Exhibit 10.1
AMENDMENT TO EMPLOYMENT
AGREEMENT
This Amendment to Employment
Agreement (the “ Amendment ”) is dated
September 13, 2005 and made effective as of September 1,
2005 by and between Gemstar-TV Guide International, Inc. (the
“ Company ”) and Stephen H. Kay
(“ Employee ”).
WHEREAS , the Company and Employee entered into an
Employment Agreement dated as of December 24, 2002 (the
“ Employment Agreement ”); and
WHEREAS , the Company and Employee desire to amend
certain provisions of the Employment Agreement in accordance with
the terms and conditions set forth herein.
NOW, THEREFORE
, in consideration of the foregoing
and of the mutual covenants and agreements herein contained, and of
other good and valuable consideration, the receipt, sufficiency and
adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. Section I of the Employment
Agreement is hereby deleted in its entirety and replaced as
follows:
“The Company hereby employs
Employee and Employee hereby accepts such employment, upon the
terms and conditions hereinafter set forth from September 1,
2005 (the “ Effective Date ”) through
August 31, 2007 (the “ Term ”). If
the Company desires to extend or renew the Term, the Company shall
so notify Employee not less than ninety (90) days prior to its
expiration, in order to permit Employee and the Company to enter
into good-faith negotiations relating to such extension or
renewal.”
2. Section II-A of the Employment
Agreement is hereby deleted in its entirety and replaced with the
following:
“Employee shall serve during
the course of his employment as Executive Vice President and
General Counsel, being primarily responsible for
(i) supervision and management of the Company’s in-house
legal department and (ii) selection and supervision of outside
counsel. In such capacity the Employee shall perform the functions
assigned and have the authority delegated to him, consistent with
his position and the terms of this Agreement, by the Company from
time to time.”
3. Sections II-C and II-D of the
Employment Agreement each are hereby deleted in their entirety and
each are replaced with the following:
“[This Section is
intentionally omitted.]”
4. The first sentence of Section
III-A of the Employment Agreement is hereby deleted and replaced
with the following:
“The Company will pay to
Employee a base salary at the annual rate of $660,000 from
September 1, 2005 through August 31,
2006.”
5. Section III-B of the Employment
Agreement is hereby deleted in its entirety and replaced with the
following:
“ Annual Bonus .
Employee shall be paid an annual bonus (the “
Bonus ”) at the Company’s sole discretion
based upon such factors or criteria as the Company determines in
its sole discretion which may include, but are not limited to, the
performance of the Company, the performance of the applicable
business unit and/or corporate segment and the Employee’s
performance, with a target bonus of forty percent (40%) of
annualized base salary.”
6. Section III-H of the Employment
Agreement is hereby deleted in its entirety and replaced with the
following:
“ Car Allowance . The
Company shall provide Employee with a car allowance of eight
hundred dollars ($800.00) per month to be used for the purchase,
lease and maintenance of an appropriate automobile for his use
during the Term.”
7. Section IV-D-2 of the Employment
Agreement is hereby deleted in its entirety and replaced as
follows:
“ Cause . If
Employee’s employment is terminated by the Company for Cause,
this Agreement shall terminate without further obligations to
Employee other than for the timely payment of Accrued Obligations.
If it is subsequently determined that the Company did not have
Cause for termination under Section IV-B, then the Company’s
decision to terminate shall be deemed instead to have been a
determination by the Company that Employee’s services are no
longer needed or desired under Section IV-D-3 and the amounts
payable thereunder shall be the only amounts Employee may
receive.”
8. Section IV-D-3 of the Employment
Agreement is hereby deleted in its entirety and replaced as
follows:
“Other than Cause or Death
or Disability . If the
Company determines that it no longer needs or desires the services
of Employee during the Term for other than Cause or
Employee’s death or Disability, Employee’s employment
shall be subject to, and the Company shall have no further
obligations to Employee except as provided in, the Contract Payout
Status
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Policy attached hereto as
Exhibit A . Furthermore, if the Company determines
that it no longer needs or desires the services of Employee during
the Term under this Section IV-D-3, or if Employee terminates his
employment with the Company for Good Reason, (i) the Options
and any other options granted to Employee by the Company prior to
the Effective Date, to the extent outstanding and not previously
vested at the time of such termination, shall thereupon vest in
full and shall, subject to earlier termination pursuant to
Section 4.2 of the Plan, continue to be exercisable for a
period of one (1) year after such termination; and
(ii) any other options granted on or after the Effective Date
shall vest and be exercisable in accordance with and subject to the
terms of the controlling stock option plan(s) and stock option
agreement(s). Employee understands and agrees that no additional or
accelerated rights or vesting, and no extended term(s) for
exercise, with respect to options granted on or after the Effective
Date are being or will be conferred as a result of a determination
by the Company that it no longer needs or desires the services of
Employee or of a termination by Employee of his employment with the
Company for Good Reason.”
