Execution Copy
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EMPLOYMENT AGREEMENT
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The EMPLOYMENT AGREEMENT ("Agreement"), dated as of the 1st day of
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June, 2001 (the "Effective Date"), is entered into by and between XxXxxxxx.xxx,
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Inc. (the "Company") and Xxxx Xxxxxxx ("Employee"). In consideration of the
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mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
1. Employment and Duties. Subject to the terms of this Agreement, Employee
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shall be employed by the Company as the Chief Executive Officer of the
Company during the Term of the Agreement (as defined below). Employee
agrees to (i) accept employment in such capacity, (ii) perform such duties
and services as set forth herein and as may be reasonably assigned to him
from time to time by the Board of Directors of the Company (the "Board")
and following the consummation of the Merger (defined below), the Board or
the President of United NewVentures (or his delegate), and (iii) diligently
devote his business time, skill and attention to such duties and services.
2. Term of Employment.
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(a) Term of Agreement. Employee's employment shall be governed by the
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provisions of this Agreement for the period commencing on the
Effective Date and terminating on the Termination Date (the "Term").
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The "Termination Date" shall be the earlier of (i) January 31, 2002,
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or (ii) the termination of this Agreement in accordance with the
provisions of this Section 2 or Section 5.
(b) Death. The obligations of each party hereunder shall immediately
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terminate without notice upon the death of Employee and the Company
shall pay the Employee's estate all earned, but unpaid, compensation
through the date of such termination.
(c) Disability. If Employee becomes Disabled during the Term, this
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Agreement may be terminated at the option of Employee upon notice of
resignation to the Company or at the option of the Company upon notice
to Employee. "Disabled" shall have the same meaning as may be set
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forth in the Company's long-term disability insurance policy, if
applicable, and if such policy does not exist, or the term is not
defined, it shall be as reasonably determined by a physician
designated by the Board and approved by the Employee. Upon termination
due to Disability, the Company shall pay the Employee all earned, but
unpaid, compensation through the date of such termination.
3. Compensation.
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(a) Base Salary. Employee shall be paid a base salary at the annual rate
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of Three Hundred and Fifty Thousand Dollars ($350,000) ("Base
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Salary"), to be paid in accordance with the Company's standard payroll
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policy, as the same may be amended by the Company from time to time.
(b) Short Term Performance Incentive. Employee will have the opportunity
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to earn a short term performance bonus, with a target of 40% of his
annual Base Salary, for performance during the period from the
consummation of the transactions set
forth in the Agreement and Plan of Merger, dated as of June 1, 2001,
between the Company, United NewVentures, Inc. and UNV Acquisition
Corp. (the "Merger Agreement") to December 31, 2001. The consummation
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of the transactions set forth in the Merger Agreement shall be the
"Merger". Any short term bonus earned during said period will be paid
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by January 31, 2002 and, based upon the attainment of performance
measures, the short term performance incentive bonus under this
paragraph will range from 0% to 80% of the Base Salary. The bonus
opportunity will be based upon mutually-agreed upon objectives defined
within the first thirty (30) days following the consummation of the
Merger. The parties agree that the bonus opportunity will be based on
a matrix containing the following components: (i) revenues, (ii)
operating cash flow, and (iii) synergy capture/integration efforts.
This matrix setting forth the bonus opportunity shall be attached to
this Agreement as Exhibit A. For purposes of this Agreement, short
term incentive bonus is not earned until the last day of the
applicable performance period (except for as provided for under
Section 5(d) - relating to the termination by the Company not for
Cause or by the Employee for Good Reason).
(c) Retention Bonus. On January 31, 2002, Employee shall be paid a one-
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time lump sum payment equal to 60% of his Base Salary (the "Retention
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Bonus"); provided, however, that no Retention Bonus shall become due
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and payable if Employee's Termination occurs prior to such date; and
provided, however, that if Employee is terminated pursuant to Sections
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5(b) or 5(d), the full Retention Bonus shall become due and payable as
soon as practicable following such termination. For purposes of this
Agreement, the Retention Bonus is not earned until January 31, 2002
(except for as provided for under Section 5(d) - relating to the
termination by the Company not for Cause or by the Employee for Good
Reason).
