EXHIBIT 10.42
MACROVISION CORPORATION
EXECUTIVE SEVERANCE AND ARBITRATION AGREEMENT
THIS EXECUTIVE SEVERANCE AND ARBITRATION AGREEMENT is made and entered
into as of June 24, 2002, by and between Macrovision Corporation, a Delaware
corporation (the "Company") and Xxx X. Halifax ("Executive").
WHEREAS, the Board of Directors (the "Board") of the Company has
determined that, in the event of a possible, threatened or pending sale or other
change in control of the Company, it is imperative that the Company and the
Board be able to rely upon Executive to continue in Executive's position, and
that the Company be able to receive and rely upon Executive's advice, if
requested, as to the best interests of the Company and its shareholders without
concern that Executive might be distracted by the personal uncertainties and
risks created by any such possible transactions; and
WHEREAS, in connection with such a change in control, Executive may, in
addition to Executive's regular duties, be called upon to assist in the
assessment of any such possible transactions, advise management and the Board as
to whether such proposals would be in the best interests of the Company and its
shareholders, and to take such other actions as the Board might determine to be
appropriate; and
WHEREAS, the Company's Compensation Committee has determined that
Executive should be provided severance benefits in the event his employment is
terminated without cause in the absence of a change in control, so that
Executive will not be distracted by personal uncertainties and risks concerning
his employment with the Company; and
WHEREAS, the Board and the Compensation Committee have authorized the
Company to enter into an agreement with Executive providing severance benefits
as set forth herein;
NOW, THEREFORE, to assure the Company that it will have the continued
dedication of Executive and the availability of Executive's advice and counsel
through the occurrence of any Change in Control of the Company, and to induce
Executive to remain in the employ of the Company, and for other good and
valuable consideration, the Company and Executive agree as follows:
1. DEFINITIONS.
(a) "CAUSE" means the occurrence of any one or more of the
following: (i) conviction of any felony or any act of fraud,
misappropriation or embezzlement which has an immediate and materially
adverse effect on the Company or a Subsidiary, (ii) engaging in a
fraudulent act to the material damage or prejudice of the Company or a
Subsidiary or in conduct or activities materially damaging to the
property, business or reputation of the Company or a Subsidiary, (iii)
willful and repeated failure to comply in any material respect with the
terms of any applicable employment agreement or any lawful written
policies or directives of the Board or the Company's chief executive
officer which have an immediate and materially adverse effect on the
Company or a Subsidiary and which have not been corrected within 30 days
after written notice from the Company of such failure, (iv) any material
act or omission involving gross negligence or willful misconduct in the
performance of employment duties which has an immediate and materially
adverse effect on the Company or a Subsidiary and which has not been
corrected within 30 days after written notice from the Company, or (v)
material breach of any other agreement with the Company, which has an
immediate and materially adverse effect on the Company or a Subsidiary and
which has not been cured within 30 days after written notice from the
Company of such breach.
(b) "CHANGE IN CONTROL" means any of the following events
(i) any "person" or "group" (as defined in or pursuant to Sections 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) other than the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly
38
(including by holding securities which are exercisable for or convertible
into shares of capital stock of the Company), of securities of the Company
representing 50% or more of the voting power of the outstanding shares of
capital stock of the Company entitled to vote generally in the election of
directors; or, (ii) the Company sells or exchanges, through merger,
assignment or otherwise, in one or more transactions, other than in the
ordinary course of business, assets which provided at least seventy
percent (70%) of the revenues or pre-tax net income of the Company and its
Subsidiaries on a consolidated basis during the most recently-completed
fiscal year, or, (iii) Continuing Directors cease to constitute at least a
majority of the Board. Notwithstanding the foregoing, the following events
shall not constitute a Change in Control: any acquisition of beneficial
ownership pursuant to (i) a reclassification, however effected, of the
Company's authorized common stock, or (ii) a corporate reorganization
involving the Company or a Subsidiary which does not result in a material
change in the ultimate ownership by the shareholders of the Company
(through their ownership of the Company or its successor resulting from
the reorganization) of the assets of the Company and its Subsidiaries, but
only if such reclassification or reorganization has been approved by the
Board.
