Exhibit 10.02
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of May
14, 2001 by and between SkyMall, Inc., a Nevada corporation ("Company"), and
Xxxxxx X. Xxxxxxx ("Executive"). Except for Section 9(b), which shall become
effective on the date hereof, this Agreement shall become effective ("Effective
Time") upon the merger of the Company with and into a wholly-owned subsidiary of
Gemstar-TV Guide International, Inc. ("Gemstar").
WITNESSETH:
WHEREAS, Company and Executive desire to set forth in this Agreement
the terms and conditions of Executive's employment with Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties agree as follows:
1. Period of Employment.
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Basic Term. The Company employs Executive to render services to the
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Company in the position and with the duties and responsibilities described in
Section 2 for the period (the "Period of Employment") commencing, without any
further action by either party, at the Effective Time and ending on the earlier
of (i) five (5) years following the date of the Effective Time and (ii) the date
the Period of Employment is terminated in accordance with Section 4.
2. Position, Duties and Responsibilities.
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(a) Position. Executive accepts, as of the Effective Time, employment
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with the Company as its Chief Executive Officer, reporting directly to Xxxxx
Xxxxx ("Supervisor"), Chief Financial Officer, Co-President and Co-Chief
Operating Officer of Gemstar, or in such other direct-reporting position(s) as
may be designated by Supervisor. In the event Supervisor is no longer employed
by Gemstar during the Term, the Supervisor to which Executive shall report shall
be the President of Gemstar.
(b) Constructive Termination. In the event that the Executive has
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been reassigned by the Company to a position with responsibilities which are
substantially less than that described in Section 2(a) above, such assignment
shall constitute a "constructive termination" of Executive and shall entitle
Executive to be treated as being terminated without cause as provided in Section
4(d) below.
(c) Other Activities. Executive, during the Period of Employment,
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will not (i) accept any other employment, or (ii) engage in any other business
activity (whether or not pursued for pecuniary advantage) that is competitive
with, or that places him in a competing position to that of, the Company or any
controlled subsidiaries of the Company. It shall not be a violation of this
Agreement for the Executive to (A) serve on corporate, civic or charitable
boards (provided that the Executive shall obtain the Company's written consent
(not to be unreasonably withheld) prior to serving on the board of any for-
profit enterprise), or (B) make equity investments in any entity that is not
competitive with the Company, Gemstar or any of their respective subsidiaries.
3. Compensation, Benefits, Etc.
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(a) Compensation. In consideration of the services to be rendered
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hereunder, including, without limitation, services to any subsidiaries of the
Company, Executive shall be paid an annual salary of three hundred fifteen
thousand dollars ($315,000) (the "Annual Salary"), payable monthly in arrears,
with a non-negative annual adjustment based on the Consumer Price Index for all
urban Consumers, U.S. City Average, for all items as published by the Bureau of
Labor Statistics of the Department of Labor with the first adjustment on the
anniversary of the Effective Time, and subsequent adjustments on subsequent
anniversaries.
(b) Stock Options. Within thirty (30) days after the Effective Time,
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the Company will arrange for Gemstar to grant to the Executive a nonqualified
stock option under Gemstar's 1994 Stock Incentive Plan to purchase 105,000
shares of Gemstar common stock, par value $.01 per share (the "Common Shares"),
with an exercise price equal to the fair market value of the Common Shares on
the day of the grant (the "Exercise Price"), vested in equal annual installments
over 5 years. Such option shall be evidenced by a standard stock option
agreement utilized by Gemstar for the grant of other stock options under such
plan, a copy of which is attached hereto as Exhibit A and by this reference
incorporated herein; provided, that to the extent there are any inconsistencies
between the terms of this Agreement and the terms of such form of stock option
agreement, the terms of this Agreement shall govern, and, to the extent
necessary, the form of option agreement entered into by Executive and Gemstar
will be revised to make it consistent herewith.. "Daily Per Share Price" has
the meaning given to such term in the Merger Agreement.
(c) Benefits. The Company shall provide Executive with the right to
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participate in and to receive benefits from all present and future life,
accident, disability, medical, pension and savings plans and all similar
benefits made available generally to executives of the Company. The amount and
extent of benefits to which Executive is entitled shall be governed by the
specific benefit plan, as it may be amended from time to time.
