EXHIBIT 10.10
EMPLOYMENT AGREEMENT, dated as of October 8, 2002, effective as of April
29, 2002 (the "Effective Date"), between Gemstar-TV Guide International, Inc., a
Delaware corporation (the "Company"), and Xxxx Xxxxx (the "Executive").
WHEREAS, the Company wishes to employ Executive on the terms and conditions
set forth herein;
and WHEREAS, Executive wishes to accept such employment with the Company on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the promises and mutual agreements
hereinafter contained, the parties agree as follows:
1. Employment, Duties and Acceptance
1.1 Employment by the Company. The Company agrees to employ Executive to
render exclusive and full-time business services to the Company. From the
Effective Date until the date upon which the current Chief Executive Officer
resigns (the "Resignation Date"), subject to the terms of this Agreement,
Executive shall serve as, and his title shall be, Co-President and Chief
Operating Officer. From the Resignation Date until the end of the Term (as
hereinafter defined), subject to the terms of this Agreement, Executive shall
serve as, and his title shall be, Chief Executive Officer of the Company. As the
Chief Executive Officer of the Company, Executive shall perform the functions
assigned and have authority delegated to him as the Chief Executive Officer of
the Company and will report directly to the Board of Directors. Executive shall
serve as a member of the Board of Directors of the Company (the "Board").
Executive shall also serve as a member of the Executive Committee of the Board.
Executive shall serve as a member on other boards of directors or committees if
and when requested by the Board. Executive shall not be entitled to receive any
additional compensation for serving as a member of the Board or on any other
board of directors or committees.
1.2 Acceptance of Employment by the Executive. Executive accepts such
employment and agrees to devote his full time and attention as necessary to
fulfill all of the duties of his employment hereunder and shall render the
services described above. Without the prior written consent of the Company,
Executive agrees that while he is employed by the Company he will not, directly
or indirectly, engage in any other business activities or pursuits,
whether on his own behalf or on behalf of any other person, firm or corporation,
except for making passive investments permitted by Section 5.1.1 hereof.
1.3 Place of Employment. Executive's principal place of employment shall be
at the Company's principal office in Los Angeles County, California, subject to
such travel as the rendering of the services hereunder may require.
2. Term of Employment. The Company hereby employs Executive for a three
year period commencing on the Effective Date and ending on April 29,2005 (the
"Term"), unless sooner terminated as herein provided.
3. Compensation and Benefits.
3.1 Compensation. As compensation for all services to be rendered
pursuant to this Agreement, the Company shall pay Executive during the Term a
base salary and bonus as follows:
3.1.1 Base Salary. Executive shall be paid, on regular pay dates as
now in effect or shall then be in effect under Company policy, at the rate of
$750,000 per annum ("Base Salary"), subject to annual increase at the discretion
of the Board; provided that, such increase shall not be less than the increase,
if any, in the Consumer Price Index for all Urban Consumers for the Los Angeles
area (or any successor Consumer Price Index) based on data published by the
Bureau of Labor Statistics of the United States Department of Labor for the
preceding year cost of living.
3.1.2 Bonus.
The Executive shall be entitled to receive an annual bonus (the "Annual
Bonus") for each fiscal year during the Term in an amount to be determined in
the sole discretion of the Company, but in no event less than $250,000 per
twelve month period or such lesser pro-rated amount if the first or last year of
the Term shall be less than twelve months.
3.2 Participation in Employee Benefit Plans. Executive shall be entitled to
participate in all benefit plans or arrangements presently in effect or
hereafter adopted by the Company applicable to senior executives of the Company
including: (i) any stock option or purchase plan, stock appreciation rights plan
or any bonus or other incentive compensation plan, including without limitation
the Company's 1994 Stock Incentive Plan, as amended and restated (the
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"Plan"), and (ii) any profit-sharing, pension, group medical, dental, disability
and life insurance or other similar benefit plans (collectively, the
"Benefits").
3.3 Business Expenses. During the Term, the Company shall pay, or reimburse
Executive for, all reasonable expenses actually incurred or paid by Executive
during the Term, in connection with his performance of his duties hereunder upon
presentation of expense statements or vouchers or such other supporting
information as the Company shall reasonably require. Executive will be permitted
to travel for business on terms no less favorable than those applicable to
executives at his level under the Company's travel policy, which shall include
first class air travel when available. The Company shall also reimburse
Executive for all reasonable and documented legal fees incurred by Executive in
connection with the negotiation and documentation of this Agreement.
