Exhibit 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is entered into this 1st day
of August, 2002, by and between Cognigen Networks, Inc., a Colorado corporation
(the "Company"), and Xxxxx X. Xxxxxxx (the "Employee"). The Company hereby
employs the Employee and the Employee hereby accepts employment with the Company
on the terms and conditions hereinafter set forth.
1. Term. Subject to the provisions for termination as hereinafter provided
in Section 4 of this Agreement, the term of this Agreement shall commence
effective on August 1, 2002, and shall terminate on January 31, 2003 (the
"Term").
2. Nature of Employment. The Company hereby employs the Employee as stated
in Schedule A, Description of Duties and Compensation, to perform such duties as
stated or as may be directed by the Chief Executive Officer of the Company. The
Employee accepts such employment, and agrees to abide by the provisions of this
Agreement and agrees to devote his full time and best efforts to his employment
under this Agreement as is reasonably required. Notwithstanding the foregoing,
the Employee may carry on outside activities so long as those activities neither
conflict nor compete with the Employee's job responsibilities and corporate
duties. The Employee shall at all times, faithfully, with due diligence and to
the best of the Employee's ability, experience and talent, perform all the
duties hereunder.
3. Compensation, Vacations and Expenses
a. Salary. The Company shall pay to the Employee an annual salary as
stated in Schedule A, Description of Duties and Compensation, during the
Term (the "Base Salary"). The Employee's Base Salary may be increased as
determined by the Board of Directors of the Company through an amendment to
this Agreement. The Base Salary shall be payable in 24 equal installments
and shall have deducted therefrom all required withholdings and amounts
requested in writing by the Employee
b. Bonuses. Any bonuses to the Employee will be set at the discretion
of the Board of Directors of the Company. Nothing shall obligate the
Company, in the future, to pay any bonus or bonuses to the Employee.
c. Vacations and Fringe Benefits. The Employee shall be entitled to an
annual vacation of three (3) weeks, during which time Employee's Base
Salary shall be paid when due. The Employee shall further be entitled to
participate in and receive the benefits provided under any employee benefit
program which may be adopted and maintained by the Company and for which
the Employee is eligible by virtue of Employee's employment hereunder, but
only as and to the extent the Employee would otherwise be eligible as
provided in any said program.
4. Termination of Agreement.
a. Termination by Employee. The Employee may terminate this Agreement
with Cause (as defined in this Section 4.a.) immediately upon written
notice of such termination to the Company. The Employee may also terminate
this Agreement without Cause upon 120 days prior written notice to the
Company. (In the event of change of control1 of the Company has transpired
after the date of execution of this Agreement, in the alternative, Employee
may terminate this Agreement without Cause upon 30 days prior written
notice to the Company.) In such event, the Employee shall continue to
render the services required under this Agreement and shall be paid on the
regular payment dates the Base Salary set forth in Section 3.a up to the
date of termination. The Company shall have the option, in its complete
discretion, to make the termination of the Employee's employment effective
at any time prior to the end of the above notice period, provided the
Company pays the Employee all compensation due and owing through the last
day he actually worked and through the balance of the notice period (not to
exceed 120 days). For purposes of this Section 4.a., the term "Cause" shall
be defined as any willful or permanent breach by the Company of its
obligations to the Employee as an employee of the Company, as provided in
California Labor Code section 2925; provided, however, the Cause shall not
be deemed to exist unless the Company fails to cure any such willful or
permanent breach within five (5) days' written notice of such breach by the
Employee.
b. Termination by the Company. The Company may terminate this
Agreement for Cause (as defined in this Section 4.b.) immediately upon
written notice of such termination to the Employee and upon payment by the
Company to the Employee of all Base Salary and any bonus accrued under this
Agreement to the date of termination. For purposes of this Section 4.b.,
"Cause" shall be deemed to exist under the following circumstances: (a) the
Employee materially fails or refuses to observe the provisions of this
Agreement; (b) the Employee is not satisfactorily performing any of his
duties required under this Agreement, as determined in the Company's
reasonable discretion; (c) the Employee perpetrates an act of fraud or
misappropria-tion, or embezzles funds; or (d) the Employee is convicted of,
or pleads nolo contendere to, any crime punishable as a felony. Provided,
however, that "Cause" shall not be deemed to exist under either item (a) or
(b) in the foregoing sentence unless the Employee is first given five (5)
days' written notice by the Company of such failure, refusal, or
performance deficiency, and if the Employee does not correct such failure,
refusal, or performance deficiency to the satisfaction of the Company
within five (5) days after the giving of such notice. In the event of a
termination of the Employee's employment for Cause, the Company shall have
no further obligation to the Employee other than to pay any and all Base
Salary and any bonus then due the Employee. However, termination of the
Employee's employment for Cause shall not terminate or extinguish the
Employee's obligation or liability to pay to the Company or any of its
affiliates any amount owed to them by the Employee (including, but not
limited to, any amounts misappropriated, embezzled or otherwise obtained by
the Employee by reason of any of the occurrences referred to in this
Section 4.b.), and shall be without prejudice to any other rights or
remedies of the Company or its affiliates at law or in equity.
