Document:

ex1020.htm

 

Ex 10.20

 

 

EMPLOYMENT AGREEMENT

 

 

This EMPLOYMENT AGREEMENT (this “Agreement”), is effective as of January 1, 2010 (the “Effective Date”), by and between AVT, Inc. a Nevada corporation (“AVT”), and James Winsor, an individual (the “Executive”).

 

WITNESSETH:

 

WHEREAS, the Company desires to continue to employ the Executive and the Executive desires to continue to be so employed and to serve from and after the Effective Date, in the capacity of Vice President of Engineering to perform services on its behalf in said position;

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and covenants herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.           EMPLOYMENT

 

The Company agrees to continue to employ the Executive, and the Executive agrees to continue to serve the Company, on the terms and conditions set forth herein.

 

2.           TERM

 

Subject to Section 5 hereof, the Executive’s employment under this Agreement shall commence on the Effective Date and shall end on the first anniversary of the Effective Date (the “Initial Term”); provided that such term shall be automatically extended for additional one-year periods, unless, not later than 45 days prior to the expiration of the Initial Term (or any extension thereof pursuant to this Section 2) either party hereto shall provide written notice of its or her desire not to extend the term hereof to the other party hereto.  As used herein, the term “Term” shall mean the Initial Term together with each one-year extension.

 

3.           POSITION AND DUTIES

 

(a)           The Executive shall be duly appointed, effective on the Effective Date, and shall thereafter during the Term, serve as Chief Executive Officer of the Company and shall perform such duties and exercise such supervision and powers over and with regard to the business of the Company customarily associated with the position of Vice President of Engineering, as well as such duties and services required herein and as may be reasonably assigned to her from time to time by the Board of Directors of the Company (the “Board”).  The Executive shall perform her duties to the best of her ability and in a diligent and proper manner.

 

(b)           Except during vacations and periods of illness, the Executive shall, during the Term, devote all Executive’s business time (as opposed to personal time) and attention to the performance of services for the Company and its subsidiaries hereunder; provided, however, that the Executive shall be permitted, to (i) continue to serve on the boards of the business enterprises on which she is serving as of the Effective Date, (ii) subject to the prior consent of the Corporate Governance Committee of the Board (the “Corporate Governance Committee”), serve on any board of any business enterprise other than those referenced in clause (i) above, and (iii) serve on any board of any non-profit organization without obtaining such a consent.  Notwithstanding the foregoing, the Corporate Governance Committee shall have the right, at any time during the Term, to require that the Executive resign from Executive’s position on the board or trusteeship of any for-profit organization, effective as soon as such resignation may be properly effected under applicable law, and the charters, by-laws or other governing documents of the applicable for-profit organization.  On or before the Effective Date, the Executive shall provide the Corporate Governance Committee with a list of the boards and committees on which she is serving as of the Effective Date.

 

4.           COMPENSATION AND RELATED MATTERS

 

(a)           Salary.                      During the Term, the Company shall pay to the Executive a base salary at a rate of not less than $75,000 per annum, payable in accordance with the usual payroll practices of the Company, but not less frequently than monthly.  The Executive’s base salary may be increased from time to time by the Compensation Committee of the Board (the “Committee”) and, if so increased, shall not thereafter be decreased during the Term.  As used herein, “Base Salary” means the Executive’s initial salary hereunder as the same may be increased during the Term.

 

 Notwithstanding anything in this Agreement to the contrary, the Executive shall not be entitled to assert that any breach of this Section 4(a)(ii) constitutes grounds for the Executive’s termination of Executive’s employment for “Good Reason” (as defined below).

 

(b)           Bonus.                      Executive shall be eligible to earn an annual bonus (the “Bonus”) as directed by the Company’s Committee.

 

(c)           Compensation Shares.                                           Executive shall receive such number of restricted shares of the Company’s common stock as is equal to $25,000, based upon the average closing price for the ten (10) trading days immediately preceding each of the following dates: March 31, 2009; June 30, 2009; September 30, 2009; and December 31, 2009 (the “Compensation Shares”).  During the time when Executive is employed by the Company, and for a period of 5 years thereafter, Executive shall limit Executive’s (or any affiliate of Executive) daily sale of the Compensation Shares (or any additional shares received from the Company as compensation) to no more than 5% of the average daily volume of the Company’s common stock as quoted on www.pinksheets.com based upon the average trading volume for the previous 30 trading days.

 

(d)           Vacations.                      During the Term, Executive shall be entitled to the number of days of paid time off (“PTO”) in each fiscal year determined in accordance with the Company’s PTO policies.  During the first year of this Agreement, Executive shall receive 15 days PTO which may be used as vacation and five (5) sick days per year.  PTO and sick may be used in any combination.

 

 

(e)           Benefit Plans.                                Executive will be entitled to the Company’s standard benefit plans.

 

5.           TERMINATION

 

The Executive’s employment hereunder and the Term may be terminated under the following circumstances:

 

(a) Death.  The Executive’s employment hereunder shall terminate upon Executive’s death.  In the case of any such termination upon death, the Executive’s estate shall be entitled to the payments and benefits described in Section 6(a).

