EXHIBIT 10.9
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement"), entered into as of
this 12th day of July, 2000, is made by and between TurboLinux, Inc., a
Delaware corporation (hereinafter the "Company"), and Xxxxxx X. Xxxxxx
(hereinafter "Executive").
ARTICLE I
EFFECT OF AGREEMENT
1.1 Effect of Agreement.
This Agreement shall be effective as of July 12, 2000 (the "Effective
Date") and shall remain in effect so long as Executive is employed by the
Company; provided, however, that the rights and obligations of the parties
hereto contained in Articles 6 and 7 of this Agreement, and as otherwise
explicitly provided in this Agreement, shall survive any termination of this
Agreement until such time as such duty or obligation is satisfied in full.
1.2 Consideration.
The duties and obligations of the Company to Executive under this Agreement
shall be in consideration of Executive's continued employment with the Company.
ARTICLE 2
EMPLOYMENT DUTIES
2.1 Title/Responsibilities.
Executive hereby accepts the terms of this Agreement and agrees to serve as
an executive officer of the Company with the title Chairman of Board of
Directors. Executive shall report directly to the Board of Directors of the
Company. Executive shall have all powers and duties commensurate with such
position, including but not limited to presiding at meetings of the Board of
Directors and when requested by the Board participating in high-level
negotiations with partners and potential partners, providing advice to the Board
of Directors and senior executive officers on technology and market strategies
and performing such other similar duties as shall be assigned by the Board. As
an executive officer of the Company, Executive will be expected to enforce the
rules and regulations of the Company. His office will be located in the San
Francisco Bay Area.
2.2 Full-Time Attention.
Executive shall devote his best efforts and his full business time and
attention to the performance of the services customarily incident to such office
and to such other services as the Board may reasonably request. Executive may
also serve on the board of directors of one or more other companies with the
prior consent of the Board, which shall not be unreasonably
withheld, so long as such service does not interfere with Executive's
performance of his responsibilities and duties to the Company.
2.3 Other Activities.
Except upon the prior consent of the Board, Executive shall not during the
period of this Agreement engage, directly or indirectly, in any other business
activity (whether or not pursued for pecuniary advantage) that is or may be
competitive with, or that might place him in a competing position to that of the
Company or to any other corporation or entity that directly or indirectly
controls, is controlled by, or is under common control with the Company (an
"Affiliated Company"), provided that Executive may own less than one percent
(1%) of the outstanding securities of any such publicly traded competing
corporation. The determination as to whether a business activity is or may be
competitive with the Company or an Affiliated Company shall be made by the
Board, and shall be final and binding on all parties. Nothing in this Section
2.3 is intended to prevent Executive from accepting employment with another
company, or providing other services to another business, after Executive's
cessation of all services for the Company. Executive shall execute and deliver
to the Company an Employee Proprietary Information and Inventions Agreement in
the form of Exhibit A to this Agreement.
ARTICLE 3
COMPENSATION
3.1 Annual Base Pay and Incentive Bonus.
The annual Base Salary of Executive will be two hundred seventy-five
thousand dollars ($275,000). For as long as this Agreement is effective, the
Board shall review Executive's Base Salary at least annually and may, in the
sole discretion of the Board, from time to time increase the Base Salary. In
addition to the Base Salary, subject to the satisfaction of performance objects
to be mutually agreed upon by Executive and the Board, Executive shall be
entitled to receive an incentive bonus in an amount up to 100% of his Base
Salary. For the first fiscal year of Executive's employment hereunder, 50% of
the bonus shall be guaranteed.
3.2 Mortgage Subsidy.
The Company will provide Executive with a monthly mortgage allowance
sufficient to cover a total mortgage amount (the "Mortgage Amount") incurred by
Executive not to exceed one million five hundred thousand dollars ($1,500,000).
This monthly mortgage subsidy will be grossed up to cover any incremental tax
obligations it creates for Executive. The mortgage subsidy provided for under
this Section 3.2 shall terminate upon the earlier to occur of (i) the third
anniversary date of this agreement or (ii) two years following the closing of an
underwritten initial public offering. If the Company has not completed an
underwritten initial public offering within three (3) years of the Effective
Date, the Company shall, if asked by Executive , make a four (4) year term loan
to the Executive equal to the Mortgage Amount, with interest payable annually at
the lowest rate permitted under Section 7872 of the Internal Revenue Code which
would not result in any imputed income to Executive and, subject to the
provisions of the
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following sentence, with the unpaid principal due and payable on the earlier of
four (4) years from the date the loan is made or the date of the termination of
Executive's employment. All of the accrued interest and one-fourth (1/4) of the
principal of the loan shall be forgiven for each year following the date the
loan is made that Executive remains in employment with the Company.
