EXHIBIT 10.9
CONTRACTOR, CONFIDENTIAL INFORMATION
AND NON-SOLICITATION AGREEMENT
This Contractor, Confidential Information and Non-Solicitation Agreement
(the "Agreement") is made and entered into as of this ___ day of February, 2002
(the "Effective Date"), by and between Brilliant Digital Entertainment, Inc., a
Delaware corporation ("BDE" or the "Company"), located at 0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx Xxxxx, XX 00000 and Xxx Xxxx, an individual ("Contractor"),
located at 0000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxxxx 00000.
RECITALS
A. The Company is engaged in the business of, among other things,
developing, producing, marketing and distributing: (1) 3D authoring tools
(software); (2) digital animated entertainment; (3) interactive, 3D animated
with audio, rich media banner advertisements for the internet ("Brilliant
Banners); (4) ad serving software necessary for Brilliant Banners to be
displayed on web pages; and (5) enterprise solutions for distributed network
services, processing and storage through its majority ownership in the
newly-formed entity sometimes referred to as the "alternate network", which is a
private, peer-to-peer network ("Altnet").
B. Contractor is engaged by the Company to perform the duties described
in Exhibit C and, in connection with his engagement, has been and/or will be
exposed to Confidential Information (as defined below) and may participate in
the development and/or sales and marketing activities of the Company referred to
in Recital "A" above, in addition to many other confidential aspects of the
Company's business. It is understood that for the period of Contractor's
engagement hereunder, Contractor's services may be non-exclusive to Company.
However, Contractor agrees that, for the term hereof, Contractor shall not
perform any services for any person or firm that is in a business that is
directly and materially competitive with the Company or with any subsidiary of
the Company.
C. Contractor has received and will, in the course of Contractor's
engagement with the Company, continue to receive training with respect to and
acquire personal knowledge of the Company's products, plans and business
relationships with customers and potential customers.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing facts and the covenants
hereinafter set forth, and in consideration of the Contractor's engagement, the
Company and Contractor agree as follows:
1. DEFINITIONS.
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For the purposes of this Agreement, the following terms have the
following definitions:
(a) "Confidential Information" means all information of any
kind, type or nature (written, stored on magnetic or other media or oral) which
at any time during the engagement of Contractor by the Company is or has been
compiled, prepared, devised, developed, designed, discovered or otherwise
learned of by Contractor to the extent that such information relates to the
Company or any of its affiliated entities including, without limitation, all of
the Company's price lists, pricing information, customer lists, customer
information, financial information, trade secrets, formulas, patterns,
compilations, devices, methods, techniques, processes, confidential trade
knowledge and computer programs and information; provided, however, that any
such information which is generally known to the public or which may be obtained
by a reasonably diligent businessman without material cost or effort from trade
publications or other readily available and public sources of information shall
not be deemed to be Confidential Information, unless such information was first
published in breach or violation of this Agreement or any similar
confidentiality agreement by Contractor. Contractor shall only have a duty to
protect Confidential Information under the terms of this Agreement (a) if it is
marked or accompanied by documents clearly and conspicuously designating them as
"confidential" or the equivalent; or (b) if it is identified by the Company as
confidential before, during or promptly after the presentation or communication
or (c) if the circumstances under which it is provided would lead a reasonable
person to concluded such information to be confidential.
(b) "Person" means any individual, corporation, partnership,
limited liability company, trust, government or regulatory authority, or other
entity.
(c) "Brilliant Banner Campaign" means the serving of
advertisements on the web, utilizing Brilliant Banner ads.
(d) "ASO"s means advertising sales organizations, and includes
third party web site advertising sales forces.
2. TERM OF THE ENGAGEMENT; AT WILL NATURE OF ENGAGEMENT;
COMPENSATION.
(a) TERM. The initial term of this Agreement shall be for a
period of twelve (12) months, commencing on the Effective Date (the "Initial
Term"). Nothing in this Agreement shall be construed as obligating the Company
to continue to engage Contractor beyond such Initial Term, however Contractor's
duties pursuant to this Agreement may be extended by mutual agreement between
the Company and Contractor.
