EXHIBIT 10.38
XXX.XXX, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of December 14,
1998, is made by and between XXX.XXX, INC. (the "COMPANY"), and XXXXXXX X.
XXXXX ("EXECUTIVE").
1. DUTIES AND SCOPE OF EMPLOYMENT.
(a) POSITION. The Company shall employ Executive as the Chief
Executive Officer of the Company reporting to the Board of Directors of the
Company (the "Board") and shall appoint Executive as a member of the Board.
The Board agrees to nominate Executive for re-election to the Board so long
as Executive is the Company's Chief Executive Officer. As Chief Executive
Officer of the Company, Executive shall have the duties and responsibilities
customarily associated with such position, including senior management powers
and responsibilities for the Company's business and affairs.
(b) OBLIGATIONS. Executive shall devote his full business efforts
and time to the Company. Executive agrees not to engage actively in any other
employment, occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the Board; provided, however, that
Executive may serve in any capacity with any civic, educational or charitable
organization, or as a member of corporate boards of directors or committees
thereof, including those upon which Executive currently serves, without the
approval of the Board, so long as such activities do not interfere with his
duties and obligations under this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been conducted by
Executive prior to the date of this Agreement, the continued conduct of such
activities (or the conduct of activities similar in scope or nature thereto)
shall not be deemed to interfere with the performance of Executive's
responsibilities to the Company. Notwithstanding anything to the contrary set
forth herein, nothing herein shall be deemed to restrict Executive's right to
continue to manage his personal investments, provided that Executive may not
own more than two percent (2%) of the outstanding securities of any other
corporation or entity that is or may be competitive with the Company or with
any corporation or entity that directly or indirectly controls, is controlled
by, or is under common control with the Company..
2. TERM. Executive's employment with the Company pursuant to this
Agreement shall commence on January 7, 1999 (the "Effective Date") and shall
continue, subject to the terms and conditions herein set forth, until
terminated by either or both parties.
3. EMPLOYEE BENEFITS. During his employment hereunder, Executive
shall be eligible to participate in: (i) all employee pension and retirement
benefit plans currently and hereafter maintained by the Company, including,
without limitation, incentive, profit-sharing, savings, deferred compensation
and retirement plans, practices, policies and programs according to their
terms; (ii) all employee health and welfare benefit plans currently and
hereinafter maintained by the Company, including, without limitation, life,
group health and disability insurance, plans, policies and programs according
to their terms; and (iii) such other employee benefits as are set forth in
this Agreement.
1
4. COMPENSATION.
(a) BASE SALARY. The Company shall pay Executive as compensation
for his services a base salary at the annualized rate of three hundred
thousand dollars ($300,000) (the "Base Salary"). The Base Salary shall be
paid periodically in accordance with normal Company payroll practices and
subject to the usual required withholding, and shall be reviewed annually for
possible adjustment in light of Executive's performance of his duties and the
Company's profitability and other relevant factors, as determined by the
Board or the Compensation Committee of the Board (the "Compensation
Committee"). Executive understands and agrees that neither his job
performance nor promotions, commendations, bonuses or the like from the
Company give rise to or in any way serve as the basis for modification or
amendment, by implication or otherwise, of this Agreement.
(b) ANNUAL BONUS. For each of the Company's fiscal years,
commencing with the Company's 1999 fiscal year and for each fiscal year
thereafter as long as this Agreement is in effect, Executive shall be
eligible for an annual bonus (the "Annual Bonus"), provided that certain
personal and corporate performance targets to be set by the Compensation
Committee are met or exceeded. Such performance targets shall be adopted by
the Compensation Committee after discussion with Executive within ninety (90)
days after the start of the Company's fiscal year, and a copy shall be
delivered in writing to Executive within fifteen (15) days thereafter. The
Compensation Committee, in its sole discretion, shall determine whether such
goals have been achieved. Executive's target bonus ("Target Bonus") for each
year shall be no less than one-third of Executive's Base Salary for such
year. The Annual Bonus shall be paid in accordance with normal company
executive bonus payment practice and subject to the usual required
withholding, and, subject to Sections 6 and 7 below, the payment of any
portion of the Annual Bonus shall also be contingent on Executive still being
employed by the Company as of the regular date of payment for such portion of
the Annual Bonus.
