EXHIBIT 10.1
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 28 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.
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
--------------------------------
Its: CEO
"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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