 

(b) Disability.  If the Executive is unable to timely and regularly perform Executive’s duties hereunder due to physical or mental illness, injury or incapacity, as determined by the Board in good faith based on medical evidence acceptable to it (a “Disability”), and such Disability continues for a period of six consecutive months, then the Company may terminate the Executive’s employment hereunder.  A return to work for less than 30 consecutive days during any period of Disability shall not be deemed to interrupt the running of (and shall be included in) the aforementioned six-month period.  In the case of any such termination by the Board on account of Disability, the Executive shall be entitled to the payments and benefits described in Section 6(a).

 

(c) Termination by the Company for Cause.  The Company may terminate the Executive’s employment hereunder at any time for Cause.  For purposes of this Agreement, “Cause” shall mean a termination of employment of the Executive by the Company due to (i) the commission by the Executive of an act of fraud or embezzlement against the Company or any of its subsidiaries or the conviction of the Executive in a court of law, or guilty plea or no contest plea, of any charge involving an act of fraud or embezzlement (including the willful and unauthorized disclosure of information of the Company or any of its subsidiaries which the Executive knows or should know to be material, confidential and proprietary to the Company or any of its subsidiaries, which results, or could reasonably have been expected to result, in material financial loss to the Company or any of its subsidiaries), (ii) the conviction of the Executive in a court of law, or guilty plea or no contest plea, to a felony charge, (iii) the willful misconduct of the Executive as an employee of the Company or any of its subsidiaries which is reasonably likely to result in injury or financial loss to (I) the Company or (II) to any subsidiaries of the Company, which injury or loss is material to the Company taken as a whole, (iv) the willful failure of the Executive to render services to the Company or any of its subsidiaries in accordance with the Executive’s employment, which failure amounts to a material neglect of the Executive’s duties to the Company and does not result from physical illness, injury or incapacity, and which failure is not cured promptly after adequate notice of such failure and a reasonably detailed explanation has been presented by the Company to the Executive, or (v) a material breach of any of the covenants in subsections 3(a), 3(b) or Section 10 hereof by the Executive, which breach is not cured, if curable, within 30 days after a written notice of such breach is delivered to the Executive.  The Executive shall not be deemed to have been terminated for Cause unless the Company shall have given or delivered to the Executive (1) reasonable notice setting forth the basis for termination for Cause, and (2) a reasonable opportunity for the Executive, together with Executive’s counsel, to request reconsideration by and be heard before the Board, provided; however, that such notice and opportunity to be heard shall not be required if the Board, based on the advice of counsel, deems it inconsistent with its fiduciary duties and so advises the Executive.

 

For purposes of determining whether the Executive was given “reasonable notice” and “reasonable opportunity to be heard” in connection with any determination by the Board as to whether Cause exists, 10 business days’ notice of the Board meeting shall be deemed to constitute “reasonable notice” (without prejudice to the determination of whether some other period would also constitute “reasonable notice”), and the opportunity for the Executive and Executive’s counsel to present arguments to the Board at such meeting as to why the Executive believes that no Cause exists shall constitute “reasonable opportunity to be heard” (without prejudice to the determination of whether some other forum or method would also constitute a “reasonable opportunity to be heard”).  For purposes of this Agreement, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s action or omission was in the best interest of the Company.

 

(d) Termination by the Executive for Good Reason.  The Executive may voluntarily terminate Executive’s employment hereunder at any time for Good Reason.  For purposes of this Agreement, “Good Reason” shall mean (i) a material breach by the Company of this Agreement (for the avoidance of doubt, other than any breach of Section 4(a)(ii) or 4(c)(ii)) or of the Non-Qualified Stock Option Agreement, which breach is not cured within 30 days after the Board’s receipt of written notice of such non-compliance from the Executive; (ii) the assignment to the Executive without Executive’s consent by the Company of duties materially and adversely inconsistent with the Executive’s position, duties or responsibilities as in effect immediately after the Effective Date, including, but not limited to, any material reduction in such position, duties or responsibilities, or a change in the Executive’s title or office, as then in effect, or any removal of the Executive from any of such positions, titles or offices, or any failure to elect or reelect the Executive as a member of the Board or any removal of the Executive as such a member, except in connection with the termination of Executive’s employment pursuant to any of subsections 5(a), 5(b) or 5(c) hereof; or (iii) the relocation of the Company’s headquarters to a place more than 50 miles from its location as of the Effective Date without the approval of the Executive.

 

(e) Termination by the Company Without Cause.  The Company may at any time terminate the Executive for any reason, and, except for the amounts payable pursuant to subsection 6(b) hereof (or as otherwise set forth in any equity agreement), the Executive shall have no claim against the Company under this Agreement or otherwise by reason of such termination.

 

(f) Termination by the Executive Without Good Reason. The Executive may at any time terminate Executive’s employment hereunder without Good Reason; provided that the Executive will be required to give the Company at least 90 days’ advance written notice of a resignation without Good Reason.

