
employment, on the terms and conditions of this Agreement.
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2.
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Term . The term of this Agreement (
“Term” ) shall commence on the Effective Date
and shall end on December 31 , 2010, subject to earlier
termination pursuant to Section 6. On December 31, 2010
and on each December 31 thereafter, unless earlier terminated
pursuant to Section 6, the Term will be automatically extended
for an additional one (1) year, unless either party gives
written notice not to extend the Term hereof at least forty-five
(45) days prior to the date such extension would be effective.
Notwithstanding anything contained herein to the contrary, in the
event of a Change in Control (as such term is defined in
Appendix A), the Term shall be automatically extended until
the second anniversary of the Change in Control.
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3.
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Duties . Executive will serve as the
Company’s President and Chief Executive Officer, and as a
member of the Company’s Board of Directors (the
“Board” ), with the responsibilities and duties
customarily associated with such positions, and any other
consistent responsibilities and duties assigned or delegated to
Executive by the Board. Executive will follow applicable policies
and procedures adopted by the Company from time to time, including
without limitation policies relating to business ethics, conflict
of interest, non-discrimination, confidentiality and protection of
trade secrets, and insider trading.
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4.
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Time Commitment . Executive will devote
Executive’s time, attention and energies to the performance
of his duties and responsibilities under this Agreement. Executive
may not be associated with, consult, advise, work for, be employed
by, contract with, or otherwise devote any of Executive’s
time to the pursuit of any other work or business activities that
may interfere with the performance of such duties and
responsibilities. The foregoing shall not preclude Executive from
devoting reasonable time to the supervision of his personal
investments, civic, charitable, educational, religious and similar
types of activities, speaking engagements and membership on other
boards of directors, provided such activities do not interfere in
any way with the business of the Company; and provided further
that, Executive cannot serve on the board of directors of more than
one publicly-traded company without the written consent of the
Board. The time involved in such activities shall not be treated as
vacation time. Executive shall be entitled to keep any amounts paid
to him in connection with such activities ( e.g., director
fees and honoraria).
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5.
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Compensation and Benefits . Beginning
on the Effective Date, the Company will pay the following
compensation to Executive in full consideration for performance of
his services hereunder, payable in regular installments in
accordance with the Company’s usual payroll policies and
procedures.
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(a)
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Salary Bonus Compensation. Executive
will receive an annual salary of Three Hundred Ninety Thousand
($390,000). The Board or the Compensation Committee of the Board
will review Executive’s salary at least annually.
Executive’s salary will not be reduced, and after any
increase the term “salary” for purposes of this
Agreement shall refer to Executive’s annual salary as most
recently increased.
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(b)
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Bonus Compensation . Executive will be
eligible to participate in the Company’s executive incentive
plan as established each year by the Board of Directors or
Compensation Committee of the Board. Executive’s target bonus
plan for fiscal year 2009 shall be set forth in the Company’s
Fiscal 2009 Executive Annual Incentive Plan.
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(c)
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Stock Options . Executive shall be
eligible to receive grants of stock options and performance shares
of the Company’s common stock as may be determined by the
Board under provisions of the Company’s Annual Executive
Incentive Plan. All options to purchase shares of the
Company’s common stock shall be evidenced by the
Company’s standard form of stock option agreement, and all
grants of performance share of the Company’s common stock
shall be evidenced by the Company’s standard form of
performance share award agreement. All options and grants of
performance shares shall be subject to the terms and conditions of
the Company’s 2006 Stock Incentive Plan.
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(e)
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Vacation . Executive shall be entitled
to five (5) weeks of paid vacation on an annual basis, to be
accrued and used in accordance with the Company’s policies as
in effect from time to time.
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(e)
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Benefits . Executive shall be eligible
to participate in such group life insurance, major medical, and
other employee benefit plans and programs generally available to
senior executive employees of the Company (collectively
“Benefit Plans”) as established by the Company, in
accordance with the applicable terms and conditions of such Benefit
Plans (including the requirements of the Benefit Plans for
participation). The benefits under the Benefit Plans available to
Executive shall be no less favorable than those available to other
senior executives of the Company.
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(f)
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Expenses . The Company will reimburse
Executive for all reasonable and necessary expenses incurred by
Executive in connection with the performance of his services
hereunder upon submission by Executive of appropriate documentation
in accordance with the Company’s expense reimbursement
policy.
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6. Termination .