The Company may also terminate this Agreement immediately without
Cause (as defined in this Section 4.b.). In such event, the Company shall
continue to pay the Employee on the regular payment dates the Base Salary
set forth in Section 3.a hereof and shall pay Employee any accrued bonuses
as they become due. In the event the Company terminates this Agreement
without Cause, the amount of Base Salary and accrued bonuses payable by the
Company shall be reduced by the gross amount of any compensation that the
Employee receives from any other source after the date of the Company's
termination of this Agreement without cause. In no event shall the Company
be required to pay the Employee any Base Salary, bonuses or other
compensation after the end of the Term.
c. Termination Upon Death of Employee. This Agreement shall
automatically terminate in the event of the Employee's death. In such case,
any accrued Base Salary and bonus shall inure to the estate of the Employee
and the payment thereof shall be the only liability the Company shall have
to the Employee's estate.
5. Employee Actions.
a. Employee Shall Not Disclose Information. The Employee recognizes
and acknowledges that the list of the customers, as it may exist from time
to time, of the Company (which for purposes of this Section 5 includes the
Company's subsidiaries and affiliates) and any other proprietary or
confidential information, including, but not limited to financial
information and information pertaining to the software, marketing and sales
operations, product pricing, financing operations and potential
acquisitions (hereinafter "Confidential Information"), used by the Company
in its business are valuable and unique assets of the Company. The Employee
further agrees and acknowledges that the Confidential Information derives
actual or potential economic value from not being generally known to the
public or to other persons who can obtain economic value from its
disclosure and use. Except as permitted by the next sentence, the Employee
will not during the Term or for a period of one (1) year after the
termination of his employment with the Company, disclose any Confidential
Information to any person, firm, corporation, association or other entity
for any reason or purpose whatsoever without the prior written consent or
authorization of the board of directors of the Company. Notwithstanding the
prohibitions contained in the foregoing sentence, the Employee shall be
permitted to disclose such information during the term of his employment
with the Company to other persons employed by the Company who have a need
to know such information for a proper purpose related to the business of
the Company. Upon termination of the Employee's employment by the Company,
the Employee shall neither take nor retain any papers, customer lists,
manuals, files or other documents or copies thereof belonging to the
Company. To the extent any items of Confidential Information constitute
trade secrets under California law, Employee's obligations of
confidentiality and nondisclosure shall continue to survive after said
one-year period to the greatest extent permitted by applicable law. These
rights of the Company are in addition to those the Company has under the
common law or applicable statutes for the protection of trade secrets.
b. Non-Compete. The Employee hereby covenants and agrees that the
Employee will not, without the prior written consent of the Company,
directly or indirectly by assisting others, whether individually or through
any entity controlled by the Employee, during the Term and for a period of
one (1) year after the termination of the Employee's employment with the
Company for any reason (the "Restrictive Period"), occupy a "Competitive
Position" with any person, firm corporation or business engaged in the
distribution of products and services using an Internet-based medium. A
"Competitive Position" means a position wherein Employee performs or has
responsibility for duties that are the same as or substantially similar to
all or part of those duties actually performed by Employee while employed
by the Company.
c. Non-Solicitation of Company Employees or Agents. During the
Employee's employment with the Company and for one (1) year thereafter,
Employee shall not solicit, either directly or indirectly, or in any manner
encourage employees or agents of the Company to leave the employ of the
Company or no longer be agents of the Company.
d. Non-Solicitation of Company Customers. During the Employee's
employment with the Company and for one (1) year immediately following the
termination of Employee's employment with the Company for any reason,
Employee shall not, on Employee's own behalf or on behalf of any person,
partnership, association, corporation or business organization, entity or
enterprise (except the Company), solicit any customer of the Company or any
representative of any such customer with a view to selling or providing any
product, equipment or service competitive or potentially competitive with
any product, equipment or service sold or provided by the Company during
the one (1) year period immediately preceding termination of Employee's
employment with the Company.
