Exhibit 10.02

 

MACROMEDIA, INC.

EMPLOYMENT AGREEMENT

 

This Agreement is made effective this 19th day of January, 2005, (the “Effective
Date”) between Macromedia, Inc., a Delaware corporation (“Macromedia”), and
Stephen Elop (“Executive”).

 

WHEREAS, Macromedia is engaged in the business of developing and marketing
certain computer software;

 

WHEREAS, Executive is currently Chief Operating Officer of Macromedia pursuant
to an employment offer letter dated February 9, 1998 (the “Prior Agreement”);
and

 

WHEREAS, Macromedia desires to secure the services of Executive as Chief
Executive Officer of 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 Board of Directors of
Macromedia (the “Board”) may from time to time prescribe consistent with his
position as Chief Executive Officer (“CEO”) of Macromedia. Macromedia shall use
its best efforts to have Executive elected and re-elected to the Board at each
Annual Stockholders Meeting held during his period of service as CEO of
Macromedia. Executive shall report directly to the Board. 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 CEO of Macromedia engage in any other business activity,
whether or not such business activity is pursued for gain, profit of other
pecuniary advantage; provided, however, that this Section 1 shall not be
construed as preventing Executive from (i) investing his assets in such form and
manner as will not require any substantial services on his part in the operation
of the affairs of the business entities in which such investments are made or
(ii) serving as a member of the board of directors or similar governing body of
one or more business enterprises or charitable organizations or foundations,
provided such service does not interfere with the duties required of him
hereunder and is approved by the Board.

 

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. $400,000 per year in base salary, payable in installments twice
per month, with such deductions or withholdings as are required by law.

 

2.2 Bonus. $100,000 target bonus for the three (3) months ending March 31, 2005,
and, effective with Macromedia’s fiscal year commencing April 1, 2005, a target
bonus of $400,000 per year; in each case based on the attainment of the
objectives established from time to time under the Macromedia Executive Bonus
Plan by the Compensation Committee of the Board of Directors. Executive’s target
bonus for periods prior to January 1, 2005, remains unchanged.

 

1

--------------------------------------------------------------------------------

2.3 Prior Stock Awards. Executive’s outstanding stock option grants (the “Prior
Options”) remain subject to and governed by the terms and provisions set forth
in the applicable stock option agreement by and between Macromedia and Executive
and the Macromedia equity incentive plan, if any, under which such grants were
awarded and as provided in the resolution concerning stock option vesting
acceleration adopted by the Board on February 26, 1997.

 

2.4 New Equity Awards.

 

(a) Stock Option. On or before January 31, 2005, the Compensation Committee of
the Board shall approve the grant of a stock option (the “New Option”) covering
four hundred thousand (400,000) shares under Macromedia’s 2002 Equity Incentive
Plan (the “Plan”). The New Option’s per share exercise price shall be at fair
market value as determined under the Plan; the vesting schedule shall be
conditioned on Executive’s employment with Macromedia and shares shall vest over
four (4) years, with twenty-five percent (25%) of the shares vesting on the
first anniversary of the date of grant of the New Option and the remaining
shares vesting over thirty-six (36) monthly installments thereafter. The other
terms shall be as provided in the standard form of option agreement adopted for
use under the Plan.

 

(b) Restricted Stock. On or before January 31, 2005 the Compensation Committee
of the Board shall approve the grant of a restricted stock award (the “New Stock
Award”) covering one hundred thousand (100,000) shares under the Plan. The
vesting schedule shall be conditioned on Executive’s employment with Macromedia
and shares shall vest over four (4) years, with twenty-five percent (25%) of the
shares vesting on the first anniversary of their date of issue and the remaining
shares vesting over thirty-six (36) monthly installments thereafter. The other
terms shall be as provided in the standard form of restricted stock agreement
adopted for use under the Plan. This grant shall be in lieu of any grant of
restricted stock communicated to you prior to the Effective Date.

 

(c) Following the Effective Date, Executive shall be eligible for the grant of
equity compensation awards from time to time under the equity compensation plans
and arrangements maintained by Macromedia.

 

3. Indemnification. The existing Indemnification Agreement between Macromedia
and Executive, in the form attached hereto as Exhibit A, shall continue in full
force and effect.

 

4. 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 and short-term disability as the
Board may, from time to time, determine to provide for the key executives of
Macromedia.

 

5. Executive Proprietary Information and Inventions Agreement. As part of the
consideration between the parties for this Agreement, Executive hereby agrees to
remain bound by the terms of Macromedia’s Proprietary Information and Inventions
Agreement entered into by and between Macromedia and Executive in the form
attached hereto as Exhibit B.

