EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT"), dated as of July 1,
1997, is made and entered into by and between XXXXXX VINEYARDS INC., a Delaware
corporation (the "COMPANY"), and XXXXX X. XXXXXX (the "EXECUTIVE").
RECITALS
A. The Company desires to employ the Executive as its Vice President
Finance, Chief Financial Officer and Treasurer on the terms and conditions
hereinafter set forth and the Executive desires to accept such employment.
B. The Executive possesses an intimate knowledge of the business and
affairs of the Company and its policies, procedures, methods and personnel.
C. The Company recognizes the valuable services that the Executive has
rendered, and desires to be assured that the Executive will continue her active
participation in the management and business of the Company.
D. The Company considers the establishment and maintenance of a sound and
vital management to be essential to protecting and enhancing the best interests
of the Company and its shareholders, and the Company recognizes that the
existence of a possible change in control of the Company causes uncertainty
among management which may result in the possible departure or distraction of
members of management to the detriment of the Company and its shareholders.
E. The Company desires to secure the services and employment of the
Executive as its Vice President Finance, Chief Financial Officer and Treasurer,
and the Executive is willing to serve the Company in such capacities, but
desires assurance that she will be protected against the financial impact of an
unexpected termination in the event of a change in control of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the
parties agree as follows:
1. EMPLOYMENT. Subject to and pursuant to the terms of this
Agreement, the Company shall employ the Executive, and the Executive shall be
employed by and shall serve the Company, in the capacity of Vice President
Finance, Chief Financial Officer and Treasurer.
2. TERM AND RENEWALS.
(a) TERM AND RENEWALS. Subject to the provisions for earlier
termination provided herein, the term of this Agreement (the "TERM") shall
commence on the date of this Agreement (the "EFFECTIVE DATE") and shall
terminate on the third anniversary of the Effective Date (the "INITIAL TERM")
unless renewed pursuant to this SECTION 2(a). The Initial Term shall be renewed
for a one (1)-year period (the "INITIAL RENEWAL TERM") if at least six (6)
months prior to the expiration of the Initial Term either party hereto shall not
have given the other party written notice not to renew this Agreement. The
Initial Renewal Term and each "Renewal Term" (as defined in this SECTION 2(a))
shall be renewed for successive one (1)-year periods (each, a "RENEWAL TERM") if
at least three (3) months prior to the expiration of the Initial Renewal Term or
a Renewal Term, as the case may be, either party hereto shall not have given the
other party written notice not to renew this Agreement.
3. DUTIES. During the Term, the Executive shall serve as and shall
have the titles of the Vice President Finance, Chief Financial Officer and
Treasurer of the Company, and shall have all duties and responsibilities
customarily associated with such position, as limited or expanded pursuant to
this Agreement. The Executive shall devote substantially her full working time
and effort during normal business hours to the business and affairs of the
Company, and shall use her reasonable best efforts to perform such duties and
responsibilities faithfully and efficiently.
4. COMPENSATION. For services rendered by the Executive pursuant to
this Agreement, the Company shall pay or award compensation to the Executive as
follows:
(a) BASE COMPENSATION. The Company shall pay to the Executive a
base salary ("BASE COMPENSATION") of $120,000 per annum from the date of this
Agreement, payable in accordance with the Company's customary practices for its
senior executive officers. The amount of Base Compensation shall be reviewed by
the Board on at least an annual basis, and may be increased to reflect inflation
or such other adjustments as the Board may deem appropriate; PROVIDED, HOWEVER,
that Base Compensation, as increased, may not be decreased.
(b) BONUS COMPENSATION. In addition to Base Compensation, the
Executive may be awarded, for each fiscal year of the Company ending with or
within the Term, an annual bonus ("BONUS"), whether pursuant to a formal bonus
or incentive plan or program of the Company or otherwise, in cash or other
property acceptable to the Executive, including stock options, rights or
warrants in the Company, which Bonus shall be based on such criteria as may be
deemed appropriate and adopted by the Board. If earned, the Bonus shall be paid
to the Executive within ninety (90) days after the end of each fiscal year of
the Company, except to the extent, if any, that the Executive otherwise shall
have elected to defer all or part of the receipt of such Bonus.
(c) WITHHOLDING. The Company shall deduct and withhold from the
compensation payable to the Executive hereunder any and all applicable federal,
state and local income and employment withholding taxes and any other amounts
required to be deducted or withheld by the Company under applicable statute or
regulation.
2.
