Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is entered
into by and between Dara Khosrowshahi ("Executive") and USA Networks, Inc., a
Delaware corporation (the "Company"), and is effective July 24, 2000, (the
"Effective Date").
WHEREAS, the Company and Executive are parties to an employment
agreement dated April 5, 2000 (the "Prior Employment Agreement").
WHEREAS, the parties now wish to amend and restate the Prior Employment
Agreement in its entirety as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, Executive and the Company have agreed and do hereby agree as follows:
EMPLOYMENT. The Company agrees to employ Executive as Executive Vice
President--Operations and Strategic Planning, and Executive accepts and agrees
to such employment. During Executive's employment with the Company, Executive
shall do and perform all services and acts necessary or advisable to fulfill the
duties and responsibilities as are commensurate and consistent with his position
and shall render such services on the terms set forth herein. During Executive's
employment with the Company, Executive shall report directly to the Company's
Chief Executive Officer or, in the Company's discretion, the Company's Chief
Executive Officer and the Company's Vice Chairman (hereinafter collectively
referred to as the "Reporting Officer"). Executive shall have such powers and
duties with respect to the Company as may reasonably be assigned to him by the
Board of Directors of the Company or the Reporting Officer, to the extent
consistent with his position and status as set forth above. Executive agrees to
devote all of his working time, attention and efforts to the Company and to
perform the duties of his position in accordance with the Company's policies as
in effect from time to time. Executive's principal place of employment shall be
the Company's offices in New York City; however, Executive's position shall
require frequent long-distance travel on Company business.
TERM OF AGREEMENT. The term ("Term") of this Agreement shall commence on the
Effective Date and shall continue until March 3, 2003, unless sooner terminated
in accordance with the provisions of Section 4 hereof.
COMPENSATION.
BASE SALARY. The Company shall pay Executive an annual base salary at
the rate of $450,000 per year (the "Base Salary"),
payable in equal biweekly installments or in accordance
with the Company's payroll practice as in effect from
time to time. For all purposes under this Agreement, the
term "Base Salary" shall refer to Base Salary, including
increases, if any, made from time to time.
DISCRETIONARY BONUS. During the Term, Executive shall be eligible to
participate in the Company's discretionary annual
incentive bonus plan.
STOCK OPTIONS.
In consideration of Executive's entering into this Agreement, Executive has been
granted under the Company's 1997 Stock and Annual Incentive Plan (the "USAi
Plan") a non-qualified stock option (the "USAi Option") to purchase an
additional 300,000 shares of the common stock, par value $.01 per share, of the
Company (the "Company's Common Stock"), which grant was approved by the
Compensation Committee of the Board of Directors of the Company on August 25,
2000.The exercise price of the Option is $24.9375.Such USAi Option shall vest
and become exercisable in four equal installments on each of the first, second,
third and fourth anniversaries of the Effective Date, provided that the Option
shall become 100% vested and exercisable upon a Change in Control (as such term
is defined in the Plan), and as provided in Section 4(d) of this Agreement.
Executive hereby acknowledges that the 100,000 options to purchase the Company's
Common Stock proposed to be granted to Executive under the Company's 1997 Stock
and Annual Incentive Plan (the "USAi Plan") in December 1999 were not granted.
Executive further acknowledges that as a result of his resignation from the
Boards of Director of Ticketmaster Online-CitySearch, Inc. ("TMCS") and
Styleclick Inc. ("Styleclick"), Executive has agreed to forfeit all options to
purchase shares of TMCS and Styleclick, as more fully described in the letters
dated September 21, 2000 to each of TMCS and Styleclick.
The Company acknowledges that Executive shall retain all rights in and to all
other options to purchase shares of the Company's Common Stock and to all shares
of Restricted Stock, in each case previously granted to Executive under the USAi
Plan and the HRN 2000 Stock Plan, including without limitation, (A) the 15,000
shares of Restricted Stock granted on December 20, 1999 (30,000 shares after
giving effect to the 2-for-1 stock split of the Company's Common Stock effective
February 24, 2000); (B) the option to purchase 100,000 shares of Class A Common
Stock, par value $.01 per share, of Hotel Reservations Network, Inc. ("HRN
Common Stock") granted on February 22, 2000 with an exercise price of $16.00;
(C) the option to purchase 100,000 shares of HRN Common Stock granted on April
5, 2000 with an exercise price of $15.50 (together with the options described in
clause (B) of this paragraph (iii), the "HRN Options"); and (D) the option to
purchase 100,000 shares of the Company's Common Stock granted on April 5, 2000
with an exercise price of $20.8675 (the "Prior USAi Option").