 

2

--------------------------------------------------------------------------------

6. Termination. Executive’s employment 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 and Executive shall,
upon request of the Board, resign as a director of Macromedia.

 

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 of Employment. In the event that Executive’s
employment is terminated, he shall be eligible for benefits as follows:

 

7.1 Termination without Cause, for Good Reason or Due to Death or Disability. In
the event that Executive’s employment is terminated (i) by Macromedia without
Cause (as defined in Subsection 7.2), (ii) because of Executive’s death or
Disability (as defined in Subsection 7.4), or (iii) voluntarily by Executive for
Good Reason (as defined in Subsection 7.3), Macromedia shall provide Executive
with termination benefits, as follows:

 

(a) Executive (or his estate) shall (i) receive a lump sum payment in an amount
equal to the sum of his annual rate of base salary and 100% of his annual target
bonus, both at the level in effect immediately prior to his termination, with
such payment to be no less than $800,000, less applicable deductions or
withholdings, and (ii) reimburse Executive for any expenses of Executive and his
dependents incurred by him, for the one (1)-year period following his
termination date, for coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1975, as amended (“COBRA”) or pay for comparable coverage
in the event Executive is no longer eligible for COBRA.

 

(b) The vesting of the New Option shall accelerate with respect to the number of
shares that will vest over the next twelve (12) months and shall remain
exercisable until the earlier of (i) the date one (1) year following Executive’s
termination date, and (ii) the expiration date set forth in the stock option
agreement.

 

(c) Prior to the payment of any termination benefits under this Subsection 7.1
or Section 8 below, Executive shall execute a general release of claims;
provided, however, that such release shall not extend to any subsequent claims
Executive may have with respect to those termination benefits or continued
option vesting.

 

7.2 Circumstances Under Which Termination Benefits Will Not Be Paid. Macromedia
shall not be obligated to provide Executive the termination benefits described
in Subsection 7.1 above if Executive’s employment is terminated by Macromedia
for Cause or if Executive voluntarily terminates his employment with Macromedia
other than for Good Reason. Upon the termination of Executive’s employment by
reason of his Disability or death, the

 

3

--------------------------------------------------------------------------------

termination benefits under Subsection 7.1 will be provided. For purposes of this
Agreement, “Cause” shall mean (1) Executive’s conviction of any felony under
federal or state law, or any fraud, misappropriation or embezzlement or (2)
Executive’s commission of a material violation of the Executive’s Proprietary
Information and Inventions Agreement. For purposes of this Agreement, “Good
Reason” shall have the meaning set forth and be determined under Subsection 7.3.

 

7.3 Termination for Good Reason. Executive may voluntarily terminate his
employment with Macromedia for Good Reason if there should occur:

 

(a) a material adverse change in Executive’s position causing it to be of
materially less stature or responsibility without Executive’s written consent,
and such a materially adverse change shall in all events be deemed to occur if
Executive no longer serves as CEO of a publicly traded company, unless Executive
consents in writing to such change,

 

(b) a reduction, without Executive’s written consent, in his level of
compensation (including base salary and fringe benefits) by more than ten
percent (10%) or a reduction by more than ten percent (10%) in his target bonus
formula under any performance-based executive incentive plans,

 

(c) a relocation of his principal place of employment by more than 50 miles, or

 

(d) a material breach by Macromedia (or its successor) of its obligations under
the attached Indemnification Agreement and the failure to cure such breach
within thirty (30) days after written notice from Executive identifying such
breach.

 

7.4 Executive’s Disability. For purposes of this Agreement, “Disability” means
Executive’s inability to perform the duties of CEO for a period of 180
consecutive days or a period of 180 days during any consecutive twelve-month
period as a result of incapacity due to mental or physical illness as determined
by the Board.

 

7.5 Additional Payment upon Certain Terminations. Upon Executive’s voluntary
termination for Good Reason, termination for Disability, death or involuntary
termination by Macromedia without Cause (as defined in Subsection 7.2) at any
time after the Effective Date, or voluntary termination other than for Good
Reason at any time after January 19, 2007, Executive shall be entitled to an
additional termination payment (the “Additional Payment”). The Additional
Payment shall be equal to five million dollars ($5,000,000), less (i) any gain
Executive received from the sale, prior to Executive’s employment termination
date, of shares attributable to the Prior Options, the New Option, any other
stock options or stock awards granted Executive and the New Stock Award; (ii)
(A) the difference between the fair market value of then unexercised vested
(including vesting under this Section 7 or Section 8 as applicable) shares
attributable to the Prior Options, the New Option and any other stock options
granted Executive and (B) the exercise price of the applicable stock option; and
(iii) the fair market value of vested (including vesting under this Section 7 or
Section 8 as applicable) shares still held by Executive that were issued under
the New Stock Award and any other stock awards granted Executive.