3.3 Attorneys' Fees Reimbursement.
The Company will reimburse Executive for all legal fees and costs
associated with the advice, execution or negotiation of this Agreement, up to a
maximum of three thousand dollars ($3,000).
ARTICLE 4
EXPENSE ALLOWANCES AND FRINGE BENEFITS
4.1 Benefits.
While this Agreement is in effect, the Company shall provide Executive with
the same benefits which it provides generally to its other senior executives,
including but not limited to medical, pension, vacation, bonus, profit-sharing
and savings plans and similar benefits as such plans and benefits may be adopted
by the Company from time to time. In addition, Executive shall be entitled to
reimbursement for reasonable travel and moving expenses incurred by Executive to
relocate Executive's family to the United States in the event such relocation
occurs during the term of this Agreement.
4.2 Business Expense Reimbursement.
While this Agreement is in effect, Executive shall be entitled to receive
proper reimbursement for all reasonable out-of-pocket expenses incurred by him
(in accordance with the policies and procedures established by the Company for
its senior executive officers) in performing services hereunder. In the event
the Board of Directors requests Executive to spend more than one hundred and
eighty (180) days in any twelve month period in Japan, the Company shall
reimburse Executive for the monthly rental for an apartment in Japan up to two
thousand dollars ($2,000) per month. Executive agrees to furnish the Company
adequate records and other documentary evidence of such expenses for which
Executive seeks reimbursement. Such expenses shall be accounted for under the
policies and procedures established by the Company.
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ARTICLE 5
OTHER RIGHTS AND BENEFITS
5.1 Nonexclusivity.
Nothing in this Agreement shall prevent or limit Executive's continuing or
future participation in any benefit, bonus, incentive or other plans, programs,
policies or practices provided by the Company and for which Executive may
otherwise qualify, nor shall anything herein limit or otherwise affect such
rights as Executive may have under any stock option or other agreements with the
Company. Except as otherwise expressly provided herein, amounts which are
vested benefits or which Executive is otherwise entitled to receive under any
plan, policy, practice or program of the Company at or subsequent to the date of
his termination shall be payable in accordance with such plan, policy, practice
or program.
5.2 Indemnity and Insurance.
The Company shall indemnify Executive and provide Executive with insurance
coverage under a policy of directors and officers liability insurance for his
actions on behalf of the Company acting in his capacity as an executive officer
of the Company in accordance with this Agreement. The terms of such
indemnification shall be subject to an agreement mutually agreeable to Executive
and the Company. Notwithstanding anything to the contrary contained in this
Agreement, such indemnification and insurance coverage shall continue in full
force and effect following termination of Executive's employment with the
Company.
ARTICLE 6
TERM AND TERMINATION OF EMPLOYMENT
6.1 Events of Termination.
The Executive's employment, will terminate:
(a) upon the death of the Executive;
(b) upon a termination of Executive's employment by the Company due to
disability after a determination of disability of the Executive (as defined in
Article 6.2);
(c) upon termination by the Company for Cause or without Cause (each
as defined in Article 6.3); or
(d) upon the Executive's resignation of his employment for any reason
or no reason.
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6.2 Definition of Disability.
For the purposes of this Agreement, the Executive will be deemed to have a
"disability" if, for physical or mental reasons, the Executive is unable to
perform the essential functions of the Executive's duties under this Agreement
with or without reasonable accommodation for 120 consecutive days, or 180 days
during any twelve-month period, as determined in accordance with this Article
6.2. The disability of the Executive will be determined by a mutually agreeable
medical doctor. The Executive must submit to a reasonable number of
examinations by the medical doctor making the determination of disability under
Article 6.2, and the Executive hereby authorizes the disclosure and release to
the Company (who shall treat such information in strictest confidence) of such
determination and all supporting medical records. If the Executive is not
legally competent, the Executive's legal guardian or duly authorized attorney-
in-fact will act in the Executive's stead, under this Article 6.2, for the
purposes of submitting the Executive to the examinations, and providing the
authorization of disclosure, required under this Article 6.2.