(d) Benefits and Paid Leave. Employee shall have the right to participate
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in the Employee Benefit Plans of the Company ("Benefit Plans"),
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subject to such changes as may be approved or adopted by the Board
from time to time. Employee will receive 20 days of Paid Leave for
vacation, illness, disability or other personal needs, which shall
accrue at a rate of 1/12` at the end of each month over the course of
a year.
(e) Relocation. Temporary Living and other Expenses. Company agrees to
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continue to make up to $100,000 (in the aggregate) available to
Employee to cover his actual temporary living expenses; travel to and
from his present residence in New Canaan, Connecticut to California
and other related expenses for the period from February 15, 2001
through August 31, 2001. Company shall reimburse Employee a maximum of
$200,000 (in the aggregate) in relocation expenses actually incurred
for the movement of household goods; house-hunting visits for Employee
and his family; real estate costs/commissions; and other relocation
incidentals, with such payment to be made in January of 2002. The
Company will retain the services of a relocation specialist who will
be made available to help Employee with the transition, the cost of
which shall be included in the maximum aggregate reimbursement in the
immediately preceding sentence. The Company shall also reimburse
Employee for all other reasonable out-of-pocket expenses incurred by
Employee in connection with the performance of his duties hereunder.
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4. Restrictive Covenants. During the Term Employee covenants as follows:
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(a) Covenants.
(i) Employee shall devote substantially all of his working time and
energy to the performance of Employee's duties described
herein.
(ii) Employee shall not directly or indirectly provide services to
or through any person, firm or other entity except the Company,
unless otherwise authorized by the Company in writing.
(iii) Employee shall not render any services of any kind or character
for Employee's own account or for any other person, firm or
entity without first obtaining the Company's written consent.
(iv) Notwithstanding the foregoing, Employee shall have the right to
perform such incidental services as are necessary in connection
with (i) his private passive investments, but only if Employee
is not obligated or required to (and shall not in fact) devote
any managerial efforts which interfere with the services
required to be performed by him hereunder, (ii) his charitable
or community activities or (iii) participation in trade or
professional organizations, but only if such incidental
services do not significantly interfere with the performance of
Employee's services hereunder.
(b) Confidential Information. Both parties recognize that the services to
be rendered under this Agreement and the knowledge now possessed by or
which may be acquired by the Employee through employment with the
Company or its affiliates are special, unique and of extraordinary
character. The Employee, therefore, agrees that:
(i) Except as specifically directed to do so by the Company or a
court of competent jurisdiction, he will keep secret and
confidential indefinitely all non-public information concerning
the Company and its affiliates which was acquired by or
disclosed to him during the course of his employment by the
Company or any of its affiliates, and not to disclose the same,
either directly or indirectly, to any other person, firm or
business entity, or to use or otherwise misappropriate it in
any way;
(ii) Immediately upon his termination of employment with the Company
for any reason, he will promptly return to the Company any and
all records, documents, physical property, information or other
material relating to the business of the Company obtained by
him during the course of his employment with the Company or its
affiliates; and
(iii) Employee acknowledges that he has entered into an Employee
Proprietary Information Agreement for the benefit of the
Company and agrees that Employee will be bound by the terms and
conditions of said agreement and the covenants contained
herein. The terms and conditions of the Employee Proprietary
Information Agreement and the covenants contained herein shall
survive the termination of the Agreement.
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(c) Non-Solicitation. During his employment, and (i) for a period of two
(2) years immediately following his termination of employment if
terminated for Cause or if Employee terminates his employment for
other than Good Reason or (ii) for a period of one (1) year from the
date of termination if terminated other than for Cause or Employee
terminates his employment for Good Reason, Employee shall not, without
the prior written approval of the Company, directly or indirectly
through any other individual or entity or otherwise:
(i) Solicit, entice, persuade or induce any individual who is under
written contract of Employment with the Company or is employed
by the Company to terminate or refrain from renewing or
extending his or her employment with the Company or to become
employed by or enter into contractual relations with any other
individual or entity, and Employee shall not approach any such
employee for any such purpose or authorize or knowingly
cooperate with the taking of any such actions by any other
individual or entity; or
(ii) Except in accordance with the Employee's duties hereunder on
behalf of the Company, solicit, entice, persuade, or induce any
individual or entity which presently is, or at any time during
the Term of this Agreement shall have been, a customer or
supplier of the Company to terminate or refrain from renewing or
extending its contractual or other relationships with the
Company, and the Employee shall not approach any such customer
or supplier for such purpose or authorize or knowingly cooperate
with the taking of any such actions by any other individual or
entity.
