EXHIBIT 99.10
AMENDMENT NO. 1 TO
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AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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This AMENDMENT NO. 1 TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Amendment") is entered into as of October 4, 1999 by and among Gemstar
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International Group Limited, a British Virgin Islands corporation ("XXXX"),
Gemstar Development Corporation, a California corporation ("Company"), and Xxxxx
X. Xxxx ("Employee").
WITNESSETH:
WHEREAS, XXXX, Company and Employee are parties to that certain Amended and
Restated Employment Agreement, entered into as of January 7, 1998, (the
"Employment Agreement") pursuant to which Employee is currently employed by XXXX
and Company.
WHEREAS, XXXX is a party to that certain Agreement and Plan of Merger of
even date herewith pursuant to which (i) XXXX has agreed to reincorporate under
the laws of the State of Delaware (the "Reincorporation") and (ii) G Acquisition
Subsidiary Corp., a Delaware corporation and a wholly owned subsidiary of XXXX
(which will remain a wholly owned subsidiary of the successor to XXXX following
the Reincorporation), will merge (the "Merger") with and into TV Guide , Inc. a
Delaware corporation ("Target") and Target will become a direct or indirect
wholly owned subsidiary of the successor to XXXX.
WHEREAS, in recognition of the increased duties and responsibilities which
Employee will bear following the Merger, Company and Employee desire to amend
the Employment Agreement, subject to the consummation of the Merger, as provided
herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties agree to amend the Employment Agreement as
follows:
1. Reincorporation of XXXX. The Employment Agreement, as amended by this
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Amendment, shall continue to bind the successor to XXXX following the
Reincorporation to the same extent as if such successor were the original
signatory thereto and hereto and all references in the Employment Agreement and
in this Amendment to "XXXX" shall, from and after the effective date of the
Reincorporation, be deemed to refer to the successor corporation to XXXX in the
Reincorporation.
2. Amendment of Section 1(a)(i) of the Employment Agreement. Subject to
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the consummation of the Merger, the first sentence of Section 1(a)(i) of the
Employment Agreement shall be amended to read in its entirety as follows:
"Company agrees to employ Employee and Employee agrees to serve Company, in
accordance with the terms of this Agreement, for an initial term commencing
with an effective date of October 1, 1997 and ending 48 months after the
effective date of the merger of G Acquisition Subsidiary Corp., a Delaware
corporation, with and into TV Guide , Inc., a Delaware corporation (the
"Merger"), pursuant to the terms of
that certain Agreement and Plan of Merger dated October 4, 1999 (the
"Initial Term"), unless this Agreement is earlier terminated in accordance
with the provisions which follow."
3. Amendment of Section 2 of the Employment Agreement. Subject to the
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consummation of the Merger, the second sentence of the first paragraph of
Section 2 of the Employment Agreement shall be amended to read in its entirety
as follows:
"XXXX and Employee agree that, subject to the provisions of this Agreement,
XXXX will employ Employee as President, Chief Executive Officer and
Chairman of the Board of XXXX"
4. Amendment of Section 3(a)(ii) of the Employment Agreement. The
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parties agree that the provisions of Section 3(a)(ii) of the Employment
Agreement providing for annual increases in Employee's base salary shall remain
in full force and effect for the fiscal year ending March 31, 2000 and that
Employee's base salary shall be increased on June 1, 2000 in accordance with the
provisions of Section 3(a)(ii) as in effect immediately prior to the date of
this Amendment. Subject to the consummation of the Merger, Section 3(a)(ii) of
the Employment Agreement shall be amended to provide as follows for the fiscal
year ending March 31, 2001 and the Compensation Period beginning June 1, 2001
and all future fiscal years and Compensation Periods:
"On June 1 of each Compensation Period commencing June 1, 2001, the
Base Salary for such Compensation Period shall be adjusted by adding to the
Base Salary for the previous Compensation Period the amount obtained by
multiplying the Base Salary for the previous Compensation Period by the
positive percentage, if any, equal to the Adjusted Percentage (as defined
below).
For purposes of this Agreement, the "Adjusted Percentage" means the
percentage equal to the product of (i) the sum of "X" plus "Y," multiplied
by (ii) twelve and one-half percent (.125), where "X" is the percentage
increase per outstanding share, if any, from the previous fiscal year in
XXXX'x consolidated earnings before interest, taxes, depreciation and
amortization ("EBITDA"), as shown on the consolidated financial statements
of XXXX (the "Financial Statements"); and "Y" is the percentage increase
per outstanding share, if any, from the previous fiscal year in that
portion of XXXX'x consolidated EBITDA attributable to the businesses being
conducted by XXXX and its subsidiaries prior to the Merger, including the
VCR Plus+ licensing business, electronic program guide licensing business
(both consumer electronics sector and service provider sector), and all
advertising, promotion, linking and transaction revenues associated with
electronic program guide and its related services (including those received
as revenue sharing under license agreements).