(d) Expenses. The Company shall reimburse Executive for reasonable
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travel and other business expenses incurred by Executive in the performance of
his duties hereunder in accordance with the Company's general policies, as they
may be amended from time to time during the term of this Agreement.
(e) Bonus. Executive shall also be eligible to receive, in the sole
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and absolute discretion of the Supervisor, as may be approved, if necessary, by
the Compensation Committee of Gemstar, an annual bonus.
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(f) Automobile Allowance. As additional compensation for Executive's
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services to the Company, the Company shall pay Executive a monthly automobile
allowance of $750 during the Period of Employment.
(g) Vacation. Executive shall be entitled to three (3) weeks paid
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vacation during each 12-month period during the Period of Employment.
(h) Relocation. In the event that the Company relocates its office
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to a new location over 50 miles outside of the city limits of Phoenix, Arizona,
without prior approval by Executive, such relocation shall constitute a
"constructive termination" of Executive and shall entitle Executive to be
treated as being terminated without cause as provided in Section 4(d) below.
4. Termination of Employment.
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(a) By Death. The Period of Employment shall terminate automatically
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upon the death of Executive. The Company shall pay to Executive's beneficiaries
or estate, as appropriate, the compensation to which he is entitled pursuant to
Section 3(a) through the end of the month in which death occurs. Thereafter,
the Company's obligations hereunder shall terminate. Nothing in this section
4(a) shall affect any entitlement of Executive's heirs to the benefits under any
life insurance plan.
(b) By Disability. If, in the sole opinion of the Board of Directors
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of the Company, Executive shall be prevented from properly performing his duties
hereunder by reason of any physical or mental incapacity for a period of more
than 150 days in the aggregate or 120 consecutive days in any twelve-month
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period, then, to the extent permitted by law, the Period of Employment shall
terminate on and the compensation to which Executive is entitled pursuant to
Section 3(a) shall be paid up through the last day of the month in which the
Board determines Executive to be disabled hereunder, and thereafter the
Company's obligations hereunder shall terminate. Nothing in this section 4(b)
shall affect Executive's rights under any disability plan in which he is a
participant.
(c) By Company For Cause. The Company may terminate this Agreement,
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without liability, for Cause (as defined below) at any time upon notice to
Executive. Termination shall be for "Cause" if: (i) Executive has engaged in
illegal or other wrongful conduct substantially detrimental to the business or
reputation of Gemstar or any subsidiary of Gemstar, or is charged with or
convicted of a felony; (ii) Executive refuses or fails to act in accordance with
any reasonable direction or order of the Supervisor and does not correct such
refusal or failure within five days after written notice thereof; or (iii)
Executive has engaged in any fraud, embezzlement, misappropriation or similar
conduct against Gemstar or any direct or indirect subsidiaries of Gemstar.
(d) By Company Without Cause. The Company may terminate the Period of
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Employment without Cause at any time upon written notice to Executive ("Notice
of Termination Without Cause"). Upon issuance of such Notice of Termination
Without Cause, the Company shall continue to employ Executive up to the date of
termination as specified in the
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Notice of Termination Without Cause, which shall be no later than thirty (30)
days after the date of the Notice of Termination, unless the Company and
Executive agree otherwise. On the date of termination, subject to the
Executive's signing of a standard general release of all claims in favor of the
Company, the Company shall pay Executive a lump sum payment of an amount equal
to the difference between (x) twenty-four (24) months of salary, based on the
then current Annual Salary, and (y) the cumulative salary received by Executive
commencing from the date of the Notice of Termination Without Cause through the
date of termination. The Company shall further pay Executive his cash equivalent
of any unused annual vacation time prior to the date of the Notice of
Termination Without Cause. In the event that on the date of Notice of
Termination Without Cause, the Executive has vested less than forty percent
(40%) of the stock options granted under Section 3(b) above, an additional
number of options shall accelerate and vest so that the percentage of vested
stock options granted under Section 3(b) above shall be equal to forty percent
(40%). Thereafter all obligations of the Company hereunder, including as to
unvested options, shall terminate.
(e) Termination Obligations.