(b) ISSUANCE OF OPTIONS. The Company recognizes the value of
Contractor's past business experiences and the potential value of his services
to be performed for the Company. Therefore, as incentive for Contractor to enter
into this Agreement, and as partial consideration for Contractor performing the
duties pursuant to Exhibit C attached hereto, upon the execution of this
Agreement by authorized signatories, the Company shall issue to Contractor,
subject to shareholder
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approval of an increase in the current size of the Company's option pool,
options to purchase Five Hundred Thousand (500,000) shares of the Company's
common stock at a strike price equal to twelve cents ($0.12) (the "Sher
Inducement Options"). The Sher Inducement Options shall be subject to and
governed by the same provisions as are currently in place for the qualified
options plan of the Company. Contractor represents and warrants that he is an
"accredited investor" as defined in Regulation D under the Securities Act of
1933 (the "Securities Act) and that the Sher Inducement Options are being
acquired for investment purposes and not with a view to further distribution.
Contractor agrees that the Sher Inducement Options will contain customary
legends and will not be transferred other than in compliance with the Securities
Act in transactions not required to be registered with the Securities and
Exchange Commission.
(c) MONTHLY RETAINER; SUCCESS OPTIONS. Commencing with the
Effective Date of this Agreement and continuing for the duration of the Initial
Term, Company agrees to pay Contractor a monthly retainer in the amount of Seven
Thousand Five Hundred Dollars ($7,500) (the "Monthly Retainer") for services to
be performed, as described in further detail in Exhibit C hereof. Additionally,
Contractor shall be compensated for the "success" of the Company, including
Altnet. "Success" of the Company is defined as the signing of at least four (4)
strategic partnership deals during the Initial Term due to Contractor's efforts
as unanimously determined by the Compensation Committee of the Company's Board
of Directors (the "Comp Committee") in their sole discretion. If Success is
achieved, Contractor shall be issued, subject to shareholder approval of an
increase in the current size of the Company's option pool, an additional Five
Hundred Thousand (500,000) options to purchase shares of the Company's common
stock at a strike price equal to twelve cents ($0.12) (the "Sher Success
Options"). The Sher Success Options shall also be subject to and governed by the
same provisions as are currently in place for the qualified options plan of the
Company, and Contractor represents and warrants that the Sher Success Options
are being acquired for investment purposes and not with a view to further
distribution and the Sher Success Options will also contain customary legends
and will not be transferred other than in compliance with the Securities Act in
transactions not required to be registered with the Securities and Exchange
Commission. Notwithstanding the foregoing, to the extent that Contractor
achieves less than one hundred percent (100%) Success as defined above, the
number of Sher Success Options shall be reduced by a percentage, the numerator
of which shall be the difference between the actual number of deals signed by
the Comp Committee and four (4) and the denominator which shall be four (4). By
way of example only, if Contractor has Success with three strategic deals,
Contractor shall receive seventy-five percent (75%) of the full Sher Success
Options, or Three Hundred Seventy-five Thousand (375,000) options upon the same
terms and conditions as the full Sher Success Options.
(d) INVESTMENT COMPENSATION. To the extent that, through the
direct efforts of Contractor (including but not limited to introductions to
individuals, venture capitalists and/or companies), a capital investment is made
in either the Company or any of its subsidiaries by a Person initially
introduced to the Company by Contractor other than by a director, officer or 5%
or greater shareholder or any of their affiliates, Contractor shall receive,
upon the funding of such investment, the following cash compensation calculated
as a percentage of the amounts invested:
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(i) up to the 1st $1.0 million: 6%;
(ii) between $1.001 million and $2.0 million: 5%;
(iii) between $2.001 million and $3.0 million: 4%; and
(iv) all amounts above $3.0 million: 3%.
By way of example, if the direct efforts of Contractor lead
to a $2.5 million investment, the cash compensation would be: $130,000 ($60,000
on the 1st million (6%); $50,000 on the 2nd million (5%); and $20,000 (4%) on
the remaining $500,000).
(e) Company shall also reimburse Contractor for all pre-approved
travel and business-related expenses, said expenses to be invoiced to the
Company. Contractor agrees to provide the Company with receipts for all
pre-approved expenses. Within fifteen (15) days of receipt of the above, Company
shall reimburse Contractor for his documented, pre-approved expenses.
(f) Both parties acknowledge that Contractor is not an employee
for state or federal tax purposes. Therefore, Contractor is solely responsible
for any and all federal, state and local taxes, and insurance applicable to the
business of Contractor and shall indemnify the Company and hold the Company
harmless for any such failure to pay any and all applicable taxes or obtain and
maintain requisite insurance, including, but not limited to, comprehensive and
business liability and worker's compensation coverage for Contractor and any
assistants and employees of Contractor.
3. INDEPENDENT CONTRACTOR STATUS; WORK FOR HIRE.
(a) Contractor and Company agree and recognize that Contractor
is not, and shall not be deemed an employee, agent, or joint venture partner of
Company, but is an Independent Contractor. Nothing in this agreement shall be
interpreted or construed as creating or establishing the relationship of
employer and employee between the Company and Contractor. Contractor shall not
be entitled to participate in any employee benefit plans provided by the
Company, including without limitation, vacation and sick pay.