(c) STOCK OPTION. Upon commencement of employment, Executive
shall be granted a compensatory stock option with a term of ten (10) years to
purchase six hundred thousand (600,000) shares of the common stock of the
Company (the "Option"), which shall be issued under the Company's 1997 Equity
Incentive Plan. To the maximum extent possible the Option shall be an
incentive stock option as such term is defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). The shares covered by the
Option shall vest and become exercisable over a period of sixty (60) months:
ten percent (10%) of the shares covered by the Option shall vest six (6)
months after the date of grant of the Option and the remaining shares covered
by the Option shall vest and become exercisable on a daily basis thereafter.
The exercise price per share for the shares covered by the Option shall be
the exercise price per share of the common stock of the Company determined as
of the date of the grant. All other terms and conditions of the Option shall
be the standard terms and conditions used in the standard form of stock
option agreement used by the Company.
5. EXPENSES. The Company shall pay or reimburse Executive for
reasonable travel, entertainment or other expenses incurred by Executive in
the furtherance of or in connection with the performance of Executive's
duties hereunder in accordance with the Company's established policies.
2
6. SEVERANCE BENEFITS.
(a) CERTAIN INVOLUNTARY TERMINATIONS OR TERMINATIONS WITH GOOD
REASON. If Executive's employment with the Company terminates involuntarily
other than for Cause (as defined below), death, or physical or mental
disability which prevents Executive from satisfactorily performing the normal
duties and responsibilities of his office in the good faith determination of
the Board for a period of more than one hundred twenty (120) consecutive days
("Disability")), or if Executive terminates his employment with the Company
voluntarily with Good Reason (as defined below), then, subject to the
limitations and conditions of Section 8 below: (i) Executive shall be
entitled to receive Base Salary continuation payments at the Base Salary rate
in effect on the date of termination, paid on a monthly basis, for twelve
(12) months after the date of termination, in addition to any accrued but
unpaid Base Salary, bonus payments, and/or accrued and unused vacation; (ii)
each of Executive's outstanding stock options and restricted stock awards
shall have their vesting and exercisability schedules accelerated by a period
of one (1) year as of the date of termination; (iii) Executive shall be
entitled to receive bonus continuation payments totaling the Target Bonus in
effect on the date of termination, paid on a monthly basis, for twelve (12)
months after the date of termination; and (iv) if at the time of termination
Executive is covered by the Company's group health plan, the Company shall
provide to Executive, subject to Executive and his eligible spouse and/or
dependents electing continuation coverage under COBRA, one hundred percent
(100%) Company-paid group health coverage at the same level of coverage as
was provided to Executive immediately prior to the date of termination (the
"Company-Paid Coverage"). If such coverage included Executive's spouse and/or
dependents immediately prior to the date of termination, such spouse and/or
dependents shall also be covered at Company expense. Company-Paid Coverage
shall continue until the earlier of (x) twelve (12) months from the date of
termination, or (y) the date that Executive and his spouse and/or dependents
become covered under another employer's group health plan that provides
Executive and his spouse and/or dependents with comparable benefits and
levels of coverage. In no event shall Executive be obligated to seek other
employment or take any other action to mitigate the amounts payable to
Executive hereunder.
For purposes of this Agreement, "Cause" is defined as Executive's: (i)
gross negligence or willful misconduct in connection with the performance of
his duties hereunder which in the written determination of a majority of the
Board has not been cured within thirty (30) days following receipt by
Executive of written notice from the Board identifying such acts of gross
negligence or willful misconduct; (ii) commission of a felony (other than a
traffic-related offense) which in the written determination of a majority of
the Board has caused material injury to the Company's business; (iii)
dishonesty with respect to a significant matter relating to the Company's
business and intended to result in personal enrichment of Executive or his
family at the expense of the Company; or (iv) material breach of this
Agreement or any agreement by and between Executive and the Company, which
material breach has not been cured within thirty (30) days following receipt
by Executive of written notice from the Board identifying such willful
material breach.
For purposes of this Agreement, "Good Reason" is defined as: (i) any
material reduction of Executive's duties, authority or responsibilities
relative to Executive's duties, authority, or responsibilities as in effect
immediately prior to such reduction (including, without limitation, Executive
ceasing to be Chief Executive Officer of the Company and/or ceasing to report
to the
3
Board), except if agreed to in writing by Executive; (ii) a reduction by the
Company in the Base Salary or Target Bonus opportunity of Executive as in
effect immediately prior to such reduction; (iii) the relocation of Executive
to a facility or a location more than thirty-five (35) miles from Executive's
then present location, without Executive's written consent; (iv) any material
breach of this Agreement by the Company, which material breach has not been
cured within thirty (30) days following receipt by the Company's Chief
Financial Officer of written notice from the Executive identifying such
material breach; (v) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company; or (vi) if, after
any Change in Control (as defined below), Executive is not, or does not
become, Chief Executive Officer of the combined or acquiring entity,
reporting to its Board of Directors; and
(b) CERTAIN TERMINATIONS ON DEATH OR DISABILITY. If Executive's
employment with the Company terminates involuntarily for death or Disability
on or prior to January 1, 2001, each of Executive's outstanding stock options
and restricted stock awards shall have their vesting and exercisability
schedules accelerated by one (1) year as of the date of termination.
