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Form of Change of Control
Agreement (Executives)
Exhibit
10.1
CHANGE OF CONTROL
AGREEMENT
AGREEMENT, dated as of the
day of August, 2007 (this “ Agreement ”),
by and between Gemstar-TV Guide International, Inc., a Delaware
corporation (the “ Company ”), and [
] (the “ Executive ”).
WHEREAS, the Board of
Directors of the Company (the “ Board ”),
has determined that it is in the best interests of the Company and
its stockholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility of a
Change of Control (as defined herein). Therefore, in order to
accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY
AGREED AS FOLLOWS:
(a) “ Affiliated
Company ” means any company controlled by,
controlling or under common control with the Company.
(b) “
Cause ” means (i) Executive is convicted
of, or pleads guilty or nolo contendere to, a felony; or
(ii) Executive engages in conduct that constitutes continued
willful neglect or willful misconduct in carrying out
Executive’s duties, resulting, in either case, in economic
harm to or damage to the reputation of the Company or any of its
affiliates, after a written demand for substantial performance is
delivered to Executive by the Chief Executive Officer of the
Company that specifically identifies the manner in which the Chief
Executive Officer of the Company believes that Executive has not
substantially performed Executive’s duties. No act, or
failure to act, on Executive’s part shall be considered
“willful” unless it is done, or omitted to be done, by
Executive in bad faith or without reasonable belief that
Executive’s action or omission was in the best interests of
the Company. Any act, or failure to act, based upon authority
(x) given pursuant to a resolution duly adopted by the Board
of Directors of the Company or the Board of Directors of the
ultimate parent company following a Change of Control,
(y) upon the instructions of the Chief Executive Officer of
the Company or a senior officer of the Company or (z) based
upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by Executive in good
faith and in the best interests of the Company.
(c) “ Change of
Control ” means (i) the dissolution or
liquidation of the Company, (ii) a sale of all or
substantially all of the assets of the Company to another person or
entity, (iii) any transaction (including without limitation a
merger or reorganization in which the Company is the surviving
entity) which results in any person or entity (other than persons
who are shareholders or affiliates immediately prior to the
transaction) owning 50% or more of the combined voting power of all
classes of stock of the Company, (iv) any “person”
or “group” (as such terms are used in
Section 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the “ Exchange Act ”)
(other than an affiliate at the time of adoption of this Plan)
becomes the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of more than
50% of the Company’s then outstanding securities entitled to
then vote
generally in the election of directors
of the Company, or (v) individuals who as of the date hereof
constitute the Board of Directors of the Company cease to
constitute at least a majority thereof, unless the election, or the
nomination for election by the Company’s shareholders, of
each new member of the Board of Directors of the Company was
approved by a vote of at least three-fourths of the members of the
Board of Directors of the Company then still in office who were
members of the Board of Directors of the Company at the beginning
of such period, including for these purposes (but without
duplication of predecessors and successors), new members whose
election or nomination was so approved.
(d) “ Change of
Control Period ” means the period commencing on the
date hereof and ending on December 31, 2008; provided ,
however , that on each annual anniversary of such date (such
date and each annual anniversary thereof, the “ Renewal
Date ”), unless previously terminated, the Change of
Control Period shall be automatically extended so as to terminate
one year from such Renewal Date, unless, at least 60 days prior to
the Renewal Date, the Company shall give notice to the Executive
that the Change of Control Period shall not be so
extended.
(e) “
Disability ” means the absence of the Executive
from the Executive’s duties with the Company on a full-time
basis for 180 consecutive business days as a result of incapacity
due to mental or physical illness that is determined to be total
and permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive’s
legal representative.
(f) “ Disability
Effective Date ” means the 30th day after receipt of
notice by the Executive from the Company of a determination of
Disability, provided that, within the 30 days after such
receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties.
(g) “ Effective
Date ” means the first date during the Change of
Control Period (as defined herein) on which a Change of Control
occurs. Notwithstanding anything in this Agreement to the contrary,
if a Change of Control occurs and if the Executive’s
employment with the Company is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment
(i) was at the request of a third party that has taken steps
reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a
Change of Control, then “Effective Date” means the date
immediately prior to the date of such termination of
employment.
(h) “ Good
Reason ” means (i) a material diminution in
Executive’s base salary or bonus opportunity, (ii) a
material diminution in Executive’s authorities, duties or
responsibilities within the Company, (iii) any change in
Executive’s office location beyond thirty-five
(35) miles from the location immediately prior to the Change
of Control or (iv) any other action or inaction that
constitutes a material breach by the Company of the agreements or
plans under which Executive provides services to the Company
(including this Agreement). In order to invoke a termination for
Good Reason, Executive must provide written notice to the Company
of the existence of one of the conditions described in clauses
(i) through (iv) within 90 days of the initial existence
of the condition and the Company shall have 30 days (the “
Cure
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Period ”) during
which it may remedy the condition. If the Company has failed to
remedy the condition constituting Good Reason during the Cure
Period, the termination for Good Reason will be effective
immediately following expiration of the Cure Period
2. Termination of
Employment . Under the terms of this Agreement, the Company may
terminate the Executive’s employment with or without Cause.
Following the Effective Date and during the one year period
following a Change of Control, the Executive’s employment may
be terminated by the Executive for Good Reason.
(a) Notice of
Termination . Any termination by the Company for Cause, or by
the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with
Section 9(b). “ Notice of Termination
” means a written notice that (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to
the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated, and
(iii) if the Date of Termination (as defined herein) is other
than the date of receipt of such notice, specifies the Date of
Termination (which Date of Termination shall be not more than 30
days after the giving of such notice). The failure by the Executive
or the Company to set forth in the Notice of Termination any fact
or circumstance that contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing
the Executive’s or the Company’s respective rights
hereunder.
