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Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of this 11th day of October, 1999, by and between
GETTY IMAGES, INC., a Delaware corporation (the "Company"), and A.D. "Bud"
Xxxxxx, an individual residing at 0000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxxx Xxxxxx, XX
00000-0000 (the "Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, both parties desire that the terms and conditions of the
Employee's employment with the Company be governed by the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. EMPLOYMENT AND DUTIES.
(a) General. The Company hereby employs the Employee, effective as of
the date hereof (the "Effective Date"), and the Employee agrees upon the terms
and conditions herein set forth to serve, effective as of the Effective Date, as
Chief Technology Officer of the Company and shall perform all duties customarily
appurtenant to such position. In such capacity, the Employee shall report
directly to Xxxxxxxx Xxxxx, Chief Executive Officer of the Company, or to such
other person designated by the Board of Directors of the Company. The Employee's
principal place of business shall be Seattle, Washington.
(b) Services and Duties. For so long as the Employee is employed by
the Company, the Employee shall devote his full business time to the performance
of his duties hereunder; shall faithfully serve the Company; shall in all
respects conform to and comply with the lawful and good faith directions and
instructions given to him by Xxxxxxxx Xxxxx, or such other person designated by
the Board of Directors of the Company; and shall use his best efforts to promote
and serve the interests of the Company.
(c) No Other Employment. For so long as the Employee is employed by
the Company, he shall not, directly or indirectly, render services to any other
person or organization for which he receives compensation without the prior
approval of Xxxxxxxx Xxxxx, or such other person designated by the Board of
Directors of the Company. No such approval will be required if the Employee
seeks to perform inconsequential services without direct compensation therefor
in connection with the management of personal investments or in connection with
the performance of charitable and civic activities, provided that such
activities do not contravene the provisions of Section 6 hereof.
2. TERM OF EMPLOYMENT. The term of the Employee's employment under
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this Agreement (the "Term") shall commence on the Effective Date and
continue until it is terminated by either party giving the other at least one
month written notice; provided, however, that in no event may a non-renewal
notice be given prior to September 1, 2000; and provided further, however, that,
in any event, the Term shall not extend beyond the last day of the month in
which the Employee attains age 65.
3. COMPENSATION AND OTHER BENEFITS. Subject to the provisions
of this Agreement, the Company shall pay and provide the following compensation
and other benefits to the Employee during the Term as compensation for all
services rendered hereunder and the covenants contained in Section 6 hereof:
(a) Salary. The Company shall pay to the Employee an annual
salary (the "Salary") at the initial rate of $220,000, payable to the Employee
in accordance with the normal payroll practices of the Company for its employees
as are in effect from time to time. The amount of the Employee's Salary shall be
reviewed annually by the Company on or about October 1st of each year during the
Term beginning in the 2000 calendar year. The Company shall pay to the Employee
a one time signing bonus of $22,000 to be paid at the time the Employee receives
his first paycheck from the Company.
(b) Annual Bonus. The Employee shall be eligible for 1999 and
each calendar year thereafter that begins during his employment to participate
in an annual incentive bonus program established by the Company, in accordance
with the policies of the Company, its subsidiaries and affiliates (hereinafter,
collectively the "Group") and subject to such terms and conditions as may be
approved annually by the Company. Under the terms of the annual incentive bonus
program, the Employee will be afforded the opportunity to earn up to 30% of his
Salary (the "Bonus") in effect for the applicable calendar year, subject to the
achievement of the performance targets established by the Company for that year,
to be paid on a pro-rata basis in the event that the Employee is employed for
less than a full calendar year (for purposes of determining the 1999 bonus, the
Employee shall be deemed to have commenced employment as of October 1, 1999).
(b) Relocation Expenses. The Company shall pay and/or
reimburse all reasonable temporary housing expenses and moving expenses as
outlined in the attached relocation agreement.
(c) Stock Options. Effective as of the Effective Date, the
Company shall grant the Employee an option (the "Option") to purchase 100,000
shares of the common stock of the Company pursuant to the terms the Company's
1998 Stock Option Plan (the "Option Plan"). The per share exercise price of the
Option shall equal the fair market value of a share of Common Stock on the
Effective Date, as determined in accordance with the terms of the Option Plan.
