EXHIBIT 99.15
eMACHINES, INC.
XXXX XXXXXXXX EMPLOYMENT AGREEMENT
This Agreement is entered into as of April 30, 2001 (the "Effective Date"),
by and between eMachines, Inc. (the "Company"), and Xxxx Xxxxxxxx ("Executive").
WHEREAS, the Company desires to retain Executive in the capacity of Senior
Vice President and Chief Operating Officer of the Company, and Executive desires
to accept such employment; and
WHEREAS the parties desire and agree to enter into an employment
relationship by means of this Agreement;
NOW THEREFORE in consideration of the premises and mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and among the parties as follows:
1. Duties and Scope of Employment.
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(a) Positions and Duties. As of the date of this Agreement, Executive
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will as Senior Vice President and Chief Operating Officer of the Company. During
the Employment Term (as defined below), Executive will render such business and
professional services in the performance of his duties, consistent with
Executive's position within the Company, as shall reasonably be assigned to him
by the Company's Chief Executive Officer; provided, however, that the Company's
Board of Directors (the "Board") shall have the right to revise such
responsibilities from time to time as the Board may deem appropriate. The
Executive's services shall be performed at the Company's principal executive
offices.
(b) Term. The period of Executive's employment under this Agreement
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is referred to herein as the "Employment Term."
(c) Obligations. During the Employment Term, Executive will perform
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his duties faithfully and in a diligent and competent manner and will devote his
full business efforts and time to the Company. For the duration of the
Employment Term, Executive agrees not to actively engage in any other
employment, occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the Board.
2. At-Will Employment. The parties agree that Executive's employment with
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the Company will be "at-will" employment and may be terminated at any time with
or without cause or notice. Executive understands and agrees that neither his
job performance nor promotions, commendations, bonuses or the like from the
Company give rise to or in any way serve as the basis for modification,
amendment, or extension, by implication or otherwise, of his employment with the
Company.
3. Compensation. As compensation for the services to be performed by
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Executive under this Agreement, the Company shall, during the Employment Term,
provide Executive with the compensation and benefits set forth in Sections 3 and
4 of this Agreement.
(a) Base Salary. The Company will pay Executive an annual salary of Two
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Hundred Forty Thousand Dollars ($240,000) (the "Base Salary"). The Base Salary
will be paid periodically in accordance with the Company's normal payroll
practices. The Base Salary will be subject to review and adjustments will be
made based upon the Company's normal performance review practices.
(b) Initial Annual Bonus. With respect to Executive's first year of
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employment with the Company under this Agreement, Executive shall receive a
bonus of Sixty Thousand Dollars ($60,000) (the "Initial Annual Bonus") payable
thirty (30) days after the first anniversary of the date of this Agreement;
provided, however, that payment of the Initial Annual Bonus is subject to
Executive's continued employment with the Company through the first anniversary
of the date of this Agreement.
(c) Subsequent Annual Bonuses. With respect to each year of employment
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with the Company under this Agreement after the first year of such employment,
Executive shall be eligible to receive a bonus (each, a "Subsequent Annual
Bonus") pursuant to the Company's bonus program for Senior Vice Presidents as
then in effect except that with respect to Executive's second year of employment
with the Company, Executive shall be eligible to receive a bonus of not less
than Sixty Thousand Dollars ($60,000) (the "Bonus Program"). Each Subsequent
Annual Bonus shall be based upon Executive's achievement of performance
objectives set forth or established pursuant to the Bonus Program for such year.
Payment of each Subsequent Annual Bonus shall be made in accordance with the
Bonus Program; provided, however, that payment of the Subsequent Annual Bonus is
subject to Executive's employment with the Company through the end of the
applicable year of employment with the Company (based on anniversary dates of
the date of this Agreement). Executive may elect to apply a Subsequent Annual
Bonus against any outstanding loans that Executive owes to the Company.
(d) Stock Option. Subject to approval of the Board, Executive will be
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granted a stock option (the "Option"), which will be, to the extent possible
under the One Hundred Thousand Dollar ($100,000) rule of Section 422(d) of the
Internal Revenue Code of 1986, as amended (the "Code"), an "incentive stock
option" (as defined in Section 422 of the Code), to purchase two hundred fifty
thousand (250,000) shares of the Company's Common Stock at an exercise price per
share equal to the per share fair market value of the Company's Common Stock on
the date of grant, determined in accordance with the Company's 1998 Amended and
Restated Stock Plan (the "Option Plan"). Subject to the accelerated vesting
provisions set forth in Section 6(c) of this Agreement, the Option will vest as
to twenty-five percent (25%) of the shares subject to the Option one (1) year
after the date of this Agreement, and as to 1/48th of the shares subject to the
Option monthly thereafter, so that the Option will be fully vested and
exercisable four (4) years from the vesting commencement date, subject to
Executive's continued service with the Company on the relevant vesting dates.