 

(g) Notice of Termination.  Any termination of the Executive’s employment hereunder, by the Company or by the Executive (other than termination pursuant to subsection 5(a) hereof), shall be communicated by written “Notice of Termination” to the other party hereto.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

 

6.           COMPENSATION UPON TERMINATION

 

(a)           Death or Disability.  If the Executive’s employment hereunder terminates pursuant to subsections 5(a) (Death) or 5(b) (Disability), the Executive or Executive’s estate (as the case may be) shall be entitled to receive: (i) a lump sum payment on the date of such termination equal to the amount of any earned, but unpaid Base Salary through the date of such termination; and (ii) an additional lump sum payment not later than thirty (30) days following such termination equal to (A) two times Base Salary, and (B) the amount of any unreimbursed business expenses properly incurred by the Executive in accordance with Company policy prior to the date of the Executive’s termination.  In addition, the Executive or Executive’s estate, as the case may be, shall be entitled to receive the Bonus for the Fiscal Year in which such termination occurs, which is provided under the Bonus formula for such Fiscal Year, based on Actual Performance for such Fiscal Year as if the Executive had remained in the employ of the Company through the end of such Fiscal Year.  Such Bonus to be paid as and when bonuses are paid to the other senior executives of the Company.  In addition, for a period of 24 months after such termination, the Executive (unless the termination is the result of the Executive’s death) and Executive’s eligible dependents shall, to the extent permitted under the applicable plans of the Company as in effect on the date of such termination be eligible to continue to participate in the medical, life, dental and disability insurance coverage provided to employees at the Company’s expense; provided, however, that after such termination the Executive shall continue to pay premiums in respect to such coverage to the same extent that the Executive was paying such premiums immediately prior to such termination.

 

(b)           Termination by the Company Without Cause or by the Executive for Good Reason.

 

If the Executive’s employment is terminated by the Company pursuant to subsection 5(e) (Without Cause) or if the Executive terminates Executive’s employment pursuant to subsection 5(d) (for Good Reason), then the Executive shall be entitled to receive: (A) a lump sum payment on the date of such termination equal to the amount of any earned, but unpaid Base Salary through the date of such termination; and (B) an additional lump sum payment not later than thirty (30) days following such termination equal to (I) any earned but unpaid Bonus; and (II) the amount of any unreimbursed business expenses properly incurred by the Executive in accordance with Company policy prior to the date of the Executive’s termination.  The Executive shall have no further rights to any compensation or other benefits under this Agreement.

 

(c)           Termination by the Company For Cause or by the Executive Without Good Reason.

 

If the Executive’s employment is terminated by the Company under subsection 5(c) (for Cause) or by the Executive under subsection 5(f) (without Good Reason), the Executive shall be entitled to receive: (i) a lump sum payment on the date of such termination equal to the amount of any earned, but unpaid Base Salary through the date of such termination; and (ii) an additional lump sum payment not later than thirty (30) days following such termination for reimbursement of any unreimbursed business expenses properly incurred by the Executive in accordance with Company policy prior to the date of the Executive’s termination.  If the Executive’s employment hereunder is terminated by the Executive under subsection 5(f) (without Good Reason), the Executive shall also be entitled to receive any earned but unpaid Bonus not later than thirty (30) days following such termination.  The Executive shall have no further rights to any compensation or other benefits under this Agreement.

 

(d)           Expiration of the Employment Term.  In the event that the Company or the Executive elects not to extend the Term as provided in Section 2 hereof, the Executive’s employment shall be terminated upon the expiration of the Term, and, subject to Section 14 hereof, the provisions of this Agreement shall cease to apply effective as of such expiration, and the Executive shall be entitled to receive only the following:  (i) any accrued but unpaid Base Salary through the date of termination; (ii) reimbursement of any unreimbursed business expenses properly incurred by the Executive in accordance with Company policy prior to the date of termination; and (iii) any earned but unpaid Bonus.  The Executive shall thereafter receive no other compensation or benefits, other than pursuant to the terms of the plans, policies and practices of the Company; provided, however, that the Executive shall not be entitled to any payments or benefits under any separately stated severance plan, policy or program of the Company.

 

7.           INDEMNIFICATION AND INSURANCE

 

During the Term and thereafter, the Executive shall be entitled to indemnification to the fullest extent permitted in accordance with the By-Laws and/or charters or other formation and governing documents of the Company and its subsidiaries and affiliates and as provided under the terms of the Company’s directors and officers liability and (if applicable) fiduciary liability insurance policies (the “Policies”), as the Policies may be amended from time to time, or any successor policy, provided, that any such policy shall have terms that are, in the aggregate, no less favorable than the terms of the relevant policy in effect on the Effective Date.  If at any time the Company’s Board of Directors or a committee thereof approves a form of indemnification agreement for use with the Company’s directors or officers, then the Company shall enter into an indemnification agreement with the Executive containing the same terms and conditions as are contained in such form of indemnification agreement.

 

8.           TAXES

 

Except as otherwise provided in Section 7 of this Agreement, the Company shall withhold from all amounts payable under this Agreement all federal, state, local and other taxes required by law to be withheld with respect to such payments.