The the USAi Option, the Prior USAi Option and the HRN Options (collectively,
the "2000 Options") shall expire upon the earlier to occur of (x) ten years from
the date of the respective grant or (y) except as otherwise provided in the
award agreement for any such option or in Section 4 of this Agreement, 90 days
following the termination of Executive's employment with the Company for any
reason. The Prior USAi Option and the HRN Options shall vest as set forth in the
Prior Employment Agreement. The 2000 Options shall not become vested and
exercisable as a result of the termination or non-renewal of this Agreement (or
the termination of Executive's employment with the Company) for any reason,
except as provided in Section 4(d).
BENEFITS. From the Effective Date through the date of termination
of Executive's employment with the Company for any
reason, Executive shall be entitled to participate in
any fringe, welfare, health and life insurance and
pension benefit and incentive programs as may be adopted
from time to time by the Company on the same basis as
that provided to peer corporate executives of the
Company. Without limiting the generality of the
foregoing, Executive shall be entitled to the following
benefits:
REIMBURSEMENT FOR BUSINESS EXPENSES. During the Term, the Company shall
reimburse Executive for all reasonable and necessary expenses incurred by
Executive in performing his duties for the Company, including, without
limitation, expenses for travel related to the business of the Company
(including expenses in respect of his wife in accompanying him during such
travel) and entertainment expenses on the same basis as peer executives in
accordance with the Company's policies.
VACATION. During the Term, Executive shall be entitled to four weeks of paid
vacation per year, or such longer period as may be provided by the Company, in
accordance with the plans, policies, programs and practices of the Company
applicable to peer corporate executives of the Company generally.
TERMINATION OF EXECUTIVE'S EMPLOYMENT.
DEATH. In the event Executive's employment hereunder is terminated by
reason of Executive's death, (i) the Company shall pay
Executive's designated beneficiary or beneficiaries within 30
days of his death his Base Salary through the end of the month
in which death occurs in a lump sum in cash; (ii) all
outstanding equity incentive awards (including, without
limitation, the Additional Stock Options) which are vested and
which have not been exercised by Executive shall remain
exercisable for a period of one year following the date of
Executive's death or, if earlier, until the end of the
applicable option term; and (iii) the Company shall pay
Executive's designated beneficiary or beneficiaries within 30
days of his death in a lump sum in cash any Accrued Obligations
(as defined in subparagraph 4(f) below).
DISABILITY. If, as a result of Executive's incapacity due to physical or
mental illness ("Disability"), Executive shall have been absent
from the full-time performance of his duties with the Company
for a period of four consecutive months and, within 30 days
after written notice is provided to him by the Company, he shall
not have returned to the full-time performance of his duties,
Executive's employment under this Agreement may be terminated by
the Company or Executive for Disability. During any period prior
to such termination during
2
which Executive is absent from the full-time performance of his
duties with the Company due to Disability, the Company shall
continue to pay Executive his Base Salary at the rate in effect
at the commencement of such period of Disability, offset by any
amounts payable to Executive under any disability insurance plan
or policy provided by the Company. Upon termination of
Executive's employment for Disability, (i) the Company shall pay
Executive within 30 days of his Disability his Base Salary
through the end of the month in which termination occurs in a
lump sum in cash, offset by any amounts payable to Executive
under any disability insurance plan or policy provided by the
Company; (ii) all outstanding equity incentive awards
(including, without limitation, the Additional Stock Options)
which are vested and which have not been exercised by Executive
shall remain exercisable for a period of one year following the
date of Executive's Disability or, if earlier, until the end of
the applicable option term; and (iii) the Company shall pay
Executive within 30 days of his Disability in a lump sum in cash
any Accrued Obligations (as defined in subparagraph 4(f) below).