The Option shall vest and become exercisable as to 25% on October 1, 2000; the
remainder of the Option shall vest ratably on the first day of each month over
the following three years. Except as otherwise specified herein, the Option
shall be subject to the terms of
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the Option Plan and to such other terms and conditions as may be specified by
the Compensation Committee of the Company in the form of a standard option
agreement between the Company and the Employee.
(d) Expenses. The Company shall pay or reimburse the Employee
for all reasonable out-of-pocket expenses incurred by the Employee in connection
with his employment hereunder in accordance with Group. Such expenses shall be
paid upon the periodic submission of invoices and shall be paid reasonably
promptly after the date of such invoice. The reimbursement of expenses under
this Section 3(d) shall be subject to the Employee's providing the Company with
such documentation of the expenses as the Company may from time to time
reasonably request in accordance with the policies of the Group.
(e) 401k plan, Health and Fringe Benefits. During the Term,
the Employee shall be eligible to participate in the Company's 401k plan,
medical, disability and life insurance plans applicable to executives of the
Company in accordance with the terms of such plans as in effect from time to
time. The Employee shall also be provided with free parking at the place of
employment.
(f) Long-Term Incentive Program. During the Term, the Employee
shall participate in all long-term incentive plans and programs of the Group
that are applicable to its senior executives in accordance with their terms and
in a manner consistent with his position with the Company.
(g) Holidays. In addition to the usual public and bank
holidays, the Employee shall be entitled to twenty days' paid vacation annually,
which shall be taken at such times as are approved by the Company. The Employee
shall be permitted to carry forward any portion of his vacation time for up to
one year and, upon the expiration of such one-year period, the Employee shall be
paid in lieu of such vacation days.
4. TERMINATION OF EMPLOYMENT. Subject to the notice and
other provisions of this Section 4, the Company shall have the right to
terminate the Employee's employment hereunder, and he shall have the right to
resign, at any time for any reason or for no stated reason.
(a) Termination for Cause; Resignation Without Good Reason.
(i) If, prior to October 1, 2000, the Employee's employment is terminated by the
Company for Cause or if the Employee resigns from his employment hereunder other
than for Good Reason, he shall be entitled to payment of the pro rata portion of
his Salary and accrued Bonus (for purposes of this Agreement, "accrued Bonus"
shall be determined using the number of days in the applicable calendar year
that the Employee was employed by the Company and the applicable performance
criteria under the bonus plan, in each case through the date of termination or
resignation) through and including the date of termination or resignation, as
well as any unreimbursed expenses. Except to the extent required by the terms of
any applicable compensation or benefit plan or program or as otherwise required
by applicable law, the Employee shall have no rights under this Agreement or
otherwise to receive any other
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compensation or to participate in any other plan, program or arrangement after
such termination or resignation of employment with respect to the year of such
termination or resignation and later years.
(ii) In addition, the Employee shall be entitled to retain the
then-vested portion of his options to purchase shares of the Company's common
stock until such options expire in accordance with their terms.
(iii) Termination for "Cause" shall mean termination of the
Employee's employment with the Company because of (A) willful, material or
persistently repeated non-performance of the Employee's duties to the Company
(other than by reason of the incapacity of the Employee due to physical or
mental illness) after notice by the Board of such failure and the Employee's
non-performance and continued, willful, material or persistent repeated
non-performance after such notice, (B) the indictment of the Employee for a
felony offense, (C) fraud against the Group or any willful misconduct that
brings the reputation of the Group into serious disrepute or causes the Employee
to cease to be able to perform his duties, (D) any other material breach by the
Employee of any material term of this Agreement, (E) the Employee files for
personal bankruptcy under the United States Bankruptcy Code, or (F) the Employee
is unable to perform his duties, by reason of disability, for a period of six
(6) months or more.
(iv) Termination of the Employee's employment for Cause shall
be communicated by delivery to the Employee of a written notice from the Company
stating that the Employee has been terminated for Cause, specifying the
particulars thereof and the effective date of such termination. The date of a
resignation by the Employee without Good Reason shall be the date specified in a
written notice of resignation from the Employee to the Company. The Employee
shall provide at least 30 days' advance written notice of resignation without
Good Reason.