9. Section IV-D-4 of the Employment
Agreement is hereby deleted in its entirety and replaced as
follows:
“Termination By Employee
With Good Reason” .
Employee may terminate his employment with the Company for Good
Reason. For the purposes of this Agreement, “Good
Reason” shall mean any of the following: (i) the Company
requires Employee to relocate his principal office more than fifty
(50) miles away from the greater Los Angeles, CA metropolitan
area without Employee’s consent; or (ii) the Company
substantially diminishes Employee’s duties or
responsibilities without Employee’s consent. Before
terminating his employment with Good Reason, Employee shall give
the Company written notice of his intent to terminate for Good
Reason and the basis therefor, and the Company shall have thirty
(30) days to cure (the “ Cure Period
”). If the Company fails to cure the Good Reason within the
Cure Period, Employee may terminate his employment and this
Agreement upon an additional ten (10) days’ written
notice. For all purposes under this Agreement, any such termination
by Employee with Good Reason shall be treated as if a determination
had been made by the Company that Employee’s services are no
longer needed or desired under Section IV-D-3 of this Agreement,
and Employee shall be entitled to the payments and benefits set
forth in Section IV-D-3 above.”
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10. Section IV-D-5 of the Employment
Agreement is hereby deleted in its entirety and replaced as
follows:
“ Exclusive Remedy .
Employee agrees that the payments contemplated by this Agreement
shall constitute the exclusive and sole remedy for any termination
of his employment and Employee covenants not to assert or pursue
any other remedies, at law or in equity, with respect to any
termination of employment. In consideration of the making of this
Agreement, as well as of the other consideration stated herein,
Employee expressly agrees that any contract, agreement or
understanding between Employee and the Company and/or its
affiliates with respect to severance or termination pay, notice of
severance or termination, or pay in lieu of notice of severance or
termination previously extended to Employee, whether by way of
contract, letter, or any termination or severance policy, program,
practice or arrangement, is hereby rescinded.”
11. Section VI of the Employment
Agreement is hereby deleted in its entirety and replaced with the
following:
“[This Section is omitted
intentionally.]”
All other references to Section VI
of the Employment Agreement, if any, are hereby deleted in their
entirety.
12. Section XIII-B is hereby deleted
in its entirety and is replaced with the following:
“This Agreement shall inure to
the benefit of and be binding upon the Company and its successors
and assigns and any such successor or assignee shall be deemed
substituted for the Company under the terms of this Agreement for
all purposes. As used herein, “successor” and
“assignee” shall include, and this Agreement may be
assigned by the Company without Employee’s prior written
consent, (i) to a successor entity resulting from a merger,
consolidation or other business combination involving the Company;
(ii) to the transferee of all or substantially all of the
assets of the Company; or (iii) to an entity under common
control, controlled by or in control of the
Company.”
13. Section XV of the Employment
Agreement is hereby deleted in its entirety and replaced with the
following:
“This Agreement may not be
amended or modified other than by a written agreement executed by
Employee and the Company.”
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14. Section XX is hereby deleted in
its entirety and replaced with the following:
“All notices, requests,
demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered or if mailed
by registered or certified mail, postage prepaid, addressed to
Employee at his home address on file with the Company. Either party
may change the address at which notice shall be given by written
notice given in the above manner.”
15. A new Section XXII is hereby
added to the Employment Agreement and reads as follows:
“The Company shall have the
right to use Employee’s name, biography and likeness in
connection with its business, including in advertising its products
and services, and may grant this right to others, but not for use
as a direct endorsement.”
16. Except as expressly modified
hereby, the Employment Agreement shall remain unchanged and in full
force and effect.
17. The Employment Agreement, as
amended hereby, shall apply to and bind, in the case of Employee,
him and his personal representatives, and in the case of both the
Company and Employee, and their respective successors and
assigns.
18. The Employment Agreement, as
amended hereby, shall be interpreted to give effect to its fair
meaning and shall be construed as though it was prepared by both
parties. The invalidity of any provision of this Amendment or the
Employment Agreement shall not affect the validity or any other
provision of this Amendment or the Employment Agreement. Section
headings in this Amendment and the Employment Agreement are for
convenience only and shall not be used in interpreting its
provisions. The Employment Agreement, as amended hereby, shall be
interpreted in accordance with the laws of the State of
California.
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/s/ Stephen H. Kay
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Stephen H.
Kay
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GEMSTAR-TV
GUIDE INTERNATIONAL, INC.
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By:
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/s/ Richard Battista
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Richard
Battista
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Chief Executive
Officer
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5
Exhibit A
CONTRACT PAYOUT STATUS
POLICY
The Company may determine that it no longer
needs or desires the services of an employee who is employed
pursuant to a personal services agreement for a specified term.
Under such circumstances, the Company may place the employee on
“contract payout status.” An employee placed on
“contract payout status” will not be offered continued
employment with the Company after expiration of the
employee’s personal services agreement. Any existing options
to extend the term of the personal services agreement will not be
exercised.
