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EXHIBIT 10.18
MACROMEDIA, INC.
EMPLOYMENT AGREEMENT
This Agreement is made effective this 22nd day of July 1997, between
Macromedia, Inc., a Delaware corporation ("Macromedia"), and Xxxxx Xxxxx
("Executive").
WHEREAS, Macromedia is engaged in the business of developing and
marketing certain computer software; and
WHEREAS, MACROMEDIA desires to secure the services of Executive as
Senior Vice President Revenue, and Executive desires to perform such services
for Macromedia, on the terms and conditions as set forth herein:
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements set forth below, it is mutually agreed as follows:
1. Duties. Executive shall have such duties as the President of
Macromedia may from time to time prescribe consistent with his position as
Senior Vice President Revenue of Macromedia. Executive shall devote his full
time, attention, energies and best efforts to the business of Macromedia based
in San Francisco, California, and shall not during his period of employment as
Senior Vice President Revenue of Macromedia engage in any other business
activity, whether or not such business activity is pursued for gain, profit or
other pecuniary advantage.
2. Compensation. Macromedia shall pay and Executive shall accept as full
consideration for the services to be rendered hereunder compensation consisting
of the following:
2.1 Base Salary. Minimum $200,000 per year in base salary, payable
in installments twice per month, with such deductions or withholdings which are
required by law.
2.2 Bonus. An annual target bonus of $200,000 per year based on
attainment of 100% of the Macromedia Executive Bonus Plan objectives, with a
total bonus potential of up to $600,000 per year based on attainment of
specified hurdles in excess of 100% of the Macromedia Executive Bonus Plan
objectives, as established each year by the Board of Directors. For Executive's
initial twelve-months of employment, Executive will be guaranteed total base
salary and bonus of at least $400,000. The Macromedia Executive Bonus Plan
objectives for fiscal 1998 for Executive will be established by the mutual
consent of Executive and the President of Macromedia, subject to the approval of
the Compensation Committee of the Board of Directors of Macromedia, within sixty
(60) days of the effective date of this Agreement, and Executive understands
that such plan may be amended from time to time. In addition, Macromedia will
pay Executive an amount equal to $150,000 net (which amount shall be grossed up
for taxes), to cover any legal advice, tax advice, closing costs, trips or
incidentals in connection with your relocation from Canada to California.
Macromedia will also reimburse any costs incurred by you in connection with
moving your household goods and motor vehicles from Canada to California.
Executive will be required to repay these amounts if Executive voluntarily
terminates employment with Macromedia within one year of the effective date of
this Agreement
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but Executive shall not be required to make any repayment if Executive is
terminated by Macromedia without Cause (as defined in Section 7.2 of this
Agreement). Such repayment obligation shall decrease proportionately based on
the number of months divided by twelve that Executive is employed as Senior Vice
President Revenue of Macromedia.
2.3 Stock Options. Executive has been granted a non-qualified option
to purchase 400,000 shares of Macromedia common stock. The exercise price for
such option will be the fair market value of Macromedia common stock on the date
of grant. The option will have a maximum term of ten (10) years, subject to
earlier termination upon the date of Executive's termination of service with
Macromedia or any successor entity. The option will vest as to 25% of the option
shares (100,000 shares) at the end of twelve (12) full months of continuous
service with Macromedia. Thereafter, the option will vest in a series of
thirty-six (36) successive equal monthly installments over Executive's period of
service with Macromedia, with each monthly installment equal to 2.0833% of the
total number of option shares (8,333 shares) on the last day of each month over
the thirty-six (36) month period. For purposes of such option, the Executive
will be deemed to continue in service with Macromedia for so long as he renders
services as an employee, director or independent consultant to Macromedia or any
parent or subsidiary corporation. The stock option shall be evidenced by the
stock option agreement attached as Exhibit A and shall contain terms no less
favorable than the terms in effect for employee nonqualified stock options
granted under the Macromedia 1992 Equity Incentive Plan.
3. Benefits. Executive shall be entitled to and shall receive such
pension, profit sharing and fringe benefits such as hospitalization, medical,
life and other insurance benefits, vacation, sick pay, short-term disability and
long-term disability as the Board of Directors of Macromedia may, from time to
time, determine to provide for the key Executives of Macromedia.