3.4 Stock Options. Upon the execution of this Agreement (the "Grant Date"),
the Company hereby grants the Executive options (the "Options") under the Plan
to purchase a total of two million shares of Company Common Stock. Except as
otherwise expressly provided in this Agreement, the Options shall be subject to
the Company's standard form of option agreement. Each option shall be granted at
an exercise price per share equal to $2.59 and for a term of 10 years. The
Option Agreement will provide that the Option shall vest and become exercisable,
subject to the Executive's continued employment with the Company (except as
provided herein), at the times and as to the number of shares determined as
follows: on the date that is six months after the Grant Date (the "Initial
Vesting Date"), for a number of shares equal to 166,666 times the number of
complete or partial calendar quarters that have elapsed from the Effective Date
to March 31, 2003; on each calendar quarter ending after March 31, 2003for an
additional 166,666 shares and on the last complete calendar quarter prior to the
expiration of the Term for an additional 166,674 shares. The Option grants
referred to in this Section 3.4 shall be conditioned on the unanimous approval
of the Company's Board or approval of the Compensation Committee which satisfies
the criteria set forth in section 162(m) of the Internal Revenue Code the "Grant
Condition"). The Company shall use its best efforts to assure that all shares
issuable upon exercise of Options will be, upon issuance, registered on a Form
S-8 Registration Statement (or any successor form) and satisfy the requirements
of Rule 16b-3(d) under the Exchange Act of 1934 (the "Exchange Act") so as to
exempt the Option Grant under Section 16(b) of the Exchange Act
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3.5 Vacation. Executive shall be entitled to not less than four weeks'
vacation during the each year of the Term to be scheduled at mutually agreeable
times and accrued and taken in accordance with Company policy.
3.6 Automobile Allowance. The Company shall provide Executive with a car
allowance of $1,100 per month to be used for the purchase, lease and maintenance
of an appropriate automobile for his use during the term of Executive's
employment hereunder. If, in lieu of such allowance, the Company leases or
purchases an automobile for Executive's use, Executive shall have the ability to
assume the lease at the end of the term thereof or purchase the automobile at
its residual or depreciated value at the end of the Term.
3.7 Disability Insurance. During the Term, the Company agrees to purchase
and keep in effect, or reimburse Executive for the cost of, one or more policies
of disability insurance reasonably satisfactory to Executive and the Company,
with maximum annual premiums not to exceed $22,000. Such policy will contain a
feature permitting Executive to continue the policy at his cost following the
end of the Term.
3.8 Life Insurance. During the Term, the Company agrees to purchase and
keep in effect, or reimburse Executive for the cost of, a policy of life
insurance reasonably satisfactory to Executive and the Company, with maximum
annual premiums not to exceed $10,000. Such policy will contain a feature
permitting Executive to continue the policy at his cost following the end of the
Term.
4. Termination of Employment
4.1 Termination Due to Death. Executive's employment shall terminate
automatically upon the Executive's death during his employment with the Company
.. In such event, his estate or his beneficiaries, as the case may be, shall be
entitled to:
(a) payment of his base salary through the date of death;
(b) payment of the pro-rated portion of the Annual Bonus for the
fiscal year in which Executive's death occurs, payable promptly
after the fiscal year ending after the date of Executive's
death;
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(c) exercise any stock options which shall have vested as of the
date of Executive's death for a period of one year following the
date of termination; all unvested or unexercisable options as of
such date shall be terminated and forfeited; and
(d) other or additional benefits in accordance with applicable plans
and programs of the Company.
4.2 Termination Due to Disability. In the event Executive's employment is
terminated due to his disability (as defined below), he shall be entitled in
such case to the following (but in no event less than the benefits due to him
under the then current disability program of the Company):
(a) payment of his base salary through the date of termination;
(b) payment of the pro-rated portion of the Annual Bonus for the
fiscal year in which termination due to disability occurs,
payable promptly after the end of the fiscal year ending after
the date of such termination;
(c) exercise any stock options which shall have vested as of the date
of Executive's termination for a period of one year following the
date of termination; all unvested or unexercisable options as of
such date shall be terminated and forfeited;
(d) until the earlier of the end of such disability and April 29,
2005, continued participation in medical, dental, hospitalization
and life insurance coverage and in such other employee plans and
programs in which he was participating (and on the same basis
that he was participating) on the date of termination of his
employment due to disability subject to the terms of such plans
and to the extent such coverage may be made available to disabled
employees; and
(e) other or additional benefits in accordance with applicable plans
and programs of the Company.
