Employment Agreement

EMPLOYMENT AGREEMENT


EMPLOYMENT AGREEMENT, dated as of __________, 1999 (this "Agreement"), by and between 7TH LEVEL, INC., a Delaware corporation (the "Company"), and ROBERT E. WEBSTER ("Employee").


RECITALS


WHEREAS, the Company desires to employ Employee as __________ of ViaGrafix on the terms and conditions hereinafter set forth and Employee desires to accept such employment.


NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows:


1. EMPLOYMENT.


1.1 Subject to the terms and conditions of this Agreement, the Company agrees to employ Employee during the Term (as defined in Section 2) as __________ of ViaGrafix. Employee shall report to the Chief Executive Officer of the Company and/or the President or Chief Operating Officer of the Company. As __________ of ViaGrafix, Employee shall be responsible for the __________ of ViaGrafix and shall perform such duties and responsibilities as are customarily performed by a __________ of a company the size and nature of ViaGrafix, and such other managerial duties and responsibilities with the Company which are appropriate for his position at the Company as, from time to time, may be assigned to him by the Chief Executive Officer of the Company and/or the President or Chief Operating Officer of the Company.


1.2 Subject to the terms and conditions of this Agreement, Employee hereby accepts employment as __________ of ViaGrafix and agrees to devote at least a majority of his working time and efforts (but no less than such time as is necessary to achieve the goals for ViaGrafix that are established by mutual agreement of the Employee and the Company) to the performance of services, duties and responsibilities in connection therewith (other than during periods of illness, disability or vacation).


1.3 Employee agrees, that if requested by the Company, Employee shall serve as a member of the Company's Board of Directors.


2. TERM OF EMPLOYMENT. The term of this Agreement (the "Term") shall be for a period commencing on the date hereof and continuing through the _____ anniversary of the date hereof; subject to earlier termination in accordance with the terms and conditions contained in Section 6 hereof.


3. PLACE OF EMPLOYMENT. During the Term, Employee shall perform his services at the principal place of business of the Company's ViaGrafix subsidiary which will be located at One American Way, Pryor, Oklahoma 74361. Employee shall be furnished with office facilities and services suitable to his position and suitable for the performance of his duties. Employee acknowledges and agrees that in connection with his employment, however, he may be required to travel on behalf of the Company.


4. COMPENSATION.


4.1 SALARY. During the Term, the Company shall pay Employee a base salary ("Base Salary") at the rate of ________________ per annum (pro rated for the balance of fiscal 1999 ending December 31, 1999, and for any partial year during the Term). The Base Salary shall be payable in accordance with the ordinary payroll practices of the Company for its Employee officers but in no event less frequently than semi-monthly. The Base Salary shall be reviewed annually by the Board on or before the last day of each fiscal year, and may be increased in the sole discretion of the Board taking into account corporate and individual performance, any increase in Employee's responsibilities on account of acquisitions by, or the general growth of, ViaGrafix and general business conditions.


4.2 STOCK OPTIONS. As an inducement to Employee to enter into this Agreement, the Company has on the date hereof (the "Grant Date") granted to Employee options (the "Options") to purchase 600,000 shares of common stock, par value $.01 per share, of the Company ("Common Stock") exercisable at a price equal to the closing market price of the Common Stock on the Nasdaq Stock Market (as reported by The Wall Street Journal) at the Effective Time (as defined in the Merger Agreement). Pursuant to the terms of the grant, vesting of such Options shall occur as follows, provided the Employee is still then employed by the Company (except as set forth in Sections 7.1 and 7.3 hereof):


200,000 Options shall vest on the second anniversary of the
Grant Date;
200,000 Options shall vest on the third anniversary of the
Grant Date;
200,000 Options shall vest on the fourth anniversary of the
Grant Date.


5. EMPLOYEE BENEFITS.


5.1 EMPLOYEE BENEFIT PROGRAMS, PLANS AND PRACTICES. The Company shall provide Employee during the Term, with coverage under all employee benefit programs, plans and practices which the Company and ViaGrafix makes available from time to time to its senior employees, with at least the same opportunity to participate as the other senior employees of the Company and ViaGrafix including, without limitation, retirement, pension, profit sharing, medical, dental, hospitalization, life insurance, short and long term disability, accidental death and dismemberment and travel accident coverage.


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5.2 VACATION AND PERQUISITES. Employee shall be entitled to paid vacation and perquisites consistent with historical practices at ViaGrafix.


5.3 EXPENSES. Employee is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this Agreement, (in accordance with the policies and procedures established from time to time by the Company) including, without limitation, entertainment and travel expenses (and the cost of living while away from home on business or at the request of, and in the service of the Company), and similar items related to such duties and responsibilities. The Company will reimburse Employee in full for all such out-of-pocket expenses upon presentation by Employee from time to time of a proper account of such expenditures in accordance with the policies and procedures established by the Board and applicable to employees of the Company.


6. TERMINATION OF EMPLOYMENT.


6.1 DISABILITY. If Employee shall fail during the Term, because of illness, physical or mental disability or other incapacity, for a period of 120 consecutive days or any 180 days in any 365 consecutive days, to render the services provided for by this Agreement or be adjudged an incompetent ("Disability"); provided that the date on which the Disability will be deemed to occur shall be such 120th day or 180th day, respectively, or the date on which Employee is adjudged an incompetent, as the case may be, the Company may terminate Employee's employment on not less than two (2) weeks written notice thereof, setting forth the facts and circumstances claimed to provide a basis for termination of Employee's employment under this Section 6.1.


6.2 DEATH. Employee's employment hereunder will terminate automatically if he should die.


6.3 TERMINATION FOR CAUSE. The Company shall have the right to terminate the employment of Employee with or without Cause (as hereinafter defined). The term "Cause," as used herein, shall mean (i) Employee's willful refusal or failure (other than during periods of illness, Disability or vacation) to perform his duties hereunder or under any lawful directive of the Board (consistent with the terms of this Agreement), (ii) Employee's willful misconduct or gross neglect in the performance of his duties hereunder, (iii) the willful breach of this Agreement by Employee, (iv) the conviction, plea of guilty or nolo contendre of Employee in respect of any felony, other than motor vehicle offenses, or for any misdemeanor constituting theft or embezzlement from the Company; provided that an indictment of Employee in such matters shall cause the Company to suspend Employee with pay until such matters are, to the Company's satisfaction, clarified or finalized, (v) other fraudulent action against the Company or (vi) any violation by Employee, or conduct by Employee that poses a substantial threat of causing the Company to violate, any statute, law, ordinance or regulation promulgated or enforced by any entity with jurisdiction over the Company or Employee, concerning employment


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