(d) Non-Competition. During the Term of the Agreement, and for a period of
twelve months following the date of termination of the Agreement, the
Employee shall not, without the prior written approval of the Company
directly or indirectly, through any other individual or entity or
otherwise, become or be interested in or associated with (whether as
an officer, director, employee, agent, representative or otherwise)
any individual or entity (other than the Company) engaged in any
business in which the Company is engaged, or developing, in any market
where the Company carries on such business; provided, however, that,
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anything above to the contrary notwithstanding, the Employee may,
after the date of this Agreement, own, as an inactive investor,
securities of any corporation engaged in any such businesses described
above which are listed on a national securities exchange or traded in
the over-the-counter market, so long as such individual (or his
spouse, parents, siblings, and children or any of their spouses or any
of them together) shall not beneficially own more than 5% of the
outstanding voting securities of such corporation.
(e) Injunctive Relief. The Employee recognizes that in the event of his
material breach of any of the provisions of this Section 4, the
Company will incur substantial and irreparable damage, and, therefore,
the Company shall, in addition to any other relief allowed in law or
in equity, be entitled to seek preliminary and permanent injunctive
relief from any court of competent jurisdiction.
5. Termination
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(a) Cause. The Company shall have the right to terminate Employee's
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employment at any time without prior notice for Cause. "Cause" shall
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mean Employee has:
(i) Violated any of the agreements or covenants contained in this
Agreement which violation resulted in significant hardship to
the Company, and which violation has remained uncured (if
curable) for thirty (30) days following written notice to
Employee by the Company;
(ii) Committed an act of theft, embezzlement or felony with the
Company; or
(iii) Committed an act or failed to commit an act during the course
of his performance of duties for the Company which action or
failure to take action amounts to willful or wanton misconduct
or gross negligence.
If Employee is terminated for "Cause," Employee shall be paid all
compensation earned, but unpaid, through the Termination Date, and the
Company shall have no further obligation to the Employee under the
Agreement.
(b) Good Reason.
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(i) Employee may terminate his employment with the Company at any
time during the Term of this Agreement for Good Reason. "Good
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Reason" shall exist if Employee terminates his employment
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because, without his express written consent, (i) the Company
materially breaches any of the terms of this Agreement, (ii)
Employee's compensation is materially reduced, or (iii)
Employee is assigned duties materially inconsistent with
Employee's position as Chief Executive Officer.
(ii) Employee hereby (i) acknowledges that the consummation of the
Merger, and the continued employment of the Employee under the
terms of this Agreement, shall not constitute Good Reason under
Section 5(b)(i) above, and (ii) waives any claim that he may
have regarding the foregoing.
(iii) Company hereby acknowledges that Section 5(b)(ii) shall not
constitute a waiver of any right to claim that a Good Reason
termination has occurred with respect to the occurrence of any
events after the consummation of the Merger.
(c) [Intentionally Omitted]
(d) Termination other than for "Cause". If the Company terminates the
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employment of Employee for any reason other than as set forth in
Sections 5(a) or (c), Employee terminates his employment for Good
Reason under Section 5(b), or the Company and Employee do not agree on
mutually acceptable terms under which Employee will continue
employment with the Company past January 31, 2002, Employee shall
continue to receive the Base Salary, and shall continue to participate
in the Benefit Plans in which he is participating at the time of
termination, for a period of twelve (12) months from the date of
termination, plus an additional month for every calendar month
(including fractions thereof) from the consummation of the Merger to
the Termination Date. However, any
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payments pursuant to this Section 5(d) shall be contingent upon
executing a full release of all claims arising from or relating in any
way to Employee's employment such that, if Employee fails or refuses
to properly execute the release as provided for above, he shall not be
entitled to any of the benefits provided for in this Section 5(d);
provided, however, that such contingency shall not limit the
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Employee's right to payment of compensation that is earned, but
unpaid, through the Termination Date, which for purposes of this
Section 5(d) includes, but is not limited to, a pro-rata short-term
incentive bonus under Section 3(b) and the full Retention Bonus under
Section 3(c).