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(a)
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Death or Disability . This Agreement
and Executive’s employment shall be terminated immediately
upon Executive’s death. In the event of Executive’s
Disability, this Agreement and Executive’s employment shall
be terminated thirty (30) days after the Company gives written
notice to Executive, unless Executive has returned to the
substantial performance of his duties on a full-time basis. For
purposes of this Agreement, “Disability” means
that as a result of physical or mental incapacity Executive is
unable for a period of 120 consecutive days during any consecutive
180-day period to perform his duties hereunder on a full-time
basis.
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Upon termination by reason of death
or Disability, Executive shall be entitled only to accrued but
unpaid salary through the date of termination, together with any
other benefit or payment provided under the Company’s plans,
policies or programs in accordance with their terms (collectively,
“Accrued Obligations” ).
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(b)
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Cause or Without Good Reason . The
Company may terminate this Agreement and Executive’s
employment for Cause (as defined in paragraph (d) of this
Section) upon ten (10) day’s prior written notice to
Executive. Executive may terminate the Agreement and his employment
without Good Reason (as defined in paragraph (d) of this
Section) upon thirty (30) days’ prior written notice to
the Company.
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Upon termination for Cause or
without Good Reason, Executive shall be entitled only to the
Accrued Obligations.
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(c)
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Good Reason; Without Cause . Executive
may terminate this Agreement and his employment for Good Reason by
providing written notice to the Company within (90) days after
the initial existence of the condition; provided however, that the
Company shall have a period of thirty (30) days during which
it may remedy the condition. The Company may terminate this
Agreement and Executive’s employment without Cause upon
thirty (30) days’ prior written notice to Executive.
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Upon termination for Good Reason or
Without Cause, Executive shall be entitled to:
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(i)
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the Accrued Obligations;
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(ii)
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a lump sum severance payment equal to two
(2) times Executive’s annual salary in effect on the
termination date (without regard to any reduction in salary
referred to in clause (ii) of the definition of Good Reason),
which shall be paid to Executive within ten (10) business days
following the lapse of the recession period for such termination;
and
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(iii)
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continuation of health and other welfare
benefits (including life, accident and disability benefits) to
Executive and his spouse and dependents under the Benefit Plans in
which they participated on the date of Executive’s
termination, for eighteen (18) months following the date of
Executive’s termination on substantially the same terms and
conditions (including contributions by Executive) as in effect
immediately prior to Executive’s termination; provided
, that the Company’s obligation to provide such health or
other welfare benefit shall cease with respect to such benefit at
the time Executive becomes eligible to participate in a group plan
of another employer providing comparable benefits in the
aggregate.
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To the extent that the health and
other welfare benefits referred to in clause (iii) above cannot be
provided after termination of employment under applicable law or
the terms of the Benefit Plans then in effect (and cannot be
provided through the Company’s paying the applicable premium
for Executive under COBRA), the Company shall pay to Executive such
amount as is necessary to provide Executive, on an after-tax basis,
with an amount equal to the cost of acquiring, for Executive and
his spouse and dependents, (on a non-group basis) those health and
other welfare benefits that would otherwise be lost to Executive
and his spouse and dependents as a result of Executive’s
termination.
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(d)
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Definitions . For the purposes of this
Agreement, “Cause” shall mean
Executive’s:
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(i)
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indictment or plea of guilty or nolo
contendere involving any felony or gross misdemeanor involving
dishonesty, fraud, or breach of trust under any law of the United
States or any State thereof;
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(ii)
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willful engagement in any conduct or gross
negligence that in either case materially injures the Company or
any of its subsidiaries; or
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(iii)
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willful and substantial nonperformance of
assigned duties, provided that such nonperformance has continued
more than ten days after the Company has given written notice of
such nonperformance and of its intention to terminate
Executive’s employment because of such nonperformance.
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For purpose of this Agreement
“Good Reason” shall exist if the Company,
without Executive’s written consent:
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(i)
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materially reduces the nature, scope, level or
extent of Executive’s responsibilities;
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(ii)
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reduces Executive’s salary;
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(iii)
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gives written notice to the Executive pursuant
to Section 2 not to extend the Term of this Agreement; or
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(iv)
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relocates Executive’s principal business
office to a location which is more than fifty (50) miles from
both (A) Executive’s principal business office
immediately prior to such relocation and (B) Executive’s
principal place of residence at the time of such relocation.
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(e)
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Conditions. Executive’s
eligibility to receive the payment and benefits under this Section
is conditioned on (i) his compliance with the provisions of
Section 8 of this Agreement and (ii) his execution of a
general release and waiver of all claims against the Company and
its directors, officers and subsidiaries, in a reasonable and
customary form prepared by the Company.