(c) "CONTINUING DIRECTOR" means (i) each Director in office
on January 1, 2002, and (ii) any successor to any such Director whose
nomination or selection was approved by a majority of the Directors in
office at the time of the Director's nomination or selection.
(d) "GOOD REASON" means the occurrence of any of the
following without the employee's consent: (i) a substantial diminution in
the employee's status, position or responsibilities, or the assignment to
the employee of any duties or responsibilities that are inconsistent with
the employee's status, position or responsibilities; (ii) a reduction in
the employee's base salary; or (iii) a relocation of the employee's
principal place of employment to a new work site requiring an increase in
one-way commute from employee's residence of more than thirty-five (35)
miles.
(e) "SUBSIDIARY" means (i) any corporation, foreign or
domestic, in which the Company directly or indirectly owns 50% or more of
the issued and outstanding voting stock on an "as converted basis" and
(ii) any partnership, foreign or domestic, in which the Company owns a
direct or indirect interest equal to 50% or more of the outstanding equity
interests.
(f) "WELFARE BENEFITS" means and includes all life, dental,
health, accident and disability benefit plans, other similar welfare
plans, and any equivalent successor policy, plan, program or arrangement
that may now exist or be adopted hereafter by the Company or a Subsidiary.
2. SEVERANCE BENEFITS.
(a) In the event that a Change in Control occurs and, within
the period beginning ninety (90) days before the date of the Change in
Control and ending twelve (12) months thereafter, (i) Executive's
employment is terminated by the Company or a Subsidiary without Cause or
(ii) Executive voluntarily terminates his employment with Company and its
Subsidiaries with Good Reason, then the Company shall pay to Executive
severance pay under this Agreement. Such severance pay shall be in the
form of salary continuation of Executive's regular base pay in effect
ninety (90) days before the time of the Change in Control or at the time
of the termination of his employment, whichever is greater.
(b) In the event that Executive's employment is terminated
by the Company or a Subsidiary without Cause and not within the period
specified in Section 2(a) above, then the Company shall pay to Executive
severance pay under this Agreement. Such severance pay shall be in the
form of salary continuation of Executive's regular base pay in effect at
the time of the termination of his employment.
39
(c) The Company shall pay the salary continuation specified
in either Section 2(a) or Section 2(b) above during the twelve (12) month
period immediately following the date on which Executive's employment with
the Company terminates.
(d) Transfer of Executive's employment from the Company to a
Subsidiary (or to an entity of which the Company is a Subsidiary) or from
a Subsidiary to the Company or to another Subsidiary (or to an entity of
which the Company is a Subsidiary) shall not be considered a termination
of Executive's employment.
3. WELFARE BENEFITS.
(a) During the period that Company is obligated to pay
Executive salary continuation as a result of a Change in Control pursuant
to Section 2(a) above, or, if sooner, until Executive is entitled to
Welfare Benefits (as defined below) under any plan maintained by any
entity employing Executive after Executive's employment with the Company
terminates, Company shall provide to Executive (and his spouse and other
qualified dependents) all Welfare Benefits that Company provided to
Executive (and his spouse and qualified dependents) immediately prior to
the Change in Control. Notwithstanding the foregoing, with respect to any
Welfare Benefits provided through an insurance policy, the Company's
obligation to provide such Welfare Benefits following a Change in Control
shall be limited by the terms of such policy; provided, however, that (i)
the Company shall make reasonable efforts to amend such policy to provide
the continued coverage described in this Section 3(a), and (ii) if such
policy is not amended to provide the continued benefits described in this
Section 3(a), the Company shall pay Executive's cost of comparable
replacement coverage.