5. FRINGE BENEFITS; REIMBURSEMENT; VACATION. In addition to Base
Compensation and Bonus provided for in SECTION 4 above, during the Term the
Executive shall be entitled to receive:
(a) all fringe benefits customarily offered by the Company to
its senior executive officers, including without limitation, participation in
any Company stock compensation plan and the various employee benefit plans or
programs (collectively, the "BENEFIT PLANS") provided to the employees of the
Company in general, subject to the eligibility requirements with respect to each
such Benefit Plan, and to such other benefits or perquisites as may be approved
by the Board during the Term;
(b) reimbursement from the Company for all customary, ordinary
and necessary business expenses incurred by the Executive in the performance of
her duties and responsibilities hereunder, PROVIDED that the Executive furnishes
the Company with vouchers, receipts and other substantiation of such expenses
within thirty (30) days after they are incurred; and
(c) paid vacation benefits in accordance with the Company's
vacation policy in effect for its senior executive officers.
The Executive may take accrued vacation at such times during each fiscal year of
the Company as mutually may be convenient to the Company and to the Executive,
and all unused vacation time as of the end of any fiscal year of the Company
shall accrue or lapse in accordance with the Company's vacation policy in effect
for its senior executive officers.
6. INDEMNIFICATION.
(a) OBLIGATION OF THE COMPANY. To the maximum extent permitted
by law, the Company hereby indemnifies and agrees to hold harmless the Executive
from any and all costs or expenses incurred by her on account of the fact that
she becomes a party, or is threatened to be made a party, to any pending,
threatened or contemplated action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that she is, was or
becomes a director, officer, employee or agent of the Company or of any parent
or subsidiary of the Company. Such costs and expenses shall include, without
limitation, expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by her in connection with
any such action, suit or proceeding. To the maximum extent permitted by and
subject to any requirements of law, costs and expenses incurred by the Executive
in defending a civil or criminal action, suit or proceeding shall be paid by the
Company as bills for such services are presented by the Executive to the
Company. In any such matter, the Executive shall be entitled to select her own
legal counsel.
(b) INSURANCE COVERAGE. To the maximum extent permitted by law,
the Company shall obtain and maintain standard form director's and officer's
liability insurance with responsible carriers and in reasonable amounts, and any
other additional insurance which reasonably may be obtained, covering to the
extent available any liability of the kind described in SECTION 6(a) above, and
protecting the Executive against costs and expenses described in SECTION 6(a)
above which are not for any reason satisfied by the Company.
3.
(c) SUCCESSOR LIABILITY AND SURVIVAL. The obligations of the
Company set forth in this SECTION 6 shall bind any successor corporation to the
Company (whether direct or indirect, by purchase, merger, consolidation,
acquisition of stock or otherwise) so that the Executive shall stand in the same
position under this Agreement with respect to any successor corporation as the
Executive would have with respect to the Company if its separate existence had
continued. The Company's obligations under this SECTION 6 shall survive
termination of this Agreement, and shall survive indefinitely with respect to
any costs, expenses or liabilities incurred by the Executive on account of any
actual or alleged action or inaction by the Executive while employed by the
Company.
7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION. Except as otherwise provided in this
Agreement, the Executive's employment by the Company hereunder shall terminate
upon the earliest to occur of the dates specified below (as applicable, the
"TERMINATION DATE"):
(i) The close of business on the date of expiration of
the Term.
(ii) The close of business on the date of the
Executive's death ("DEATH").
(iii) The close of business on the date specified as the
effective date of termination of the Executive's employment in a "Notice of
Termination" (as defined below) delivered by the Company to the Executive
due to the Executive's "Disability" (as defined below). For purposes of
this Agreement, the term "DISABILITY" shall mean the inability or
incapacity of the Executive, due to any medically determined physical or
mental impairment, to perform her duties and responsibilities for the
Company for a total of one hundred eighty (180) calendar days in any twelve
(12) month period during the Term.
(iv) The close of business on the date specified as the
effective date of termination of the Executive's employment by the
Executive in a Notice of Termination delivered by the Executive to the
Company (a "VOLUNTARY TERMINATION").