7. SEVERANCE BENEFITS IN THE EVENT OF A CHANGE OF CONTROL.
Notwithstanding any provisions of the preceding Section 6 of this Agreement,
if within eighteen (18) months following the date of a Change of Control (as
defined below) of the Company, Executive's employment with the Company
terminates involuntarily other than for Cause, death or Disability, or if
within such eighteen (18) month period, Executive terminates his employment
with the Company voluntarily with Good Reason, then, subject to the
limitations and conditions of Section 8 below: (i) Executive shall be
entitled to receive Base Salary continuation payments at the Base Salary rate
in effect on the date of termination, paid on a monthly basis, for twelve
(12) months after the date of termination, in addition to any accrued but
unpaid Base Salary, bonus payments, and/or accrued and unused vacation; (ii)
each of Executive's outstanding stock options and restricted stock awards
shall have their vesting and exercisability schedules accelerated by eighteen
(18) months as of the date of termination; (iii) Executive shall be entitled
to receive bonus continuation payments totaling the Target Bonus in effect on
the date of termination, paid on a monthly basis, for twelve (12) months
after the date of termination; and (iv) if at the time of termination
Executive is covered by the Company's group health plan, the Company shall
provide to Executive, subject to Executive and his eligible spouse and/or
dependents electing continuation coverage under COBRA, one hundred percent
(100%) Company-paid group health coverage at the same level of coverage as
was provided to Executive immediately prior to the date of termination (the
"Company-Paid Coverage"). If such coverage included Executive's spouse and/or
dependents immediately prior to the date of termination, such spouse and/or
dependents shall also be covered at Company expense. Company-Paid Coverage
shall continue until the earlier of (x) twelve (12) months from the date of
termination, or (y) the date that Executive and his spouse and/or dependents
become covered under another employer's group health plan that provides
Executive and his spouse and/or dependents with comparable benefits and
levels of coverage. In no event shall Executive be obligated to seek other
employment or take any other action to mitigate the amounts payable to
Executive hereunder.
If Executive receives benefits under this Section 7, Executive shall not
receive any additional benefits under the preceding Section 6 of this
Agreement.
4
For purposes of this Agreement, "Change of Control" means: (i) a
dissolution or liquidation of the Company; (ii) a sale of all or
substantially all of the assets of the Company; (iii) a merger or
consolidation in which the Company is not the surviving corporation and in
which beneficial ownership of securities of the Company representing at least
fifty percent (50%) of the combined voting power entitled to vote in the
election of directors has changed; (iv) a reverse merger in which the Company
is the surviving corporation but the shares of the common stock of the
Company outstanding immediately preceding the merger are converted by virtue
of the merger into other property, whether in the form of securities, cash or
otherwise, and in which beneficial ownership of securities of the Company
representing at least fifty percent (50%) of the combined voting power
entitled to vote in the election of directors has changed; (v) an acquisition
by any person, entity or group within the meaning of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
any comparable successor provisions (excluding any employee benefit plan, or
related trust, sponsored or maintained by the Company or subsidiary of the
Company or other entity controlled by the Company) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act, or comparable successor rule) of securities of the Company representing
at least fifty percent (50%) of the combined voting power entitled to vote in
the election of directors; or, (vi) in the event that the individuals who, as
of the date of the execution of this Agreement, are members of the Company's
Board (the "Incumbent Board"), cease for any reason to constitute at least
fifty percent (50%) of the Board. (If the election, or nomination for
election by the Company's stockholders, of any new director is approved by a
vote of at least fifty percent (50%) of the Incumbent Board, such new
director shall be considered as a member of the Incumbent Board.)
In the event that the severance, acceleration of stock options and other
benefits provided for in this Agreement or otherwise payable to Executive (i)
constitute "parachute payments" within the meaning of Section 280G (as it may
be amended or replaced) of the Code and (ii) but for this paragraph, would be
subject to the excise tax imposed by Section 4999 (as it may be amended or
replaced) of the Code (the "Excise Tax"), then Executive's benefits hereunder
shall be either
(a) delivered in full, or
(b) delivered as to such lesser extent which would result in no
portion of such benefits being subject to the Excise Tax, whichever of the
foregoing amounts, taking into account the applicable federal, state and
local income taxes and the Excise Tax, results in the receipt by Executive on
an after-tax basis, of the greatest amount of benefits, notwithstanding that
all or some portion of such benefits may be taxable under the Excise Tax.