e. Intellectual Property. The Employee shall disclose to the Company
all ideas and business plans developed by the Employee during the term of
the Employee's employment with the Company which relate to the business
conducted by the Company. All patents, patent applications, patent
licenses, formulas, inventions, improvements, designs, discoveries,
processes, software, copyrights, know-how, proprietary information, rights,
trademarks or trade names or future improvements thereto developed or
conceived of by the Employee during any period of employment with the
Company shall be promptly disclosed to, and all rights with respect thereto
shall be assigned by the Employee to, the Company in consideration of the
remuneration paid or payable to the Employee hereunder and shall be
considered work made for hire for the Company within the meaning of Title
17 of the United States Code. The Employee acknowledges that "software" as
used in this Section 5.e shall include without limitation all ideas,
concepts, know-how, methods, techniques, structures, information and
materials relating to the software including source code, object and load
modules, requirements specifications, design specifications, design notes,
flow charts, decoding sheets, annotations, documentation and the
structures, organization, sequence, designs, formulas and algorithms which
reside in the software and which are not generally known to the public or
within the industries or trades in which the Company competes. The parties
understand and agree that the provisions of this Section 5.e. requiring
assignment of inventions to the Company do not apply to any invention that
qualifies fully under the provisions of California Labor Code section 2870
(attached hereto as Exhibit B). The Employee shall advise the Company
promptly in writing of any inventions that Employee believes meet the
criteria in California Labor Code section 2870.
f. Remedies. The Employee acknowledges and agrees that Employee's
obligations provided in this Section 5 are necessary and reasonable in
order to protect the Company and its business and the Employee expressly
agrees that monetary damages would be inadequate to compensate the Company
for any breach by Employee of Employee's covenants and agreements set forth
herein. Accordingly, Employee agrees and acknowledges that any such
violation or threatened violation of this Section 5 will cause irreparable
injury to the Company and that, in addition to any other remedies that may
be available, in law, in equity or otherwise, the Company may be entitled
to obtain injunctive relief against the prospective breach of this Section
5 or the continuation of any such breach by the Employee without the
necessity of proving actual damages.
g. Construction. In the event that any provision of this Section 5
should ever be deemed to exceed the time, geographic, or other limitations
permitted by applicable law, then such provision shall be reformed to the
maximum time, geographic, or other limitations permitted by applicable law.
The provisions of this Section 5 shall be applicable for the period
indicated and shall survive the termination of this Agreement.
h. Relocation. Under no circumstances, throughout the Term, shall the
Employee be required to relocate in order to maintain his position of
employment with the Company. This covenant of the Company is a material
element of the Employee's willingness to enter into this Agreement.
6. General Matters.
a. Governing Law. This Agreement shall be governed by the laws of the
State of California and shall be construed in accordance therewith.
b. No Waiver. No provision of this Agreement may be waived except by
an Agreement in writing signed by the waiving party. A waiver of any term
or provision shall not be construed as a waiver of any other term or
provision.
c. Amendment. This Agreement may only be amended or altered, in whole
or in part, by a written instrument setting forth such changes, signed by
all parties
d. Binding Effect. This Agreement shall be binding upon the Employee,
the Company and their successors and assigns.
e. Construction. Throughout this Agreement the singular shall include
the plural, the plural shall include the singular and the masculine shall
include the feminine wherever the context so requires.
f. Text to Control. The headings of Sections are included solely for
convenience of reference. If any conflict between any heading and the text
of this Agreement exists, the text shall control.
g. Severability. If any provision of this Agreement is declared by any
court of competent jurisdiction to be invalid for any reason, such
invalidity shall not affect the remaining provisions, which shall be fully
severable, and the Agreement shall be construed and enforced as if such
invalid provision had never been included. .
h. Entire Agreement of the Parties. The parties agree that this
document contains the entire agreement and understanding between them in
relation to the subject matter hereof and no representations, warranties,
covenants, understandings or agreements in relation thereto exist between
the parties except as expressly set forth herein.
i. Notices. Every notice or other communication to be given by either
party to the other party with respect to this Agreement shall be in writing
and shall not be effective for any purpose unless the same shall be served
personally or by national air courier service or United States certified
mail, return receipt requested, postage prepaid, addressed, if to the
Company at 0000 Xxxxxxx Xxxxxx, XX, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000,
Attention, Chief Executive Officer and President, and if to the Employee at
0 Xxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000 or, such other address or
addresses as the Company or the Employee may from time to time designate by
written notice given as above provided. Every notice or other communication
hereunder shall be deemed to have been given as of the third business day
following the date of such mailing (or as of any earlier date evidenced by
a receipt from such national air courier service or the United States
Postal Service) or immediately if personally delivered. Notices not sent in
accordance with the foregoing shall be of no force and effect until
received by the foregoing parties as such addresses specified herein.
j. Duplicate Originals. This Agreement may be executed in several
counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument. .