(v) The close of business on the date specified as the
effective date of termination of the Executive's employment by the Company
for "Cause" (as defined below) in a Notice of Termination delivered by the
Company to the Executive. For purposes of this Agreement, the term "CAUSE"
shall mean termination based on (A) the Executive's material breach of this
Agreement which, if capable of cure, is not cured fully within ten (10)
days after written notice to the Executive identifying such breach,
PROVIDED, that such ten (10)-day period shall be extended to sixty (60)
days if such breach is not reasonably susceptible to cure within ten (10)
days and the Executive shall have commenced to cure and is then proceeding
with due diligence to cure such breach; (B) conviction of the Executive for
(x) any crime constituting a felony in the jurisdiction in which committed,
(y) any crime involving moral turpitude (whether or not a felony) or (z)
any other criminal act against the Company involving dishonesty or willful
misconduct intended to injure the Company (whether or not a felony);
4.
(C) substance abuse by the Executive which is repeated after written notice
to the Executive identifying such abuse; (D) the failure or the refusal of
the Executive to follow lawful and proper directives of the Board (or of
any superior officer of the Company having direct supervisory authority
over the Executive), which is not corrected within ten (10) days after
written notice to the Executive identifying such failure or refusal;
(E) willful malfeasance or gross misconduct by the Executive which
discredits or damages the Company; (F) indictment of the Executive by a
grand jury for a felony violation of the federal securities laws; or (G)
the engagement by the Executive in any "Prohibited Activity" or
"Competitive Activity" (as such terms respectively are defined in SECTIONS
10(c)(i) and 10(c)(ii) below) in violation of this Agreement.
(vi) The close of business on the date specified as the
effective date of termination of the Executive's employment by the Company
other than for Death, Disability or Cause in a Notice of Termination
delivered by the Company to the Executive. The Executive acknowledges and
agrees that the Executive's employment hereunder is "at will" and that the
Company may terminate the Executive's employment at any time for any or no
reason, with or without Cause.
(b) NOTICE OF TERMINATION. Any termination of the Executive's
employment hereunder (other than termination as a result of Death) by the
Company or by the Executive shall be communicated by a Notice of Termination to
the other party hereto given in accordance with the provisions of SECTION 11(b)
below. For purposes of this Agreement, a "NOTICE OF TERMINATION" shall mean a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, and (ii) if applicable, sets forth the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment.
8. PAYMENT UPON TERMINATION OF EMPLOYMENT. If the Executive's
employment is terminated for any reason, then, without limiting any other rights
or remedies available to the Company at law or in equity, the Company shall pay
or provide to the Executive, her legal representatives, heirs, eligible
dependents, if any, or permitted assigns, as applicable, (i) within ten (10)
days after the Termination Date, all Base Compensation earned but unpaid as of
the Termination Date; and (ii) all benefits to which such persons may be
entitled under any of the Benefit Plans which provide for benefits after
termination of employment, in accordance with the terms thereof.
9. LIMITATION ON PAYMENTS. If any payments provided for under this
Agreement, either alone or together with other payments which the Executive
would have the right to receive from the Company, will constitute a "parachute
payment" as defined in Section 280G of the Internal Revenue Code of 1986 (the
"CODE") as in effect at the time of payment, such payment shall be reduced to
the largest amount which will result in no portion being subject to the excise
tax imposed by Section 4999 of the Code or the disallowance of a deduction by
the Company pursuant to Section 280G(a) of the Code. The determination of the
amount of any reduction under this SECTION 9 and the payments to which such
reduction shall apply, shall be made in good faith by the Executive and such
determination shall be binding on the Company.
5.
10. EXECUTIVE COVENANTS.
(a) UNAUTHORIZED DISCLOSURE. The Executive agrees and
understands that due to the Executive's position with the Company, both prior
to, if applicable, and subsequent to the date of this Agreement, the Executive
has been and will be exposed to, and has received and will receive confidential
and proprietary information of the Company or relating to the Company's business
or affairs (collectively, the "TRADE SECRETS"), including but not limited to
technical information, computer software (including source and object code data
and related documentation), research and development, know-how, product
information, formulae, processes, business and marketing plans, strategies,
customer information, other information concerning the Company's products,
promotions, development, financing, expansion plans, business policies and
practices and other forms of information considered by the Company to be
proprietary and confidential and in the nature of trade secrets. Except to the
extent that the proper performance of the Executive's duties and
responsibilities hereunder may require disclosure, and except as such
information (i) was known to the Executive prior to her employment by the
Company or (ii) was or becomes generally available to the public other than as a
result of a disclosure by the Executive in violation of the provisions of this
SECTION 10(a), the Executive agrees that during the Term and at all times
thereafter the Executive will keep such Trade Secrets confidential and will not
disclose such information, either directly or indirectly, to any third person or
entity without the prior written consent of the Company. This confidentiality
covenant has no temporal, geographical or territorial restriction. On the
Termination Date, the Executive promptly will supply to the Company all
property, keys, notes, memoranda, writings, lists, files, reports, customer
lists, correspondence, tapes, disks, cards, surveys, maps, logs, machines,
technical data, formulae or any other tangible product or document which have
been produced by, received by or otherwise submitted to the Executive in the
course of her employment with the Company, including the period during and prior
to the Term. Any material breach of the terms of this SECTION 10(a) shall be
considered Cause.