Unless the Company and Executive otherwise agree in writing, any
determination required under this paragraph shall be made in writing in good
faith by the outside accounting firm responsible for auditing the Company's
financial records (the "Accountants"). In the event of a reduction in
benefits hereunder, Executive shall be given the choice of which benefits to
reduce. For purposes of making the calculations required by this paragraph,
the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of the Code. The Company and Executive shall
furnish to the Accountants such information and documents as the Accountants
may reasonably request in order to make a determination under this paragraph.
The Company shall bear all costs
5
the Accountants may reasonably incur in connection with any calculations
contemplated by this paragraph.
8. LIMITATIONS AND CONDITIONS ON BENEFITS. The benefits and payments
provided under this Agreement shall be subject to the following terms and
limitations:
(a) WITHHOLDING TAXES. The Company shall withhold appropriate
federal, state and local income and employment taxes from any payments
hereunder.
(b) PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT PRIOR TO
RECEIPT OF EMPLOYMENT BENEFITS. Executive shall execute and deliver to the
Company a form of the Company's proprietary information and inventions
agreement, a copy of which is attached hereto as Exhibit A (the "Proprietary
Information and Inventions Agreement"), prior to the Effective Date and prior
to the receipt of any benefits under this Agreement. Additionally, Executive
agrees that all documents, records, apparatus, equipment and other physical
property which is furnished to or obtained by Executive in the course of his
employment with the Company shall be and shall remain the sole property of
the Company. Executive agrees not to make or retain copies, reproductions or
summaries of any such property, except as otherwise necessary while acting in
the normal course of business. In the event of any breach by Executive of
the Proprietary Information and Inventions Agreement, all severance benefits
payable under Sections 6 and 7 of this Agreement shall immediately terminate.
(c) EMPLOYEE AGREEMENT AND RELEASE PRIOR TO RECEIPT OF SEVERANCE
BENEFITS. If, pursuant to either Section 6 or Section 7 above, Executive's
employment with the Company terminates involuntarily other than for Cause,
death or Disability, or Executive terminates his employment with the Company
voluntarily with Good Reason, then prior to, and as a condition of the
receipt of any benefits under this Agreement on account of such termination,
Executive shall, as of the date of such termination, execute an employee
agreement and release in the form attached hereto as Exhibit B (the "Employee
Agreement and Release"). Such Employee Agreement and Release shall
specifically relate to all of Executive's rights and claims in existence at
the time of such execution and shall confirm Executive's obligations under
the Company's standard form of Proprietary Information and Inventions
Agreement. Executive has twenty-one (21) days to consider whether to execute
such Employee Agreement and Release and Executive may revoke such Employee
Agreement and Release within seven (7) days after execution of such Employee
Agreement and Release. In the event Executive does not execute such Employee
Agreement and Release with the twenty-one (21) days specified above, or if
Executive revokes such Employee Agreement and Release within the seven (7)
day period specified above, no benefits shall be payable to Executive on
account of a termination under Sections 6 or 7 of this Agreement.
9. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of (i) the heirs, executors and legal representatives of Executive
upon Executive's death and (ii) any successor of the Company. Any such
successor of the Company shall be deemed substituted for the Company under
the terms of this Agreement for all purposes. As used herein, "successor"
shall include any firm, corporation or other business entity which at any
time, whether by purchase, merger or otherwise, directly or indirectly
acquires all or substantially all of the assets
6
or business of the Company or fifty percent (50%) or more of the total voting
power represented by the Company's then outstanding voting securities.
10. NOTICES. All notices, requests, demands and other communications
called for hereunder shall be in writing and shall be deemed given (i) when
delivered personally, (ii) three (3) days after being mailed by certified
mail, (iii) one (1) business day after being sent by Federal Express or a
similar private next-business-day delivery company, or (iv) when sent by
facsimile (fax), provided that a copy is sent by certified mail on the same
day; in each case addressed to the parties or their successors in interest at
the following addresses, or at such other addresses as the parties may
designate by written notice in the manner aforesaid:
If to the Company: XXX.XXX, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attn: Chairman of the Board
Fax: 408/000-0000
If to Executive: Xxxxxxx X. Xxxxx
00000 Xxxxxxx Xxxx
Xxx Xxxxx Xxxxx, XX 00000
Home Fax: (000) 000-0000
11. SEVERABILITY. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
12. ENTIRE AGREEMENT. This Agreement represents the entire agreement
and understanding between the Company and Executive concerning Executive's
employment relationship with the Company, and supersedes and replaces any and
all prior agreements and understandings concerning Executive's employment
relationship with the Company.