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(i) Executive hereby acknowledges and agrees that all personal
property, including, without limitation, all books, manuals, records, reports,
notes, contracts, lists, blueprints and other documents, or materials, or copies
thereof, Proprietary Information (as defined below), furnished to or prepared by
Executive in the course of or incident to his employment, including, without
limitation, records and any other materials pertaining to Invention Ideas (as
defined below), belong to the Company.
(ii) Upon termination of the Period of Employment, Executive
shall be deemed to have resigned from all offices then held with Gemstar or any
of its subsidiaries (including the Company), including any seats on any board of
directors, subject to then applicable law.
(iii) The agreements and covenants contained herein and
Executive's obligations under Sections 5, 6 and 7 shall survive termination of
the Period of Employment and the expiration of this Agreement.
5. Proprietary Information.
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(a) Defined. "Proprietary Information" is all information and any
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idea in whatever form, tangible or intangible, pertaining in any manner to the
business of Gemstar, the Company or any of their respective subsidiaries, or to
its clients, consultants or business associates, unless: (i) the information is
or becomes publicly known through lawful means other than Executive; (ii) the
information was rightfully in Executive's possession or part of his general
knowledge prior to his employment by the Company; or (iii) the information is
disclosed to Executive without confidential or proprietary restriction by a
third party who rightfully
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possesses the information (without confidential or proprietary restriction) and
did not learn of it, directly or indirectly, from Gemstar, the Company or any of
their respective subsidiaries.
(b) General Restrictions on Use. Executive agrees to hold all
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Proprietary Information in strict confidence and trust for the sole benefit of
Gemstar, the Company and their respective subsidiaries and not to, directly or
indirectly, disclose, use, copy, publish, summarize or remove from the premises
of Gemstar, the Company or any of their respective subsidiaries any Proprietary
Information (or remove from the premises any other property of Gemstar, the
Company or any of their respective subsidiaries), except (i) during the Period
of Employment to the extent necessary to carry out Executive's responsibilities
under this Agreement, and (ii) after termination of the Period of Employment as
specifically authorized in writing by the Supervisor.
(c) Interference with Business; Competitive Activities. Executive
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acknowledges that pursuit of the activities prohibited by this Section 5(c)
would necessarily involve the use or disclosure of Proprietary Information in
breach of Section 5(b), but that proof of such breach would be extremely
difficult. To prevent such disclosure, use and breach and in consideration of
employment under this Agreement, Executive agrees for a period of three (3) year
after termination of the Period of Employment, he shall not for himself or any
third party, directly or indirectly, (i) divert or attempt to divert from
Gemstar, the Company or any of their respective subsidiaries any business of any
kind in which it is engaged, including, without limitation, the solicitation of
or interference with any suppliers or customers of Gemstar, the Company or any
of their respective subsidiaries, (ii) employ, solicit for employment, or
recommend for employment any person employed by Gemstar, the Company or any of
their respective subsidiaries during the period of such person's employment and
for a period of one year thereafter, or (iii) engage in any business activity
that is competitive with Gemstar, the Company or any of their respective
subsidiaries, unless Executive can prove that action taken in contravention of
this Section 5(c)(iii) was done without the use of any Proprietary Information;
provided, that in no event shall Executive engage in such competitive activities
during the period which Executive continues to receive payments pursuant to
Section 4 above. For purposes of this Section 5(c), "competitive activities"
shall be business activities that are directly competitive with an existing or
presently planned business of Gemstar, the Company or any of their respective
subsidiaries on the date of termination.
(d) Remedies. Nothing in this Section 6 is intended to limit any
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remedy of the Company under the California Uniform Trade Secrets Act (California
Civil Code (S) 3426), or otherwise available under law.
6. Executive Inventions and Ideas.
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(a) Defined; Statutory Notice. The term "Invention Ideas" means any
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and all ideas, processes, trademarks, service marks, inventions, technology,
computer programs, original works of authorship, designs, formulas, discoveries,
patents, copyrights, and all improvements, rights, and claims related to the
foregoing that are conceived, developed, or reduced to practice by the Executive
alone or with others except to the extent that California
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Labor Code Section 2870 lawfully prohibits the assignment of rights in such
ideas, processes, inventions, etc. Section 2870(a) provides:
Any provision in an employment agreement which provides that an
Executive shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
Executive developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(i) Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.
(ii) Result from any work performed by the Executive for the
employer.