 

9.           CONFIDENTIALITY AND NON-SOLICITATION

 

(a)           The Executive acknowledges that the information, observations and data obtained by Executive’s while employed by the Company concerning the business or affairs of the Company and its subsidiaries and affiliates which are not available to the public, customers, suppliers and competitors of the Company which are in the nature of trade secrets, are proprietary or the disclosure of which could reasonably be expected to cause a financial loss to the Company, or otherwise have an adverse effect on the Company (“Confidential Information”) are the property of the Company or such subsidiary or affiliate.  Therefore, the Executive agrees that, except as required by law or the rules of any national securities exchange, she shall not disclose to any unauthorized person or use for Executive’s own account any Confidential Information without the prior written consent of the Board, unless and to the extent that any of the aforementioned matters becomes generally known to the public or is ascertainable from public or published information and is available for use by the public other than as a result of the Executive’s acts or omissions to act.  The Executive shall deliver to the Company any time the Company may request in writing, all copies of all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data, or the portions thereof, that contain the Confidential Information, which she may then possess or have under Executive’s control.

 

During the Term and for 36 months thereafter, the Executive shall not either directly or indirectly through another entity, (i) induce or attempt to induce any management or other key employees of the Company or its subsidiaries or affiliates to leave the employ of the Company or such subsidiary or affiliate, or in any way interfere with the relationship between the Company or its subsidiaries or affiliates and any such employee, or (ii) hire any person who was a management or other key employee of the Company or its subsidiaries or affiliates at any time during the Executive’s employment with the Company.

 

(b)           If, at the time of enforcement of this Section 10, a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances, if less, shall be substituted for the stated duration, scope or area and that the court or arbitrator shall be allowed to revise the restrictions contained herein to cover, if less, the maximum period, scope and area permitted by law.

 

(c)           In the event of the breach or a threatened breach by the Executive of any of the provisions of this Section 10, the Company, in addition and supplementary to other rights and remedies existing in its favor, may apply to any court of law or equity of competent jurisdiction for specific performance or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security).

 

10.           SUCCESSORS; BINDING AGREEMENT

 

(a)           This Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company, including, any corporation acquiring directly or indirectly all or substantially all of the Common Stock, business or assets of the Company, whether by merger, restructuring, reorganization, consolidation, sale or otherwise (and such successor shall thereafter be deemed the “Company” for the purposes of this Agreement).  Each of the Company’s subsidiaries is hereby acknowledged to be a third-party beneficiary with respect to the provisions of Section 10 hereof and shall be entitled to enforce such provisions as if it were a party hereto.

 

(b)           This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  In the event of the Executive’s death or of a judicial determination of Executive’s incompetence, reference in this Agreement to the Executive shall be deemed to refer, as appropriate, to Executive’s beneficiary, estate or other legal representative.

 

11.           NO MITIGATION; NO OFFSET

 

The Company agrees that, subsequent to the Executive’s termination of employment by the Company, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to Executive’s due under this Agreement, and that the amount of any payment that the Company is obligated to make to the Executive shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

 

 

Page 

 

 

  

  

  

12.           NOTICE

 

For the purposes of this Agreement, notices, demands and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when hand delivered or (unless otherwise specified) when mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:

 

[Redacted]

If to the Company:

 

Natalie Russell

AVT, Inc.

341 Bonnie Circle, Suite 102

Corona, CA 92880

or to such other address as any party may have furnished to the others in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

13.           SURVIVORSHIP

 

The respective rights and obligations of the parties hereunder, including the rights and obligations set forth in Sections 6, 7, 8, 9 and 10 of this Agreement, shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations.

 

14.           REPRESENTATIONS AND WARRANTIES

 

(a)           The Company represents and warrants that (i) it is fully authorized and empowered to enter into this Agreement and that the Board has approved the terms of this Agreement, (ii) the execution of this Agreement and the performance of its obligations under this Agreement will not violate or result in a breach of the terms of any material agreement to which the Company is a party or by which it is bound, (iii) no approval by any governmental authority or body is required for it to enter into this Agreement, and (iv) the Agreement is valid, binding and enforceable against the Company in accordance with its terms.

 

(b)           The Executive hereby represents to the Company that the execution and delivery of this Agreement by the Executive and the Company, and the performance by the Executive of the Executive’s duties hereunder, shall not constitute a breach of, or otherwise contravene, the terms of any employment or other agreement to which the Executive is a party or otherwise bound.

 

15.           MISCELLANEOUS

 

The parties hereto agree that this Agreement contains the entire understanding and agreement between them, and supersedes all prior understandings and agreements between the parties respecting the employment by the Company of the Executive (including, without limitation, the Executive Severance Agreement, dated as of November 19, 1999), and that the provisions of this Agreement may not be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the parties hereto.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.  The validity, interpretations, construction and performance of this Agreement shall be governed by the laws of the State of California without giving effect to conflict of laws principles.  The parties hereby consent to the jurisdiction of the state and federal courts located within the State of California.  Any legal action, mediation or arbitration shall be held in North County San Diego, State of California.

 

16.           VALIDITY

 

The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision or provisions of this Agreement, which shall remain in full force and effect.

