Exhibit 10.34
MACROVISION CORPORATION
EXECUTIVE SEVERANCE AND ARBITRATION AGREEMENT
THIS EXECUTIVE SEVERANCE AND ARBITRATION AGREEMENT is made and
entered into as of April 30, 2001 by and between Macrovision Corporation, a
Delaware corporation (the "Company") and Xxxxxxx X. Krepick ("Executive").
WHEREAS, the Board of Directors (the "Board") of the Company has
recommended and authorized the Company to enter into a severance agreement in
the form hereof with Executive; and
WHEREAS, the Board 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 the foregoing, 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;
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. Payment of Severance Benefit.
(a) In the event that a "Change in Control" (as hereinafter
defined) 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 (as
hereinafter defined) without Cause (as hereinafter defined) or (b) Executive
voluntarily terminates his employment with Company and its Subsidiaries with
Good Reason (as hereinafter defined), then the Company shall pay to Executive
severance pay under this Agreement. 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. 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. The Company shall pay such severance pay
during the twelve (12) month period immediately following the date on which
Executive's employment with the Company terminates; provided, however, that, if
Executive commences new employment within such twelve (12) month period, such
severance pay shall cease on the later of (i) the date six (6) months after
Executive's employment with the Company terminates or (ii) the date Executive
commences new employment.
(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 (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. "Continuing Directors" are (A) each
Director in office on January 1, 2001, and (B) 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.
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) "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) failure to comply in any material respect with the terms of any applicable
employment agreement or any written policies or directives of the Board 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 malfeasance
or negligence 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.
(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.
2. Welfare Benefits.
(a) During the period that Company is obligated to pay
Executive severance pay pursuant to Section 1(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. For purposes of this Agreement, the term "Welfare Benefits"
shall include, without limitation, 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. 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 2(a), and (ii) if such policy
is not amended to provide the continued benefits described in this Section 2(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.
3. Stock Options. 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." 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.
4. 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 1(a) 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.
5. 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.
6. Subsequent Employment with Competitor. Executive's right to
receive benefits under this Agreement, including Executive's right to exercise
any Stock Options that have accelerated under this Agreement, shall cease
immediately upon Executive's employment by any competitor of the Company and its
Subsidiaries.
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.
(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
subparagraph paragraph 6(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 upon a Change in Control 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 dated December 12, 1988, the terms of this Agreement
shall prevail. Without limiting the generality of the foregoing, the arbitration
provisions of the December 12, 1988 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 1 and 2 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.
MACROVISION CORPORATION EXECUTIVE
By /s/ Xxxx X. Xxxx /s/ Xxxxxxx X. Krepick
--------------------------------- ----------------------------------------
Xxxx Xxxx XXXXXXX X. KREPICK
Chief Executive Officer