Executive hereby acknowledges that he understands the foregoing
limitations created by Section 2870.
(b) Disclosure. Executive agrees to maintain adequate and current
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written records on the development of all Invention Ideas and to disclose
promptly to the Company all Invention Ideas and relevant records, which records
will remain the sole property of the Company. Executive further agrees that all
information and records pertaining to any idea, process, trademark, service
xxxx, invention, technology, computer program, original work of authorship,
design, formula, discovery, patent, or copyright that Executive does not believe
to be an Invention Idea, but is conceived, developed, or reduced to practice by
Executive (alone or with others) during his Period of Employment or during the
one year period following termination of employment, shall be promptly disclosed
to the Company (such disclosure to be received in confidence). The Company
shall examine such information to determine if in fact the idea, process, or
invention, etc., is an Invention Idea subject to this Agreement.
(c) Assignment. Executive agrees to assign to the Company, without
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further consideration, his entire right, title, and interest (throughout the
United States and in all foreign countries), free and clear of all liens and
encumbrances, in and to each Invention Idea, which shall be the sole property of
the Company, whether or not patentable. In the event any Invention Idea shall
be deemed by the Company to be patentable or otherwise registerable, Executive
shall assist the Company (at its expense) in obtaining letters patent,
copyright, trademark, or other applicable intellectual property registrations
thereon and shall execute all documents and do all other things (including
testifying at the Company's expense) necessary or proper to obtain letters
patent, copyright, trademark, or other applicable intellectual property
registrations thereon and to vest the Company, or any Controlled subsidiaries of
the Company specified by the Board, with full title thereto. Should the Company
be unable to secure Executive's signature on any document necessary to apply
for, prosecute, obtain, or enforce any patent, copyright, or other right or
protection relating to any Invention Idea, whether due to the Executive's mental
or physical incapacity or any other cause, Executive hereby irrevocably
designates and appoints
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Company and each of its duly authorized officers and agents as the Executive's
agent and attorney in fact, to act for and in the Executive's behalf and stead
and to execute and file any such document, and to do all other lawfully
permitted acts to further the prosecution, issuance, and enforcement of patents,
copyrights, or the rights or protections with the same force and effect as if
executed and delivered by Executive. Executive hereby agrees, at the Company's
request, to maintain, update, improve and modify the Invention Ideas, for so
long as he is living, regardless of whether the Period of Employment has
terminated; provided that, his reasonable costs incurred in connection with such
activities following the termination of this Agreement are reimbursed.
(d) Exclusions. Executive acknowledges that there are no ideas,
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processes, trademarks, service marks, technology, computer programs, original
works of authorship, designs, formulas, inventions, discoveries, patents,
copyrights, or improvements to the foregoing that he desires to exclude from the
operation of this Agreement, except for the inventions and ideas of Executive
and his associates outside of the Company (i) which were or are developed
entirely by Executive and each such associate entirely outside of his or her
activities for the Company, (ii) which do not relate at the time of conception
or reduction to practice to the Company's business, or actually or demonstrably
anticipated research development, and (iii) which do not result from any work
performed by Executive for the Company. To the best of the Executive's
knowledge, there is no existing contract in conflict with this Agreement or any
other contract to assign ideas, processes, trademarks, service marks,
inventions, technology, computer programs, original works of authorship,
designs, formulas, discoveries, patents, or copyrights that is now in existence
between Executive and any other person or entity.
(e) Post-Termination Period. Because of the difficulty of
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establishing when any idea, process, invention, etc., is first conceived or
developed by Executive, or whether it results from access to Proprietary
Information or the Company's equipment, facilities, and data, Executive agrees
that any idea, process, trademark, service xxxx, technology, computer program,
original work of authorship, design, formula, invention, discovery, patent,
copyright, or any improvement, rights, or claims related to the foregoing shall
be presumed to be an Invention Idea if it is conceived, developed, used, sold,
exploited, or reduced to practice by Executive or with the aid of Executive
within one (1) year after termination of the Period of Employment. Executive
can rebut the above presumption if he proves that the invention, idea, process,
etc., (i) was first conceived and/or developed prior to the date of this
Agreement, (ii) was first conceived or developed after termination of the Period
of Employment, (iii) was conceived or developed entirely on Executive's own time
without using the Company's equipment, supplies, facilities, or Proprietary
Information, and (iv) did not result from any work performed by Executive for
the Company. Nothing in this Agreement is intended to expand the scope of
protection provided Executive by Sections 2870 through 2872 of the California
Labor Code.