In computing the Adjusted Percentage (for the purposes of this Section 3(a)
as well as for the purposes of Section 3(b) and 3(c) hereof, and Schedule I
hereto), the parties acknowledge that it is their intention to compute the
increase, if any, in EBITDA or any portion thereof from one fiscal year to
the next fiscal year on a basis which fully
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reflects the Merger in both fiscal years being compared. Accordingly, if
for any reason (e.g., a change in fiscal year or the consummation of the
Merger after March 31, 2000) the full effects of the Merger are not
included in the first of the two fiscal years being compared in determining
the Adjusted Percentage, XXXX, Company and Employee shall work together in
good faith to adjust the computation of EBITDA appropriately to ensure that
the Adjusted Percentage is determined in a manner consistent with the
intentions of the parties."
5. Amendment of Section 3(b)(i) of the Employment Agreement. The parties
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agree that the provisions of Section 3(b)(i) of the Employment Agreement
providing for the payment of Employee's annual Merit Bonuses shall remain in
full force and effect for the fiscal year ending March 31, 2000 and that
Employee's Merit Bonus for such fiscal year shall be computed and paid in
accordance with the provisions of Section 3(b)(i) as in effect immediately prior
to the date of this Amendment. Subject to the consummation of the Merger,
Section 3(b)(i) of the Employment Agreement shall be amended to provide as
follows for the computation and payment of Employee's Merit Bonuses, if any, for
the fiscal year ending March 31, 2001 and for all future fiscal years (or
portions thereof) ending thereafter:
"Within fifty (50) days following the end of each fiscal year ending
March 31 of the Company (or portion thereof) during the term of this
Agreement ("Fiscal Year"), commencing with the fiscal year ending on March
31, 2001, the XXXX Board shall approve the payment to Employee of a merit
bonus (the "Merit Bonus") equal to the Adjusted Percentage of the Base
Salary. XXXX shall immediately inform Employee of the amount, if any, of
the Merit Bonus."
6. Amendment of Schedule I to the Employment Agreement. The parties
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agree that the provisions of Section 3(c) of the Employment Agreement providing
for the payment of Employee's Annual Incentive Bonuses in accordance with the
terms of Schedule I to the Employment Agreement, shall remain in full force and
effect for the fiscal year ending March 31, 2000 and that Employee's Annual
Incentive Bonus for such fiscal year shall be computed and paid in accordance
with the provisions of such Section 3(c) and such Schedule I as in effect
immediately prior to the date of this Amendment. Subject to the consummation of
the Merger, paragraph (a) of Schedule I to the Employment Agreement shall be
amended to provide as follows for the computation and payment of Employee's
Annual Incentive Bonus, if any, for the fiscal year ending March 31, 2001 and
all future fiscal years:
"(a) Subject to the terms and conditions of this Agreement, and in
addition to the Base Salary, Merit Bonus and other Additional Benefits to
which Employee may otherwise be entitled from Company, at the end of each
Fiscal Year (or portion thereof) during the term of the Agreement, Employee
shall be deemed to have earned a bonus (the "Annual Incentive Bonus"),
payable by the Company to Employee on the last day of the Compensation
Period in which such Fiscal Year ends (or sooner date as of which this
Agreement terminates, equal to the Adjusted Percentage times the Base
Salary."
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Paragraph (b) of Schedule I to the Employment Agreement will have no force or
effect in the computation of Employee's Annual Incentive Bonus for the fiscal
year ending March 31, 2001 or any future fiscal year ending thereafter.
7. Amendment of Section 3(k) of the Employment Agreement. Subject to the
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consummation of the Merger, the table included in Section 3(k) of the Employment
Agreement shall be amended as follows: (a) all amounts in the "Cash Maximum"
column of such table for the Compensation Periods ending March 31, 2002 and
thereafter shall be increased by twenty five percent (25%) and (b) such table
shall be extended to provide that the Cash Maximum amounts for the Compensation
Periods ending March 31, 2006 and for each fiscal year thereafter shall each be
equal to 1.25 times the Cash Maximum amount for the immediately preceding fiscal
year. In the event that XXXX changes its fiscal year, XXXX, Company and
Employee will work together in good faith to adjust the table set forth in
Section 3(k) in an equitable and appropriate manner.
8. Amendment of Section 4(c) of the Employment Agreement. Subject to the
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consummation of the Merger, the first sentence of the fifth paragraph of Section
4(c) of the Employment Agreement shall be amended to provide that, if Employee
is the prevailing party in any Decision, Employee shall be reinstated as
President and Chief Executive Officer of Company and as President, Chief
Executive Officer and Chairman of the Board of XXXX.