(b) INVENTIONS. The Executive agrees that any and all
inventions, discoveries, improvements, processes, formulae, business application
software patents, copyrights and trademarks made, developed, discovered or
acquired by her during her employment by the Company, including the Term, solely
or jointly with others or otherwise, which relate to the business of the
Company, and all knowledge possessed by the Executive relating thereto
(collectively, the "INVENTIONS"), shall be fully and promptly disclosed to the
Board and to such person or persons as the Board shall direct, and shall be the
sole and absolute property of the Company and the Company shall be the sole and
absolute owner thereof. The Executive agrees that she will at all times keep
all Inventions secret from everyone except the Company and such persons as the
Board may from time to time direct. The Executive shall, as requested by the
Company at any time and from time to time, whether prior to or after the
expiration of the Term, execute and deliver to the Company any instruments
deemed necessary by the Company to effect disclosure and assignment of the
Inventions to the Company or its designees and any patent applications (United
States or foreign) and renewals with respect thereto, including any other
instruments deemed necessary by the Company for the prosecution of patent
applications or the acquisition of letters patent. Reference is hereby made to
APPENDIX A to this Agreement, which reprints the text of Sections 2870 through
2872 of the California Labor Code. Execution of this Agreement by the Executive
shall confirm that the Executive has received and read such APPENDIX A. The
provisions of this SECTION 10(b) shall
6.
not apply to any invention which qualifies fully under the provisions of Section
2870 of the California Labor Code.
(b)
(c) PROHIBITED AND COMPETITIVE ACTIVITIES. The Executive and
the Company recognize that due to the nature of the Executive's engagement
hereunder and the relationship of the Executive to the Company, both prior and
subsequent to the date of this Agreement, the Executive has had and will have
access to, has had and will acquire, and has assisted and may continue to assist
in developing, confidential and proprietary information relating to the business
and operations of the Company and its affiliates, including Trade Secrets. The
Executive acknowledges that such information has been and will be of central
importance to the business of the Company and its affiliates and that disclosure
of it to, or its use by, others (including, without limitation, the Executive
(other than with respect to the Company's business and affairs)) could cause
substantial loss to the Company. The Executive and the Company also recognize
that an important part of the Executive's duties and responsibilities will be to
develop good will for the Company and its affiliates through her personal
contact with "Clients" (as defined below), employees and others having business
relationships with the Company, and that there is a danger that this good will,
a proprietary asset of the Company, may follow the Executive if and when her
relationship with the Company is terminated. The Executive accordingly agrees
as follows:
(i) PROHIBITED ACTIVITIES. The Executive will not at any
time during the Term and for two (2) years thereafter: (A) other than in
the course of her employment, disclose or furnish to any other person or,
directly or indirectly, use for her own account or the account of any other
person, any Trade Secrets, no matter from where or in what manner she may
have acquired such Trade Secrets, and she shall retain all such Trade
Secrets in trust for the benefit of the Company, its affiliates and the
successors and assigns of any of them; (B) directly or through one or more
intermediaries, solicit for employment any person who, at the time of such
solicitation, is employed by the Company or any affiliate thereof; (C)
directly or indirectly, whether for her own account or for the account of
any other person, solicit, divert or endeavor to entice away from the
Company or any entity controlled by the Company, or otherwise engage in any
activity intended to terminate, disrupt or interfere with, the Company's or
any of its affiliate's relationship with, Clients, or otherwise adversely
affect the Company's or any of its affiliate's relationship with Clients or
other business relationships of the Company or any affiliate thereof; or
(D) publish or make any statement critical of the Company or any
shareholder or affiliate of the Company, or in any way adversely affect or
otherwise malign the business or reputation of any of the foregoing persons
(any activity described in CLAUSE (A), (B), (C) OR (D) of this SECTION
10(c)(i) being herein referred to as a "PROHIBITED ACTIVITY"); PROVIDED,
HOWEVER, that if in the written opinion of counsel, the Executive is
legally compelled to disclose Trade Secrets to any tribunal or else stand
liable for contempt or suffer other similar censure or penalty, then the
disclosure to such tribunal of those Trade Secrets which such counsel
advises in writing legally are required to be disclosed shall not
constitute a Prohibited Activity, PROVIDED that the Executive shall give
the Company as much advance notice of such disclosure as is reasonably
practicable. For purposes of this Agreement, "CLIENTS" shall mean those
persons who, at any time during the Executive's course of employment with
the Company (including, without limitation, prior to the date of this
Agreement) are
7.
or were clients or customers of the Company or any affiliate thereof or any
predecessor of any of the foregoing.