6.3 Definition of "Cause."
For the purposes of this Agreement, a termination of Executive's employment
for "Cause" shall mean a termination of Executive's employment by the Company
(by action of the Board) due to (i) Executive's conviction of any felony or any
crime involving moral turpitude or dishonesty, including a plea of guilty or no
contest, (ii) Executive's participation in a fraud or act of dishonesty either
of which, in the determination of the Board, materially damages the Company,
(iii) Executive's conduct that, based upon a good faith and reasonable factual
investigation and determination by the Board, demonstrates Executive's willful
failure or refusal to perform his job duties, or (iv) any other willful act of
misconduct which, in the determination of the Board, materially damages the
Company. The Company must provide the Executive with thirty (30) days advance
written notice of intent to terminate Executive's employment for "Cause" (the
"Cure Period"). During the Cure Period, the Company, at its sole option, may
require the Executive to take a paid leave of absence and the Executive may
attempt to cure the situation. If Executive does not cure the situation to the
reasonable satisfaction of the Company, in the determination of the Board, by
the expiration of the Cure Period, the Executive's employment will then
terminate. A termination of Executive's employment by the Company for any other
reason or in any other circumstances will be a termination "Without Cause." The
Executive's physical or mental Disability shall not constitute "Cause" for
termination of employment.
6.4 Termination Pay.
Effective upon the termination of Executive's employment, the Company will
pay the Executive (or, in the event of his death, his designated beneficiary as
defined below) the sums provided in this Article 6.4. For purposes of this
Article 6.4, the Executive's designated beneficiary will be such individual
beneficiary or trust, located at such address, as the Executive may designate by
notice to the Company from time to time or, if the Executive fails to give
notice to the Company of such a beneficiary, the Executive's estate.
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(a) Termination Other than for Cause.
If the Company terminates the Executive's employment Without Cause (or
if Executive's employment with the Company terminates on account of Executives
death or Disability, the Company shall provide Executive with the following
severance benefits, provided that Executive, or the Executive's legal guardian
or attorney-in-fact, as applicable, first executes the employee agreement and
release substantially in the form attached hereto as Exhibit B:
(i) the Company shall continue to pay to Executive his then
current monthly Base Salary for a period of twenty-four (24) months
following Executive's actual separation date;
(ii) the Company shall pay Executive any target bonus established
for the Executive by the Board (assuming performance at target) for the
twenty-four (24) month period following Executive's actual separation date
at such time or times as the Company would make bonus payments to the
Company's senior executives; and
(iii) the Company will continue Executive's benefits, including
medical coverage, or pay for the continuation of such coverage, for twenty-
four (24) months.
(b) Termination for Cause.
If the Company terminates Executive's employment for Cause or if
Executive resigns pursuant to Section 6.1(d), the Executive will be entitled to
receive his annual base salary and benefits through the date such termination is
effective.
6.5 Definition of "Change of Control."
For purposes of this Agreement, the term "Change of Control" means the
consummation of any of the following transactions:
(a) the stockholders of the Company approve a business combination
(such as a merger or consolidation) of the Company with any other corporation or
other type of business entity (such as a limited liability company), other than
a business combination which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such controlling
surviving entity outstanding immediately after such business combination; or
(b) the sale, lease, exchange or other transfer or disposition by the
Company of all or substantially all (more than seventy percent (70%)) of the
Company's assets by value.
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6.6 Termination Due to Change in Control.
(a) Change in Control Severance. The Executive shall also be entitled
to the compensation and benefits described in Article 6.4(a), but only for a
period of six (6) months, following termination of this Agreement by the
Executive in the event of the occurrence of a Change in Control while the
Executive is employed by the Company, but only if upon or within twelve (12)
months following the occurrence of the Change of Control, the Executive resigns
within sixty days of a) his position, authority or responsibilities being
significantly reduced; b) being asked to relocate his principal place of
employment such that his commuting distance from his residence prior to the
Change of Control is increased by over fifty (50) miles; c) his annual Base
Salary or any target bonus being reduced; or d) his benefits being materially
reduced. The Company will provide Executive with the severance benefits
described in this Section 6.6(a), provided that Executive must first execute the
employee agreement and release substantially in the form attached hereto as
Exhibit B.