TERMINATION FOR CAUSE. The Company may terminate Executive's employment
under this Agreement for Cause at any time prior to the
expiration of the Term. As used herein, "Cause" shall mean: (i)
the plea of guilty to, or conviction for, the commission of a
felony offense by Executive; PROVIDED, HOWEVER, that after
indictment, the Company may suspend Executive from the rendition
of services, but without limiting or modifying in any other way
the Company's obligations under this Agreement; (ii) a material
breach by Executive of a fiduciary duty owed to the Company;
(iii) a material breach by Executive of any of the covenants
made by him in Section 5 hereof; or (iv) the willful and gross
neglect by Executive of the material duties required by the
Agreement. In the event of termination for Cause, this Agreement
shall terminate without further obligation by the Company,
except for the payment of any Accrued Obligations (as defined in
subparagraph 4(f) below).
TERMINATION BY THE COMPANY OTHER THAN FOR DEATH, DISABILITY OR CAUSE OR
BY EXECUTIVE FOR GOOD REASON. If Executive's employment is
terminated by the Company for any reason other than Executive's
death or Disability or for Cause, or Executive terminates his
employment for Good Reason (as defined below), then A) the
Company shall pay Executive the Base Salary through the end of
the Term over the course of the then remaining Term; and B) the
2000 Options shall immediately vest and they and any other then
outstanding portion of the 2000 Options held by Executive shall
remain outstanding for one year from the date of such
termination or, if earlier, the end of the term of any such 2000
Options; and the Company shall pay Executive within 30 days of
the date of such termination in a lump sum in cash any Accrued
Obligations (as defined in subparagraph 4(f) below). As used
herein, "Good Reason" shall mean the occurrence of any of the
following: (i) the Company's material breach of any of the
provisions of this Agreement; (ii) any material adverse
alteration in Executive's title, position, status, duties, level
of reporting or responsibilities with the Company and (iii) any
relocation of Executive's office outside of the New York
metropolitan area. If on or prior to December 3, 2002, after
written notice by Executive, such notice to be provided no later
than November 3, 2002, the Company has not offered Executive an
extension of the Term specifically until July 25, 2004 on the
same terms as apply to the July 24, 2000 - March 3, 2003 period
of the Term, if, and to the extent that, any of the USAi Options
shall then not have vested, all of said unvested USAi Options
other than those which are to vest on the fourth anniversary of
the Effective Date shall also immediately vest and they and any
other then outstanding portion of the 2000 Options held by
Executive shall remain outstanding until March 3, 2004.
MITIGATION; OFFSET. In the event of termination of Executive's
employment prior to the end of the Term, and Executive's
obtaining other employment during the Term, all future Base
Salary payable by the Company to Executive during the remainder
of the Term shall be offset by the Base Salary paid to Executive
from another employer. For purposes of this Section 4(e),
Employee shall have an obligation to inform the Company
regarding Executive's employment status following termination
and during the period encompassing the Term.
ACCRUED OBLIGATIONS. As used in this Agreement, "Accrued Obligations"
shall mean the sum of (i) any portion of Executive's Base Salary
through the date of death, Disability or termination, as the
case may be, which has not yet been paid; (ii) any compensation
previously deferred by Executive (together with any interest or
earnings thereon) that has not yet been paid; and (iii) any
accrued but unpaid bonuses or other accrued incentive
compensation as of the date of death, Disability or termination,
as the case may be.
CONFIDENTIAL INFORMATION/NON-SOLICITATION.
CONFIDENTIALITY. Executive acknowledges that in his employment hereunder
he will occupy a position of trust and confidence. Executive
shall not, except as may be required to perform his duties
hereunder or as required by
3
applicable law, without limitation in time or until such
information shall have become public other than by Executive's
unauthorized disclosure, disclose to others or use, whether
directly or indirectly, any Confidential Information regarding
the Company or any of its respective subsidiaries. "Confidential
Information" shall mean information about the Company or any of
its respective subsidiaries, and their respective clients and
customers that is not disclosed by the Company or any of its
respective subsidiaries for financial reporting purposes and
that was learned by Executive in the course of his employment by
the Company or any of its respective subsidiaries, including
(without limitation) any proprietary knowledge, trade secrets,
data, formulae, information and client and customer lists and
all papers, resumes, and records (including computer records) of
the documents containing such Confidential Information.