(e) Termination by Employee other than for "Good Reason." If the Employee
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terminates his employment with the Company other than for Good Reason,
Employee shall be paid all compensation earned, but unpaid, through
the Termination Date, and the Company shall have no further obligation
to the Employee under the Agreement.
(f) Guarantee. United NewVentures, Inc. shall guarantee the obligations of
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the Company under Section 5(d) and Section 3(c) in the event that the
Company has not paid such obligations within 10 business days after
they become due and payable under the terms of this Agreement;
provided, however that United NewVentures, Inc. shall have no
obligation under this Section 5(f) if the Merger Agreement is
terminated.
6. Indemnification.
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(a) Employee represents and warrants to Company that, to the best of his
knowledge, as of the Effective Date, his employment with Company, and
the performance of his duties for the Company under this Agreement as
they are understood by Employee, and the Company's compensation to him
therefore, do not and will not violate any enforceable contractual
obligation or other duty that Employee may owe to any current or
former employer or to any other persons, including (without
limitation) any obligations not to compete or any obligations not to
disclose trade secrets or other confidential business information.
Employee further represents and warrants that, to the best of his
knowledge, as of the Effective Date, he has not disclosed and will not
disclose to the Company any such trade secret or other confidential
business information belonging to any current or former employer of
Employee or belonging to any other person. In addition, except as
provided herein, Employee hereby agrees to indemnify and hold the
Company and its Directors and officers harmless from all actual
liability, damages, reasonable out-of-pocket costs and expenses
(including, without limitation, reasonable attorneys fees, court costs
and arbitration fees) arising from the judicially determined knowing
and willful breach of any representation or warranty of Employee
contained in this Section 6(a).
(b) In addition to indemnification under the Merger Agreement, the
Employee shall be eligible for indemnification by the Company to the
maximum extent provided in the Company By-Laws and under Delaware Law,
as currently in effect.
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(c) The Employee shall be entitled to coverage under the directors and
officers liability insurance coverage maintained by the Company,
whether self insured or otherwise.
7. Assignment of Technology Rights. Employee shall promptly furnish to the
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Company a complete record of any and all technological ideas, inventions
and improvements, whether patentable or not, which he, solely or jointly,
may conceive, make or first disclose during the Term unless otherwise
agreed in writing by the Company. Any patent filed by the Company during
the Term of the Agreement, or during the first year following the
Termination Date hereunder, shall be conclusively presumed to have been
conceived or made during the Term, or any extension thereof.
Employee agrees to and does hereby grant and assign to the Company, or its
nominee, his entire right, title and interest in and to any ideas,
inventions and improvements coming within the scope of the Agreement:
(a) Which relate in any way to the business or activities (including
research and development activities) of the Company; or
(b) Which are suggested by or result from any work or task of Employee for
the Company, together with any and all domestic and foreign patent
rights in such ideas, inventions and improvements. Employee agrees to
execute specific assignments and do anything else reasonably requested
by the Company at any time during or after the Term, or any extension
thereof, to secure such rights.
Employee acknowledges, by execution of this Agreement, that he has been
notified of the limitations placed upon this Section 7 under the provisions
of California Labor Code Section 2870 as set forth in Exhibit B attached
hereto. Employee agrees to advise Company promptly in writing of any
inventions that Employee believes meet the criteria in California Labor
Code Section 2870.
8. Successors and Assigns. The provisions of the Employment Agreement shall
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inure to the benefit of, and shall be binding upon, the Company, its
successors and assigns, and Employee, the personal representative of his
estate and his heirs and legatees; provided, however, that (a) Employee
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shall not assign, transfer or delegate his rights or obligations hereunder
and any attempt to do so shall be void; and (b) Company shall not assign,
transfer or delegate its rights or obligations hereunder without giving the
Employee thirty (30) days prior written notice of any such assignment,
transfer or delegation.
9. Notices. Any and all notices, demands or other communications required or
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desired to be given hereunder by any party shall be in writing and shall be
validly given or made to another party if served either personally or, if
deposited in the United States mail, certified or registered, postage
prepaid, return receipt requested. If such notice, demand or other
communication shall be served personally, service shall be conclusively
deemed made at the time of such personal service. If such notice, demand or
other communication is given by mail, service shall be conclusively deemed
made at the time of the receipt by the party to whom such notice, demand or
other communication is sent. Any and all notices, demands or other
communications shall be delivered to the following address:
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To the Company: XxXxxxxx.xxx, .Inc.