An employee placed on contract payout status may
choose to proceed under one of the following two
options:
Option #1 - Mitigation
:
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The employee
does not need to report to work. Instead, the employee’s
primary job duty is to search for employment with another employer,
work as an independent contractor, and/or self-employment. Under
this option, the employee will be required to provide the Company,
on a monthly basis, with a written status report regarding the
employee’s job search efforts in accordance with the letter
of instruction (substantially in the form attached hereto as
Exhibit “1”) which the Company will
provide.
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During the time
the employee is searching for a new job, and provided that the
employee timely submits to the Company complete and accurate status
reports regarding his or her job search efforts, the employee
will:
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Remain on the
Company’s payroll as an active employee; and
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Continue to
receive all applicable Company benefits.
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Once the
employee obtains a new job (whether on a full-time, part-time, or
independent contractor basis, or self-employment), the employee
shall provide the Company with documentation regarding his or her
rate of pay, earnings and benefits. The employee shall furnish to
the Company such related documentation as requested, such as copies
of W-2 or Form 1099 statements for the remaining period of the
personal services agreement.
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The
employee’s employment with the Company and all applicable
Company benefits will be terminated once the employee obtains a new
job (whether on a full-time, part-time, or independent contractor
basis, or self-employment).
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If the new job
the employee obtains does not pay a salary comparable to what the
employee earns with the Company, the Company will pay the employee
the difference between the employee’s new salary and his or
her salary at the Company for the remaining period of the personal
services agreement (excluding any options periods, which will not
be exercised). However, regardless of whether the new job pays a
comparable salary, upon acceptance of the new job all applicable
Company benefits will be terminated.
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Upon the
employee’s termination from the Company, information
regarding benefits continuation (COBRA) will be sent to the
employee.
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Option #2 – Lump-Sum
Payment/Settlement :
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The employee
and the Company will negotiate a one-time lump-sum payment to the
employee, in exchange for which the employee shall execute a
Separation Agreement and General Release (“Release”),
substantially in the form attached hereto as Exhibit
“2” which the Company shall prepare. The Release
will include, among others, provisions which terminate the personal
services agreement, the employee’s employment with the
Company, and all applicable Company benefits.
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Upon the
employee’s termination from the Company, information
regarding benefits continuation (COBRA) will be sent to the
employee.
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The employee
will not be required to furnish the Company with monthly written
status reports regarding the employee’s job search efforts.
Further, unless the Release specifies otherwise, if the employee
accepts a new job within a short period of time after receiving the
lump-sum payment, the Company will not seek an offset against the
lump-sum payment.
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For the
employee’s information, the lump-sum payment is generally
considered supplemental income and may be taxed at a higher
percentage rate.
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If the employee fails or refuses to choose one
of the two options, the Company will require the employee to
proceed under “Option #1 - Mitigation.” If an employee
proceeding under Option #1 (whether by choice or otherwise) fails
to comply with the requirements outlined under Option #1 (e.g.,
furnishing the Company with accurate and complete monthly written
status reports), the Company may suspend payroll payments to the
employee until the employee complies. The Company also reserves all
other legal rights, including the right to terminate the personal
services agreement “for cause” in accordance with the
terms of such agreement.
2
Exhibit
“1”
Instructions re Status
Reports
DATE
EMPLOYEE NAME
EMPLOYEE ADDRESS
EMPLOYEE ADDRESS
Dear Mr./Ms.
:
Effective
, you shall be relieved of your day to day duties as
(EMPLOYEE’S TITLE) . As the Company is not
currently taking the position that you have breached your
Employment Agreement or were terminated for cause, we will retain
you on the payroll through the expiration date of your Employment
Agreement, on the terms and conditions detailed in this letter. You
will receive regular paychecks (direct deposit is not available)
contingent upon you returning the complete mitigation verification
form referenced (which the Company will provide). The expiration
date of your Employment Agreement excludes any future option(s) to
extend the term of your Employment Agreement, which the Company
hereby declines to exercise.
In order to remain on the payroll,
you must provide the following information:
1. Monthly statements detailing
completely and accurately your efforts to find employment,
including applications made, interviews held, offers made, your
response, and any other information concerning your efforts to find
employment; and
2. Monthly statements detailing
completely and accurately all monies whatsoever received by you
from any source as a result of your working, whether full-time or
part-time, temporary or permanent or any other manner, or as a
result of your efforts in any trade or business.
For so long as you continue to provide this
information and are acting diligently in your efforts to mitigate
your damages, you will continue to receive payments at your final
rate of pay, less any monies received from other work or efforts in
any trade or business, until the expiration date of your Employment
Agreement or until you obtain a new job, whichever is earlier. In
the event that you obtain a new job, you agree to notify the Vice
President of Human Resources of the Company within two
(2) business days thereafter, and your employment with the
Company and all applicable Company benefits will then be
terminated, but the Company will pay you the difference, if any,
between your new salary and your salary at the Company f