 

17.           OWNERSHIP.

 

Company shall solely own and have exclusive worldwide right, title and interest in to all the work performed by Executive, and to all derivative works and/or modifications thereto, and in all United States and foreign trademarks, service marks, copyrights, patents, trade secrets, and all other intellectual property rights (collectively “Intellectual Property Rights”) relating thereto.  No license, ownership or other interest of any kind in the Work is granted directly or indirectly to Contractor.  In the event this Agreement is terminated for any reason prior to the completion of all of the Term, Company shall still exclusively own all rights in the work and other work in process related thereto, and in all Intellectual Property Rights related thereto.

 

18.           ASSIGNMENT.

 

All work performed by Executive, and all written, graphic and/or machine readable materials, documentation, designs, models, drawings, inventions, know-how, software code and tools, algorithms, libraries, routines, deliverables and other items created or produced by Executive hereunder (collectively “Related Materials”) are commissioned at Company’s request and direction and shall be considered a “work-made-for-hire” under the copyright laws of the United States.  To the extent that any of the work performed by Executive and/or Related Materials are not considered a “work-made-for-hire,” Executive hereby irrevocably assigns and transfers to Company all right, title and interest worldwide in and to the work performed by Executive and Related Materials, whether or not patentable or copyrighted, made or conceived or reduced to practice, and to all modifications and derivative works thereof and to all Intellectual Property Rights related thereto.  In addition, Executive hereby irrevocably waive any right to assert any moral rights against Company or any third party with respect to the work performed by Executive, Related Materials, any modifications or derivative works thereof, and/or to any Intellectual Property Rights related thereto.

 

19.           COUNTERPARTS

 

This Agreement may be executed in one or more counterparts (and by facsimile), each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and the year first above written.

 

	
AVT, Inc.

A Nevada corporation

 

 

 

______________________________________

By:  Natalie Russell

Its:  Secretary

	  	
Executive

 

 

 

 

_______________________________________

James Winsor

 

 

Pageex4-01.htm

 

Exhibit 4.01

 

EXECUTION COPY

 

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR QUALIFIED UNDER THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION (THE “ LAW ”), AND THIS WARRANT HAS BEEN, AND THE COMMON STOCK TO BE ISSUED UPON EXERCISE OF THIS WARRANT WILL BE, ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION OF THE WARRANT OR COMMON STOCK AS APPLICABLE. NO SALE OR OTHER DISPOSITION MAY BE MADE WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND QUALIFICATION UNDER ANY APPLICABLE LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY (AS THAT TERM IS DEFINED BELOW) AND ITS COUNSEL, THAT THE REGISTRATION AND QUALIFICATION ARE NOT REQUIRED UNDER THE ACT AND LAW, RESPECTIVELY.

 

 

NON-CONTINGENT WARRANT

TO PURCHASE COMMON STOCK

OF

ROVI CORPORATION

 

(void after December 31, 2012)

 

No. NCW-1

 

THIS CERTIFIES THAT, for value received, Cryptography Research, Inc., a California corporation (“Holder”), from and after the date hereof and at any time before the Expiration Date (as defined below), and subject to the terms and conditions herein set forth, is entitled to purchase from Rovi Corporation (parent company to Rovi Solutions Corporation, which was formerly named Macrovision Corporation), a Delaware corporation (the “ Company ”), all or a portion of the Warrant Shares (as defined below) at an exercise price per share equal to the Warrant Price (as defined below). The Company issued Holder this Warrant pursuant to the terms of that certain Asset Purchase Agreement, dated November 17, 2007 (the “Asset Purchase Agreement ”), between the Company and Holder.

 

1.  Definitions. As used in this Warrant, the following terms have the definitions ascribed to them below:

 

	 (a)   “Closing” shall have the meaning ascribed to such term in the Asset Purchase Agreement.
	 	 
	 (b)   “Market Price” shall mean the closing sale price of the Company’s common stock, $.001 par value per share (the “ Common Stock ”), as reported on the Nasdaq Stock Market, or if not then traded on the Nasdaq Stock Market, such closing sale or bid price as reported on any exchange over which the Company’s Common Stock may then be traded, or if not then traded over any exchange, then the market price of the Company’s Common Stock shall be the fair market value of the Company’s Common Stock as determined in good faith by the Board of Directors of the Company.
	 	 
	 (c)   “Warrant Price” means $35.45 per share. The Warrant Price is subject to adjustment under Section 4.
	 	 
	 (d)   “Warrant Shares” means 928,315 shares of the Company’s Common Stock. The number of Warrant Shares is subject to adjustment under Section 4.
	 	 