13. NO ORAL MODIFICATION, CANCELLATION OR DISCHARGE. This Agreement
may only be amended, canceled or discharged in writing signed by Executive
and the Company.
14. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California.
15. DISPUTE RESOLUTION. Unless otherwise prohibited by law or
specified below, all disputes, claims, and causes of action (including but
not limited to any claims of statutory discrimination of any type), in law or
equity, arising from or relating to this Agreement or its enforcement,
performance, breach, or interpretation, shall be resolved solely and
exclusively by final, binding and confidential arbitration through Judicial
Arbitration & Mediation Services/Endispute, Inc. ("JAMS") under the then
existing JAMS arbitration rules. This arbitration shall be held in the San
Francisco Bay area. Nothing in this section is intended to prevent either
party from obtaining injunctive relief in court to prevent irreparable harm
pending the conclusion of any such arbitration. The prevailing party in any
such arbitration proceedings
7
shall be entitled to reimbursement of all reasonable costs incurred in the
course of such proceedings.
16. EFFECTIVENESS. This Agreement is effective immediately after it has
been signed by both parties.
8
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
respective dates set forth below
XXX.XXX, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxxx
Chairman and Chief Executive Officer
XXXXXXX XXXXX
/s/ Xxxxxxx Xxxxx
-------------------------------------
Signature
9
EXHIBIT A
XXX.XXX, INC.
FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
In consideration of my employment or continued employment by XXX.XXX,
INC. (the "Company"), and the compensation now and hereafter paid to me, I
hereby agree as follows:
1. RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during the term of my employment and thereafter, I will hold in strictest
confidence and will not disclose, use, lecture upon or publish any of the
Company's Proprietary Information (defined below), except as such disclosure,
use or publication may be required in connection with my work for the Company
and an officer of the Company expressly authorizes such in writing. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns and the Company and its assigns shall
be the sole owner of all trade secret rights, patent rights, copyrights, mask
work rights, trade secret rights and all other rights throughout the world
(collectively, "Proprietary Rights") in connection therewith.
The term "Proprietary Information" shall mean trade secrets,
confidential knowledge, data or any other proprietary information of the
Company. By way of illustration but not limitation, "Proprietary
Information" includes (a) trade secrets, inventions, mask works, ideas,
processes, formulas, source and object codes, data, programs, other works of
authorship, cell lines, know-how, improvements, discoveries, developments,
designs and techniques (hereinafter collectively referred to as
"Inventions"); and (b) information regarding plans for research, development,
new products, marketing and selling, business plans, budgets and unpublished
financial statements, licenses, prices and costs, suppliers and customers;
and information regarding the skills and compensation of other employees of
the Company.
2. THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("Third Party Information") subject
to a duty on the Company's part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the term
of my employment and thereafter, I will hold Third Party Information in the
strictest confidence and will not disclose (to anyone other than Company
personnel who need to know such information in connection with their work for
the Company) or use, except in connection with my work for the Company, Third
Party Information unless expressly authorized by an officer of the Company in
writing.
3. ASSIGNMENT OF INVENTIONS.
3.1 ASSIGNMENT. I hereby assign to the Company all my right,
title and interest in and to any and all Inventions (and all Proprietary
Rights with respect thereto) whether or not patentable or registrable under
copyright or similar statutes, made or conceived or reduced to practice or
learned by me, either alone or jointly with others, during the period of my
employment with the Company. Inventions assigned to or as directed by the
Company by this
1
paragraph 3 are hereinafter referred to as "Company Inventions." I recognize
that this Agreement does not require assignment of any invention which
qualifies fully for protection under Section 2870 of the California Labor
Code (hereinafter "Section 2870"), which provides as follows:
(1) Any provision in an employment agreement which provides that
an employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the
employer's equipment, supplies, facilities, or trade secret information
except for those inventions that either:
(A) Relate at the time of conception or reduction to practice
of the invention to the employer's business, or actual or demonstrably
anticipated research or development of the employer.
(B) Result from any work performed by the employee for the
employer.
(2) To the extent a provision in an employment agreement purports
to require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (i), the provision is against the
public policy of this state and is unenforceable.