Executive acknowledges that such Confidential Information is
specialized, unique in nature and of great value to the Company
and its respective subsidiaries, and that such information gives
the Company and its respective subsidiaries a competitive
advantage. Executive agrees to deliver or return to the Company,
at the Company's request at any time or upon termination or
expiration of his employment or as soon thereafter as possible,
all documents, computer tapes and disks, records, lists, data,
drawings, prints, notes and written information (and all copies
thereof) furnished by the Company and its respective
subsidiaries or prepared by Executive in the course of his
employment by the Company and its respective subsidiaries.
NON-SOLICITATION OF EMPLOYEES. Executive recognizes that he will possess
confidential information about other employees of the Company
and its respective subsidiaries relating to their education,
experience, skills, abilities, compensation and benefits, and
inter-personal relationships with suppliers to and customers of
the Company and its respective subsidiaries. Executive
recognizes that the information he will possess about these
other employees is not generally known, is of substantial value
to the Company and its respective subsidiaries in developing
their respective businesses and in securing and retaining
customers, and will be acquired by him because of his business
position with the Company. Executive agrees that, during the
Term (and for a period of 24 months beyond the expiration of the
Term), he will not, directly or indirectly, solicit or recruit
any employee of the Company or any of its respective
subsidiaries for the purpose of being employed by him or by any
business, individual, partnership, firm, corporation or other
entity on whose behalf he is acting as an agent, representative
or employee and that he will not convey any such confidential
information or trade secrets about other employees of the
Company or any of its respective subsidiaries to any other
person except within the scope of Executive's duties hereunder.
PROPRIETARY RIGHTS; ASSIGNMENT. All Executive Developments shall be made
for hire by the Executive for the Company or any of its
subsidiaries or affiliates. "Executive Developments" means any
idea, discovery, invention, design, method, technique,
improvement, enhancement, development, computer program,
machine, algorithm or other work or authorship with respect to
which the Executive may have any rights that (i) relates to the
business or operations of the Company or any of its subsidiaries
or affiliates, or (ii) results from or is suggested by any
undertaking assigned to the Executive or work performed by the
Executive for or on behalf of the Company or any of its
subsidiaries or affiliates, whether created alone or with
others, during or after working hours. All Confidential
Information and all Executive Developments shall remain the sole
property of the Company or any of its subsidiaries or
affiliates. The Executive shall acquire no proprietary interest
in any Confidential Information or Executive Developments
developed or acquired during the Term. To the extent the
Executive may, by operation of law or otherwise, acquire any
right, title or interest in or to any Confidential Information
or Executive Development, the Executive hereby assigns to the
Company all such proprietary rights. The Executive shall, both
during and after the Term, upon the Company's request, promptly
execute and deliver to the Company all such assignments,
certificates and instruments, and shall promptly perform such
other acts, as the Company may from time to time in its
discretion deem necessary or desirable to evidence, establish,
maintain, perfect, enforce or defend the Company's rights in
Confidential Information and Executive Developments.
COMPLIANCE WITH POLICIES AND PROCEDURES. During the Term, Executive shall adhere
to the policies and standards of professionalism set forth in
the Company's Policies and Procedures as they may exist from
time to time.
REMEDIES FOR BREACH. Executive expressly agrees and understands that the
remedy at law for any breach by Executive of this Section 5 will
be inadequate and that damages flowing from such breach are not
usually susceptible to being measured in monetary terms.
Accordingly, it is acknowledged that upon Executive's violation
of any provision of this Section 5 the Company shall be entitled
to obtain from any court of competent jurisdiction immediate
injunctive relief and obtain a temporary order restraining any
threatened or further breach as well as an equitable accounting
of all profits or benefits arising out of such violation.
4
Nothing in this Section 5 shall be deemed to limit the Company's
remedies at law or in equity for any breach by Executive of any
of the provisions of this Section 5, which may be pursued by or
available to the Company.