 

    2.  Exercise of Warrant. This Warrant may be exercised by the Holder hereof, in whole or in part, at any time prior to the Expiration Date, at the election of the Holder hereof, by (a) the surrender of this Warrant to the Secretary of the Company for cancellation, (b) the delivery of a duly completed and executed notice of exercise in substantially the form attached hereto as Exhibit A to the Secretary of the Company and (c) the payment to the Company of an amount (the “ Exercise Payment ”) equal to the then applicable Warrant Price multiplied by the number of Warrant Shares then being purchased, payable as follows: (i) by payment to the Company in cash, by certified or official bank check, or by wire transfer of the Exercise Payment, (ii) by surrender to the Company for cancellation of securities of the Company having a Market Price on the date of exercise equal to the Exercise Payment; or (iii) by a combination of the methods described in clauses (i) and (ii) above. This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date the Secretary of the Company is in receipt of items (a), (b) and (c) of the preceding sentence (the “ Exercise Date ”), and the person entitled to receive the Warrant Shares issuable upon such exercise shall be treated for all purposes as the holder of such shares of record as of the close of business on such date. As promptly as practicable after the Exercise Date, and in any event within thirty (30) days after such Exercise Date, the Company shall issue and deliver to 

 

 

  

  

  

 

 

such holder a certificate or certificates for the number of full Warrant Shares issuable upon such exercise. If exercised in part, the Company shall deliver to Holder a new Warrant, identical in form, in the name of the Holder, evidencing the right to purchase the number of Warrant Shares as to which this Warrant has not been exercised, which new Warrant shall be signed by a duly authorized officer of the Company.

 

3.  Conversion. In lieu of exercising this Warrant pursuant to Section 2, the Holder may elect to convert this Warrant, without the payment by the Holder of any additional consideration, into shares of Common Stock equal to the value of this Warrant (or the portion thereof being converted) by (a) surrendering this Warrant to the Secretary of the Company for cancellation and (b) delivering a duly completed and executed notice of such conversion election in substantially the form attached hereto as Exhibit A  to the Secretary of the Company, in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:

	  	  	  	  	  	  	  
	  	  	 X=	  	
Y (A - B)

	
  

	  
	 	 	 	 	A	 	 

                                                                  

	  	  	  	  	  
	
Where:

	
  

	
X =

	
  

	
The number of shares of Common Stock to be issued to the Holder pursuant to this conversion;

	  	  	  
	  	
  

	
Y =

	
  

	
The number of shares of Common Stock in respect of which the election to convert is made;

	  	  	  
	  	
  

	
A =

	
  

	
The average of the Market Price of one share of the Common Stock for the ten (10) trading days immediately prior to the Conversion Date; and

	  	  	  
	  	
  

	
B =

	
  

	
The Warrant Price.

 

 

 This Warrant shall be deemed to have been converted immediately prior to the close of business on the date the Secretary of the Company is in receipt of this Warrant and a duly completed and executed notice of conversion election in substantially the form attached hereto as Exhibit A (the “ Conversion Date ”), and the person entitled to receive the Warrant Shares issuable upon such conversion shall be treated for all purposes as the holder of such shares of record as of the close of business on the Conversion Date. As promptly as practicable after the Conversion Date, and in any event within thirty (30) days after such Conversion Date, the Company shall issue and deliver to such holder a certificate or certificates for the number of full Warrant Shares issuable upon such conversion. If converted in part, the Company shall deliver to the Holder a new Warrant, identical in form, in the name of the Holder, evidencing the right to purchase the number of Warrant Shares as to which this Warrant has not been converted, which new Warrant shall be signed by a duly authorized officer of the Company.

 

4.   Adjustments and Notices. The Warrant Price and/or the Warrant Shares shall be subject to adjustment from time to time in accordance with this Section 4. The Warrant Price and/or the Warrant Shares shall be adjusted to reflect all of the following events that occur on or after the date of issuance.

 

 

	 (a)   Subdivision, Stock Dividends or Combinations. In case the Company shall at any time subdivide the outstanding shares of Common Stock or shall issue a stock dividend with respect to the Common Stock, the Warrant Price in effect immediately prior to such subdivision or the issuance of such dividend shall be proportionately decreased, and the number of Warrant Shares for which this Warrant may be exercised immediately prior to such subdivision or the issuance of such dividend shall be proportionately increased. In case the Company shall at any time combine the outstanding shares of Common Stock, the Warrant Price in effect immediately prior to such combination shall be proportionately increased, and the number of Warrant Shares for which this Warrant may be exercised immediately prior to such combination shall be proportionately decreased. In each of the foregoing cases, the adjustment shall be effective at the close of business on the date of such subdivision, dividend or combination, as the case may be.
	 	 
	 (b)   Reorganization, Reclassification, Exchange, Consolidation, Substitution, In-Kind Distribution, Merger or Sale of Assets. If, prior to the termination of this Warrant, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock shall be changed into the same or a different number of shares of the same or another class or classes of stock or securities of the Company or another entity, then the Holder shall thereafter have the right to purchase and receive upon the terms and conditions specified in this Warrant and in lieu of the Warrant Shares immediately theretofore purchasable and receivable upon the exercise of the Warrant, such shares of stock and/or securities as may be issued or payable with respect to or in exchange 
	 	 

 

   

  

  

  

 

 

 

	 for the number of Warrant Shares immediately theretofore purchasable and receivable upon the exercise of the Warrant had such merger, consolidation, exchange of shares, recapitalization or reorganization not taken place, and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Warrant Price and of the number of shares purchasable upon the exercise of the Warrant) shall thereafter be applicable, as nearly as may be practicable in relation to any shares of stock or securities thereafter deliverable upon the exercise hereof.
	 	 