(b) Parachute Payment. In the event that the benefits payable to
Executive under Section 6.6 (a) constitute "parachute payments" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended, (the
"Code"), or any comparable successor provision, and, but for this section, would
be subject to the excise tax imposed by Section 4999 of the Code, or any
comparable successor provision (the 'Excise Tax"), then Executive's benefits
hereunder shall be either
(i) provided to Executive in full, or
(ii) provided to Executive 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, when taking into account applicable federal,
state, local and foreign income and employment taxes, the Excise Tax and any
other applicable taxes, 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 section shall be made in writing in good faith by the accountants
described below. In the event of a reduction of benefits hereunder, benefits
payable in cash shall be reduced first. For purposes of making the calculations
required by this section, 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, and other
applicable legal authority. 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 section. The Company shall
bear all costs the accountants may reasonably incur in connection with any
calculations contemplated by this section.
The accounting firm engaged by the Company for general audit purposes as of
the day prior to the effective date of the Change of Control shall perform the
foregoing calculations. If the accounting firm so engaged by the Company is
also serving as accountant or auditor for the individual, entity or group which
will control the Company upon the occurrence of a Change of
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Control under Article 6.5, the Company shall appoint a nationally recognized
accounting firm other than the accounting firm engaged by the Company for
general audit purposes to make the determinations required hereunder. The
Company shall bear all expenses with respect to the determinations by such
accounting firm required to be made hereunder.
The accounting firm engaged to make the determinations hereunder shall
provide its calculations, together with detailed supporting documentation, to
the Company and Executive within thirty (30) calendar days after the date on
which the parachute payments are due to be paid to the Executive. If the
accounting firm determines that no Excise Tax is payable with respect to a
Payment, it shall furnish the Company and Executive with an opinion reasonably
acceptable to the Executive that no Excise Tax will be imposed with respect to
such Payment. Any good faith determinations of the accounting firm made
hereunder shall be final, binding and conclusive upon the Company and the
Executive.
6.7 Mitigation.
Executive shall not be required to mitigate damages or the amount of any
payment provided under this Agreement by seeking other employment or otherwise,
nor shall the amount of any payment provided for under this Agreement be reduced
by any compensation earned by Executive as a result of employment by another
company or by retirement benefits after the date of his termination.
ARTICLE 7
GENERAL PROVISIONS
7.1 Governing Law.
The validity, interpretation, construction and performance of this
Agreement and the rights of the parties hereunder shall be interpreted and
enforced under California law without reference to principles of conflicts of
laws. The parties expressly agree that inasmuch as the Company's headquarters
and principal place of business are located in California, it is appropriate
that California law govern this Agreement.
7.2 Assignment; Successors; Binding Agreement.
Executive may not assign, pledge or encumber his interest in this Agreement
or any part thereof and any attempt to do so shall be void.
The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by operation of law or by agreement in
form and substance reasonably satisfactory to Executive, to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
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This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die
while any amount is at such time payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Executive's devisee, legatee or other designee or, if there be
no such designee, to his estate.
7.3 Withholding of Taxes.
The Company shall withhold appropriate federal, state and local income and
employment taxes from any payments hereunder.
7.4 Notices.
Any notices provided hereunder must be in writing and such notices or any
other written communication shall be deemed effective upon the earlier of
personal delivery (including personal delivery by telex or facsimile) or the
third day after mailing by first class mail, to the Company at its primary
office location and to Executive at his address as listed in the Company's
payroll records. Any payments made by the Company to Executive under the terms
of this Agreement shall be delivered to Executive either in person or at his
address as listed in the Company's payroll records.
7.5 Modification; Waiver; Entire Agreement.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
Executive and such officer or other representative of the Company as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party 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 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 expressly set forth or referred to in this Agreement.
7.6 Validity.
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provisions had never been contained herein.
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7.7 Controlling Document.
In case of conflict between any of the terms and conditions of this
Agreement and the documents herein referred to, or any other documents or
agreements affecting the same terms and conditions of Executive's employment as
are addressed in this Agreement, the terms and conditions of this Agreement
shall control, and such other documents shall be deemed to be amended- hereby.
7.8 Employment Status.
This Agreement does not impose on Executive any obligation to remain as an
employee or impose on the Company any obligation (i) to retain Executive as an
employee, (ii) to change the status of Executive as an at-will employee whose
employment with the Company can be terminated at any time, with or without
notice, for any reason or no reason, or (iii) to change the Company's policies
regarding termination of employment.
7.9 Headings.
The headings of the Articles hereof are inserted for convenience only and
shall not be deemed to constitute a part hereof nor to affect the meaning
thereof.
