Exhibit 4.27
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of June 16, 2000 by and between Xxxxx
Xxxxxxxx ("Executive") and OpenTV, Inc., a Delaware corporation (the "Company").
1. Duties and Scope of Employment.
(a) Position. The Company agrees to employ Executive as its President
and Chief Operating Officer and Chief Executive Officer Applications Group (Open
TV Studios) for the period of his employment under this Agreement ("Employment")
which shall commence no later than November 1, 2000. Executive will have
worldwide responsibility for the Applications Group, Sales, Marketing and
Business Development. (See attached diagram.) Executive shall report to the
Company's Chief Executive Officer (the "CEO"). Executive shall be invited to
attend all Board Meetings of OpenTV Corp. and, shall be recommended by the CEO
at the first available opportunity for appointment to the Board of Directors of
OpenTV Corp.
(b) Obligations. During the term of his Employment, Executive shall
devote his full business efforts and time to the Company and shall not render
services to any other person or entity without the express prior approval of the
Board of Directors (the "Board") of the Company. Executive represents and
warrants to the Company that he is under no contractual obligations or
commitments inconsistent with his obligations under this Agreement.
2. Cash and Incentive Compensation.
(a) Salary. The Company shall pay Executive as compensation for his
services a base salary at an annual rate of not less than $400,000 for the term
of this Agreement unless terminated earlier pursuant to Section 10. Such salary
shall be payable in accordance with the Company's standard payroll procedures.
Such salary and other benefits herein shall be subject to review by the Board
annually or more often. (The annual compensation specified in this subsection
(a), together with any increases in such compensation that the Company may grant
from time to time, are referred to in this Agreement collectively as "Base
Compensation.")
(b) Incentive Bonuses. Executive shall be eligible to participate in
the OpenTV Bonus Plan, approved by unanimous written consent of the Compensation
Committee of OpenTV Corp. in May 2000. Executive's actual annual bonus will be
at the discretion of the CEO, subject to ratification of the Board based upon
individual and company performance assessments as agreed by the Company and
Executive from time to time. The first annual assessment shall be agreed before
the date of this agreement. For purposes of this agreement, there is no target
bonus amount and no maximum bonus amount.
3. Stock Benefits. As soon as practicable and no later than 30 days from
the date of this Agreement, the Board shall grant Executive options to purchase
200,000 shares of OpenTV Corp. Class A Ordinary Shares (the "Ordinary Shares")
under OpenTV Corp.'s 1999 Amended Stock Option/Stock Issuance Plan at an
exercise price equal to the fair market value of the Ordinary Shares on the date
of the grant. These grants will be structured so that Executive will receive
options to purchase up to the maximum number of Incentive Stock Options ("ISOs")
permissible under Internal Revenue Code section 422 per the Compensation
Committee's resolution detailing the above information and included in the
individual Stock Grant. The option will be evidenced by the Company's standard
stock option agreement. So long as Executive continues in service with the
Company, the option will vest with respect to 25% of the option shares upon
completion of one year of service with the Company and with respect to the
balance in 36 successive equal monthly installments upon your completion of each
additional month of Executive's service thereafter. For the avoidance of doubt,
any incentive bonus under this Section shall be separate and independent from
the Home Purchase Loan and Related Stock Award contained in Section 6.
4. Vacation Time and Executive Benefits. During the term of his
Employment, Executive shall be eligible for paid vacation time in accordance
with the Company's vacation policy applicable to its senior management which
shall in any event be not less than 20 days per year in addition to customary
public holidays. Executive also shall be eligible to participate in any
Executive benefit plans maintained by the Company for the benefit of its senior
management, subject in each case to the generally applicable terms and
conditions of the plan in question and to the determinations of any person or
committee administering such plan.
5. Business Expenses. During the term of his Employment, Executive shall
be authorized to incur necessary and reasonable travel, entertainment and other
business expenses in connection with his duties hereunder. In respect of
business trips by air, Executive shall be entitled to business class travel. The
Company shall reimburse Executive for such expenses upon presentation of an
itemized account and appropriate supporting documentation, all in accordance
with the Company's generally applicable policies.