(b) Involuntary Termination. (i) If, prior to October 1, 2000,
the Company terminates the Employee's employment for any reason other than Cause
or Employee resigns from his employment hereunder for Good Reason (collectively
hereinafter referred to as an "Involuntary Termination"), the Company shall pay
to the Employee his Salary and accrued Bonus up to and including the date of
such Involuntary Termination, as well as any unreimbursed expenses. In addition,
the Company shall continue to pay to the Employee as severance (the "Severance
Payments") in accordance with the Company's normal payroll practices, his
Salary, at the rate in effect immediately prior to such Involuntary Termination,
through and including October 1, 2000.
(ii) In addition, in the event of the Employee's Involuntary
Termination prior to October 1, 2000, all of the Employee's then-outstanding
options to purchase shares of the Company's common stock shall continue to vest
until October 1, 2000. The Employee shall be entitled to retain the vested
portion of his options as if he had remained an Employee until October 1, 2000.
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(iii) Resignation for "Good Reason" shall mean resignation by Employee
because of (A) an adverse and material change in the Employee's duties, titles
or reporting responsibilities, (B) a material breach by the Company of any term
of the Agreement, (C) a reduction in the Employee's Salary or bonus opportunity
or the failure of the Company to pay the Employee any material amount of
compensation when due, (D) the assignment to Employee of any material duties
that are inconsistent with those described in Section 1 of this Agreement
without the Employee's consent, or (E) the Company's requirement that Employee
perform a substantial portion of his duties outside the Seattle, Washington
metropolitan area, except for travel in furtherance of the Company's business.
The Company shall have 30 business days from the date of receipt of such notice
to effect a cure of the material breach described therein and, upon cure thereof
by the Company to the reasonable satisfaction of the Employee, such material
breach shall no longer constitute Good Reason for purposes of this Agreement.
(iv) The date of termination of employment without Cause shall be the
date specified in a written notice of termination to the Employee. The date of
resignation for Good Reason shall be the date specified in a written notice of
resignation from the Employee to the Company; provided, however, that no such
written notice shall be effective unless the cure period specified in Section
4(b)(iv) above has expired without the Company having corrected, to the
reasonable satisfaction of the Employee, the event or events subject to cure.
(v) Anything in this Agreement to the contrary notwithstanding, no
amounts shall be payable under this Section 4(b) if the Employee's employment
with the Company ends, for any reason, on or after October 1, 2000.
5. LIMITATION ON PAYMENTS.
Notwithstanding anything herein to the contrary, if any of the payments
made hereunder would constitute a "parachute payment" (as defined in Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code"), and
the net after-tax amount of the parachute payment is less than the net after-tax
amount if the aggregate payments to be made to the Employee were three times his
"base amount" (as defined in Section 280G(b)(3) of the Code), less $1.00, then
the aggregate of the amounts constituting the parachute payment shall be reduced
to an amount that will equal three times the base amount, less $1.00. The
determinations to be made with respect to this Section 5 shall be made by an
independent accounting firm of national standing (other than the Company's
regular auditors). The accounting firm shall be paid by the Company for its
services performed hereunder.
6. PROTECTION OF THE COMPANY'S INTERESTS.
(a) No Competing Employment. For so long as the Employee is employed
by the Company and for one (1) year thereafter (such period being referred to
hereinafter as the "Restricted Period"), the Employee shall not, without the
prior written consent of the Board, directly or indirectly, own an interest in,
manage, operate, join, control, lend money or render financial or other
assistance to or participate in or be connected with, as an officer,
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employee, partner, stockholder, consultant or otherwise, any individual,
partnership, firm, corporation or other business organization or entity that
competes with the Group by providing any goods or services provided or under
development by the Group at the effective date of the Employee's termination of
employment under this Agreement; provided, however, that this Section 6(a) shall
not proscribe the Employee's ownership, either directly or indirectly, of either
less than five percent of any class of securities which are listed on a national
securities exchange or quoted on the automated quotation system of the National
Association of Securities Dealers, Inc..
(b) No Interference. During the Restricted Period, the
Employee shall not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization (other
than the Company), intentionally solicit, endeavor to entice away from the Group
or otherwise interfere with the relationship of the Group with, any key person
or team who is employed by or otherwise engaged to perform services for the
Group or any key person or team or entity who is, or was within the then most
recent twelve-month period, a customer, client or supplier of the Group.
