Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into as of January 28,
2005 by and between MACROVISION CORPORATION (the "Company"), a California
corporation, and XXXXXXX X. KREPICK (the "Executive").
RECITALS:
A. The Company and the Executive desire to enter into an employment
agreement for the purposes of continuing the services of the Executive
as President and Chief Executive Officer of the Company.
B. In so doing, the Company and the Executive desire to delineate
their respective rights, obligations and responsibilities.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the company and the Executive agree as follows:
1. Employment. The Company shall continue to employ the Executive,
and the Executive accepts such employment with the Company, as the Company's
President and Chief Executive Officer, and/or such other positions as the
Company's Board of Directors (the "Board") shall determine consistent with
Section 16(c) hereof, for a period of two (2) years beginning January 1, 2005,
and ending December 31, 2006 (the "Term"), upon the terms and conditions set
forth herein.
2. Location of Employment. The Company agrees that, during the Term
of this Agreement, the Executive will be allowed to maintain his principal place
of employment within 35 miles of his current residence in Mountain View,
California, and will not be required to relocate his principal place of
employment to a location further distant. Executive shall be excused from
performing services under this Agreement during any period of time that the
Company is in breach of this covenant, and the Company shall be obligated to
continue to provide compensation and benefits hereunder as though Executive were
continuing in full-time employment during such period.
3. Duties and Obligations of the Executive. The Executive shall
report directly to the Board and shall perform the customary duties of the
office of President and Chief Executive Officer (and, as applicable, transition
duties pursuant to Section 16(c)) as may from time to time be reasonably
requested of him by the Board. Such duties shall include, but are not limited
to:
(a) Supervising, directing and controlling the Company's
business and personnel;
(b) Providing leadership in planning, strategic development
and implementation of the Company's business plans and affairs; and
(c) Maintaining a good relationship with the Company's
shareholders, regulatory agencies and governmental authorities.
4. Base Salary. In consideration for the services to be performed
hereunder, the Executive shall receive base salary in the amount of $325,000 per
annum, payable in substantially equal installments during the Term in accordance
with the Company's normal payroll practices. The Executive shall receive such
annual increases in salary, if any, as may be determined by the Compensation
Committee of the Board, in its sole discretion.
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5. Incentive Compensation. The Executive shall participate in the
Company's annual executive incentive plan ("EIP") for the full calendar year
2005 and on a prorated basis for calendar year 2006, based on the period of time
that the Executive is a full-time employee of the Company during 2006, provided
that Company shall pay Executive a minimum of four (4) months prorated bonus for
2006. The Company shall provide the Executive with a bonus opportunity under the
EIP for each such year that is comparable to the bonus opportunity provided to
the Executive under the EIP for 2004. The Compensation Committee of the Board
will determine the amount of any bonus payable to the Executive pursuant to the
EIP for each such year, which amount shall be based on Executive's base salary
as determined under Section 4 above.
6. Stock Options. The Company has granted the Executive options to
purchase Company common stock that are currently outstanding, some of which are
not yet exercisable in whole or in part. The Company will grant additional stock
options (or other equity compensation) to the Executive in the future while he
continues to serve as the Company's President and Chief Executive Officer, and
for any period thereafter that the Executive is serving as a full-time employee
of the Company, at the same times, if any, and in similar proportions to
historic grants for other executive officers, that the Company grants stock
options (or other equity compensation) to its other executive officers
generally, provided that the Executive continues to serve as the Company's
President and Chief Executive Officer, or otherwise is a full-time employee of
the Company, on the grant dates. The currently outstanding stock options and any
future stock options (or other equity compensation) the Company grants to the
Executive are hereinafter referred to as the "Stock Options." Any Stock Options
granted after the date of this Agreement will remain exercisable for a period of
not less than one (1) year following the end of the Term, unless Executive's
employment is terminated by the Company for Cause in accordance with Section
16(a) below. Notwithstanding the provisions of any agreement(s) pursuant to
which the Stock Options are granted, the Stock Options granted to the Executive
on July 23, 2003 (covering 166,667 shares of the Company's common stock, some of
which are already vested and exercisable) and the Stock Options granted to the
Executive on September 22, 2004 (covering 37,500 shares of the Company's common
stock) are hereby made fully vested and exercisable on the date of this
Agreement. Notwithstanding the provisions of any agreement(s) pursuant to which
the Stock Options are granted, unless the Executive's employment with the
Company is earlier terminated by the Company for Cause in accordance with
Section 16(a) below, on the last day of the Term all of the Stock Options then
held by the Executive shall become fully vested and exercisable.