6. Home Purchase Loan and Related Stock Award. The Company shall make
available to Executive the sum of $3,000,000 for the purchase of a residence in
the San Francisco area in connection with Executive's relocation and in
consideration of Executive accepting this appointment on the terms of this
Section 6. Within 3 months of commencing Employment or such later date as is
agreed by the parties, Executive shall notify the Company as to the residence
that he wishes to purchase.
Upon such notification, the Company shall make a relocation loan
representing up to 100% of the cost of the home required by the Executive to a
maximum sum of $3,000,000 (the "Home Loan"). The Home Loan shall not bear
interest and shall be non-amortizing. The Company shall be granted a security
interest in the Executive's principal residence to secure repayment. In the
event that the Home Loan shall be in default and, in the event that the Company
were to foreclose on the home securing the Home Loan, if the value of the home
realized by the Company is insufficient to repay the Home Loan in full, the
Company shall have recourse against Executive in an amount not to exceed 50% of
the deficiency.
The Company will forgive 25% of the Home Loan on January 1, 2001, 25% on
January 1, 2002, 25% on January 2003, and the remaining 25% on January 1, 2004.
If the Executive is terminated by the Company without Cause (including
termination as the result of death or disability) prior to complete forgiveness
of the Home Loan, the Company shall, on the date of such termination, forgive
from the remaining balance of the Home Loan the sum representing 50% of the Home
Loan, or if termination should occur after January 1, 2002, the entire remaining
amount of the Home Loan. If Executive is terminated for Cause or voluntarily
resigns from the Company, Executive shall only be entitled to loan forgiveness
earned through the date of such termination and the Home Loan shall become due
and payable within 120 days of such termination.
In respect of the difference between the sum of $3,000,000 and the actual
amount of the Home Loan (the "Shortfall") on each of January 1, 2001, 2002, 2003
and 2004, the Company will award to Executive that number of Ordinary Shares
having a value of at least one-quarter of the Shortfall which shall be fully
vested and transferable on the date of each such award. The Ordinary Shares
shall be registered under applicable federal and state securities laws so as to
permit the resale of such shares by Executive on the date of each such award. In
the event that Executive is terminated without Cause (including termination as
the result of death or disability) on or before January 1, 2004, the Company
shall immediately award to Executive two years additional share awards of the
remaining number of shares which were to have been awarded through January 1,
2004, which shares shall be fully vested and transferable on the date of such
award and shall be registered under applicable federal and state securities laws
so as to permit the resale of such shares by Executive on the date of each such
award.
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7. Annual Physical Exam. The Company shall pay the full cost of an annual
physical exam for Executive.
8. Other Benefits. The Company shall provide other perquisites as may be
approved by Compensation Committee from time to time, including, without
limitation:
(a) the provision by the Company of a fully expensed car up to the value
of $60,000 which shall be acquired by the Company on a three-year
lease purchase and transferred to Executive at the end of the lease
term without additional payment therefore. Executive acknowledges that
this automobile benefit may be treated as taxable compensation to him.
(b) the reimbursement of school fees incurred in respect of private
schooling for Executive's children for the first year of employment
only, to a maximum of $10,000 per child in respect of that year.
The Company will reimburse Executive up to a maximum amount of
$100,000 for all reasonable, documented expenses incurred in relocating himself
and his family from the United Kingdom (to include, without limitation, travel,
temporary lodging and meals for up to 3 months, packing, unpacking and storage)
and the Company shall also reimburse Executive for reasonable attorney fees
associated with the negotiation of this agreement, the acceptance of the
appointment hereunder, the consideration of Executive's tax position and the
purchase of the home referred to in Section 6.
The Company shall reimburse Executive for any tax on such relocation
and other related expenses as provided in the above paragraph of this Agreement,
together with any additional tax on such tax reimbursement, such that Executive
incurs no additional tax liability in connection with such reimbursements.