(b) Without limiting the generality of any other provision of
this Agreement, Contractor specifically acknowledges and agrees that all work
product resulting from Contractor's engagement pursuant to this Agreement are
for the benefit of and are the sole and exclusive property of the Company, it
successors and assigns and constitute "work for hire" under Section 201 of Title
17 of the United States Code. If such work product(s) are not legally capable of
being considered as "work for hire", then, in such event, Contractor hereby
irrevocably grants, transfers and assigns to the Company in perpetuity all
right, title and interest, including without limitation, copyright, and all
extensions and renewals thereof, Contractor may have in or to such work product.
4. CONFIDENTIALITY. Subject to the limitations set forth in Section
8, below:
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(a) Contractor shall not, at any time from and after the date
hereof and throughout perpetuity, directly or indirectly, disclose, reveal or
permit access to all or any portion of the Confidential Information, or any
tangible expressions or embodiments thereof (including any facilities, apparatus
or equipment which embody or employ all or any portion of the Confidential
Information), to any Person without the written consent of the Company, except
to Persons designated or employed by the Company.
(b) Without the prior written consent of the Company, Contractor
shall not, directly or indirectly, use or exploit the Confidential Information
at any time from and after the date hereof and throughout perpetuity for any
purpose other than in connection with his engagement duties and obligations to
the Company, and any gain or profit of any kind or nature obtained or derived by
Contractor or to which Contractor may become entitled, directly or indirectly,
at any time as a result of the disclosure of use of all or any part of the
Confidential Information in violation of the provisions of this Agreement, shall
be held in trust by Contractor for the express benefit of the Company and shall
be remitted thereby to the Company on demand.
(c) Contractor acknowledges and agrees that the uses of
Confidential Information specifically prohibited hereunder include, without
limitation, the following:
(i) Using any Confidential Information to induce or attempt
to induce any Person, who is either a customer of the Company or who was being
actively solicited by the Company at any time during which Contractor is or was
engaged by the Company, to cease doing business or not to commence doing
business in whole or in part with the Company; or
(ii) Using any Confidential Information to solicit or assist
in the solicitation of the business of any customer for any products or services
competing with those products and services offered and sold by the Company at
any time during which Contractor is engaged by the Company.
5. DISCLOSURES AND ASSIGNMENT OF RIGHTS. Subject to the limitations
set forth in Sections 1(a), above, and 8, below:
(a) Contractor shall disclose in writing to the Company full and
complete details respecting any Confidential Information devised, developed,
designed or discovered by Contractor while engaged by the Company. Such
disclosure shall be made promptly upon such development, design or discovery,
and shall be disclosed in writing pursuant to the form attached as Exhibit "A"
to this Agreement, or such other form as the Company may from time to time
provide.
(b) Contractor agrees to assign and does hereby irrevocably
assign to the Company all of his right, title and interest in and to any
Confidential Information devised, developed, designed or discovered by him or in
which he may otherwise obtain, or has otherwise obtained, any rights, while
engaged by the Company and while performing work on behalf of the Company.
Contractor agrees to take any actions, including the execution of documents or
instruments, which the Company may reasonably require to effect the Contractor's
assignment of
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rights pursuant to this Paragraph 5(b), and Contractor hereby constitutes and
appoints, with full power of substitution and resubstitution, the President of
the Company as his attorney-in-fact to execute and deliver any documents or
instruments which Contractor is obligated to execute and deliver pursuant to
this Paragraph 5(b).
(c) Contractor shall promptly notify the Company of any patent
relating to any portion of the Confidential Information which is applied for by,
or issued to, Contractor ("Patent"). Such notice shall be in writing on the form
attached as Exhibit "B" to this Agreement, or on such other form as the Company
may from time to time provide. Upon the written request of the Company,
Contractor shall sell to the Company, and the Company shall purchase from
Contractor, all right, title and interest of Contractor in and to any Patent,
whether or not Contractor is engaged by the Company at the time the Patent is
issued. The purchase price for any Patent shall be one dollar ($1.00), and shall
be paid by the Company at the time it makes the written request to purchase the
Patent. Contractor agrees to execute any and all documents and instruments
necessary to evidence and affect the transfer to the Company of all right, title
and interest of Contractor in and to the Patent.
