ROVI CORPORATION EXECUTIVE SEVERANCE AND ARBITRATION AGREEMENT
EXHIBIT 10.1
ROVI
CORPORATION
THIS
EXECUTIVE SEVERANCE AND ARBITRATION AGREEMENT (the “Agreement”) is made and
entered into as of December 21, 2009 by and between Rovi Corporation, a Delaware
corporation (the “Company”) and Xxxxxx Xxxxxx (“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
stockholders 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 stockholders, 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 (as defined in Section 1(b) below) of the
Company, and to induce Executive to enter into and remain in the employ of the
Company, and for other good and valuable consideration, the Company and
Executive agree as follows:
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1.
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Payment of Severance
Benefit.
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(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/her 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), by
itself 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; (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 serving on the Board on May 5, 2008, 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 stockholders 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 engaging 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
has 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 Executive’s consent: (i) a
material diminution in the Executive’s authority, duties or responsibilities, or
the assignment to the Executive of any duties or responsibilities that are
inconsistent with the Executive’s authority, duties or responsibilities; (ii) a
material diminution in the Executive’s base salary; or (iii) a relocation of the
Executive’s principal place of employment to a new work site requiring an
increase in one-way commute from Executive’s residence of more than thirty-five
(35) miles. Within 90 days of the initial occurrence of
any of the events listed in this section, Executive must provide written notice
to the Company of the occurrence of the event, and the Company shall have 30
days following receipt of such notice during which it may remedy the
condition. If Executive fails to give such notice within the 90 day
period or the Company remedies the condition within the 30 day period, the
occurrence of such event shall not constitute “Good Reason.”
(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” or (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) Notwithstanding the
foregoing, if any payment hereunder, or any portion thereof, is considered
“nonqualified deferred compensation” that is to be paid to Executive at a
time that he is considered to be a “specified employee,” in each case as defined
and determined for purposes of Section 409A of the Internal Revenue Code of 1986
as amended ("Section 409A"), and is to be paid within six months
following Executive’s termination of employment, then to the extent that
such payment is not otherwise exempt from the application of the 20% excise tax
under Section 409A, such payment shall be delayed and paid on the first day of
the seventh calendar month following the month in which Executive’s termination
of employment occurs.
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2.
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Welfare
Benefits.
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(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/her spouse and other qualified dependents)
all Welfare Benefits that Company provided to Executive (and his/her 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.
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3.
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Equity
Compensation.
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The Company
has granted Executive options to purchase Company common stock that are
currently outstanding, but not yet exercisable in whole or in
part. Additionally, the Company has granted Executive restricted
shares of Company common stock that have not yet vested and become
nonforfeitable. The Company may grant Executive additional stock
options, restricted stock or other forms of equity compensation in the
future. The currently outstanding stock options and restricted stock
and any future equity compensation Company grants to Executive are hereinafter
referred to as the “Stock Awards.” Notwithstanding the
provisions of any agreement(s) pursuant to which the Stock Awards 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
Awards held by Executive shall become fully vested and exercisable.
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4.
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Other Employee
Benefits.
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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 to other termination payments to which Executive may be entitled under
any employment agreement with, or other plan or arrangement of, the
Company.
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5.
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Withholding.
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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.
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6.
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Subsequent Employment
with Competitor.
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Executive’s
right to receive benefits under this Agreement, including Executive’s right to
exercise any Stock Awards that have accelerated under this Agreement, shall
cease immediately upon Executive’s employment by any company that the Company
reasonably determines to be a competitor of the Company and its
Subsidiaries.
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7.
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No Solicitation of
Employees.
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Executive
hereby agrees that for a period of one year following the termination of
Executive’s employment by or contractual relationship with the Company, for
whatever reason, Executive will not directly or indirectly solicit, induce or
influence any person who is engaged as an employee or otherwise by the Company
or its Subsidiaries to seek employment with any other business, nor will
Executive provide any information regarding employees of the Company or its
Subsidiaries for the purpose of directly or indirectly soliciting, inducing or
influencing an employee of the Company or its Subsidiaries to seek employment
with any other business, including without limitation name, e-mail address,
telephone or fax numbers, job titles or compensation information, to any third
party without the prior written consent of the Company. Executive
acknowledges that such information is proprietary to the Company and that
providing such information for any unauthorized purpose, including without
limitation the direct or indirect solicitation of such employees for employment,
is strictly prohibited, and Executive further acknowledges that violation of
this provision would result in damage to the Company for which Executive may be
held personally liable, and Executive agrees that should Executive violate this
provision, the Company may obtain injunctive relief as well as actual,
incidental, or punitive damages, if appropriate.
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8.
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Arbitration of
Claims.
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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/she may, if he/she 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/her 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
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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 statue of
limitations to any claim, taking into account compliance with subparagraph
paragraph 8(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 Trail
Waiver. Executive understands that, by this Agreement, he/she
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/she 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/her 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 arbitral 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.
| 9. | 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 agreements related to the
Stock Awards, or (ii) that certain accepted original offer of employment between
Executive and the Company dated May 2, 2008, the terms of this Agreement shall
prevail. Without limiting the generality of the foregoing, the
arbitration provisions of the arbitration policy accompanying the original offer
of employment shall be superseded by the arbitration provisions set forth in
this Agreement.
| 10. | Amendment. | ||
| This Agreement may not be amended without the prior written consent of both Executive and the Company. | |||
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| 11. | 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
Executive 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, 2 and 3 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/her position as a senior executive.
| 12. | 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. | |||
| 13. | 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,
distributes, devisees and legatees.
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14.
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Governing
Law.
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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.
| ROVI CORPORATION | EXECUTIVE | ||||||
| By_____/s/ Xxxxxx X. Amoroso________________ | _/s/ Xxxxxx Carson________________________ | ||||||
| Xxxxxx X. Xxxxxxx, CEO | Xxxxxx
Xxxxxx, EVP Worldwide Sales and
Services
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