(b) If prior to the Change in Control Executive was required
to contribute towards the cost of a Welfare Benefit as a condition of
receiving such Welfare Benefit, the Executive may be required to continue
contributing towards the cost of such Welfare Benefit under the same terms
and conditions as applied to the Executive immediately prior to the Change
in Control in order to receive such Welfare Benefit.
4. STOCK OPTIONS.
(a) The Company has granted Executive options to purchase
Company common stock that are currently outstanding, but not yet
exercisable in whole or in part, and the Company may grant Executive
additional stock options in the future. The currently outstanding stock
options and any future stock options Company grants to Executive are
hereinafter referred to as the "Stock Options."
(b) Notwithstanding the provisions of any agreement(s)
pursuant to which the Stock Options are granted, in the event that a
Change in Control occurs and, within the period beginning ninety (90) days
before the date of the Change in Control and ending twelve (12) months
thereafter, (a) Executive's employment is terminated by the Company or a
Subsidiary without Cause or (b) Executive voluntarily terminates his
employment with Company and its Subsidiaries with Good Reason, then on the
last day of Executive's employment with the Company and its Subsidiaries,
all of the Stock Options held by Executive shall become fully vested and
exercisable.
(c) Notwithstanding the provisions of any agreement(s)
pursuant to which the Stock Options are granted, in the event that
Executive's employment is terminated by the Company or a Subsidiary
without Cause and not within the period specified in Section 4(b) above,
then on the last day of Executive's employment with the Company and its
Subsidiaries, all of the Stock Options held by Executive that are
scheduled to become fully vested and exercisable
40
within twelve (12) months following such last day of employment shall
become fully vested and exercisable.
5. OTHER EMPLOYEE BENEFITS. The benefits provided to Executive
hereunder shall not be affected by or reduced because of any other benefits
(including, but not limited to, salary, bonus, pension, stock option or stock
purchase plan) to which Executive may be entitled by reason of his employment
with the Company or any Subsidiary thereof or the termination of his employment
with the Company, and no other such benefit by reason of such employment shall
be so affected or reduced because of the benefits bestowed by this Agreement.
Notwithstanding the foregoing, if Executive qualifies for severance pay under
Section 2 of this Agreement, such severance pay will be in lieu of, and not in
addition to, any severance or other termination payments to which Executive may
be entitled under any employment agreement with, or other plan or arrangement
of, the Company.
6. WITHHOLDING. All amounts payable by the Company hereunder shall be
subject to all federal, state, local and other withholdings and employment taxes
as required by applicable law.
7. ARBITRATION OF CLAIMS. The following arbitration provisions shall
apply to any claim brought by Executive or the Company after the date of this
Agreement even if the facts upon which the claim is based arose prior to the
execution of this Agreement:
(a) CLAIMS COVERED BY THIS AGREEMENT. To the maximum extent
permitted by law, the Company and Executive mutually consent to the
resolution by arbitration of all claims or causes of action that the
Company may have against Executive or that Executive may have against the
Company or against its officers, directors, employees, or agents in the
capacity as such or otherwise (collectively "claims"). The claims covered
by this Agreement include, but are not limited to, claims for breach of
any contract or covenant (express or implied); tort claims; claims for
discrimination (including, but not limited to, race, sex, sexual
harassment, or any type of unlawful harassment, religion, national origin,
age, marital status, medical condition, disability or sexual orientation);
claims for wrongful termination in violation of public policy; and claims
for violation of any federal, state, or other governmental law, statute,
regulation or ordinance, including, but not limited to, all claims arising
under Title VII of the Civil Rights Act of 1969, as amended, the Age
Discrimination in Employment Act of 1967, the Americans with Disabilities
Act, the California Fair Employment & Housing Act, the California Labor
Code, the Consolidated Omnibus Budget Reconciliation Act of 1985, the Fair
Labor Standards Act or Employee Retirement Income Security Act.