7.10 Non-Publication.
The parties mutually agree not to disclose publicly the terms of this
Agreement except to the extent that disclosure is mandated by applicable law.
7.11 Construction.
In the event of a conflict between the text of the Agreement and any
summary, description or other information regarding the Agreement, the text of
the Agreement shall control.
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7.12 Counterparts.
This Agreement may be executed in one or more counterparts any one of which
need not contain signatures of more than one party, all of which taken together
shall constitute one and the same Agreement.
Executed by the parties as of the day and year first above written.
TURBOLINUX, INC.
By: /s/ T. Xxxx Xxxxxx
----------------------------------
T. Xxxx Xxxxxx
Chief Executive Officer
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
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EXHIBIT A
Employee Proprietary Information and Inventions Agreement
TURBOLINUX, INC.
EMPLOYEE PROPRIETARY INFORMATION
AND INVENTIONS AGREEMENT
In consideration of my employment or continued employment by TurboLinux,
Inc. (the "Company"), and the compensation now and hereafter paid to me, I
hereby agree as follows:
1. NONDISCLOSURE
1.1 Recognition of Company's Rights; Nondisclosure. At all times during
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, or unless an officer of
the Company expressly authorizes such in writing. I will obtain the Company's
written approval before publishing or submitting for publication any material
(written, oral, or otherwise) that relates to my work at the Company or
incorporates any Proprietary Information. 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.
1.2 Proprietary Information. The term "Proprietary Information" means any
and all confidential or proprietary knowledge, data or 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, 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 (c) information regarding the skills and
compensation of other employees of the Company. Notwithstanding the foregoing,
it is understood that, at all such times, I am free to use information which is
generally known in the trade or industry, which is not gained as result of a
breach of this Agreement, and my own, skill, knowledge, know-how and experience
to whatever extent and in whichever way I wish.
1.3 Third Party Information. I understand 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.
1.4 No Improper Use of Information of Prior Employers and Others. 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 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.
2. ASSIGNMENT OF INVENTIONS
2.1 Proprietary Rights. The term "Proprietary Rights" means all trade
secret, patent, copyright, mask work and other intellectual property rights
throughout the world.
2.2 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 B (Previous Inventions) attached hereto a complete list 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 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 (collectively referred to as "Prior Inventions"). If disclosure
of any such Prior Invention would cause me to violate any prior confidentiality
agreement, I understand that I am not to list such Prior Inventions in Exhibit
B but am only to disclose a cursory name for each such invention, a listing of
the party or parties to whom it belongs, and the fact that full disclosure as to
such inventions has not been made for that reason. A space is provided on
Exhibit B for such purpose. If no such disclosure is attached, I represent that
there are no Prior Inventions. If, in the course of my employment with the
Company, I incorporate a Prior Invention into a Company product, process or
machine, the Company is hereby granted and shall have a nonexclusive, royalty-
free, irrevocable, perpetual, worldwide license (with rights to sublicense
through multiple tiers of sublicensees) to make, have made, modify, use and sell
such Prior Invention. Notwithstanding the foregoing, I agree that I will not
incorporate, or permit to be incorporated, Prior Inventions in any Company
Inventions without the Company's prior written consent.
2.3 Assignment of Inventions. Subject to Sections 2.4 and 2.6, I hereby
assign and agree to assign in the future (when any such Inventions or
Proprietary Rights
are first reduced to practice or first fixed in a tangible medium, as
applicable) 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 the
Company, or to a third party as directed by the Company pursuant to this Section
2, are hereinafter referred to as "Company Inventions."
2.4 Nonassignable Inventions. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section 2870
of the California Labor Code (hereinafter "Section 2870"). I have reviewed the
notification on Exhibit A (Limited Exclusion Notification) and agree that my
signature acknowledges receipt of the notification.
2.5 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 all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others. In addition, 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. The Company will keep in
confidence and will not use for any purpose or disclose to third parties without
my consent any confidential 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.
2.6 Government or Third Party. I also agree to assign all my right, title
and interest in and to any particular Company Invention to a third party,
including without limitation the United States, as directed by the Company.
2.7 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,"
pursuant to United States Copyright Act (17 U.S.C., Section 101).
2.8 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 other
lawfully permitted acts to further the purposes of the preceding paragraph with
the same legal force and effect as if executed by me. I hereby waive and
quitclaim to the Company any and all claim, of any nature whatsoever, which I
now or may hereafter have for infringement of any Proprietary Rights assigned
hereunder to the Company.