(c) Secrecy. The Employee recognizes that the services to be
performed by him hereunder are special, unique and extraordinary in that, by
reason of his employment hereunder, he may acquire confidential information and
trade secrets concerning the operation of the Group, the use or disclosure of
which could cause the Group substantial losses and damages which could not be
readily calculated and for which no remedy at law would be adequate.
Accordingly, the Employee covenants and agrees with the Company that he will not
at any time, except in performance of the Employee's obligations to the Company
hereunder or with the prior written consent of the Board, directly or indirectly
disclose to any person any confidential information that he may learn or has
learned by reason of his association with the Group. The term "confidential
information" means any information not previously disclosed to the public or to
the trade by the Group with respect to the Company's, or any of its affiliates'
or subsidiaries', products, facilities and methods, trade secrets and other
intellectual property, systems, procedures, manuals, confidential reports,
product price lists, customer lists, financial information (including the
revenues, costs or profits associated with any of the Group's products),
business plans, prospects or opportunities.
(d) Exclusive Property. The Employee confirms that all
confidential information is and shall remain the exclusive property of the
Group. All business records, papers and documents kept or made by the Employee
relating to the business of the Group shall be and remain the property of the
Group. Upon the termination of his employment with the Company or upon the
request of the Company at any time, the Employee shall promptly deliver to the
Company, and shall not without the consent of the Board retain copies of, any
written materials not previously made available to the public, or records and
documents made by the Employee or coming into his possession concerning the
business or affairs of the Group; provided, however, that subsequent to any such
termination, the Company shall provide the Employee with copies (the cost of
which shall be borne by the Employee) of any documents which are requested by
the Employee and which the Employee has determined in good faith are (i)
required to establish a defense to a claim that the Employee has not complied
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with his duties hereunder or (ii) necessary to the Employee in order to comply
with applicable law.
(e) Assignment of Developments. All "Developments" (as defined
below) that were or are at any time made, conceived or suggested by Employee,
whether acting alone or in conjunction with others, during Employee's employment
with the Group shall be the sole and absolute property of the Group, free of any
reserved or other rights of any kind on the part of Employee. During Employee's
employment and, if such Developments were made, conceived or suggested by
Employee during his employment with the Group, thereafter, Employee shall
promptly make full disclosure of any such Developments to the Group and, at the
Group's cost and expense, do all acts and things (including, among others, the
execution and delivery under oath of patent and copyright applications and
instruments of assignment) deemed by the Group to be necessary or desirable at
any time in order to effect the full assignment to the Group of Employee's right
and title, if any, to such Developments. For purposes of this Agreement, the
term "Developments" shall mean all data, discoveries, findings, reports,
designs, inventions, improvements, methods, practices, techniques, developments,
programs, concepts, and ideas, whether or not patentable, relating to the
activities of the Group of which Employee is as of the date of this Agreement
aware or of which Employee becomes aware at any time during the Term, excluding
any Development for which no equipment, supplies, facilities or confidential
information of the Group was used and which was developed entirely on Employee's
own time, unless (i) the Development relates directly to the business of the
Group, (ii) the Development relates to actual or demonstrably anticipated
research or development of the Group, or (iii) the Development results from any
work performed by Employee for the Group (the foregoing is agreed to satisfy the
written notice and other requirements of Section 49.44.140 of the Revised Code
of Washington).
(f) Injunctive Relief. Without intending to limit the remedies
available to the Company, the Employee acknowledges that a breach of any of the
covenants contained in this Section 6 may result in material irreparable injury
to the Group for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, the Company shall be entitled to obtain a
temporary restraining order and/or a preliminary or permanent injunction
restraining the Employee from engaging in activities prohibited by this Section
6 or such other relief as may be required to specifically enforce any of the
covenants in this Section 6. Without intending to limit the remedies available
to the Employee, the Employee shall be entitled to seek specific performance of
the Company's obligations under this Agreement.
7. GENERAL PROVISIONS.
(a) Source of Payments. All payments provided under this
Agreement, other than payments made pursuant to a plan which provides otherwise,
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made, to
assure payment. The Employee shall have no right, title or interest whatever in
or to any investments which the Company may make to aid
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the Company in meeting its obligations hereunder. To the extent that any person
acquires a right to receive payments from the Company hereunder, such right
shall be no greater than the right of an unsecured creditor of the Company;
provided, however, that this provision shall not be deemed to waive or abrogate
any preferential or other rights to payment accruing to the Employee under
applicable bankruptcy laws by virtue of the Employee's status as an employee of
the Company.