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(f)
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Right of Recapture . In the event that
(x) within one year after termination of this Agreement and
Executive’s employment for any reason the Company determines
that prior to such termination he engaged in any activity which
would have constituted a basis for termination by the Company for
Cause while employed by the Company or (y) Executive breaches
the restrictive covenants of Section 8, then:
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(i)
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the Company shall have no further obligations
to pay the lump sum severance payment or to continue providing
Executive and his spouse and dependents with health and other
welfare benefits, as provided in paragraph (c) above, if such
termination was by the Company without Cause or by Executive for
Good Reason;
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(ii)
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upon written notice to Executive from the
Company, Executive shall pay to the Company within ten
(10) business days any lump severance payment received by
Executive pursuant to paragraph (c) above, and
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(iii)
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if Executive has exercised any stock options
granted to him by the Company, Executive shall pay to the Company
within ten (10) business days after written notice from the
Company the difference between (A) the aggregate fair market
value on the date (or dates) of exercise of the shares subject to
stock options which were exercised by Executive on or after the
date which is one (1) year prior to Executive’s
termination of employment and (B) the aggregate exercise price
of such stock options.
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If Executive disputes the exercise
by the Company of any rights under this Section 6(f), Executive
shall have the right to submit such dispute to arbitration in
accordance with Section 13(e). Notwithstanding anything
contained herein, this paragraph shall not apply to any breach of
the provisions of Section 8(a) unless there has been substantial
damage to the Company. For purposes of this paragraph, “fair
market value” on any date means the per share closing price
of the Company’s common stock on the Nasdaq Stock Market on
that date (or, if there was no reported closing price on that date,
on the last preceding date on which the closing price was reported)
or, if the Company is not then listed on the Nasdaq Stock Market,
as determined by the Board in good faith.
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(a)
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Retention Bonus . In the event that
Executive’s employment continues for two (2) years after
a Change in Control (as such term is defined in Appendix A),
Executive shall be entitled to a lump sum cash retention bonus
equal to two (2) times Executive’s annual salary then in
effect. Such retention bonus shall be paid to Executive within ten
(10) business days following the second anniversary of the
Change in Control.
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(b)
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Severance Payment and Benefits . In the
event that Executive’s employment is terminated less than two
(2) years after a Change in Control by the Company without
Cause or by Executive for Good Reason, Executive shall be entitled
to the same rights, payments and benefits as provided in paragraph
(c) of Section 6.
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For purposes of this Section, Good
Reason shall also include the Company’s failure without
Executive’s written consent to continue in effect any
incentive or bonus plan, or Benefit Plan, unless Executive is
permitted to participate in other plans providing Executive with
substantially equivalent compensation and benefits in the aggregate
(and, with respect to life insurance, major medical and other
employee welfare benefit plans, at a substantially equivalent
cost).
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(c)
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Reduction of Payment . If, as provided
in Appendix B, Executive would otherwise be subject to the
excise tax imposed by Section 4999 of the Internal Revenue
Code, the amounts payable under this Agreement shall be reduced as
provided in Appendix B.
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(d)
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Legal Fees . If any contest or dispute
shall arise under this Agreement involving termination of
Executive’s employment with the Company after a Change in
Control or involving the failure or refusal of the Company to
perform fully in accordance with the terms of this Section, the
Company shall reimburse Executive for all reasonable legal fees and
related expenses, if any, incurred by Executive in connection with
such contest or dispute if a court of competent jurisdiction or an
arbitration panel substantially upholds Executive’s
position.
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8.
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Restrictive Covenants .
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(a)
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Confidentiality . Executive agrees not
to directly or indirectly, without the Company’s prior
written consent:
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(i)
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use or disclose, for the benefit of any
person, firm or entity other than the Company and its subsidiaries,
the Confidential Business Information of the Company or any of its
subsidiaries;
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(ii)
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distribute or disseminate in any way to any
person, firm or entity anyone other than the Company and its
subsidiaries, any Confidential Business Information in any form
whatsoever;
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(iii)
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copy any Confidential Business Information
other than for use by the Company or any of its subsidiaries;
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(iv)
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remove any Confidential Business Information
from the premises of the Company;
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(v)
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fail to safeguard all confidential documents;
and
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(vi)
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copy any confidential documents belonging to
any of the Company’s customers.
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For purposes of this Agreement,
“Confidential Business In
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