3.2 GOVERNMENT. I also assign to or as directed by the Company
all my right, title and interest in and to any and all Inventions, full title
to which is required to be in the United States by a contract between the
Company and the United States or any of its agencies.
3.3 WORKS FOR HIRE. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the
scope of my employment and which are protectable by copyright are "works made
for hire," as that term is defined in the United States Copyright Act (17
U.S.C., Section 101).
4. ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company in
every proper way to obtain and from time to time enforce United States and
foreign Proprietary Rights relating to Company Inventions in any and all
countries. To that end I will execute, verify and deliver such documents and
perform such other acts (including appearances as a witness) as the Company
may reasonably request for use in applying for, obtaining, perfecting,
evidencing, sustaining and enforcing such Proprietary Rights and the
assignment thereof. In addition, I will execute, verify and deliver
assignments of such Proprietary Rights to the Company or its designee. My
obligation to assist the Company with respect to Proprietary Rights relating
to such Company Inventions in any and all countries shall continue beyond the
termination of my employment, but the Company shall compensate me at a
reasonable rate after my termination for the time actually spent by me at the
Company's request on such assistance.
In the event the Company is unable for any reason, after reasonable
effort, to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate
and appoint the Company and its duly authorized officers and agents as my
agent and attorney in fact, which appointment is coupled with an interest, to
act for and in my behalf to execute, verify and file any such documents and
to do all
2
other lawfully permitted acts to further the purposes of the preceding
paragraph thereon with the same legal force and effect as if executed by me.
I hereby waive and quitclaim to the Company any and all claims, of any nature
whatsoever, which I now or may hereafter have for infringement of any
Proprietary Rights assigned hereunder to the Company.
5. OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for six (6) months after termination of my employment with the
Company, I will promptly disclose to the Company fully and in writing and
will hold in trust for the sole right and benefit of the Company any and all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others. In addition, after termination of my employment, I will
promptly disclose to the Company all patent applications filed by me or on my
behalf within a year after termination of employment. At the time of each
such disclosure, I will advise the Company in writing of any Inventions that
I believe fully qualify for protection under Section 2870; and I will at that
time provide to the Company in writing all evidence necessary to substantiate
that belief. I understand that the Company will keep in confidence and will
not disclose to third parties without my consent any proprietary information
disclosed in writing to the Company pursuant to this Agreement relating to
Inventions that qualify fully for protection under the provisions of Section
2870. I will preserve the confidentiality of any Invention that does not
fully qualify for protection under Section 2870. I agree to keep and
maintain adequate and current records (in the form of notes, sketches,
drawings and in any other form that may be required by the Company) of all
Proprietary Information developed by me and all Inventions made by me during
the period of my employment at the Company, which records shall be available
to an remain the sole property of the Company at all times.
6. PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
which I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible
uncertainty, I have set forth on Exhibit A attached hereto a complete
disclosure of all Inventions that I have, alone or jointly with others,
conceived, developed or reduced to practice or caused to be conceived,
developed or reduced to practice prior to the commencement of my employment
with the Company, that I consider to be my property or the property of third
parties and that I wish to have excluded from the scope of this Agreement.
If disclosure of any such Invention on Exhibit A would cause me to violate
any prior confidentiality agreement, I understand that I am not to disclose
such Inventions on Exhibit A. Instead, I am to disclose in the applicable
space on Exhibit A, only a cursory name for each such Invention, a listing of
the party(s) to whom it belongs and the fact that full disclosure as to such
Invention has not been made for that reason.
7. ADDITIONAL ACTIVITIES. I agree that during the period of my
employment by the Company I will not, without the Company's express written
consent, engage in any employment or business activity other than for the
Company. As further assurance that I will not improperly use or disclose any
Proprietary Information of the Company, I agree that, for the period of my
employment by the Company and for one (l) year after the date of termination
of my employment by the Company, I will not (i) solicit or induce any
employee of the Company to leave the employ of the Company or (ii) solicit
the business of any customer of the Company (other than, prior to termination
of my employment, on behalf of the Company and, after termination of my
employment, with respect to products or services of a type not supplied by
the Company).
3
If any restriction set forth in this Section is found by any court
of competent jurisdiction to be unenforceable because it extends for too long
a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum
period of time, range of activities or geographic area as to which it may be
enforceable.