4. Relocation Expenses. Macromedia has provided Executive with a
recourse loan of up to $2,400,000, at an annual interest rate of 6.65% per
annum, to purchase Executive's residence on Hawthorn Lane in Atherton,
California and make improvements on such residence, which such residence shall
be repurchased by Macromedia at Executive's cost (including the cost of any
painting, repairs, improvements and maintenance of a structural or capital
nature), upon request by the Executive within two years of the purchase of such
residence by Executive (which two-year period shall be referred to as the
"Initial Period"). $2,200,000 of the recourse loan has already been funded for
purchase of Executive's residence and an additional $200,000 is available for
reimbursement of expenses incurred for improvements to Executive's residence.
all pursuant to a loan agreement, which is attached as Exhibit B. The loan shall
be secured by a first deed of trust on such residence. No interest shall accrue
or be payable for two years from the date of the loan and Macromedia will
provide Executive with a tax gross-up of the resulting taxable benefits. During
the Initial Period, Macromedia will provide Executive with an amount equal to
any property taxes and property insurance costs attributable to such residence
and shall provide Executive with a tax gross-up of the resulting taxable
benefits. All interest accrued and the principal on the loan will become
immediately due and payable seven years from the date of the loan. If
Executive's employment with Macromedia is terminated for any reason or Executive
sells his residence prior to the end of such seven year period, all interest
accrued and principal on the loan will become immediately due and payable upon
the earlier of (a) 180 days after such termination or (b) immediately upon such
sale.
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4.1 Reimbursement of Duplicative Canadian Expenses. During the
Initial Period, while Executive maintains residences in Canada and California,
Macromedia shall reimburse Executive for the cost of Canadian housing expenses,
repairs and maintenance ("Services") to the extent that those Services are
duplicated at Executive's California residence.
5. Executive Proprietary Information and Inventions Agreement. As part
of the consideration between the parties for this Agreement, Executive hereby
agrees to enter into Macromedia's Proprietary Information and Inventions
Agreement attached as Exhibit C contemporaneously with the execution of this
Agreement.
6. Termination. Executive's employment as Senior Vice President Revenue
of Macromedia shall terminate immediately upon Executive's receipt of written
notice by Macromedia, upon Macromedia's receipt of written notice by Executive,
or upon Executive's death.
6.1 Surrender of Records and Property. At the time of termination,
executive shall deliver promptly all equipment, records, manuals, books, data
tables or copies thereof regardless of the underlying media upon which such
materials are recorded which are property of Macromedia and which are under
Executive's possession and control.
7. Benefits Upon Termination as Senior Vice President Revenue. Except in
connection with a termination for Cause (as defined in Subsection 7.2) or a
voluntary termination by Executive, Macromedia shall provide Executive with
termination benefits upon the termination by Macromedia of his employment with
Macromedia, irrespective of the cause of the termination, (a termination
described by this Section 7 shall be referred to throughout this Agreement as an
"Eligible Termination") as follows:
7.1 Termination Benefits. During a period of time beginning on the
date of an Eligible Termination and ending twelve months from such date,
Executive's base salary and health benefits and life insurance coverage at the
time of termination shall continue to be paid by Macromedia in installments
twice per month with applicable deductions or withholdings. Under no
circumstances shall Macromedia be obligated to make any payments beyond the
twelve-month period after an Eligible Termination. Vesting on any stock options
held by Executive shall terminate following an Eligible Termination. Following
such termination of employment, Macromedia shall reimburse Executive for any
costs incurred in moving household goods and motor vehicles from California to
Canada.
7.2 Circumstances Under Which Termination Benefits Would Not Be
Paid. Macromedia shall not be obligated to pay Executive the termination
benefits described in Subsection 7.1 above if Executive's employment with
Macromedia is terminated for Cause. For purposes of this Agreement, "Cause"
shall be limited to (1) Executive's conviction of any felony under federal or
state law, or any fraud, misappropriation or embezzlement or act of dishonesty;
or (2) Executive's commission of a material violation of the Executive's
Proprietary Information and Inventions Agreement. In addition, Executive shall
not be entitled to any termination benefits or continued option vesting under
Subsection 7.1 if he voluntarily terminates his service with Macromedia.
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7.3 Accrued Bonus. In the event of termination of Executive's
employment, other than for cause, Executive shall be entitled to the
proportionate share of any bonus earned up to the last day worked following
notice of termination, calculated after the fiscal period to which the bonus
relates.
8. Change in Control Benefits
8.1 Should there occur a Change in Control (as defined below), then
the vesting of all of Executive's stock options to purchase Macromedia common
stock will be accelerated by eighteen months automatically upon such Change of
Control, regardless of whether Executive continues in employment with Macromedia
or its successor. For example, if Executive has a stock option to purchase 80
shares of Macromedia stock vesting over four years (at the rate of twenty shares
per year) and at the time of the Change of Control, one-fourth of such stock
options (twenty shares) are vested according to their original terms, thirty
additional shares (eighteen months worth of vesting) will become vested at the
time of the Change of Control and the remaining thirty shares will vest over the
eighteen month period following the Change of Control.