The Option will be subject to the terms, definitions and provisions of the
Option Plan and the stock option agreement by and between Executive and the
Company (the "Option Agreement").
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4. Benefits, etc.
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(a) Employee Benefits. During the Employment Term, Executive will be
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entitled to participate in the employee benefit plans currently and hereafter
maintained by the Company of general applicability to other senior executives of
the Company, including, without limitation, the Company's group medical, dental,
vision, disability, life insurance, and flexible-spending account plans. The
Company reserves the right to cancel or change the benefit plans and programs it
offers to its employees at any time.
(b) Vacation. Executive will be entitled to fifteen (15) days of paid
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vacation for his first year of employment with the Company and twenty (20) days
of paid vacation per year thereafter in accordance with the Company's vacation
policy, with the timing and duration of specific vacations mutually and
reasonably agreed to by the parties hereto.
(c) Expenses. The Company will reimburse Executive for reasonable
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travel, entertainment or other expenses incurred by Executive in the furtherance
of or in connection with the performance of Executive's duties hereunder, in
accordance with the Company's expense reimbursement policy as in effect from
time to time.
(d) Relocation and Temporary Living Reimbursement. The Company will
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reimburse Executive for reasonable moving and travel expenses incurred by
Executive and his family during their relocation from Executive's primary
residence to the Orange County, California area. The Company will reimburse
Executive for reasonable temporary living expenses that Executive incurs during
the first ninety (90) days of the Employment Term, and during this period,
Company will provide Executive with such temporary housing in the Orange County,
California area as the Company reasonably selects. The total of all such amounts
paid under this Section 4(d) shall not exceed Twenty-Five Thousand Dollars
($25,000).
(e) Housing Loan. The Company will provide Executive with an interest
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free loan in an amount up to Three Hundred Thousand Dollars ($300,000) to be
used for the purchase of a home (the "Loan"). Executive represents to the
Company that (i) the proceeds of this loan will be used exclusively for the
purpose of acquiring a primary residence and (ii) that Executive reasonably
believes that he will itemize deductions on all federal income tax paid while
the loan is in effect. The Loan will be due and payable in full at upon the
earlier of: (i) sixty (60) days after the termination of the Employment Term;
and (ii) the three (3) year anniversary from the Effective Date. The Loan shall
also be secured by a second mortgage executed by Executive in favor of the
Company on the date the Loan is made.
5. Termination.
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(a) Termination by Company.
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(i) The Employment Term shall terminate upon Executive's
death; and
(ii) The Company may terminate the Employment Term for Cause
(as defined below), Total Disability (as defined below) or any other reason,
in each case, by written notice to Executive.
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(b) Termination by Executive. Executive may terminate the Employment
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Term for Good Reason (as defined below) or for any other reason, in each case,
by written notice to the Company.
6. Effect of Termination.
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(a) Voluntary Termination by Executive; Termination for Death, Total
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Disability and Cause. If the Employment Term is voluntarily terminated by
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Executive, is terminated because of Executive's death or Total Disability, or is
terminated by the Company for Cause, in each case, (i) all vesting of the Option
will terminate immediately, (ii) all payments of compensation by the Company to
Executive hereunder will terminate immediately (except as to amounts already
earned), (iii) Executive will only be eligible for severance benefits in
accordance with the Company's established policies as then in effect, and (iv)
Executive shall not be entitled to any portion of the applicable annual bonus
for such year and shall promptly repay to the Company any such portion
previously paid to Executive.
(b) Other Termination. If the Employment Term is terminated by the
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Company other than for Cause or Total Disability or as a result of Executive's
death, then (i) Executive shall be entitled to receive continuing payments of
severance pay (less applicable withholding taxes) at a rate equal to his Base
Salary rate, as then in effect, for a period of six (6) months from the date of
such termination, to be paid periodically in accordance with the Company's
normal payroll policies, and (ii) if such termination occurs prior to the first
anniversary of this Agreement, Executive shall be entitled to receive a pro rata
portion of the Initial Annual Bonus equal to the amount (less applicable
withholding taxes) determined by multiplying the Initial Annual Bonus by the
fraction determined by dividing (x) the number of days from the date of this
Agreement through the date of termination by (y) three hundred sixty-five (365)
days. The foregoing severance payments based on Base Salary and accrued bonuses
to which Executive is entitled upon such termination are referred to herein
collectively as the "Severance Payment." Any portion of the Severance Payment to
which Executive is entitled under Section 6(b)(ii) shall be paid in a lump sum
within ten (10) days following the effective date of termination of the
Employment Term. The Severance Payment shall be in lieu of any further payments
to Employee.