For purposes of this Agreement, "disability" shall mean Executive's
inability to substantially perform his duties and responsibilities under this
Agreement for (i) a period of 120 consecutive days or (ii) an aggregate of 180
days during any twelve month period.
4.3 Termination for Cause.
(a) For the purposes of this Agreement, "Cause" shall mean:
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(i) Executive is convicted of, or pleads guilty or nolo
contendre to, a felony;
(ii) Executive engages in conduct that constitutes continued
willful neglect or willful misconduct in carrying out
his duties under this Agreement, resulting, in either
case, in economic harm to or damage to the reputation
of the Company or any of its affiliates; or
(iii) Executive breaches any material affirmative or
negative covenant or undertaking hereunder (other than
immaterial breaches), which breach, if curable, is not
substantially cured within thirty days after written
notice to Executive specifying such breach.
(b) The Company shall have the right to terminate Executive's
employment for Cause. A termination for Cause shall be
communicated by a written notice of termination to Executive,
which notice of termination shall set forth the facts and
circumstances claimed to provide a basis for termination of
Executive's employment.
(c) In the event the Company terminates Executive's employment for
Cause, (i) he shall be entitled to Base Salary through the date
of the termination of his employment for Cause, (ii) all unvested
or unexercisable options as of the date of termination shall be
terminated and forfeited ,(iii) all previously vested options as
of the date of termination shall immediately cease to be
exercisable, and (iv) the Company shall have no further
obligations to the Executive
4.4 Termination without Cause. If the Company terminates Executive's
employment for any reason during the Term other than those specified in Section
4.1, 4.2 or 4.3 above, or if the Executive terminates his employment for a Good
Reason (as set forth in Section 4.5 below), he shall be entitled to receive the
following:
(a) payment of his base salary and the guaranteed portion of his
Annual Bonus through the end of the Term (payable over the
remainder of the term);
(b) the right to exercise any vested stock options and any unvested
options which would have vested if the Executive continued his
employment until the end of the Term; In each case, Executive
shall have the right to exercise such options for the remainder
of the option term.
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(c) until the earlier of the end of the Term and the date on which
Executive finds other employment, continued participation in
the employee plans and programs (including the programs set forth
in Sections 3.6, 3.7 and 3.8, but excluding the option plan) in
which he was participating on the date of termination of his
employment subject to the terms of such plans.
Executive agrees to accept the severance provided in this Section 4.4 as
liquidated damages in lieu of any other damages or severance benefits to which
he might be entitled as a result of the termination of his employment with the
Company. All amounts paid to the Executive pursuant to this Section 4.4 shall be
paid without regard to whether the Executive has taken or takes actions to
mitigate damages.
4.5 Termination by the Executive for Good Reason.
If News Corporation and its affiliates (including entities in which News
owns less than 50%) sells, in the aggregate, more than two-thirds of its
existing equity interest in the Company to a third party or the Company without
the consent of the Executive (i) diminishes Executive's title or position, (ii)
reassigns the Executive to a geographic location outside of Los Angeles County,
(iii) makes a material change that is adverse to Executive in the nature of the
Executive's responsibilities, authority or status (other than changes resulting
from dispositions of divisions, subsidiaries or operating units, the outsourcing
of corporate functions, or any increase in the Executive's responsibilities),
(iv) does not reelect Executive to the Board, Executive Committee or Special
Committee (so long as Executive shall not have previously resigned or been
removed for cause from the Board, Executive Committee or Special Committee), (v)
the Grant Condition has not been satisfied by December 1, 2002, or (vi) the
Company breaches any material provision of this Agreement (other than immaterial
breaches), he shall be entitled to consider his employment to have been
constructively terminated by the Company and to, therefore, quit for "Good
Reason" and receive the amounts and benefits set forth in Section 4.4 above;
provided however that the Executive shall not be entitled to terminate his
employment pursuant to this Section 4.5 unless the Executive has previously
notified the Company in writing of the basis for such termination and the
Company has been given 30 days to substantially cure the breach specified, to
the extent curable.