7. Other Employee Benefits.
(a) During the Term, the Executive shall be entitled to
those employee benefits adopted by the Company for employees of the Company
generally and for its executive officers, subject to any eligibility conditions
stated in the plan documents for such employee benefits and regulatory approval
requirements, if any.
(b) At the end of the Term, or upon Executive's earlier loss
of coverage under the Company's healthcare plan, the Executive shall be entitled
to the benefits provided under the Consolidated Omnibus Budget Reconciliation
Act of 1985 ("COBRA"). If any such loss of coverage occurs prior to the end of
the Term, other than as a result of termination of Executive's employment by the
Company for Cause, the Company will pay the cost of COBRA coverage for the
Executive for the remainder of the Term. Any payments under COBRA after the end
of the Term or following any termination of the Executive's employment by the
Company for Cause will be Executive's sole responsibility.
(c) The Executive will continue to be entitled to 25 days of
paid vacation per calendar year, and 10 days of sick time per calendar year, as
currently provided under the Company's standard policies. Any unused vacation
time shall be paid to the Executive at the end of the Term, or upon termination
of the Executive's employment for any reason prior to the end of the Term.
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8. Withholding Taxes. All amounts payable by the Company hereunder
shall be subject to all federal, state, local and other withholding and
employment taxes as may be required by applicable law.
9. Excise Taxes. If all or any portion of the amounts payable to
the Executive under this Agreement, either alone or together with other payments
which the Executive receives from the Company, constitute "excess parachute
payments" within the meaning of Section 280G of the Code, that are subject to
the excise tax imposed by Section 4999 of the Code, the Company shall increase
the amounts payable under this Agreement to the extent necessary to afford the
Executive substantially the same economic benefit under this Agreement as the
Executive would have received had no such excise tax been imposed on the
payments due the Executive under this Agreement. The determination of the amount
of any such excise taxes shall be made by an independent accounting firm
employed by the Company prior to the occurrence of the event giving rise to such
excess parachute payments.
10. Indemnification. The Company and the Executive have entered into
the Company's standard indemnification agreement, and the Company shall
indemnify the Executive in accordance with such agreement, together with any
amendments thereto or replacements thereof, and applicable law. The Company
represents that it currently has directors and officers liability insurance
coverage and that it currently intends to maintain such insurance during the
Term.
11. Devotion to the Company's Business. The Executive shall devote
his full business time, ability and attention to the business of the Company
during the Term and shall not during the Term engage in any other business
activities, duties or pursuits whatsoever, or directly or indirectly render any
services of a business, commercial or professional nature to any other person or
organization, whether for compensation or otherwise, without the prior written
consent of the Board. However, the expenditure of reasonable amounts of time for
educational, charitable or professional activities shall not be deemed a breach
of this Agreement if those activities do not materially interfere with the
services required of the Executive under this Agreement. Nothing in this
Agreement shall be interpreted to prohibit the Executive from making passive
personal investments. However, the Executive shall not directly or indirectly
acquire, hold or retain any interest in any business competing with or similar
in nature to the business of the Company. In the event that the Company
terminates the Executive's status as President and Chief Executive Officer
pursuant to Section 16(b), the Board shall not unreasonably withhold consent to
the Executive's engaging in other business activities or rendering other
services after expiration of the 120-day period specified in Section 16(c),
provided that such activities and services do not relate to any business that
competes with or is similar in nature to the business of the Company.
12. Noncompetition. The Executive shall not, during the Term,
directly or indirectly, either as an employee, employer, consultant, agent,
principal, stockholder, officer, director or in any other individual or
representative capacity, engage or participate in any business or prospective
business that is or may be competitive with any business of the Company without
obtaining the prior written consent of the Board. This Section 12 shall survive
any termination of this Agreement for the balance of the Term.
13. No Solicitation of Employees. The Executive agrees that during
the Term and for a period of twelve (12) months following the end of the Term,
he will not solicit, recruit, or encourage, directly or indirectly, any
employees of the Company or any of its subsidiaries for employment with any
other person or entity, and he will not encourage any other person or entity to
do so. This Section 13 shall survive the Term and any termination of this
Agreement for the period stated above.
14. Injunctive Relief. The Executive hereby represents and agrees
that the services to be performed under this Agreement are of a special, unique,
unusual, extraordinary and intellectual character that gives them a peculiar
value, the loss of which cannot be reasonably or adequately compensated in
damages in an action at law. The Executive therefore expressly agrees that, in
addition to any other rights or remedies that the Company may possess, the
Company shall be entitled to injunctive and other
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equitable relief to prevent or remedy a breach of this Agreement by the
Executive, including but not limited to Sections 11, 12 and 13 hereof.