(c) Additional Benefits Upon Termination Following a Change of Control.
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If the Employment Term is terminated by the Company other than for Cause or
Total Disability or as a result of Executive's death or by Executive for Good
Reason, in either case, at any time within twelve (12) months after a Change of
Control (as defined below) of the Company, then all of the stock options granted
by the Company to the Executive, including the Option, prior to the Change of
Control shall become fully vested and exercisable as of the date of the
termination to the extent such stock options are outstanding and unexercisable
at the time of such termination.
7. Definitions.
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(a) Cause. For purposes of this Agreement, "Cause" is defined as (i) a
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significant act of dishonesty made by Executive in connection with Executive's
responsibilities as an employee, (ii) Executive's conviction of, or plea of nolo
contendere to, a felony, (iii) Executive's gross misconduct in connection with
Executive's responsibilities as an employee, (iv) Executive's continued failure
to substantially perform his employment duties after Executive has received a
written demand for
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performance from the Company which specifically sets forth the factual basis for
the Company's belief that Executive has not substantially performed his duties
and after Executive has had thirty (30) days after receipt of such written
demand to cure such nonperformance, if such nonperformance can reasonably be
cured within such time frame, (v) Executive's breach of any material provision
of this Agreement or the Confidentiality Agreement after Executive has received
a written demand for performance from the Company which specifically sets forth
the factual basis for the Company's belief that Executive has breached such
provision and after Executive has had thirty (30) days after receipt of such
written demand to cure such nonperformance, if such nonperformance can
reasonably be cured within such time frame, or (vi) failure by Executive to take
or pass the drug test as required in Section 12(b) of this Agreement.
(b) Change of Control. For purposes of this Agreement, a "Change of
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Control" of the Company means:
(i) the date on which a change in the ownership of the
Company's outstanding securities occurs such that any "person" (as such term is
used in Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company's then outstanding voting securities;
(ii) a change in the composition of the Board occurring within
a two (2) year period, as a result of which fewer than a majority of the
Company's directors are Incumbent Directors. "Incumbent Directors" means
directors who either (A) are members as of the date of this Agreement, or (B)
are elected, or nominated for election, to the Board with the affirmative votes
of at least a majority of the Incumbent Directors at the time of such election
or nomination (but will not include an individual whose election or nomination
is in connection with an actual or threatened proxy contest relating to the
election of directors to the Board);
(iii) the date of the consummation of a merger or
consolidation of the Company with any other entity that has been approved by the
Company's stockholders, other than a merger or consolidation that 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) more than fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation;
(iv) the date on which the stockholders of the Company approve
a plan of complete liquidation of the entity; or
(v) the date of the consummation of the sale or disposition
by the Company of all or substantially all the Company's assets.
None of the foregoing transactions or series of transactions shall
constitute a Change of Control if a shareholder who together with its affiliates
owns, directly or indirectly, fifteen percent (15%) or more of the total voting
power represented by the outstanding voting securities of the Company as of the
date of this Agreement, owns, together with its affiliates, directly or
indirectly, as
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a result of such transaction or series of transactions, or after giving effect
to such transactions, more than fifty percent (50%) of the total voting power
represented by the outstanding voting securities of the Company or such
surviving entity; provided, that in the case of a sale or disposition by the
Company of all or substantially all of the Company's assets, the successor
entity has assumed all of the obligations under this Agreement, the Options and
the Option Agreement.
(c) Good Reason. For purposes of this Agreement, "Good Reason" means (i)
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without the Executive's express written consent, a significant reduction of the
Executive's duties, position or responsibilities relative to the Executive's
duties, position, or responsibilities in effect immediately prior to such
reduction; provided, however, that a reduction in duties, position or
responsibilities solely by virtue of the Company being acquired and made part of
a larger entity (as, for example, when the Chief Financial Officer of a company
remains as such following a change of control of the Company but is not made the
Chief Financial Officer of the acquiring company) shall not constitute Good
Reason; (ii) without the Executive's express written consent, a significant
reduction by the Company in the Base Salary of the Executive as in effect
immediately prior to such reduction; (iii) without the Executive's express
written consent, a material reduction by the Company in the kind or level of
employee benefits (other than salary, bonus and golf club membership) to which
the Executive is entitled immediately prior to such reduction with the result
that the Executive's overall benefits package (other than salary, bonus and golf
club membership) is significantly reduced; or (iv) without the Executive's
express written consent, the relocation of the Executive to a facility or a
location more than fifty (50) miles from the current location of the Company's
headquarters and principal place of business.