 

4

--------------------------------------------------------------------------------

8. Change in Control Benefits. Should there occur a Change in Control (as
defined below), then the following provisions shall become applicable:

 

8.1 Period of Continued Employment. During the period (if any) following a
Change in Control that Executive continues to be employed by Macromedia or any
successor entity, then the terms and provisions of this Agreement shall continue
in full force and effect, and Executive shall continue to vest in his
outstanding stock awards pursuant to the terms and provisions set forth in the
agreements governing such stock awards.

 

8.2 Certain Terminations Following a Change in Control. Should any of the
following events occur within the twelve (12) months following a Change in
Control: (i) the Executive’s voluntary termination of his employment for Good
Reason, (ii) the termination of Executive’s employment without Cause by
Macromedia or any successor or (iii) the termination of Executive’s employment
by reason of his death or Disability, then in lieu of the benefits set forth in
Section 7.1 above, the following benefits shall become due and payable:

 

(a) Executive (or his estate) shall (i) receive a lump sum payment in an amount
equal to the sum of his annual rate of base salary and 100% of his annual target
bonus, both at the level in effect immediately prior to his termination or, if
greater, at the level in effect immediately prior to the Change in Control, with
such payment to be not less than $800,000, and (ii) be reimbursed for any
expenses of Executive and his dependents incurred by him for COBRA coverage or
pay for comparable coverage in the event he is no longer eligible for COBRA,
during the one (1) year period following his termination date.

 

(b) The New Option and the New Stock Award, and any stock awards granted by
Macromedia’s successor shall vest in full on Executive’s termination date, and
shall remain exercisable until the earlier of (i) the first anniversary of
Executive’s termination date, and (ii) the expiration date of such options as
set forth in the applicable stock option agreement; provided that solely for
purposes of determining whether Executive shall be entitled to accelerated
vesting pursuant to this Subsection 8.2(b), Executive shall have Good Reason for
termination of employment only if Executive remains in employment for the six
(6) months immediately following the Change in Control, upon written request by
Macromedia and/or its successor, or such shorter period as may be determined by
Macromedia and/or its successor.

 

(c) Upon Executive’s voluntary termination (whether or not for Good Reason),
termination for Disability, death or termination by Macromedia without Cause (as
defined in Subsection 7.2), Executive shall be entitled to the Additional
Payment provided for in Section 7 of this Agreement.

 

5

--------------------------------------------------------------------------------

For purposes of this Section 8, a Change in 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 50% percent of the aggregate voting power
of all classes of common equity stock of Macromedia,

 

(III) a liquidation and winding up of the business of Macromedia, or

 

(IV) a change in the composition of the Board of Directors over a period of
thirty-six (36) consecutive months or less such that a majority of the then
current Board members ceases to be comprised of individuals who either (a) have
been Board members continuously since the beginning of such period, or (b) have
been elected or nominated for election as Board members during such period by at
least a majority of the Board members described in clause (a) who were still in
office at the time such election or nomination was approved by the Board of
Directors.

 

9. Arbitration.

 

9.1 Except for proceedings seeking injunctive relief, including, without
limitation, allegations of misappropriation of trade secrets, copyright or
patent infringements, 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 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.

 

6

--------------------------------------------------------------------------------

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 General Counsel 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.

 

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, the Indemnification Agreement attached hereto
as Exhibit A and the Proprietary Information and Inventions Agreement attached
as Exhibit B hereto, constitutes the complete and exclusive statement of the
agreement between the parties concerning the subject of Executive’s employment
and supersedes the Prior Agreement, any other prior employment agreement (and
any amendments thereto) by and between Executive and Macromedia, the resolution
concerning stock option vesting acceleration (other than for Prior Options)
adopted by the Board on February 26, 1997 and all proposals (oral or written),
understandings, representations, conditions, covenants, and all other
communications between the parties relating to the subject matter hereof.

 

7

--------------------------------------------------------------------------------

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. Any payments or benefits which
become due under this Agreement in connection with the Executive’s death shall
be paid to his designated beneficiary(ies) or, in the absence of such
designation, to the personal representative or administrator of his estate.

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.

 

MACROMEDIA, INC.       ACCEPTED BY EXECUTIVE By:  

/s/ Robert K. Burgess

--------------------------------------------------------------------------------

     

/s/ Stephen Elop

--------------------------------------------------------------------------------

Name:  

Robert K. Burgess

        Title:  

Chairman of the Board of Directors and

Chief Executive Officer

       

 

Exhibits:

 

A – Indemnification Agreement

 

B – Proprietary Information and Inventions Agreement

 

8