15. Generally Applicable Agreements and Company Policies. The
Executive shall comply with all agreements and policies generally applicable to
employees of the Company and to its executive officers, whether entered into or
adopted before, after or concurrently with this Agreement. Such agreements and
policies shall include, but are not limited to, the Company's Proprietary
Information, Inventions and Ethics Agreement, the Company's Code of Personal and
Business Conduct and Ethics, and the Company's Xxxxxxx Xxxxxxx Policy.
16. Termination of Employment Status.
(a) Termination by Company for Cause. The Company by action
of the Board may terminate Executive's employment for Cause. Upon any such
termination of the Executive's employment for Cause, the Company's obligations
under Sections 4, 5, 6 and 7 (except statutory obligations under COBRA and to
pay accrued vacation time) shall immediately terminate. For purposes of this
Agreement, "Cause" means the occurrence of any one or more of the following: (i)
the Executive's conviction of any felony or any act of fraud, misappropriation
or embezzlement which has an immediate and materially adverse effect on the
Company, (ii) the Executive's engaging in a fraudulent act to the material
damage or prejudice of the Company or in conduct or activities materially
damaging to the property, business or reputation of the Company, (iii) the
Executive's failure to comply in any material respect with the terms of this
Agreement or any written policies or directives of the Board which have an
immediate and materially adverse effect on the Company and which have not been
corrected within 30 days after written notice from the Company of such failure,
(iv) any material act or omission involving the Executive's malfeasance or
negligence in the performance of employment duties which has an immediate and
materially adverse effect on the Company and which has not been corrected within
30 days after written notice from the Company, or (v) the Executive's material
breach of any other agreement with the Company, which has an immediate and
materially adverse effect on the Company and which has not been cured within 30
days after written notice from the Company of such breach. Upon a termination of
Executive's employment for Cause, the Executive's right to receive compensation
and benefits under this Agreement shall terminate immediately upon the effective
date of the termination for Cause. Without limiting the foregoing, the Executive
shall not receive any base salary for any period after the effective date of any
such termination for Cause, shall not receive any EIP bonus for any year during
which any such termination for Cause occurs and shall not be entitled to any
accelerated vesting or accelerated exercisability of any Stock Option following
any such termination for Cause.
(b) Termination of CEO Status. The Company may, at the
election of the Board and in its sole discretion, terminate Executive's status
as President and Chief Executive Officer of the Company for any reason, or for
no reason, by giving not less than 30 days' prior written notice of such
termination of status to the Executive. Upon any such termination in status, the
Executive shall be entitled to receive compensation and benefits as specified in
Sections 4 through 7 above for the balance of the Term; provided that, as set
forth in Sections 5 and 6 above, the Executive's EIP bonus for calendar year
2006 shall be prorated if he ceases to be a full-time employee of the Company
prior to the end of such calendar year, and the Company shall not grant
Executive any Stock Options after the date he ceases to be a full-time employee
of the Company.
(c) Transition Services. Executive shall continue in
full-time employment with the Company for a period of 120 days following the
termination of Executive's status as President and Chief Executive Officer in
order to assist the Company in its transition to a new Chief Executive Officer.
During this transition period Executive agrees to devote his full energy and
attention, at the direction of the Board, toward making a smooth transition and
toward helping to bring the Company's new Chief Executive Officer up to speed as
quickly as possible. Following such 120-day transition period, Executive shall
not be required to work full time for the Company, but shall continue in
employment with
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the Company for the balance of the Term, performing such duties as Executive and
the Board shall agree upon from time to time.
17. Continuation of Compensation and Benefits in Lieu of Severance
Pay. The Executive acknowledges and agrees that the continuation of compensation
and benefits as set forth herein through the end of the Term and the accelerated
vesting and exercisability of Stock Options as provided herein are in lieu of
all damages, payments and liabilities on account of any change in status or
termination of the Executive's employment by the Company and are the sole and
exclusive remedy for any change in status or termination of the Executive's
employment by the Company. Except as provided in Section 19 below, the
compensation and benefits provided under this Agreement are in lieu of, and not
in addition to, any severance or other termination payments to which the
Executive otherwise might be entitled under any other plan or arrangement of the
Company.
18. Subsequent Employment with Competitor. The Executive's right to
receive benefits under this Agreement, including the Executive's right to
exercise any Stock Options that have accelerated under this Agreement, shall
cease immediately upon the Executive's employment by any competitor of the
Company.