(d) Total Disability. For purposes of this Agreement, "Total Disability"
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means Executive's mental or physical impairment that has or is likely to prevent
Executive from performing the responsibilities and duties of his position for
three (3) months or more in the aggregate during any six (6) month period. Any
question as to the existence or extent of Executive's disability upon which the
Executive and the Company cannot agree shall be resolved by a qualified
independent physician who is an acknowledged expert in the area of the mental or
physical impairment, selected in good faith by the Board and approved by the
Executive, which approval shall not unreasonably be withheld.
8. Confidential Information. Executive agrees to enter into the Company's
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standard confidential information and invention assignment agreement (the
"Confidentiality Agreement") upon commencing employment hereunder.
9. Non-Solicit. Executive covenants and agrees with the Company that during
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his service to the Company and for a period expiring one (1) year after the date
of termination of such services, he will not solicit any of the Company's then-
current employees to terminate their employment with the Company or to become
employed by any firm, company or other business enterprise with which Executive
may then be connected.
10. Representations of Executive. Executive represents that the execution
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of this Agreement and the Confidentiality Agreement, and performance of
Employee's obligations hereunder and thereunder, will not conflict with, or
result in a violation or breach of, any other agreement to which Executive is a
party or any judgment, order or decree to which Executive is subject.
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11. Arbitration.
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(a) General. In consideration of Executive's service to the Company, its
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promise to arbitrate all employment-related disputes and Executive's receipt of
the compensation, pay raises and other benefits paid to Executive by the
Company, at present and in the future, Executive agrees that any and all
controversies, claims, or disputes with anyone (including the Company and any
employee, officer, director, shareholder or benefit plan of the Company in their
capacity as such or otherwise) arising out of, relating to, or resulting from
Executive's service to the Company under this Agreement or otherwise or the
termination of Executive's service with the Company, including any breach of
this Agreement, shall be subject to binding arbitration under the Arbitration
Rules set forth in California Code of Civil Procedure Section 1280 through
1294.2, including Section 1283.05 (the "Rules") and pursuant to California law.
Disputes which Executive agrees to arbitrate, and thereby agrees to waive any
right to a trial by jury, include any statutory claims under state or federal
law, including, but not limited to, claims under Title VII of the Civil Rights
Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination
in Employment Act of 1967, the Older Workers Benefit Protection Act, the
California Fair Employment and Housing Act, the California Labor Code, claims of
harassment, discrimination or wrongful termination and any statutory claims.
Executive further understands that this Agreement to arbitrate also applies to
any disputes that the Company may have with Executive.
(b) Procedure. Executive agrees that any arbitration will be
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administered by the American Arbitration Association ("AAA") and that a neutral
arbitrator will be selected in a manner consistent with its National Rules for
the Resolution of Employment Disputes. The arbitration proceedings will allow
for discovery according to the rules set forth in the National Rules for the
Resolution of Employment Disputes or California Code of Civil Procedure.
Executive agrees that the arbitrator shall have the power to decide any motions
brought by any party to the arbitration, including motions for summary judgment
and/or adjudication and motions to dismiss and demurrers, prior to any
arbitration hearing. Executive agrees that the arbitrator shall issue a written
decision on the merits. Executive also agrees that the arbitrator shall have the
power to award any remedies, including attorneys' fees and costs, available
under applicable law. Executive understands the Company will pay for any
administrative or hearing fees charged by the arbitrator or the AAA except that
Executive shall pay the first Two Hundred Dollars ($200) of any filing fees
associated with any arbitration Executive initiates. Executive agrees that the
arbitrator shall administer and conduct any arbitration in a manner consistent
with the Rules and that to the extent that the AAA's National Rules for the
Resolution of Employment Disputes conflict with the Rules, the Rules shall take
precedence.