k. Arbitration of Any Dispute. During and after the term of this
Agreement, any dispute, controversy or claim arising out of or relating to
this Agreement, or the breach thereof, or the employment relationship
between the Company and the Employee ("Arbitral Claims") shall be settled
by binding arbitration in San Diego, California, according to the Federal
Arbitration Act, 9 U.S.C.ss.1, et seq., inasmuch as this Agreement concerns
transactions involving interstate commerce. The arbitration shall be held
in San Diego, California, unless otherwise agreed by the parties. Arbitral
Claims shall include, but are not limited to, contract (express or implied)
and tort claims of all kinds, as well as all claims based on any federal,
state, or local law, statute, or regulation, excepting only claims under
applicable workers' compensation law and unemployment insurance claims. THE
PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO
ARBITRAL CLAIMS. The arbitrator(s) shall be selected as follows: The
parties shall jointly select one impartial arbitrator in the event the
dispute is less than $50,000. In the event the parties cannot agree on one
arbitrator within ten days, or the dispute is $50,000 or greater, then each
party shall select an impartial arbitrator within the following twenty
days, and those two selected arbitrators shall select the third arbitrator
who will comprise a three-person panel for arbitration. All arbitration
matters shall be held and decided in accordance with the Employment Dispute
Resolution Rules of the American Arbitration Association ("AAA"), but
without the administration or supervision of AAA. In any arbitration, the
burden of proof shall be allocated as provided in applicable law, and the
arbitrator shall have the authority to award or grant legal, equitable, and
declaratory relief only to the same extent as if the case were brought in a
civil court. Confirmation and enforcement of the decision and award
rendered by the arbitrator or panel of arbitrators shall be binding and may
be entered in any court having jurisdiction thereof for confirmation and
enforcement. Notwithstanding the foregoing, either party may obtain
provisional remedies to prevent a threatened breach or continued breach of,
as permitted by California Code of Civil Procedure section 1281.8. Each of
the parties hereby submits to the jurisdiction of the state and federal
courts in San Diego, California, for these purposes.
l. Attorneys' Fees. In the event that the Company or the Employee
retains an attorney or attorneys to enforce performance of this Agreement
by the other party or to obtain damages or other relief because of
violation of the terms of this Agreement by the other party, then all
reasonable attorneys' fees and costs of arbitration or litigation are to be
borne and paid by the party determined to have failed to perform this
Agreement or to be liable for damages or against which other relief is
granted. .
m. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of the Employee's employment to the
extent necessary to the intended preservation of such rights and
obligations.
n. Remedies Cumulative; No Waiver. No remedy conferred upon a party by
this Agreement is intended to be exclusive of any other remedy and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given hereunder or now or hereafter existing at law or in equity. No
delay or omission by a party in exercising any right, remedy or power
hereunder or existing at law or in equity shall be construed as a waiver
thereof and any such right, remedy or power may be exercised by such party
from time to time and as often as may be deemed expedient or necessary by
such party in such party's sole discretion. .
o. Acknowledgement. Employee acknowledges that he has been represented
by and has consulted with independent legal counsel of his own choosing in
regard to this Agreement, that he has read and understands this Agreement,
that he is fully aware of its legal effect, and that he has entered into it
freely and voluntarily and based on his own judgment and not on any
representations or promises other than those contained in this Agreement.
The parties executed this Agreement to be effective as of the date first
above written.
EMPLOYEE:
/s/ Xxxxx X. Xxxxxxx
---------------------------------
Xxxxx X. Xxxxxxx
COGNIGEN NETWORKS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx, President and Chief Executive Officer
Attested to by:
/s/ Xxxxx X. Xxxxxxx
---------------------------------
Xxxxx X. Xxxxxxx, Chief Operating Officer
SCHEDULE A
DESCRIPTION OF DUTIES AND COMPENSATION
EMPLOYEE: Xxxxx X. Xxxxxxx
POSITION WITH COMPANY: Senior Vice-President Corporate and Public Affairs
and Corporate Secretary
COMPENSATION:
Salary: One Hundred Thirty-Two Thousand and Ninety-Six Dollars
($132,096.00) per year, payable twice monthly in equal
installments.
BENEFITS:
Insurance: health insurance plan made available
------
401(k) Plan: to be determined, if any
EMPLOYEE:
/s/ Xxxxx X. Xxxxxxx
----------------------
Xxxxx X. Xxxxxxx
COGNIGEN NETWORKS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------------------------
Xxxxxxx X. Xxxxxx, President and Chief Executive Officer
Attested to by:
/s/ Xxxxx X. Xxxxxxx
------------------------------------------------------
Xxxxx X. Xxxxxxx, Chief Operating Officer
Exhibit B
CALIFORNIA LABOR CODE SECTION 2870
INVENTION ON OWN TIME - EXEMPTION FROM AGREEMENT
"(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."