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4.6 Calculation of Bonus. For purposes of Section 4.1(b) and Section 4.2(b)
above, the pro-rated portion of the Annual Bonus referenced in such sections
shall be determined by multiplying such Annual Bonus by a fraction, the
numerator of which shall be the number of days during such fiscal year that
Executive was employed and the denominator of which shall be 365.
5. Certain Covenants of the Executive.
5.1 Covenants Against Competition. Executive acknowledges that the services
to be furnished by Executive hereunder and the rights and privileges granted to
the Company by Executive are of a special, unique, unusual, extraordinary, and
intellectual character which gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in any action at law,
and a breach or threatened breach by Executive of any of the provisions
contained in this Section 5.1 will cause the Company, irreparable injury and
damage. In order to induce the Company to enter into this Agreement, Executive
covenants and agrees that:
5.1.1 Non-Compete. During the Term, Executive will not, in any manner
directly or indirectly, engage in any business which competes with business in
which the Company is then engaged and will not directly or indirectly own,
manage, operate, join, control or participate in the ownership, management,
operation or control of, or be employed by, or connected in any manner with any
corporation, firm or business that is so engaged. The foregoing does not
prohibit the Executive's ownership of less than five percent (5%) of the
outstanding common stock of any company whose shares are publicly traded on a
national stock exchange, are reported on NASDAQ, or are regularly traded in the
over-the-counter market by a member of a national securities exchange.
5.1.2 Employees of the Company. Executive shall not, during the Term, or
for a period of one year thereafter, directly or indirectly, induce, solicit or
attempt to induce or solicit any employee of the Company or its affiliates to
leave the Company or such affiliates.
5.1.3 Property of the Company. Executive acknowledges that the relationship
between the parties hereto is exclusively that of employer and employee, and
that the Company's obligations to him are exclusively contractual in nature. The
Company and/or its affiliates shall be the sole owner or owners of all the
fruits and proceeds of Executive's services hereunder,
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including, but not limited to, all ideas, concepts, formats, suggestions,
developments, arrangements, designs, packages, programs, scripts, audio visual
materials, promotional materials, photography and other intellectual properties
and creative works which Executive may prepare, create, produce or otherwise
develop in connection with and during his employment hereunder, including,
without limitation, all copyrights and all rights to reproduce, use, authorize
others to use and sell such properties or works at any time or place for any
purpose, free and clear of any claims by the Executive (or anyone claiming under
him) of any kind of character whatsoever (other than Executive's right to
compensation hereunder). Executive agrees that he will have no right in or to
such properties or works and shall not use such properties or works for his own
benefit or the benefit of any other person. Executive shall, at the request of
the Company, execute such assignments, certificates, applications, filings,
instruments or other documents, consistent herewith, as the Company may from
time to time reasonably deem necessary or desirable to evidence, establish,
maintain, perfect, protect, enforce or defend its right, title and interest in
or to any such properties or works.
5.1.4 Confidential Information. With the exception of Executive's personal
files, all memoranda, notes, records and other documents made or compiled by
Executive, or made available to him during the Term, concerning the business or
affairs of the Company or its affiliates shall be the property of the Company or
such affiliates and shall be delivered to the Company or its affiliates on the
termination of this Agreement or at any other time on request. Executive shall
keep in confidence and shall not use for himself or others, or, except in the
course of carrying out his duties hereunder, divulge to others, any information
concerning the business or affairs of the Company or its affiliates which is not
otherwise publicly available and which is obtained by Executive as a result of
his employment, including, but not limited to, trade secrets or processes and
information deemed by the Company to be proprietary in nature, including,
without limitation, financial information, programming or plans of the Company
or its affiliates, unless disclosure is permitted by the Company or required by
law.
5.1.5 Right to Use Name. During the Term, the Company shall have the right
to use Executive's biography, name and likeness in connection with its business,
including in advertising its, or their, products and services, but not for use
as a direct or indirect endorsement.