(b) No Other Severance Benefits. Except as specifically set forth in this
Agreement, the Employee covenants and agrees that he shall not be entitled to
any other form of severance benefits from the Company, including, without
limitation, benefits otherwise payable under any of the Company's regular
severance policies, in the event his employment hereunder ends for any reason
and, except with respect to obligations of the Company expressly provided for
herein, the Employee unconditionally releases the Company and its subsidiaries
and affiliates, and their respective directors, officers, employees and
stockholders, or any of them, from any and all claims, liabilities or
obligations under this Agreement or under any severance or termination
arrangements of the Company or any of its subsidiaries or affiliates for
compensation or benefits in connection with his employment or the termination
thereof.
(c) Tax Withholding. Payments to the Employee of all compensation
contemplated under this Agreement shall be subject to all applicable tax
withholding.
(d) Notices. Any notice hereunder by either party to the other shall be
given in writing by personal delivery, or certified mail, return receipt
requested, or (if to the Company) by telex or facsimile, in any case delivered
to the applicable address set forth below:
(i) To the Company: Getty Images, Inc.
0000 Xxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
(ii) To the Employee: A.D. "Bud" Xxxxxx
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxxxx, XX 00000-0000
or to such other persons or other addresses as either party may specify to the
other in writing.
(e) Representation by the Employee. The Employee represents and warrants
that his entering into this Agreement does not, and that his performance under
this Agreement and consummation of the transactions contemplated hereby will
not, violate the provisions of any agreement or instrument to which the Employee
is a party, or any decree, judgment or order to which the Employee is subject,
and that this Agreement constitutes a valid and binding obligation of the
Employee in accordance with its terms. Breach of this representation
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will render all of the Company's obligations under this Agreement void ab
initio.
(f) Limited Waiver. The waiver by the Company or the Employee
of a violation of any of the provisions of this Agreement, whether express or
implied, shall not operate or be construed as a waiver of any subsequent
violation of any such provision.
(g) Assignment; Assumption of Agreement. No right, benefit or
interest hereunder shall be subject to assignment, encumbrance, charge, pledge,
hypothecation or setoff by the Employee in respect of any claim, debt,
obligation or similar process. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to assume expressly
and to agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place.
(h) Amendment; Actions by the Company. This Agreement may not
be amended, modified or canceled except by written agreement of the Employee and
the Company. Any and all determinations, judgments, reviews, verifications,
adjustments, approvals, consents, waivers or other actions of the Company
required or permitted under this Agreement shall be effective only if undertaken
by the Company pursuant to authority granted by a resolution duly adopted by the
Board; provided, however, that by resolution duly adopted in accordance with
this Section 7(h), the Board may delegate its responsibilities hereunder to one
or more of its members other than the Employee.
(i) Severability. If any term or provision hereof is
determined to be invalid or unenforceable in a final court or arbitration
proceeding, (i) the remaining terms and provisions hereof shall be unimpaired
and (ii) the invalid or unenforceable term or provision shall be deemed replaced
by a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
(j) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (determined
without regard to the choice of law provisions thereof).
(k) Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the matters
covered hereby and supersedes all prior agreements and understandings of the
parties with respect to the subject matter hereof.
(l) Headings. The headings and captions of the sections of
this Agreement are included solely for convenience of reference and shall not
control the meaning or interpretation of any provisions of this Agreement.
(m) Counterparts. This Agreement may be executed by the
parties hereto in counterparts, each of which shall be deemed an original, but
both such counterparts shall
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together constitute one and the same document.
(n) Disciplinary and Grievance Procedures. For statutory
purposes, there is no formal disciplinary procedure in relation to the
Employee's employment. The Employee shall be expected to maintain the highest
standards of integrity and behavior. If the Employee has any grievance in
relation to his employment or is not satisfied with any disciplinary procedure
taken in relation to him, he may apply in writing within 14 days of that
decision to the Board, whose decision shall be final. The foregoing shall not be
construed, however, to limit the Employee's remedies at law or otherwise.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the day and year first written above.
GETTY IMAGES, INC.
By:
Name:
Title:
EMPLOYEE
By: ____________________________________
A.D. "Bud" Xxxxxx
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