(d) At the request and expense of the Company, Contractor shall
assist the Company in applying for and obtaining both domestic and foreign
patents, or copyrights, as the case may be, on all Confidential Information that
the Company deems to be patentable or copyrightable devised, developed, designed
or discovered by Contractor or in which he may otherwise obtain, or has
otherwise obtained, any rights, while engaged by the Company, and Contractor
shall execute at any time or times any and all documents and perform all acts
reasonably requested by the Company which the Company deems to be necessary or
desirable in order to obtain such patents or copyrights or otherwise to vest in
the Company full and exclusive title and interest in and to all such
Confidential Information, to protect the same against infringement by others and
otherwise to aid the Company in connection with any continuations, renewals or
reissues of any patents or copyrights, or in the conduct of any proceedings or
litigation in regard thereto. All expenses of procuring any patent or copyright
shall be born by the Company.
6. CERTAIN INVENTIONS OF CONTRACTOR.
Notwithstanding anything to the contrary herein, pursuant to
Section 2870 of the California Labor Code, this Agreement does not apply to any
invention for which no equipment, supplies, facilities or trade secret
information of the Company was used and which was developed entirely on
Contractor's own time, and (i) which does not relate at the time of conception
or reduction to practice of the invention either to the business of the Company
or to the Company's actual or demonstrably anticipated research or development,
or (ii) which does not result from any work performed by Contractor for the
Company.
7. COVENANT NOT TO SOLICIT.
Contractor covenants and agrees that for so long as he is engaged
by the Company and for one year thereafter, Contractor shall not hire, solicit
or cause to be solicited for engagement
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by Contractor or by any third party, any person who is as of the date of such
solicitation or who was within the 12-month period prior to the date of such
solicitation an employee of the Company or any subsidiary or affiliate of the
Company.
8. BUSINESS OPPORTUNITIES EXCLUSIONS.
Contractor has advised Company and Company is aware that
Contractor is currently providing advice to other individuals and entities
including, without limitation, SSP Solutions, PNG, Cash Technologies, Argoquest
and its portfolio companies, Infinity Investments and its portfolio companies,
Slingshot Ventures and its portfolio companies, the current operations of each
of which shall not be deemed to be competitive with the Company or any of its
affiliates.
9. NOTICES.
Any notice to the Company required or permitted hereunder shall
be given in writing to the Company, either by personal service, or by registered
or certified mail, postage prepaid, duly addressed to the President of the
Company at its then principal place of business. Any such notice to the
Contractor shall be given in a like manner, at the following address:
Xx. Xxx Xxxx
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
For the purpose of determining compliance with any time limit herein, a notice,
if sent by mail, shall be deemed given on the date it is so deposited in the
United States mail.
10. MISCELLANEOUS PROVISIONS.
(a) INDEMNIFICATION. Company agrees to indemnify Contractor as
follows:
(i) Company agrees to indemnify, defend, and hold
Contractor harmless from any claims, losses, liabilities, causes of action and
costs (including reasonable attorney's fees) arising from, or on account of any
representation made by the Company to Contractor regarding the Company's
products, services, or business practices, upon which Contractor relies and, in
the performance of his duties hereunder, represents to others; provided,
however, that the Contractor shall promptly notify Company of any such claim and
shall provide Company the opportunity to control the defense and negotiations
for the settlement and/or compromise of such claim at Company's exclusive cost.
The indemnity set forth above shall be in addition to any other rights of
indemnity which Contractor may have in any other capacity with respect to
Company, including as a member of the Board of Directors.
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(b) REPRESENTATIONS AND WARRANTIES. Contractor warrants and
represents that Contractor is free and available to enter this Agreement and
perform the services herein and that permission of no other party is required to
perform such services.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
on the parties hereto and their respective successors and assigns. The parties'
respective duties, obligations, rights and privileges hereunder may not be
delegated or assigned in any manner, except as provided below. The benefits
hereunder with respect to the rights of the Company may be assigned by the
Company to any other corporation or other business entity which succeeds to all
or substantially all of the business of the Company through merger,
consolidation, corporate reorganization or by acquisition of all or
substantially all of the assets of the Company.
(d) SEVERABILITY. If any provision of this Agreement is or
becomes or is deemed invalid, illegal or unenforceable in any jurisdiction such
provision shall be deemed amended to conform to the applicable laws of such
jurisdiction so as to be valid and enforceable or, if it cannot be so amended
without materially altering the intention of the parties, it will be stricken,
but the validity, legality and enforceability of such provision shall not in any
way be affected or impaired thereby in any other jurisdiction and the remainder
of this Agreement shall remain in full force and effect.