(b) CLAIMS NOT COVERED BY THE AGREEMENT. Claims Executive
may have for workers' compensation, unemployment compensation benefits or
wage and hour claims within the jurisdiction of the California Labor
Commissioner are not covered by this Agreement. Notwithstanding the fact
that Executive is not required to arbitrate such claims, he may, if he so
chooses, submit wage and hour claims to binding arbitration pursuant to
this Agreement. Also not covered are claims by either party for injunctive
and/or other equitable relief, as to which the parties understand and
agree that either party may seek and obtain relief from a court of
competent jurisdiction.
(c) REQUIRED NOTICE OF ALL CLAIMS. The Company and Executive
agree that the aggrieved party must give written notice of any claim to
the other party. Written notice to the Company, or its officers, employees
or agents, shall be sent to the Company's Chief Executive Officer.
Executive will be given notice at the last address recorded in his
personnel file or such other address as Executive may provide to the
Company from time to time following the date of this Agreement by a
writing specifying that it is the address for notice under this Agreement.
The written notice shall identify and describe the nature of all claims
asserted and detail the facts upon which such claims are based. The notice
shall be sent to the other party by certified or registered mail, return
receipt requested.
41
(d) ARBITRATION PROCEDURES. The Company and Executive agree
that, except as provided in this Agreement, any arbitration shall be in
accordance with and under the auspices and rules of the American
Arbitration Association (hereinafter the "Arbitration Service"). The
arbitration shall take place in Santa Xxxxx County, California, unless the
parties mutually agree to conduct the arbitration in a different location.
The arbitrator shall be selected by the mutual agreement of the parties.
If the parties cannot agree on a neutral arbitrator, Executive first, and
then the Company, will alternately strike names from a list provided by
the Arbitration Service until only one name remains. The arbitrator shall
have exclusive authority to resolve any dispute relating to the
interpretation, applicability, enforceability or formation of this
Agreement, including but not limited to any claim that all or any part of
this Agreement is void or voidable. The arbitrator shall apply the
applicable statute of limitations to any claim, taking into account
compliance with Section 7(c) of this Agreement. The arbitrator shall issue
a written opinion and award, which shall be signed and dated. The
arbitrator shall be permitted to award those remedies that are available
under applicable law. The arbitrator's decision regarding the claims shall
be final and binding upon the parties. The arbitrator's award shall be
enforceable in any court having jurisdiction thereof.
(e) ACKNOWLEDGMENT OF JURY TRIAL WAIVER. Executive
understands that, by this Agreement, he is waiving his right to have a
claim adjudicated by a court or jury. Any party may be represented by an
attorney or other representative selected by the party.
(f) ARBITRATION FEES AND COSTS; ATTORNEYS' FEES. Executive
will be required to pay an arbitration fee to initiate the arbitration
equal to what he would be charged as a first appearance fee in court. The
Company shall advance the remaining fees and costs of the arbitrator.
However, to the extent permissible under the law, and following the
arbitrator's ruling on the matter, the arbitrator may rule that the
arbitrator's fees and costs be distributed in an alternative manner. The
arbitrator's award in any arbitration brought pursuant to the provisions
of this Agreement shall provide for the prevailing party to recover from
the other party the prevailing party's reasonable attorneys' fees relating
to such action.
(g) REQUIREMENTS FOR MODIFICATION OR REVOCATION. This
agreement to arbitrate shall survive the termination of Executive's
employment with the Company. It can only be revoked or modified by a
writing signed by the parties that specifically states an intent to revoke
or modify this Agreement.
(h) CONSIDERATION. Executive understands that the provisions
for severance pay as set forth herein and his continued employment with
the Company are consideration for his acceptance of these arbitration
provisions. In addition, the promises by the Company and by Executive to
arbitrate claims, rather than litigate them before courts or other bodies,
provide consideration for each other.
(i) VIOLATION OF THIS AGREEMENT. Should any party to this
Agreement hereafter institute any legal action or administrative
proceeding against the other with respect to any claim required to be
arbitrated under this Agreement or pursue any arbitrable dispute by any
method other than arbitration, the responding party shall recover from the
initiating party all damages, costs, expenses and attorneys' fees incurred
as a result of such action.