3. Records. 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 and remain the sole property of the Company at all times.
4. 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 which is competitive with, or would
otherwise conflict with, my employment by the Company. I agree further that for
the period of my employment by the Company and for one (1) year after the date
of termination of my employment by the Company I will not induce any employee of
the Company to leave the employ of the Company.
5. 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 to keep in confidence information acquired by me in confidence or
in trust 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.
6. 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, 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. 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.
7. Legal And Equitable Remedies. 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.
8. 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 (3) days after the date of mailing.
9. Notification Of New Employer. In the event that I leave the employ of the
Company, I hereby consent to the notification of my new employer of my rights
and obligations under this Agreement.
10. General Provisions
10.1 Governing Law; Consent to Personal Jurisdiction. This agreement will
be governed by and construed according to the laws of the State of California,
as such laws are applied to agreements entered into and to be performed entirely
within California between California residents. I hereby expressly consent to
the personal jurisdiction of the state and federal courts located in San
Francisco County, California for any lawsuit filed there against me by Company
arising from or related to this Agreement.
10.2 Severability. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, it shall be construed
by limiting and reducing it, so as to be enforceable to the extent compatible
with the applicable law as it shall then appear.
10.3 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.
10.4 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.
10.5 Employment. I agree and understand that nothing in this Agreement
shall confer any right with respect to continuation of employment by the
Company, nor shall it
17
interfere in any way with my right or the Company's right to terminate my
employment at any time, with or without cause.
10.6 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.
10.7 Entire Agreement. The obligations pursuant to Sections 1 and 2 of
this Agreement shall apply to any time during which I was previously employed,
or am in the future employed, by the Company as a consultant if no other
agreement governs nondisclosure and assignment of inventions during such period.
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. Any subsequent change or changes
in my duties, salary or compensation will not affect the validity or scope of
this Agreement.
[Signature Page Follows]
18
This Agreement shall be effective as of the first day of my employment with
the Company, namely: ________________, 19__.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.
Dated:
----------------
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(Signature)
---------------------------------------
(Printed Name)
---------------------------------------
(Address)
---------------------------------------
ACCEPTED AND AGREED TO:
TURBOLINUX, INC.
By:
----------------------------------
Title:
-------------------------------
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(Address)
---------------------------------------
19
Exhibit A
Limited Exclusion Notification
THIS IS TO NOTIFY you in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that you
developed entirely on your own time without using the Company's equipment
supplies, facilities or trade secret information except for those inventions
that either:
1. Relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company;
2. Result from any work performed by you for the Company.
To the extent a provision in the foregoing Agreement purports to require
you to assign an invention otherwise excluded from the preceding paragraph, the
provision is against the public policy of this state and is unenforceable.
This limited exclusion does not apply to any patent or invention covered by
a contract between the Company and the United States or any of its agencies
requiring full title to such patent or invention to be in the United States.
I ACKNOWLEDGE RECEIPT of a copy of this notification.
By:
-------------------------------
(Printed Name of Employee)
Date:
------------------------------
WITNESSED BY:
---------------------------------
(PRINTED NAME OF REPRESENTATIVE)
EXHIBIT A
Exhibit B
TO: TurboLinux, Inc.
FROM:
------------------
DATE:
------------------
SUBJECT: Previous Inventions
1. Except as listed in Section 2 below, the following is a complete list of
all inventions or improvements relevant to the subject matter of my
employment by TurboLinux, Inc. (the "Company") that have been made or
conceived or first reduced to practice by me along or jointly with others
prior to my engagement by the Company:
[_] No inventions or improvements
[X] 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(ies):
Invention or Improvement Party(ies) Relationship
1. --------------------- --------------------- ----------------------------
2. --------------------- --------------------- ----------------------------
3. --------------------- --------------------- ----------------------------
[_] Additional sheets attached.
Exhibit A
EXHIBIT B
Employee Agreement and Release
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 other-wise, 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 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.
This Release extends to all claims except the following: a) Any claim I may have
to workers' compensation and unemployment insurance benefits; b) any right to
indemnity under California Labor Code section 2802 and as provided by the
Company by-laws and policies; c) any right to continue my medical coverage under
COBRA; d) my right to vested stock and earned benefits under Company stock
option plans, employee stock purchase plans, 401k plans, and the like; and e)
all benefits and rights to which I am entitled under the Agreement.
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 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:
---------------------------------
---------------------------------
Date:
-------------------------------