(ii) NON-COMPETITION. By and in consideration of the
Company's entering into this Agreement and providing the compensation and
benefits to be provided by the Company to the Executive, and further in
consideration of the Executive's continued exposure to the confidential and
proprietary information of the Company (including, without limitation, the
Trade Secrets), the Executive agrees that the Executive will not, during
the Term, engage in any "Competitive Activity" (as defined below). For
purposes of this Agreement, the term "COMPETITIVE ACTIVITY" shall mean
engaging in any of the following activities: (A) serving as a director of
any "Competitor" (as defined below); (B) directly or indirectly through one
or more intermediaries, either (x) controlling any Competitor or (y) owning
any equity or debt interests in any Competitor (other than equity or debt
interests which are publicly traded and, at the time of any acquisition, do
not exceed 5% of the particular class of interests outstanding) (it being
understood that, if interests in any Competitor are owned by an investment
vehicle or other entity in which the Executive owns an equity interest, a
portion of the interests in such Competitor owned by such entity shall be
attributed to the Executive, such portion determined by applying the
percentage of the equity interest in such entity owned by the Executive to
the interests in such Competitor owned by such entity); (C) employment by
(including, without limitation, serving as an officer or partner of),
providing consulting services to (including, without limitation, as an
independent contractor), or managing or operating the business or affairs
of, any Competitor; or (D) participating in the ownership, management,
operation or control of or being connected in any manner with any
Competitor. For purposes of this Agreement, the term "COMPETITOR" shall
mean any person (other than the Company or any affiliate thereof) that
competes, either directly or indirectly, at the time of determination, in
any "Restricted Area" (as defined below) with any of the business conducted
by the Company or any affiliate thereof. For purposes of this Agreement,
the term "RESTRICTED AREA" shall mean any state or territory of the United
States in which the Company or any affiliate thereof conducts business or
any state or similar subdivision of any foreign country.
(iii) REMEDIES. The Executive agrees that any
breach of the terms of this SECTION 10 would result in irreparable injury
and damage to the Company for which the Company would have no adequate
remedy at law. The Executive therefore also agrees that in the event of
any such breach or any threat of such breach, the Company shall be entitled
to an immediate injunction and restraining order to prevent such breach
and/or threatened breach and/or continued breach by the Executive and/or
any and all persons and/or entities acting for and/or with the Executive,
without having to prove damages, in addition to any other remedies to which
the Company may be entitled at law or in equity. The terms of this SECTION
10 shall not prevent the Company from pursuing any other available remedies
for any breach or threatened breach hereof, including but not limited to
the recovery of damages from the Executive.
8.
The provisions of this SECTION 10 shall survive any termination of
this Agreement. The existence of any claim or cause of action by the Executive
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of the covenants and
agreements set forth in this SECTION 10.
11. MISCELLANEOUS.
(a) BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, executors, representatives, estates, successors and assigns, including
any successor or assign to all or substantially all of the business and/or
assets of the Company, whether direct or indirect, by purchase, merger,
consolidation, acquisition of stock or otherwise; PROVIDED, HOWEVER, that the
Executive, or any beneficiary or legal representative of the Executive, shall
not assign all or any portion of the Executive's rights or obligations under
this Agreement without the prior written consent of the Company.
(b) NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been given on
the day delivered if delivered personally, within three (3) "Business Days" (as
defined below) after being sent if sent by registered or certified mail (postage
prepaid, return receipt requested), the next day after being sent if sent by
overnight courier (prepaid) or the next day after being sent if sent by
telecopier to either party at the following address:
IF TO THE COMPANY:
Xxxxxx Vineyards Inc.
00000 Xxxxxxxxxx Xxxx.
Xxxxxx xxx Xxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
WITH A COPY TO:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: V. Xxxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
9.
IF TO THE EXECUTIVE:
Xxxxx X. Xxxxxx
c/x Xxxxxx Vineyards Inc.