8. ENTIRE AGREEMENT; EFFECT OF PRIOR AGREEMENTS. This is the complete
agreement of the parties on the subjects set forth herein, including severance
pay and arbitration of disputes. This Agreement supersedes any prior or
contemporaneous oral or written understanding on such subjects. No party is
relying on any representations, oral or written, on the subject of the effect,
enforceability, or meaning of this Agreement, except as specifically set forth
in this Agreement. In the event of a conflict between any of the terms of this
Agreement and any of the terms of (i) any of the Option Agreements, or (ii) that
certain accepted offer of employment between Executive and the Company
42
dated October 8, 1999, the terms of this Agreement shall prevail. Without
limiting the generality of the foregoing, the arbitration provisions of the
October 8, 1999 offer of employment shall be superseded by the arbitration
provisions set forth in this Agreement.
9. AMENDMENT. This Agreement may not be amended without the prior written
consent of both Executive and the Company.
10. NO RIGHT TO CONTINUED EMPLOYMENT. This Agreement does not constitute a
contract of employment, does not change the status of the Executive's employment
and does not change the Company's policies regarding termination of employment.
Nothing in this Agreement shall be deemed to give Executive the right to be
retained in the service of the Company or to deny the Company any right it may
have to discharge or demote him at any time; provided, however, that any
termination of employment of Executive, or any removal of Executive as an
executive officer of the Company primarily in contemplation of a Change in
Control shall not be effective to deny Executive the benefits of this Agreement,
including without limitation Sections 2, 3 and 4 hereof. No provision of this
Agreement shall in any way limit, restrict or prohibit Executive's right to
terminate employment with the Company or leave his position as senior executive.
11. SEVERABILITY. If a court or other body of competent jurisdiction
determines that any provision of this Agreement is invalid or unenforceable,
that provision will be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, or, if it is not possible to so
adjust such provision, this Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted. The invalidity and
unenforceability of any particular provision of this Agreement shall not affect
any other provision hereof, and all other provisions of the Agreement shall be
valid and enforceable to the fullest extent possible.
12. SUCCESSORS.
(a) The Company will require any successor, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business and/or assets of the Company to expressly
assume and 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.
(b) This Agreement shall inure to the benefit of, and be
enforceable by, Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard or reference
to the rules of conflicts of law that would require the application of the laws
of any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement,
effective as of the date set forth in the first paragraph hereof.
43
MACROVISION CORPORATION EXECUTIVE
By /s/ Xxxxxxx X. Krepick /s/ Ian Halifax
--------------------------------------- -----------------------------------
Xxxxxxx X. Xxxxxxx XXX HALIFAX
Chief Executive Officer
-----------------------------------
(Address)
-----------------------------------
44
EXHIBIT 99.1
CERTIFICATION PURSUANT TO
SECTION 906 OF THE XXXXXXXX-XXXXX ACT OF 2002
(18 U.S.C. SECTION 1350, AS ADOPTED)
In connection with the Quarterly Report of Macrovision Corporation (the
"Company") on Form 10-Q for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), Xxxxxxx X.
Krepick and Xxx X. Halifax certify in their capacities as Chief Executive
Officer and Chief Financial Officer, respectively, of the Company, pursuant to
Section 906 of the Xxxxxxxx-Xxxxx Act of 2002 (18 U.S.C. Section 1350, as
adopted), that:
(a) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended, and
(b) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operation of the Company.
IN WITNESS WHEREOF, the undersigned have hereunto signed this
Certification as of August 14, 2002.
/s/ Xxxxxxx X. Krepick
----------------------------------
Xxxxxxx X. Krepick
Chief Executive Officer
/s/ Xxx X. Halifax
----------------------------------
Xxx X. Halifax
Chief Financial Officer
45