8. NO IMPROPER USE OF MATERIALS. During my employment by the Company
I will not improperly use or disclose any confidential information or trade
secrets, if any, of any former employer or any other person to whom I have an
obligation of confidentiality, and I will not bring onto the premises of the
Company any unpublished documents or any property belonging to any former
employer or any other person to whom I have an obligation of confidentiality
unless previously and specifically consented to in writing by that former
employer or person. I will use in the performance of my duties only
information which is generally known and used by persons with training and
experience comparable to my own, which is common knowledge in the industry or
otherwise legally in the public domain, or which is otherwise provided or
developed by the Company or by me while employed by the Company.
9. NO CONFLICTING OBLIGATION. I represent that my performance of all
the terms of this Agreement and as an employee of the Company does not and
will not breach any agreement or obligation of mine relating to any time
prior to my employment by the Company. I have not entered into, and I agree
I will not enter into, any agreement either written or oral in conflict
herewith.
10. RETURN OF COMPANY DOCUMENTS. When I leave the employ of the
Company, I will deliver to the Company any and all drawings, notes,
memoranda, specifications, devices, formulas, molecules, cells and documents,
together with all copies thereof, and any other material containing or
disclosing any Company Inventions, Third Party Information or Proprietary
Information of the Company, whether kept at the Company, home or elsewhere.
I further agree that any property situated on the Company's premises and
owned by the Company, including disks and other storage media, filing
cabinets or other work areas, is subject to inspection by Company personnel
at any time with or without notice. Prior to leaving, I will cooperate with
the Company in completing and signing the Company's termination statement for
technical and management personnel confirming the above and my obligations
under this Agreement.
11. LAW AND REMEDIES. I understand that the unauthorized taking of the
Company's trade secrets (i) could result in civil liability under California
Civil Code Section 3426, and that, if willful, could result in an award for
triple the amount of the Company's damages and attorneys' fees; and (ii) is a
crime under California Penal Code Section 499(c), punishable by imprisonment
for a time not exceeding one year, or by a fine not exceeding five thousand
dollars ($5,000), or by both. Because my services are personal and unique
and because I may have access to and become acquainted with the Proprietary
Information of the Company, the Company shall have the right to enforce this
Agreement and any of its provisions by injunction, specific performance or
other equitable relief, without bond and without prejudice to any other
rights and remedies that the Company may have for a breach of this Agreement.
4
12. NOTICES. Any notices required or permitted hereunder shall be
given to the appropriate party at the address specified below or at such
other address as the party shall specify in writing. Such notice shall be
deemed given upon personal delivery to the appropriate address or if sent by
certified or registered mail, three days after the date of mailing.
13 GENERAL PROVISIONS.
13.1 GOVERNING LAW. This Agreement will be governed by and
construed according to the laws of the State of California without respect to
its choice of law provisions.
13.2 ENTIRE AGREEMENT. This Agreement is the final, complete and
exclusive agreement of the parties with respect to the subject matter hereof
and supersedes and merges all prior discussions between us. No modification
of or amendment to this Agreement, nor any waiver of any rights under this
Agreement, will be effective unless in writing and signed by the party to be
charged therewith. Any subsequent change or changes in my duties, salary or
compensation will not affect the validity or scope of this Agreement. As
used in this Agreement, the period of my employment includes any time during
which I may be retained by the Company as a consultant.
13.3 SEVERABILITY. If one or more of the provisions in this
Agreement are deemed unenforceable by law, then such provision will be deemed
stricken from this Agreement and the remaining provisions will continue in
full force and effect.
13.4 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon
my heirs, executors, administrators and other legal representatives and will
be for the benefit of the Company, its successors, and its assigns.
13.5 SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the
Company to any successor in interest or other assignee.
13.6 EMPLOYMENT. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of my
employment by the Company, nor shall it interfere in any way with my right or
the Company's right to terminate my employment at any time, with or without
cause.
13.7 WAIVER. No waiver by the Company of any breach of this
Agreement shall be a waiver of any preceding or succeeding breach. No waiver
by the Company of any right under this Agreement shall be construed as a
waiver of any other right. The Company shall not be required to give notice
to enforce strict adherence to all terms of this Agreement.
This Agreement shall be effective as of the first day of my employment
with the Company, namely: January 7, 1999.
I UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO INVENTIONS I MAKE
DURING MY EMPLOYMENT, AND RESTRICTS MY RIGHT TO DISCLOSE OR USE THE COMPANY'S
CONFIDENTIAL INFORMATION DURING OR SUBSEQUENT TO MY EMPLOYMENT.
5
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT.