9. Amendment of Section 4(f) of the Employment Agreement. Subject to the
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consummation of the Merger, the definition of "Constructive Termination" in
Section 4(f) of the Employment Agreement shall be amended to include within the
scope of such definition, without otherwise changing the scope of such
definition in any way, the removal of Employee from the office of Chairman of
the Board of XXXX.
10. Amendment of Section 4(h) of the Employment Agreement. The parties
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acknowledge that, in connection with the Merger, it is anticipated that Employee
will enter into a shareholders agreement with Liberty Media Corporation and The
News Corporation Limited pursuant to which Employee will grant a right of first
refusal to Liberty Media Corporation and The News Corporation Limited with
respect to certain future sales of XXXX'x Ordinary Shares held by Employee.
Subject to the consummation of the Merger, subparagraph (A) of Section 4(h)(i)
of the Employment Agreement shall be amended to read in its entirety as follows:
(A) The acquisition (other than from (i) XXXX directly, (ii) any
stockholder of XXXX who as of January 7, 1998 owned twenty five percent
(25%) or more of XXXX'x outstanding Ordinary Shares or (iii) Employee
pursuant to a right of first refusal granted by Employee to Liberty Media
Corporation and The News Corporation Limited pursuant to the terms of a
shareholders agreement entered into by Employee in connection with the
Merger) after January 7, 1998 by any person, entity, or group, within the
meaning of (S)13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), of beneficial ownership of twenty five
percent (25%) or more of XXXX'x outstanding Ordinary Shares; or"
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11. Amendment of Section 6(a) of the Employment Agreement. Subject to the
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consummation of the Merger, the third sentence of Section 6(a) of the Employment
Agreement shall be amended to read in its entirety as follows:
"For the purpose of this Agreement, Company's business and research or
development referred to in (ii) above shall include (1) the Business
described in the Bylaws of XXXX adopted in connection with the Merger and
(2) the businesses described in Exhibits A and B attached hereto, which
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may, from time to time, be modified or augmented, but only by resolution of
the Company Board in meetings to which Employee shall be invited to attend,
but at which only non-management directors applying the standard referred
to in (ii) above can vote."
12. Waiver by Employee. The parties acknowledge that (i) in connection
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with the Merger, it is anticipated that certain changes will be made in the
corporate governance of XXXX as set forth in the Bylaws of XXXX to be adopted in
connection with the Merger (the "Proposed Structural Changes"), which changes
shall not include any change in the offices held by Employee or in the
requirement that Employee report to the XXXX Board during the term of this
Agreement, (ii) there may be some ambiguity as to whether the Proposed
Structural Changes, when implemented, would constitute "Constructive
Termination" as such term is defined in Section 4(f) of the Employment Agreement
and (iii) the Merger may constitute a "Change of Control," as such term is
defined in Section 4(h)(i)(D) of the Employment Agreement. Employee hereby
agrees that (x) the provisions of Section 4(f) of the Employment Agreement
notwithstanding, the Proposed Structural Changes, when implemented, shall not be
deemed to constitute "Constructive Termination" as such term is defined in
Section 4(f) of the Employment Agreement and Employee will not, at any time,
assert that he is entitled to the benefits to which he would be entitled upon
Constructive Termination by virtue of the Proposed Structural Changes, when
implemented, and (y) the provisions of Section 4(h)(i)(D) notwithstanding, the
Merger shall not constitute a Change of Control, and Employee will not, at any
time, by virtue or reason of the Merger, assert that he is entitled to the
benefits which would accrue to him upon a Change of Control.
13. Full Force and Effect. Except as expressly amended hereby, the
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Employment Agreement shall continue in full force and effect in accordance with
the provisions thereof on the date hereof.
14. Section Headings. Section and other headings in this Amendment are
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for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Amendment.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
"XXXX"
GEMSTAR INTERNATIONAL GROUP LIMITED
By: /s/ XXXXX X. XXXXX
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Xxxxx X. Xxxxx, Chief Operating
Officer and Chief Financial Officer
By: /s/ XXXXXXX X. XXXXXXXXXX
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Xxxxxxx X. Xxxxxxxxxx, Secretary
"Company"
GEMSTAR DEVELOPMENT CORPORATION
By: /s/ XXXXX X. XXXXX
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Xxxxx X. Xxxxx, Chief Financial
Officer
By: /s/ XXXXXXX X. XXXXXXXXXX
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Xxxxxxx X. Xxxxxxxxxx, Secretary
"Employee"
/s/ XXXXX X. XXXX
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XXXXX X. XXXX
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