For purposes of this Section 8, a Change of Control shall be deemed
to occur upon:
(i) the sale, lease, conveyance or other disposition of all or
substantially all of Macromedia's assets as an entirety or substantially as an
entirety to any person, entity or group of persons acting in concert,
(ii) any transaction or series of transactions (as a result of a
tender offer, merger, consolidation or otherwise) that results in, or that is in
connection with, any person, entity or group acting in concert, becoming the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934), directly or indirectly, of more than fifty percent of the aggregate
voting power of all classes of common equity stock of Macromedia, or
(iii) a liquidation and winding up of the business of Macromedia;
provided that no acceleration will occur upon a Change of Control if it is a
transaction such as a merger that is intended by Macromedia and the other party
to the transaction to be treated as a pooling of interests for accounting
purposes and if it is determined by the Securities and Exchange Commission or
the independent accountants for Macromedia that the acceleration would prevent
the transaction from being treated as a pooling of interests.
9. Arbitration.
9.1 Except for proceedings seeking injunctive relief, including,
without limitation, allegations of misappropriation of trade secrets, copyright
or patent infringements, or breach of any anti-competition provisions of this
Agreement, any controversy or claim arising out of or in relation to this
Agreement, or the breach thereof, shall be settled by arbitration in accordance
with the Commercial Arbitration rules of the American Arbitration Association
("AAA"), and judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. Arbitration of this Agreement shall
include claims of fraud or fraud in the inducement relating to this Agreement.
Arbitration further includes all claims, regardless of
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whether the dispute arises during the term of the Agreement, at the time of
termination or thereafter.
9.2 Either party may initiate the arbitration proceedings, for which
the provision is herein made, by notifying the opposing party, in writing, of
its demand to arbitrate. In any such arbitration there shall be appointed one
arbitrator who shall be selected in accordance with the AAA Commercial
Arbitration Rules. The place of arbitration shall be San Francisco, California.
The law applicable to the dispute shall be the laws of the State of California.
Accordingly, the California Uniform Arbitration Act shall apply to the
interpretation of the arbitration procedure; pursuant thereto, the arbitrator's
powers shall include, without limitation, the power to issue subpoenas for the
attendance of witnesses for hearing or deposition, and for other production of
books, records, documents or other evidence pursuant to California law.
9.3 The parties agree that the award of the arbitrator shall be the
sole and exclusive remedy between them regarding any claims, counterclaims,
issues or accountings presented or plead to the arbitrator; that the arbitrator
shall be the final judge of both law and fact in arbitration of disputes arising
out of or relating to this Agreement, including the interpretation of the terms
of this Agreement. The parties further agree it shall be the sole and exclusive
duty of the arbitrator to determine the arbitrability of issues in dispute and
that neither party shall have recourse to the court for such a determination.
10. General.
10.1 Waiver. Neither party shall, by mere lapse of time, without
giving notice or taking other action hereunder, be deemed to have waived any
breach by the other party of any of the provisions of this Agreement. Further,
the waiver by either party of a particular breach of this Agreement by the other
shall neither be construed as, nor constitute a, continuing waiver of such
breach or of other breaches by the same or any other provision of this
Agreement.
10.2 Severability. If for any reason a court of competent
jurisdiction or arbitrator finds any provision of this Agreement to be
unenforceable, the provision shall be deemed amended as necessary to conform to
applicable laws or regulations, or if it cannot be so amended without materially
altering the intention of the parties, the remainder of the Agreement shall
continue in full force and effect as if the offending provision were not
contained herein.
10.3 Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
considered effective upon personal service or upon depositing such notice in the
U.S. Mail, postage prepaid, return receipt requested and addressed to the
Chairman of the Board of Macromedia as its principal corporate address, and to
Executive at his most recent address shown on Macromedia's corporate records, or
at any other address which he may specify in any appropriate notice to
Macromedia.
10.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which taken
together constitutes one and the same instrument and in making proof hereof it
shall not be necessary to produce or account for more than one such counterpart.
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10.5 Entire Agreement. The parties hereto acknowledge that each has
read this Agreement, understands it, and agrees to be bound by its terms. The
parties further agree that this Agreement and the referenced stock option
agreement and Proprietary Information and Inventions Agreement constitute the
complete and exclusive statement of the agreement between the parties and
supersedes all proposals (oral or written), understandings, representations,
conditions, covenants, and all other communications between the parties relating
to the subject matter hereof.
10.6 Assignment and Successors. Macromedia shall have the right to
assign its rights and obligations under this Agreement to an entity which
acquires substantially all of the assets of Macromedia. The rights and
obligation of Macromedia under this Agreement shall inure to the benefit and
shall be binding upon the successors and assigns of Macromedia.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
MACROMEDIA, INC. ACCEPTED BY EXECUTIVE
By: /s/ XXX XXXXXXX By: /s/ XXXXX XXXXX
Name: XXX XXXXXXX Name: Xxxxx Xxxxx
Title: President & CEO
ATTACHMENTS:
Exhibit A: Stock Option Agreement
Exhibit B: Loan Agreement
Exhibit C: Macromedia's Proprietary Information and Inventions Agreement
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