	 (c)   Certificate of Adjustment. In each case of an adjustment or readjustment of the Warrant Price or the number of Warrant Shares that may be purchased hereunder pursuant to this Section 4, the Company shall promptly mail to the Holder a certificate setting forth (i) a brief statement of the facts requiring such adjustment, (ii) the Warrant Price after such adjustment and (iii) the kind and amount of stock or other securities or property into which this Warrant shall be exercisable after such adjustment.
	 	 
	 (d)   No Impairment. The Company shall not, by amendment of its charter, by-laws or other organizational documents, or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Warrant by the Company, but shall subject to Section 9 at all times in good faith assist in carrying out all of the provisions of this Section 4 and in taking all such action as may be necessary or appropriate to protect the Holder’s rights under this Section 4 against impairment.
	 	 
	 (e)   Fractional Shares. No fractional shares shall be issuable upon exercise or conversion of the Warrant and the number of shares to be issued shall be rounded down to the nearest whole share. If a fractional share interest arises upon any exercise or conversion of the Warrant, the Company shall eliminate such fractional share interest by paying the Holder an amount computed by multiplying the fractional interest by the fair market value of a full share.
	 	 

 

 

    5.   No Stockholder Rights. This Warrant, by itself, as distinguished from any shares purchased hereunder, shall not entitle the Holder to any of the rights of a stockholder of the Company.

 

6.   Reservation of Stock; Due Issuance; Listing. The Company will reserve from its authorized and unissued stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of this Warrant. Issuance of this Warrant shall constitute full authority to the Company’s officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares issuable upon the exercise of this Warrant. The Warrant Shares, when issued pursuant to the exercise of this Warrant, will be duly and validly issued, fully paid and nonassessable, not subject to any preemptive rights and free from all taxes, liens, charges and other encumbrances with respect to the issuance thereof other than those created by or imposed upon the Holder thereof through no action by the Company. The Company has secured or will secure, prior to issuance, the listing of the shares of Common Stock issuable upon exercise of or otherwise pursuant to this Warrant upon the Nasdaq Stock Market (subject to official notice of issuance upon exercise of this Warrant) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all shares of Common Stock from time to time issuable upon the exercise of or otherwise pursuant to this Warrant.

 

7.   Transfer of Warrant.

 

 

	 (a)   By the acceptance of this Warrant, the Holder hereby acknowledges and covenants that this Warrant and any stock purchased pursuant thereto are and will be held for investment and not for distribution.
	 	 
	 (b)   The Warrant Shares shall be issued upon exercise of this Warrant only in compliance with the Act and applicable state securities laws. If, at the time of issuance of the Warrant Shares, no registration statement is in effect with respect to such shares under applicable provisions of the Act, the Company may, if reasonably necessary to comply with applicable securities laws, require that the Holder provide the Company with written reconfirmation of the Holder’s investment intent and that any stock certificate delivered to the Holder of a surrendered Warrant shall bear legends reading substantially as follows:
	 	 
	 (i)   TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE WARRANT PURSUANT TO WHICH THESE SHARES WERE PURCHASED FROM THE COMPANY. COPIES OF THOSE RESTRICTIONS ARE ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY, AND NO TRANSFER OF SUCH SHARES OR OF THIS CERTIFICATE, OR OF ANY SHARES OR OTHER SECURITIES (OR CERTIFICATES THEREFOR) ISSUED IN EXCHANGE FOR OR IN RESPECT OF SUCH SHARES, SHALL BE EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS THEREIN SET FORTH SHALL HAVE BEEN COMPLIED WITH.
	 	 
	 (ii)   THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER 

 

 

 

  

  

  

 

 

	THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS.
	 	 
	 (iii)   Any legends required by the laws of the States of Delaware or California.
	 	 

 

In addition, so long as the foregoing legends may remain on any stock certificate delivered to the Holder, the Company may maintain appropriate “stop transfer” orders with respect to such certificates and the shares represented thereby on its books and records and with those to whom it may delegate registrar and transfer functions.

 

 

	 (c)   This Warrant and the Warrant Shares issuable upon exercise of this Warrant may be transferred or assigned in whole or in part (i) if the assignee has agreed in writing for the benefit of the Company to be bound by all of the provisions of this warrant as if such assignee were the original Holder hereof, and (ii) if such transfer is in compliance with applicable federal and state securities laws by the transferor and the assignee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate (as such term is defined under the Act) of Holder or if there is no material question as to the availability of current information as referenced in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e) in reasonable detail, the selling broker represents that it has complied with Rule 144(f), and the Company is provided with a copy of Holder’s notice of proposed sale.
	 	 
	 (d)   Subject to the provisions of Section 7(c) above, Holder may transfer all or part of this Warrant or the Warrant Shares issuable upon exercise of this Warrant by delivering an executed copy of the Assignment form attached as Exhibit B hereto and providing the Company notice of the portion of the Warrant being transferred setting forth the name, address and taxpayer identification number of the assignee and surrendering this Warrant to the Company for reissuance to the assignee(s) (and Holder, if applicable). The terms and conditions of this Warrant shall inure to the benefit of, and be binding upon, the Company and the holders hereof and their respective permitted successors and assigns. 