7. Assignment: Successors and Assigns.
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Executive agrees that he will not assign, sell, transfer, delegate or
otherwise dispose of, whether voluntarily or involuntarily, or by operation of
law, any rights or obligations under this Agreement, nor shall Executive's
rights be subject to encumbrance or the claims of
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creditors. Any purported assignment, transfer or delegation shall be null and
void. Nothing in this Agreement shall prevent the consolidation of the Company
with, or its merger into, any other corporation, or the sale by the Company of
all or substantially all of its properties or assets, or the assignment by the
Company of this Agreement and the performance of its obligations hereunder to
any successor in interest or any subsidiaries of the Company. Subject to the
foregoing, this Agreement shall be binding upon and shall inure to the benefit
of the parties and their respective heirs, legal representatives, successors and
permitted assigns, and shall not benefit any person or entity other than those
enumerated above.
In the event of a consolidation or merger of the Company with or into
another corporation, or the sale of all, or substantially all, of the Company's
assets to another corporation, such corporation as may survive said transaction
shall assume this Agreement and become obligated to perform all the terms and
conditions hereof, and Executive's obligations hereunder shall continue in favor
of such surviving corporation.
8. Notices. All notices or other communications required or
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permitted hereunder shall be made in writing and shall be deemed to have been
duly given if delivered by hand or mailed, postage prepaid, by certified or
registered mail, return receipt requested, and addressed to the Company at:
Gemstar-TV Guide International, Inc.
000 Xxxxx Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
or to Executive at:
Xxxxxx X. Xxxxxxx
000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Notice of change of address shall be effective only if done in accordance with
this section.
9. Entire Agreement. (a) The terms of this Agreement are intended by
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the parties to be the final and exclusive expression of their agreement with
respect to the employment of Executive by the Company and may not be
contradicted by evidence of any prior or contemporaneous agreement or
arrangement, written or oral, any and all of which are superceded as of the
Effective Time. The parties further intend that this Agreement shall constitute
the complete and exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any judicial, administrative or other legal
proceeding involving this Agreement.
(b) Executive hereby waives any right he may have, under any
agreement or arrangement with the Company or any of its subsidiaries (other than
this Agreement), to receive (1) any increase in the amount of, or acceleration
of the vesting or timing of, any compensation or benefits or (2) any severance
pay, additional employment compensation or any other payment,
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benefit or award as a result of the execution and delivery of the Merger
Agreement or the consummation of the transactions contemplated thereby.
10. Amendments; Waivers. This Agreement may not be modified, amended
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or terminated except by an instrument in writing, signed by Executive and by a
duly authorized representative of the Company other than Executive. By an
instrument in writing similarly executed, either party may waive compliance by
the other party with any provision of this Agreement that such other party was
or is obligated to comply with or perform, provided, however, that such waiver
shall not operate as a waiver of, or estoppel with respect to, any other or
subsequent failure. No failure to exercise and no delay in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, remedy or power hereunder preclude
any other or further exercise thereof or the exercise of any other right, remedy
or power provided herein or by law or in equity.
11. Severability; Enforcement. If any provision of this Agreement,
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or the application thereof to any person, place or circumstance, shall be held
by a court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect.
12. Governing Law. The validity, interpretation, enforceability and
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performance of this Agreement shall be governed by and construed in accordance
with the law of the State of California.
13. Injunctive Relief. The parties agree that in the event of any
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breach or threatened breach of any of the covenants in Section 6, the damage or
imminent damage to the value and the goodwill of the Company's business will be
irreparable and extremely difficult to estimate, making any remedy at law or in
damages inadequate. Accordingly, the parties agree that the Company shall be
entitled to injunctive relief against Executive in the event of any breach or
threatened breach of any such provisions by Executive, in addition to any other
relief (including damages) available to the Company under this Agreement or
under law.
[Signature Page Follows]
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The parties have duly executed this Agreement as of the date first written
above.
________________________________________
Executive - Xxxxxx X. Xxxxxxx
SKYMALL, INC.
By: ____________________________________
Name:
Title:
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