9. Term of Employment.
(a) Term. The Company agrees to continue Executive's employment, and
Executive agrees to remain in employment with the Company, from the date of this
Agreement for four (4) years ("The Term"), or until the date when Executive's
Employment terminates. The term of this agreement will terminate at Executive's
death. The term may be terminated at the Company's option, by notice to
Executive, as a result of Executive's disability (defined in Subsection 9(b)),
or for Cause (defined in Subsection 10(g)). In addition, the Company may
terminate Executive's employment without Cause (subject to the provisions of
Sections 6 and 10). The Term shall be automatically renewed for successive
periods of one (1) year unless either party gives written notice of non-renewal
to the other party no later than sixty (60) days prior to the expiration of the
then current Term.
(b) Permanent Disability. The Company may terminate Executive's
Employment due to Permanent Disability by giving Executive notice in writing.
For all purposes under this Agreement, "Permanent Disability" shall mean that
Executive, at the time notice is given, has failed to perform his duties under
this Agreement for not less than 90 working days (whether or not consecutive) in
any 365-day period of as the result of his incapacity due to physical or mental
illness. If Executive's employment is terminated under this Subsection (b), the
Company shall continue paying Executive's Base Compensation for a period six (6)
months following the effective date of the termination.
10. Termination Benefits.
(a) Eligibility for Termination Benefits. This Section 10 shall
apply if, during the term of this Agreement:
(i) The Company terminates Executive's Employment for any
reason other than Cause (as defined below), Permanent Disability or death; or
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(ii) Executive resigns his Employment.
If Executive terminates his employment during the term of this
Agreement by voluntary resignation, death, or disability or by the Company for
Cause, the Company will pay, in lieu of any other payments hereunder (including
bonus payments), Executive's Base Compensation that has actually accrued to the
date of termination, any expense reimbursements, and any vacation pay that has
accrued to that date and is payable under the Company's standard policies.
Executive acknowledges that upon receipt of such payments pursuant to this
subparagraph, the Company will have no further obligations to you under this
agreement.
(b) Severance Pay. If Executive's employment is terminated during the Term
of this agreement other than by voluntary resignation, death, or disability or
by the Company for Cause, Executive shall receive, in lieu of all amounts
otherwise payable hereunder, an additional two years of the then-current Base
Compensation which would be payable during the remainder of the term, continued
vesting for an additional two years on the ISO grant defined in Section 3, the
Company leased car defined in Subsection 8(a), and those amounts owed under
Sections 5 and 6 and Subsections 10(c), 10(d) and 10(e). Such Base Compensation
payments will be made at the same intervals as they would have been made if this
Agreement had not been terminated. Executive acknowledges that upon receipt of
such payments pursuant to this Subsection, the Company will have no further
obligations to Executive under this Agreement. At the end of the original four
year Term, thereafter Executive shall only be entitled to six months severance
and six months continued vesting on any ISO grants, along with the amounts owed
under Section 5.
(c) Health Insurance. If this Section 10 applies, and if Executive
elects to continue his health insurance coverage under the Consolidated Omnibus
Budget Reconciliation Act ("COBRA") following the termination of his Employment,
then the Company shall pay Executive's monthly premium under COBRA until the
earliest of (i) six months or (ii) the date when Executive receives
substantially equivalent health insurance coverage in connection with new
employment or self-employment.
(d) Relocation Expenses. If this Section 10 applies, the Company
will reimburse Executive up to a maximum amount of $50,000 for all reasonable,
documented expenses incurred in relocating from California. The Company shall
reimburse Executive for any tax on such relocation and other related expenses as
provided in this Agreement, together with any additional tax on such tax
reimbursement, such that Executive incurs no additional tax liability in
connection with such reimbursements.
(e) Outplacement Services. If this Section 10 applies, the Company
will pay up to a maximum of $25,000 for outplacement services to be chosen by
Executive.