 

8.   Registration Rights. The Company has the obligation to register the Warrant Shares as set forth in the Asset Purchase Agreement.

 

9.   Expiration Date. This Warrant shall terminate and be null, void and non-exercisable at 5:00 p.m. Pacific Time on December 31, 2012 (the “ Expiration Date ”).

 

10. Notices of Certain Transactions. In case:

 

  (a)   of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity), or any transfer of all or substantially all of the assets of the Company, or

 

  (b)   of the voluntary or involuntary dissolution, liquidation or winding-up of the Company, or

 

  (c)   the Company shall declare any cash dividend upon its Common Stock,

 

then, and in each such case, the Company will mail or cause to be mailed to the Holder of this Warrant a notice specifying the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up) are to be determined. Such notice shall be mailed at least ten (10) days prior to the record date or effective date for the event specified in such notice.

 

11.  Governing Law. This Warrant shall be governed by the laws of the State of California, as such laws are applied to contracts to be entered into and performed entirely in California by California residents.

 

12.  Amendments. Neither this Warrant nor any term hereof may be changed or waived orally, but only by an instrument in writing signed by the Company and the Holder.

 

13.  Notices. Any notice required or contemplated by this Warrant shall be deemed to have been duly given, made or transmitted (i) if hand delivered and a receipt obtained therefor, on the date of the hand delivery, or (ii) two days after it is (a) mailed, postage prepaid, by registered or certified mail, return receipt requested, or (b) sent by telex, or (c) delivered to the telegraph office, in each case, addressed to the Company at its principal office, or to the Holder at the address set forth on the first page of this Warrant, or at any other address or addresses as the Holder may specify in a written notice so 

 

 

  

  

  

 

 

given to the Company.

 

14.  Loss, Theft, Destruction or Mutilation. Upon receipt of evidence satisfactory to the Company of the ownership of and the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security satisfactory to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same aggregate number of shares of Common Stock.

15. Miscellaneous. The headings in this Warrant are for purposes of convenience and reference only, and shall not be deemed to constitute a part hereof.

 

 

	ISSUED:   October 8, 2010	 	 
	 	 	 	 
	ROVI COPRORATION	 	 
	 	 	 	 
	 By:	   /s/ Alfred J. Amoroso	 	 
	 	 	 	 
	 Name:     	   Alfred J. Amoroso	 	 
	 	 	 	 
	 Title:	   Chief Executive Officer	 	 

 

  

  

  

 

Exhibit A

 

NOTICE OF EXERCISE

 

	
TO:

	
ROVI CORPORATION

 

	  	
1.

	
Pursuant to Section 2 of the Warrant, the undersigned hereby elects to purchase _________ shares

of Common Stock of the Company pursuant to the terms of the attached Warrant, and tenders herewith the Exercise Payment for such shares in full.

 

	  	
2.

	
Pursuant to Section 3 of the Warrant, the undersigned hereby elects to convert _______ shares

of Common Stock pursuant to the terms of the attached Warrant.

 

	  	
3.

	
Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned

or in such other name as is specified below:

 

 

	
 

 

	 (Name in which certificate(s) are to be issued)
	 
	 
	 
	 (Address)
	 

 

	 	 
	 (Name of Warrant Holder)	 
	 	 

 

	 By:	 
	 	 
	 	 
	 Title: 	 
	 	 
	 	 
	 Date signed:	 

 

 

 

 

  

  

  

Exhibit B

 

ASSIGNMENT FORM

 

 

FOR VALUE RECEIVED, _________________________________________ hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant with respect to the number of shares of Common Stock covered thereby set forth below, to:

 

	  	  	  	  	  
	

Name of Assignee

	  	

Address/Fax Number

	
  

	
No. of 

Shares

	
  

 

 

	  	  	
  

	  

 

and does hereby irrevocably constitute and appoint _____________ as Attorney-in-Fact to make such transfer on the books of the Company, maintained for the purpose, with full power of substitution in the premises.

 

The undersigned also represents that, by assignment hereof, and the Assignee acknowledges that the Warrant and the shares of Common Stock to be issued upon exercise hereof are being acquired for investment and that the Assignee will not offer, sell or otherwise dispose of the Warrant or any shares of Common Stock issued upon exercise thereof except in compliance with the registration provisions of the Securities Act of 1933, as amended, and applicable state securities laws, or exemptions from such registration or qualification requirements. Further, the Assignee hereby acknowledges that upon exercise of this Warrant, the Assignee shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the shares of Common Stock so purchased are being acquired for investment and not with a view to distribution or resale thereof. The Assignee hereby agrees to the terms and conditions of the Warrant in all respects as assignee of the Warrant and agrees to be bound by the provisions thereof.

 

	  	  	  	  	  	  	  	  	  
	  	  	  	  	  
	
Dated:

	  	  	  	  	  	
Signature:

	  	  
	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  	  	
Witness:

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