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5.1.6 Cooperation. Executive agrees that during the Term and thereafter he
will cooperate in the Company's and its affiliates defense against any
threatened or pending litigation or in any investigation or proceeding by any
governmental agency or body that relates to any events or actions which occurred
during the Term. The Company agrees to reimburse Executive for any reasonable
and necessary out-of-pocket costs incurred by Executive in providing such
assistance.
5.1.7 Survival. The covenants set forth above in this Section 5.1 (the
"Restrictive Covenants"), with the exception of Section 5.1.5, shall survive the
termination of this Agreement.
5.2 Severability of Covenants. If any court determines that any of the
Restrictive Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected and shall
be given full effect, without regard to the invalid portions.
5.4 Blue-Pencilling. If any court construes any of the Restrictive
Covenants, or any part thereof, to be unenforceable because of the duration of
such provision or the area covered thereby, such court shall have the power to
reduce the duration or area of such provision and, in its reduced form, such
provision shall then be enforceable and shall be enforced.
6. No Prior Agreements. Executive represents and warrants that he is not
bound by any agreement or any other existing or previous business relationship
which conflicts with, or may prevent or otherwise conflict with, the full
performance of his obligations and duties under this Agreement.
7. Other Provisions.
7.1 Notices. Any notice or other communication required or which may be
given hereunder shall be in writing and shall be delivered personally or
telecopied, or sent by certified, registered or express mail, postage prepaid,
and shall be deemed given when so delivered personally or telecopied, or if
mailed, two days after the date of mailing, as follows:
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(i) if to the Company, to:
Gemstar-TV Guide International, Inc.
000 Xxxxx Xxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: General Counsel
(ii) if to Executive, to:
Xxxx Xxxxx
Gemstar-TV Guide International, Inc.
000 Xxxxx Xxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Such addresses may be changed by written notice sent to the other party at the
last recorded address of that party.
7.2 Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements, written or oral, with respect thereto.
7.3 Waivers and Amendments. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
7.4 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of California
applicable to agreements made within the State of California, without regard to
its conflict of law rules which are deemed applicable herein. The parties hereto
agree that any controversy which may arise under this Agreement or out of the
relationship established by this Agreement would involve complicated and
difficult factual and legal issues and that, therefore, any action brought by
the Company against Executive or brought by Executive, alone or in combination
with others, against the
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Company, whether arising out of this Agreement or otherwise, shall be determined
by a judge sitting without a jury.
7.5 Assignment. This Agreement, and Executive's rights and obligations
hereunder, may not be assigned by Executive. This Agreement shall inure to the
benefit of the successors of the Company and assigns permitted by this agreement
and to the benefit of any other corporation or entity which is a parent of the
Company to which the Agreement is assigned, and any other corporation or entity
into which the Company may be merged or with which it may be consolidated.
Except as herein provided, this Agreement shall be nonassignable.
7.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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7.7 Headings. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
7.8 Indemnity. To the maximum extent permitted by applicable law, Company
shall indemnify Executive and hold Executive harmless from and against any and
all clams, liabilities, judgments, fines, penalties, costs and expenses
(including, without limitation, reasonable attorneys' fees, costs of
investigation and experts, settlements and other amounts actually incurred by
Executive in connection with the defense of any action, suit or proceeding, and
in connection with any appeal thereon) incurred by Executive in any and all
threatened, pending or completed actions, suits or proceedings, whether civil,
criminal administrative or investigative (including, without limitation,
actions, suits or proceedings brought by or in the name of Company) arising,
directly or indirectly, by reason of Executive's status, actions or inaction as
a director, officer, employee or agent of Company or of an affiliate of Company
so long as Executive's conduct was in good faith. The Company shall promptly
advance to Executive upon request any and all expenses incurred by Executive in
defending any and all such actions, suits or proceedings to the maximum extent
permitted by applicable law. However, the Executive agrees to repay any expenses
paid or reimbursed by the Company if it is ultimately determined that the
Executive is not legally entitled to be indemnified by the Company.
7.9 Attorney's Fees. If legal action is brought in connection with this
Agreement or arising out of the subject matter hereof, the prevailing party in
such legal action shall be entitled to recover reasonable attorneys fees and
other costs incurred in that action in addition to any other relief to which
such party may be entitled.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
GEMSTAR - TV GUIDE INTERNATIONAL, INC.
By___________________________________
Name:
Title:
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Xxxx Xxxxx
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