(f) Noncompetition. Executive agrees that, during his employment
with the Company and following termination of employment in accordance with
Section 10(b), for the period of 6 months thereafter (the "Severance Period"),
Executive will not, without first obtaining the Company's prior written
approval, directly or indirectly engage or prepare to engage in any activities
in competition with the Company or accept employment, provide services to, or
establish a business relationship with a business or individual engaged in or
preparing to engage in competition with the Company. As used herein, Competitive
Activity shall mean the development, marketing, or sale of products related to
the Company's industry. Executive agrees to notify the Company, in writing, at
least ten business days prior to engaging in any work for any business purpose
other than work for the Company. For purposes of this paragraph, the holding of
less than five percent of the outstanding voting securities of any firm or
business organization in competition with the Company shall not constitute
activities or services precluded by this paragraph.
(g) Definition of "Cause." For all purposes under this Agreement,
"Cause" shall mean:
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(i) Gross and willful failure to perform services, if such
failure materially injures the Company and has not been cured within 30 days
after Executive was given notice of such failure by the Company;
(ii) Material dishonesty;
(iii) Breach of fiduciary duty;
(iv) Fraud or embezzlement as determined by a court;
(v) Conviction of, or a plea of "guilty" or "no contest" to, a
felony under the laws of the United States or any state thereof, if such felony
either is work-related or materially impairs Executive's ability to perform
services for the Company;
(vi) A material breach of this Agreement, if such breach has not
been cured within 30 days after Executive was given notice of such failure by
the Company.
11. Nondisclosure.
Executive has entered into a Proprietary Information and Inventions
Agreement with the Company, which is incorporated herein by reference.
12. Successors.
(a) Company's Successors. This Agreement shall be binding upon any
successor (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.
(b) Executive's Successors. This Agreement and all rights of
Executive hereunder shall inure to the benefit of, and be enforceable by,
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
13. Miscellaneous Provisions.
(a) Notice. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered mail, return receipt
requested and postage prepaid. In the case of Executive, mailed notices shall be
addressed to him at the home address that he most recently communicated to the
Company in writing. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be directed to
the attention of its Secretary.
(b) Modifications and Waivers. No provision of this Agreement shall
be modified, waived or discharged unless the modification, waiver or discharge
is agreed to in writing and signed by Executive and by an authorized officer of
the Company (other than Executive). No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the
same condition or provision at another time.
(c) Whole Agreement. No other agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. This Agreement and the
Proprietary Information and Inventions Agreement contain the entire
understanding of the parties with respect to the subject matter hereof.
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(d) Withholding Taxes. All payments made under this Agreement shall
be subject to reduction to reflect taxes or other charges required to be
withheld by law.
(e) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California (except the provisions governing the choice of law).
(f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(g) Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be settled in San Francisco,
California, by arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. The decision of the arbitrator shall be
final and binding on the parties, and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The parties
hereby agree that the arbitrator shall be empowered to enter, an equitable
decree mandating specific enforcement of the terms of this Agreement. The
Company and Executive shall bear equally all fees and expenses of the
arbitrator; provided, however, that the Company and Executive shall bear such
fees and expenses of the arbitrator and such of the legal fees and out-of-pocket
expenses of the other party as the arbitrator may determine if the arbitrator
determines that the claim or position of the Company or Executive (as the case
may be) was without reasonable foundation. Executive hereby consents to personal
jurisdiction of the state and federal courts located in the State of California
for any action or proceeding arising from or relating to this Agreement or
relating to any arbitration in which the parties are participants.
(h) No Assignment. This Agreement and all rights and obligations of
Executive hereunder are personal to Executive and may not be transferred or
assigned by Executive at any time. The Company may assign its rights under this
Agreement to any entity that assumes the Company's obligations hereunder in
connection with any sale or transfer of all or a substantial portion of the
Company's assets to such entity.
(i) Counterparts. This Agreement may be executed in two or counters
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year first
above written.
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
OpenTV, Inc.
By: /s/ Jan Steenkamp
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Title:
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