(e) CONTROLLING LAW. All of the provisions of this
Agreement shall be construed in accordance with the laws of the State of
California as applied to residents of that State entering into contracts to be
performed solely within such state. Contractor consents to the exclusive
jurisdiction of any state or federal court empowered to enforce this Agreement
located in Los Angeles County, California, and waives any objection thereto on
the basis of personal jurisdiction or venue.
(f) WAIVER. Waiver by either of the parties of any breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereof.
(g) SURVIVAL OF CONTRACTOR'S OBLIGATIONS. The obligations
of Contractor hereunder shall survive the termination of Contractor's engagement
with the Company and the termination of this Agreement regardless of the reason
or cause for such termination.
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(h) ENTIRE AGREEMENT. This instrument contains the entire
agreement of the parties with respect to the subject matter hereto and into
which all prior agreements and negotiations, whether written or oral, are
merged.
IN WITNESS WHEREOF, the parties hereto have entered into and executed this
Agreement as of the date first above written.
"COMPANY"
Brilliant Digital Entertainment, Inc.
By: /S/ XXXXX XXXXXXXXXX
----------------------------
Xxxxx Xxxxxxxxxx
Its: Chief Executive Officer
"CONTRACTOR"
/S/ XXX XXXX
-------------------------------------
Xxx Xxxx
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EXHIBIT A
NOTICE OF DISCOVERY
Pursuant to Paragraph 5(a) of that certain Contractor, Confidential
Information and Non-Solicitation Agreement (the "Agreement") between Brilliant
Digital Entertainment, Inc. (the "Company") and myself, I hereby disclose full
and complete details of the following Confidential Information (as defined in
Paragraph 1(a) of the Agreement) (I have attached additional sheets if the space
provided herein is insufficient):
I agree to provide such further information regarding such Confidential
Information as may be requested by the Company.
Name: Xxx Xxxx
Date: _____________________________
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EXHIBIT B
NOTICE OF PATENT
Pursuant to Paragraph 5(c) of that certain Contractor, Confidential
Information and Non-Solicitation Agreement (the "Agreement") between Brilliant
Digital Entertainment, Inc. (the "Company") and myself, I hereby notify the
Company that I have applied for or obtained the following described Patent (as
defined in Paragraph 5(c) of the Agreement):
(i) Patent No.:
(ii) Date of Issuance:
(iii) General Description of Subject Matter of Patent:
I agree to provide such further information regarding such Patent as may be
requested by the Company.
Name: Xxx Xxxx
Date: __________________________
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EXHIBIT C
CONTRACTOR'S DUTIES
In executing Contractor's responsibilities hereunder, Contractor will
consult with and report to the Company's Designated Representative ("CDR")
identified PRO TEM as Xxxxx Xxxxxxxxxx. Contractor shall submit periodic
reports, containing a summary of Contractor's activities, analyses, and
recommendations (including, in the case of recommendations, cost estimates for
implementing such recommendations).
THE SCOPE OF CONTRACTOR'S DUTIES: Contractor shall be engaged as an advisor
to the Company. In his capacity as an advisor, Consultant shall advise the sales
force and business development team, provide strategic financial, marketing and
managerial advise, introduce corporate alliance partners, and interface with
multiple external sales forces with the main intent of promoting, marketing, and
exploiting the Company's private peer-to-peer network currently known as
"Altnet". Secondarily, Contractor shall provide services necessary to exploit
the Company's (1) Brilliant Banner ad strategy, and (2) b3d software authoring
tools known as b3d STUDIO and STUDIO PRO. Specifically, Contractor shall assist
Company with the following:
i. developing business relationships and achieving strategic
sales relationships for Altnet services primarily focused on
leveraging Altnet's technologies to generate money saving
enterprise and entertainment based retail solutions for
distributed network, processing and storage services;
ii. work directly with senior management of the Company. Such
work shall include assisting the Company with the
development of the necessary business plans, strategic
directions, documentation, promotional and support materials
for presentations and follow-up communications related to
the commercial applications of Altnet's technologies;
iii. developing relationships with ASOs to promote the acceptance
of Brilliant Banner ad serving technology and achieve sales
of Brilliant Banner Campaigns. By way of example only, and
not of limitation, some of the ASOs currently identified by
the Company include: DoubleClick; Xxxxxxxxxxx.xxx; 24/7 Real
Media; Interep Interactive; 411 Web; and Premium Networks;
and
iv. identifying third party developers which are potential
licensees of b3d STUDIO and b3d STUDIO PRO and actively
market and close licensing transactions of these software
tools to such potential licensees.
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