19. Change in Control. In the event that the Executive's employment
with the Company is terminated in connection with a "Change in Control" as
defined in the Executive Severance and Arbitration Agreement between the parties
dated April 30, 2001, the Executive shall be entitled to receive all
compensation and benefits provided under this Agreement (in which case the
Executive shall receive no compensation or benefits under such Executive
Severance and Arbitration Agreement) or to receive the compensation and benefits
provided under such Executive Severance and Arbitration Agreement (in which case
the Executive shall receive no compensation or benefits following such
termination under this Agreement), whichever provides the greater compensation
and benefits to the Executive.
20. Notices. Any notices to be given hereunder by either party to
the other shall be in writing and may be transmitted by personal delivery or by
U.S. mail, registered or certified, postage prepaid with return receipt
requested. Mailed notices shall be addressed to the parties at the address
listed as follows:
If to the Company: Macrovision Corporation
0000 Xx Xx Xxxx Xxxx.
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chairman of the Board
If to the Executive: Xxxxxxx X. Krepick
[Address omitted]
[Address omitted]
Each party may change the address for receipt of notices by written notice in
accordance with this Section 20. Notices delivered personally shall be deemed
received as of the date of actual receipt; mailed notices shall be deemed
received as of three days after the date of mailing.
21. Arbitration of Claims. The arbitration provisions set forth in
the Executive Severance and Arbitration Agreement dated April 30, 2001, by and
between the Executive and the Company shall apply to any and all claims brought
by the Executive or the Company pursuant to this Agreement or otherwise relating
to the Executive's employment with the Company or termination thereof, even if
the facts upon which the claim is based arose prior to the execution of this
Agreement. The agreement to arbitrate shall survive the termination of this
Agreement.
22. Entire Agreement; Effect of Prior Agreements. This is the
complete agreement of the parties regarding the employment of the Executive by
the Company and, except as otherwise set forth
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herein, contains all of the covenants and agreements between the parties
relating to the employment of the Executive by the Company. This Agreement
supersedes any and all other agreements, either oral or in writing, between the
parties, except as set forth herein and except that this Agreement shall not
supersede or otherwise affect the Executive Severance and Arbitration Agreement
between the parties dated April 30, 2001, and shall modify any agreement
relating to the Stock Options only as expressly set forth herein. Each party to
this Agreement acknowledges that no other representations, inducements, promises
or agreements, oral or otherwise, have been made by any party, or anyone acting
on behalf of any party, which are not set forth herein, and that no other
agreement, statement or promise not contained in this Agreement shall be valid
or binding on either party.
23. Amendment. This Agreement may be amended only with the prior
written consent of both the Executive and the Company.
24. Waiver. The failure of either party to insist on strict
compliance with any of the terms, provisions, covenants or conditions of this
Agreement by the other party shall not be deemed a waiver of any term,
provision, covenant or condition, individually or in the aggregate, unless such
waiver is in writing, nor shall any waiver or relinquishment of any right or
power at any one time or times be deemed a waiver or relinquishment of that
right or power for all or any other times.
25. Interpretation. This Agreement shall be construed without regard
to the party responsible for the preparation of the Agreement and shall be
deemed to have been prepared jointly by the parties. Any ambiguity or
uncertainty existing in this Agreement shall not be interpreted against either
party, but according to the application of other rules of contract
interpretation, if an ambiguity or uncertainty exists.
26. Severability. If a court or other body of competent jurisdiction
determines that any provision of this Agreement is invalid or unenforceable,
that provision will be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, or, if it is not possible to so
adjust such provision, this Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted. The invalidity and
unenforceability of any particular provision of this Agreement shall not affect
any other provision hereof, and all other provisions of the Agreement shall be
valid and enforceable to the fullest extent possible.
27. Governing Law. The validity, construction and effect of this
Agreement shall be governed by and construed in accordance with the laws of the
State of California without regard or reference to the rules of conflicts of law
that would require the application of the laws of any other jurisdiction.
28. Independent Legal Representation. The Executive represents and
acknowledges that he is sophisticated in business matters (including, but not
limited to, employment agreements) and that he has had the opportunity to seek
and has obtained independent legal advice regarding this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, effective as of the date set forth in the first paragraph hereof.
MACROVISION CORPORATION
By: /s/ Xxxx X. Xxxx
--------------------------------
Xxxx X. Xxxx
Chairman of the Board
By: /s/ Xxxxxx Xxxxx
--------------------------------
Xxxxxx Xxxxx
Chairman, Compensation Committee
EXECUTIVE:
/s/ Xxxxxxx X. Krepick
--------------------------------
Xxxxxxx X. Krepick
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