0000 X. Xxxxxxxxx Xx., Xxxxx 000
Xxxxxxxxxx, XX 00000
ATTN: Senior Vice President and General Counsel
To Employee: Xx. Xxxx Xxxxxxx
0000 Xxxxx Xxxxx
Xxx Xxxxxx, XX 00000
With a copy to:
Xx. Xxxx X. Xxxxxxxx, Esq.
HDDGP
00 X. XxXxxxx Xx., Xxxxx 0000
Xxxxxxx, XX 00000
Any party hereto may change its address for the purpose of receiving
notices, demands and other communications as herein provided by a written
notice given in the manner aforesaid to the other party hereto.
10. Waivers. No waiver of any term or provision of the Agreement shall be valid
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unless such waiver is in writing signed by the party against whom
enforcement of the waiver is sought. In the case of the Company, such
waiver shall be signed by the President, or at least one (1) member of the
Company's Board of Directors. The waiver of any term or provision of the
Agreement shall not apply to any subsequent breach of the Agreement.
11. Entire Agreement.
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(a) General. Except as is specifically provided for in the Merger
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Agreement, current stock option plan, the Company By-Laws (as in
effect as of the Effective Date), or as specifically referenced
herein, this Agreement contains the entire understanding and agreement
between the Employee and the Company relating to the Employee's
retention as an employee of the Company, and the Agreement may not be
amended, modified or supplemented in any respect, except by a
subsequent written agreement entered into between the Employee and the
Company.
(b) Prior Employment Agreement. This Agreement supercedes and replaces in
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its entirety any prior employment agreement between the parties
hereto, and from and after the Effective Date any such prior
employment agreement shall become null, void and unenforceable.
12. Governing Law. The provisions of this Agreement shall be construed and
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interpreted under the laws of the State of Delaware. If any provision of
this Agreement as applied to any party or to any circumstance should be
adjudged by a court of competent jurisdiction to be void or unenforceable
for any reason, the invalidity of that provision shall in no way affect (to
the maximum extent permitted by law) the application of such provision
under circumstances different from those adjudicated by the court, the
application of any other provision of this Agreement, or the enforceability
or invalidity of this Agreement as a whole. Should any provision of this
Agreement become or be deemed invalid, illegal or
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unenforceable in any jurisdiction by reason of the scope, extent or
duration of its coverage, then such provision shall be deemed amended to
the extent necessary to conform to applicable law so as to be valid and
enforceable or, if such provision cannot be so amended without materially
altering the intention of the parties, then such provision shall be
stricken and the remainder of this Agreement shall continue in full force
and effect.
13. Arbitration. The parties hereto agree that any and all disputes that arise
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out of this Agreement shall be resolved through final and binding
arbitration, as specified herein. Binding arbitration shall be conducted in
the county in which the non-enforcing party's principal residence or place
of business is then located in accordance with the rules and regulations of
the American Arbitration Association. Each side shall bear its own
attorneys' fees; that is, the arbitrator shall not have the authority to
award attorneys' fees unless a statutory section at issue in the dispute
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authorizes the award of attorneys' fees to the prevailing party, in which
case the arbitrator has authority to make such award as permitted by the
statute in question. The parties understand and agree that the arbitration
shall be instead of any jury trial and that the arbitrator's decision shall
be final and binding to the fullest extent permitted by law and enforceable
by any court having jurisdiction thereof.
14. Counterparts. The Agreement may be executed in more than one counterpart,
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each of which shall be deemed as original, but all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed the Agreement as of
the day and year first above written.
COMPANY: XxXxxxxx.xxx, Inc.
By: /s/ Xxxxx X. Xxxxxxx
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Its: Senior V.P. and General Counsel
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EMPLOYEE: Xxxx Xxxxxxx
/s/ Xxxx Xxxxxxx
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EXHIBIT A
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BONUS OPPORTUNITY.
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EXHIBIT B
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CALIFORNIA LABOR CODE SECTION 2870
(a) 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:
(i) Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably
anticipated or development of the employer; or
(ii) Result from any work performed by the employee for the employer.
(b) 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 (a), the provision is against the public
policy of this state and is unenforceable.
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