SURVIVAL OF PROVISIONS. The obligations contained in this Section 5 shall, to
the extent provided in this Section 5, survive the termination
or expiration of Executive's employment with the Company and, as
applicable, shall be fully enforceable thereafter in accordance
with the terms of this Agreement. If it is determined by a court
of competent jurisdiction in any state that any restriction in
this Section 5 is excessive in duration or scope or is
unreasonable or unenforceable under the laws of that state, it
is the intention of the parties that such restriction may be
modified or amended by the court to render it enforceable to the
maximum extent permitted by the law of that state.
NOTICES. All notices and other communications under this Agreement shall be in
writing and shall be given by first-class mail, certified or registered with
return receipt requested or hand delivery acknowledged in writing by the
recipient personally, and shall be deemed to have been duly given three days
after mailing or immediately upon duly acknowledged hand delivery to the
respective persons named below:
If to the Company: USA Networks, Inc.
Carnegie Hall Tower
152 West 57th Street
New York, New York 10019
Attention: General Counsel
If to Executive: Dara Khosrowshahi
251 West 19th Street, Apartment 9B
New York, New York 10011
Either party may change such party's address for notices by notice duly given
pursuant hereto.
TERMINATION OF PRIOR AGREEMENTS. Except as otherwise herein provided, this
Agreement constitutes the entire agreement between the parties and terminates
and supersedes any and all prior agreements and understandings among the parties
with respect to Executive's employment and compensation by the Company,
including, without limitation, the Prior Employment Agreement. The Company
acknowledges and agrees that neither Executive nor anyone acting on his behalf
has made, and is not making, and in executing this Agreement, the Company has
not relied upon, any representations, promises or inducements except to the
extent the same is expressly set forth in this Agreement.
ASSIGNMENT; SUCCESSORS. This Agreement is personal in its nature and none of the
parties hereto shall, without the consent of the others, assign or transfer this
Agreement or any rights or obligations hereunder, provided that, in the event of
the merger, consolidation, transfer, or sale of all or substantially all of the
assets of the Company with or to any other individual or entity, this Agreement
shall, subject to the provisions hereof, be binding upon and inure to the
benefit of such successor and such successor shall discharge and perform all the
promises, covenants, duties, and obligations of the Company hereunder, and all
references herein to the "Company" shall refer to such successor.
GOVERNING LAW. This Agreement and the legal relations thus created between the
parties hereto shall be governed by and construed under and in accordance with
the internal laws of the State of New York.
WITHHOLDING. The Company shall make such deductions and withhold such amounts
from each payment and benefit made or provided to Executive hereunder as may be
required from time to time by applicable law, governmental regulation or order.
HEADINGS. Section headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of this Agreement for any
other purpose.
WAIVER; MODIFICATION. Failure to insist upon strict compliance with any of the
terms, covenants, or conditions hereof shall not be deemed a waiver of such
term, covenant, or condition, nor shall any waiver or relinquishment of, or
failure to insist upon strict compliance with, any right or power hereunder at
any one or more times be deemed a waiver or relinquishment of such right or
power at any other time or times. This Agreement shall not be modified in any
respect except by a writing executed by each party hereto.
SEVERABILITY. In the event that a court of competent jurisdiction determines
that any portion of this Agreement is in violation of any law or public policy,
only the portions of this Agreement that violate such law or public policy shall
be stricken. All portions of this Agreement that do not violate any statute or
public policy shall continue in full force and effect. Further, any court order
striking any portion of this Agreement shall modify the stricken terms as
narrowly as possible to give as much effect as possible to the intentions of the
parties under this Agreement.
INDEMNIFICATION. The Company shall indemnify and hold Executive harmless for
acts and omissions in his capacity as
5
an officer, director or employee of the Company to the maximum extent permitted
under applicable law; provided, HOWEVER, that neither the Company, nor any of
its respective subsidiaries or affiliates shall indemnify Executive for any
losses incurred by Executive as a result of acts described in Section 4(c) of
this Agreement.
COUNTERPARTS. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and delivered by its duly authorized officer and Executive has executed and
delivered this Agreement on September 21, 2000, effective as of July 24, 2000.
USA NETWORKS, INC.
---------------------------------------------
By: Julius Genachowski
Senior Vice President and General Counsel
---------------------------------------------
DARA KHOSROWSHAHI