(b) Date of Termination.
“ Date of Termination ” means (i) if
the Executive’s employment is terminated by the Company for
Cause, or by the Executive for Good Reason, the date of receipt of
the Notice of Termination or any later date specified in the Notice
of Termination, (which date shall not be more than 30 days after
the giving of such notice), as the case may be, (ii) if the
Executive’s employment is terminated by the Company other
than for Cause or Disability, the date on which the Company
notifies the Executive of such termination, (iii) if the
Executive resigns without Good Reason, the date on which the
Executive notifies the Company of such termination, and
(iv) if the Executive’s employment is terminated by
reason of death or Disability, the date of death of the Executive
or the Disability Effective Date, as the case may be.
3. Obligations of the
Company upon Termination . (a) Good Reason; Other Than
for Cause . If, following the Effective Date and during the
one-year period following a Change of Control, the Company
terminates the Executive’s employment other than for Cause or
Disability or the Executive terminates employment for Good
Reason:
(i) the Company shall pay to
the Executive, in a lump sum in cash within 30 days after the Date
of Termination, the aggregate of the following amounts;
provided that Executive executes, delivers to the Company
and does not rescind a waiver of claims substantially in the form
attached as Exhibit A hereto:
(A) the sum of (1) the
Executive’s annual base salary through the Date of
Termination to the extent not theretofore paid and (2) any
accrued vacation pay to the extent not theretofore paid (the sum of
the amounts described in sub-clauses (1) and (2), the “
Accrued Obligations ”); and
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(B) the amount equal to the
product of (1) [1.5]/[1.0] and (2) the sum of
(x) the Executive’s annual base salary in effect
immediately prior to the Change of Control (or, if greater,
immediately prior to the Date of Termination) and
(y) Executive’s target bonus in effect immediately prior
to the Change of Control (or, if greater, immediately prior to the
Date of Termination);
provided ,
however , that at Executive’s option, Executive may
elect via written notice to the Company to forego the lump sum
payment described in this Section 3(a)(i) and receive in lieu
of such payment such amounts at such times as are prescribed by the
employment agreement, if any, between Executive and the Company
(the “ Employment Agreement ”), it being
understood that Executive shall either receive the amounts payable
pursuant to this Section 3(a)(i) or the amounts payable under
the Employment Agreement, but in no event shall Executive receive
payments under this Agreement and the Employment
Agreement.
(ii) the Company shall
reimburse Executive, on a monthly basis for [eighteen]/[twelve]
months after the Executive’s Date of Termination, an amount
equal to the employer and employee contribution portion of the
self-pay health insurance benefits for Executive and his dependents
under the Consolidated Omnibus Budget Reconciliation Act of 1985 (
i.e ., the amount of self-pay health insurance benefits
corresponding to the amount of Executive’s employee
contribution and the employer contribution in effect on the date of
termination); and
(iii) to the extent not
theretofore paid or provided, the Company shall timely pay or
provide to the Executive any Other Benefits (as defined in
Section 4) in accordance with the terms of the underlying
plans or agreements.
4. Non-exclusivity of
Rights . Nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any plan,
program, policy or practice provided by the Company or the
Affiliated Companies and for which the Executive may qualify, nor,
subject to Section 9(f), shall anything herein limit or
otherwise affect such rights as the Executive may have under any
other contract or agreement with the Company or the Affiliated
Companies. Amounts that are vested benefits or that the Executive
is otherwise entitled to receive under any plan, policy, practice
or program of or any other contract or agreement with the Company
or the Affiliated Companies at or subsequent to the Date of
Termination (“ Other Benefits ”) shall be
payable in accordance with such plan, policy, practice or program
or contract or agreement, except as explicitly modified by this
Agreement.
5. Full Settlement .
The Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder
shall not be affected by any set-off, counterclaim, recoupment,
defense, or other claim, right or action that the Company may have
against the Executive or others. In no event shall the Executive
be
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obligated to seek other employment or
take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, and
such amounts shall not be reduced whether or not the Executive
obtains other employment. The Company agrees to pay as incurred
(within 10 days following the Company’s receipt of an invoice
from the Executive), at any time from the date of this Agreement
through the Executive’s remaining lifetime or, if longer,
through the 20th anniversary of the Effective Date, to the full
extent permitted by law, all legal fees and expenses that the
Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement), plus,
in each case, interest at the applicable federal rate provided for
in Section 7872(f)(2)(A) (“ Interest
”) of the Internal Revenue Code of 1986, as amended (the
“ Code ”), provided , that the Executive
shall have submitted an invoice for such fees and expenses at least
10 days before the end of the calendar year next following the
calendar year in which such fees and expenses were incurred;
provided , however , that Executive shall be required
to repay any such amounts to the Company if a court of competent
jurisdiction issues a final and non-appealable ruling that
Executive has brought or defended such contest in bad
faith.
[6. Certain Additional
Payments by the Company .
(a) Anything in this
Agreement to the contrary notwithstanding and except as set forth
below, in the event it shall be determined that any Payment would
be subject to the Excise Tax, then the Executive shall be entitled
to receive an additional payment (the “ Gross-Up
Payment ”) in an amount such that, after payment by
the Executive of all taxes (and any interest or penalties imposed
with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect
thereto) and Excise Tax imposed upon the Gross-Up Payment, but
excluding any income taxes and penalties imposed pursuant to
Section 409A of the Code, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this
Section 6(a), if it shall be determined that the Executive is
entitled to the Gross-Up Payment, but that the Parachute Value of
all Payments does not exceed 110% of the Safe Harbor Amount, then
no Gross-Up Payment shall be made to the Executive and the amounts
payable under this Agreement s
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