(c) Remedy. Except as provided by the Rules, arbitration shall be the
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sole, exclusive and final remedy for any dispute between Executive and the
Company. Accordingly, except as provided for by the Rules, neither Executive nor
the Company will be permitted to pursue court action regarding claims that are
subject to arbitration. Notwithstanding anything in this Agreement to contrary,
the arbitrator will not have the authority to disregard or refuse to enforce any
lawful Company policy, and the arbitrator shall not order or require the Company
to adopt a policy not otherwise required by law that the Company has not
adopted.
(d) Availability of Injunctive Relief. In addition to the right under
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the Rules to petition the court for provisional relief, Executive agrees that
any party may also petition the court
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for injunctive relief where either party alleges or claims a violation of this
Agreement or the Confidentiality Agreement or any other agreement regarding
trade secrets, confidential information, nonsolicitation or Labor Code (S)2870.
In the event either party seeks injunctive relief, the prevailing party shall be
entitled to recover reasonable costs and attorneys fees.
(e) Administrative Relief. Executive understands that this Agreement
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does not prohibit Executive from pursuing an administrative claim with a local,
state or federal administrative body such as the Department of Fair Employment
and Housing, the Equal Employment Opportunity Commission or the workers'
compensation board. This Agreement does, however, preclude Executive from
pursuing court action regarding any such claim.
(f) Voluntary Nature of Agreement. Executive acknowledges and agrees
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that Executive is executing this Agreement voluntarily and without any duress or
undue influence by the Company or anyone else. Executive further acknowledges
and agrees that Executive has carefully read this Agreement and that Executive
has asked any questions needed for Executive to understand the terms,
consequences and binding effect of this Agreement and that Executive fully
understands this Agreement, including that Executive is waiving Executive's
right to a jury trial. Finally, Executive agrees that Executive has been
provided an opportunity to seek the advice of an attorney of Executive's choice
before signing this Agreement.
12. Miscellaneous Provisions.
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(a) Assignment. This Agreement will be binding upon and inure to the
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benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive's death and (b) any successor of the Company, subject, in the case of
the transfer of all or substantially all the assets or business of the Company
to the agreement of the successor to the effect of this provision. Any such
successor of the Company will be deemed substituted for the Company under the
terms of this Agreement for all purposes. For this purpose, "successor" means
any person, firm, corporation or other business entity which at any time,
whether by purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance or other
disposition of Executive's right to compensation or other benefits is void.
(b) Drug Testing. Executive acknowledges that upon commencement of his
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employment with the Company, he shall submit to a drug test as required of all
Company employees.
(c) Notices. All notices, requests, demands and other communications
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called for hereunder shall be in writing and shall be deemed given (i) on the
date of delivery if delivered personally, (ii) one (1) day after being sent by a
well established commercial overnight service, or (iii) four (4) days after
being mailed by registered or certified mail, return receipt requested, prepaid
and addressed to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in writing:
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If to the Company:
eMachines, Inc.
00000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Chief Executive Officer
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If to Executive:
at the last residential address known by the Company.
(d) Severability. In the event that any provision hereof becomes or is
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declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.
(e) Integration. This Agreement, together with the Option Plan, Option
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Agreement and the Confidentiality Agreement, represents the entire agreement and
understanding between the parties as to the subject matter herein and supersedes
all prior or contemporaneous agreements whether written or oral.
(f) Waiver and Amendment. No provision of this Agreement may be waived
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except by a writing executed by the party against whom the waiver is to be
effective. A party's failure to enforce any provision of this Agreement shall
neither be construed as a waiver of the provision nor prevent the party from
enforcing any other provision of this Agreement. No provision of this Agreement
may be amended or otherwise modified except by a writing signed by the parties
to this Agreement.
(g) Headings. All captions and section headings used in this Agreement
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are for convenient reference only and do not form a part of this Agreement.
(h) Governing Law. This Agreement will be governed by the laws of the
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State of California (with the exception of its conflict of laws provisions).
(i) Acknowledgment. Executive acknowledges that he has had the
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opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.
(j) Counterparts. This Agreement may be executed in
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counterparts, and each counterpart shall have the same force and effect as an
original and shall constitute an effective, binding agreement on the part of
each of the undersigned.
(k) Withholding, Etc. The Company may make such deductions and
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withholdings from all sums payable pursuant to this Agreement that are required
by law or as Executive requests for taxes and other charges.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, and in
the case of the Company by its duly authorized officers, as of the date first
above written.
COMPANY:
eMACHINES, INC.
By: /s/ XXXXX XXXXXXXXX
_____________________________
Title:
_____________________________
EXECUTIVE:
/s/ XXXX XXXXXXXX
________________________________
Xxxx Xxxxxxxx
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