/s/ Xxxxxxx X. Xxxxx
-------------------------------------
XXXXXXX X. XXXXX
Address:
00000 Xxxxxxx Xxxx
Xxx Xxxxx Xxxxx, XX 00000
ACCEPTED AND AGREED TO:
XXX.XXX, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------
XXXXX X. XXXXXXXXX,
Chairman of the Board
Address: XXX.XXX, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
6
EXHIBIT A.2
XXX.XXX, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
Gentlemen:
1. Except as noted in Section 2 below, the following is a complete
disclosure of all inventions or improvements relevant to the subject matter
of my employment by XXX.XXX, Inc. (the "Company") that have been made or
conceived or first reduced to practice by me alone or jointly with others
prior to my engagement by the Company:
No inventions or improvements.
See below:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Additional sheets attached.
2. Due to a prior confidentiality agreement, I cannot complete the
disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality
with respect to which I owe to the following party(s):
INVENTION OR IMPROVEMENT PARTY(S) RELATIONSHIP
1. ------------------------------ ----------- ----------------------
2. ------------------------------ ----------- ----------------------
3. ------------------------------ ----------- ----------------------
Additional sheets attached.
3. I propose to bring to my employment the following devices,
materials and documents of a former employer or other person to whom I have
an obligation of confidentiality that are not generally available to the
public, which materials and documents may be used in my employment pursuant
to the express written authorization of my former employer or such other
person (a copy of which is attached hereto):
1
No material.
See below:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Additional sheets attached.
Effective as of January 7, 1999.
Very truly yours,
/s/ Xxxxxxx X. Xxxxx
---------------------------------------
Xxxxxxx X. Xxxxx
2
EXHIBIT B
XXX.XXX, INC.
EMPLOYEE AGREEMENT AND RELEASE
I UNDERSTAND AND AGREE COMPLETELY TO THE TERMS SET FORTH IN THE
FOREGOING AGREEMENT.
I hereby confirm my obligations under the Company's standard form of
proprietary information agreement.
I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A general release does not
extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor." I hereby expressly waive
and relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to my release of any claims I may
have against the Company.
Except as otherwise set forth in this Agreement, I hereby release,
acquit and forever discharge the Company, its parents and subsidiaries, and
their officers, directors, agents, servants, employees, shareholders,
successors, assigns and affiliates, of and from any and all claims,
liabilities, demands, causes of action, costs, expenses, attorneys fees,
damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed (other than any claim for indemnification I may have as a
result of any third party action against me based on my employment with the
Company), arising out of or in any way related to agreements, events, acts or
conduct at any time prior to and including the Effective Date of this
Agreement, including but not limited to: all such claims and demands directly
or indirectly arising out of or in any way connected with my employment with
the Company or the termination of that employment, including but not limited
to, claims of intentional and negligent infliction of emotional distress, any
and all tort claims for personal injury, claims or demands related to salary,
bonuses, commissions, stock, stock options, or any other ownership interests
in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law or cause of action including, but not limited to,
the federal Civil Rights Act of 1964, as amended; the federal Age
Discrimination in Employment Act of 1967, as amended ("ADEA"); the federal
Americans with Disabilities Act of 1990; the California Fair Employment and
Housing Act, as amended; tort law; contract law; wrongful discharge;
discrimination; fraud; defamation; emotional distress; and breach of the
implied covenant of good faith and fair dealing; provided, however, that
nothing in this paragraph shall be construed in any way to release the
Company from its obligation to indemnify you pursuant to the Company's
Indemnification Agreement and to provide you with continued coverage under
the Company's directors and officers liability insurance policy to the same
extent that it has provided such coverage to previously departed officers and
directors of the Company.
I acknowledge that I am knowingly and voluntarily waiving and releasing
any rights I may have under ADEA. I also acknowledge that the consideration
given for the waiver and release in the preceding paragraph hereof is in
addition to anything of value to which I was
1
already entitled. I further acknowledge that I have been advised by this
writing, as required by the ADEA, that: (A) my waiver and release do not
apply to any rights or claims that may arise after the Effective Date of this
Agreement; (B) I have the right to consult with an attorney prior to
executing this Agreement; (c) I have twenty-one (21) days to consider this
Agreement (although I may choose to voluntarily execute this Agreement
earlier); (D) I have seven (7) days following the execution of this Agreement
by the parties to revoke the Agreement; and (E) this Agreement shall not be
effective until the date upon which the revocation period has expired, which
shall be the eighth day after this Agreement is executed by me, provided that
the Company has also executed this Agreement by that date ("Effective Date").
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Xxxxxxx X. Xxxxx
Date: December 14, 1998
---------------------------------
2