00000 Xxxxxxxxxx Xxxx.
Xxxxxx xxx Xxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or to such other address as either party shall have specified for itself or
herself from time to time to the other party in writing. For purposes of this
Agreement, the term "BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or any day on which commercial banks in Los Angeles, California, are
authorized or required by law to close.
(c) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter hereof,
and supersedes all prior agreements and understandings, oral or written, between
them as to such subject matter.
(d) AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
(e) HEADINGS. The headings contained in this Agreement are
inserted for convenience or reference only, and do not constitute a part of this
Agreement.
(f) NO THIRD PARTY BENEFICIARIES. This Agreement is not
intended to confer any rights or remedies on any person not a party to this
Agreement.
(g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
(h) INVALIDITY; SEVERABILITY. In the event that any provision
of this Agreement shall be deemed contrary to law or invalid or unenforceable in
any respect by a court of competent jurisdiction, the remaining provisions shall
remain in full force and effect to the extent that such provisions reasonably
can still be given effect in accordance with the intentions of the parties, and
the invalid and unenforceable provisions shall be deemed, without further action
on the part of the parties, modified, amended and limited solely to the extent
necessary to render the same valid and enforceable.
(i) GOVERNING LAW. The validity and interpretation of this
Agreement shall be governed by the laws of the State of California, without
reference to the conflict of laws principles thereof.
(j) MEDIATION AND ARBITRATION. Any dispute which may arise
between the parties hereto as to the construction, interpretation or effect of
this Agreement which is not resolved by mutual agreement between the parties,
shall first be submitted to nonbinding mediation on terms and conditions to be
mutually agreed upon by the parties. In the event that
10.
a dispute is not resolved by nonbinding mediation, the disputing party may give
the other party notice of such party's intention to cause the same to be
submitted to arbitration. After fifteen (15) days have elapsed from the giving
of such notice, but not before such time, the party who gave such notice may
cause any such dispute which then remains unresolved to be submitted to
arbitration by submitting the same to the Los Angeles, California office of the
American Arbitration Association (the "AAA") (or any successor thereto, but if
no organization is then performing a function reasonably similar to the AAA,
then to a court of competent jurisdiction in accordance with the rules of such
court) with a request for arbitration to be conducted in accordance with the
rules thereof by one (1) arbitrator to be jointly selected by the parties. The
prevailing party's expenses, including without limitation attorneys' fees, in
connection with such arbitration shall be borne by the losing party; PROVIDED,
HOWEVER, that if liability is allocated by the arbitrator between the parties,
the expenses of such arbitration, including without limitation the parties'
attorneys' fees, shall be borne by the parties in proportion to their respective
percentages or proportions of liability assessed by the arbitrator. The
decision of the arbitrator as to all matters properly submitted to such
arbitrator and as to the apportionment of expenses of arbitration shall be
conclusive and binding upon the parties and judgment upon any award may be
entered in any court of competent jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
XXXXXX VINEYARDS INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
"COMPANY"
/s/ Xxxxx X. Xxxxxx
--------------------------------------------------
XXXXX X. XXXXXX
"EXECUTIVE"
11.
Appendix A
NOTIFICATION TO EMPLOYEE
Set forth below is the text of Sections 2870, 2871 and 2872 of
the California Labor Code, as published in Xxxx'x Xxx. Cal. Labor Code (1989)
and Xxxx'x Xxx. Cal. Labor Code (1994 Supp.):
Section 2870. EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS
(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:
(1) 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; or
(2) 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.
Section 2871. CONDITIONS OF EMPLOYMENT OR CONTINUED EMPLOYMENT; DISCLOSURE OF
INVENTIONS
No employer shall require a provision made void and unenforceable by
Section 2870 as a condition of employment or continued employment. Nothing in
this article shall be construed to forbid or restrict the right of an employer
to provide in contracts of employment for disclosure, provided that any such
disclosures be received in confidence, of all of the employee's inventions made
solely or jointly with others during the term of his or her employment, a review
process by the employer to determine such issues as may arise, and for full
title to certain patents and inventions to be in the United States, as required
by contracts between the employer and the United States or any of its agencies.
Section 2872. NOTICE TO EMPLOYEE; BURDEN OF PROOF
If an employee agreement entered into after January 1, 1980, contains
a provision requiring the employee to assign or offer to assign any of his or
her rights in any invention to his or her employer, the employer must also, at
the time the agreement is made, provide a written notification to the employee
that the agreement does not apply to an invention which qualifies fully under
the provisions of Section 2870. In any suit or action arising thereunder, the
burden of proof shall be on the employee claiming the benefits of its
provisions.
