EX-10.4 5 v453514_ex10-4.htm EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT
Exhibit 10.4
This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into this November 22, 2016, by and among Nexsan Corporation (the “Company”), Xxxxxx X. Xxxxxxxxx (“Executive”), and, solely as to Sections 3, 4, 9(b) and 10, Imation Corporation (“Imation”), effective as of the consummation (the “Closing”) of the transactions contemplated by that certain Stock Purchase Agreement by and between Imation and NXSN Acquisition Corp. (“Purchaser”) (the “Stock Purchase Agreement”).
(a) During the Term, Executive shall serve as the Interim Chief Executive Officer of the Company. In such position, Executive shall have such executive duties and authority as shall be determined from time to time by the Board of Directors (the “Board”).
(b) During the Term, Executive will devote his full business time and his best efforts to the performance of Executive’s duties hereunder (except for paid time off provided for hereunder and periods of illness or incapacity) and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the rendition of such services to the Company either directly or indirectly, without the prior written consent of the Board. Notwithstanding the foregoing, it shall not be a breach of this Section 2(b) for the Executive to be concurrently employed as the Interim CEO of Imation.
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6. Expense Reimbursement. During the Term, reasonable business expenses (including travel expenses) incurred by Executive in the performance of Executive’s duties hereunder shall be reimbursed by the Company in accordance with Company policies in effect from time to time. Executive will be expected to reimburse the Company for any expenses paid by the Company that would not be eligible for reimbursement if paid by Executive. The Company acknowledges that Executive resides and will primarily perform work in Austin, Texas, and will regularly be travelling on Company business to and from his home base in Austin, Texas, and all travel expense related to such business travel will be reimbursable travel expense.
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(a) Executive’s Accrued Rights; and
(b) Subject to (i) the obligations and restrictions set forth in subparagraph (c) below, and (ii) Executive’s execution and return of a severance agreement, which shall, among other things, release the Company (and its officers, directors, employees, agents, parents, affiliated entities, and successors and assigns of any of them) from any and all claims, and which shall be in a form and containing reasonable terms in the reasonable discretion of the Board (the “Severance Agreement”), within twenty-one (21) days following the Company’s presenting Executive with such Severance Agreement; and (iii) Executive’s non-revocation of and continued compliance with the Severance Agreement, Executive shall be entitled to a severance payment equal to $450,000, subject to all applicable taxes and withholdings (“Severance Payment”), payable as a lump sum on the Company’s next normal payroll processing at least five (5) days following the expiration date of any revocation period (if applicable) under the Severance Agreement. The Severance Payment shall be payable fifty percent (50%) by Imation and fifty percent (50%) by the Company. Such Severance Payment shall be paid through the Company’s payroll, and Imation shall wire its fifty percent (50%) portion to the payroll provider designated by the Company within three (3) days prior to the date of payment thereof; and the Company and its agents shall hold any such wire transfers to the Company or its agents for the benefit of Executive until the net amounts of same are paid to Executive and any lawful deductions from same are deposited as employment tax deposits with the appropriate depositary institution(s). Immediately upon Closing, the Company and Imation shall deposit the gross amounts of their respective portions of the Severance Payment with an escrow agent acceptable to Executive; and the escrow agent’s maintaining and disbursement of such monies shall be in accordance with and subject to escrow instructions acceptable to Executive. The parties shall work in good faith to put in place an escrow agreement in connection with the foregoing.
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For purposes of this Agreement, “Termination by the Company Without Cause” shall include but shall not be limited to the following circumstances: (a) Executive’s death; or (b) Executive’s Disability, which shall be deemed to have occurred when in the good faith judgment of the Board, Executive becomes physically or mentally incapacitated and is therefore unable for a period of four (4) consecutive months or for an aggregate of six (6) months in any twelve (12) consecutive month period to perform Executive’s duties (such incapacity is referred to herein as “Disability”). The Company will also comply with any applicable federal and state disability and leave laws.
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For purposes of this Section 9 of the Agreement, Executive shall be entitled to terminate employment for “Good Reason” by written notice to the Company of such termination within sixty (60) days after any of the following events occur: (a) a material diminution occurs in the Executive’s title or duties as Interim Chief Executive Officer; (b) the Company requires that the Executive change his primary residence away from Austin, Texas, without giving Executive at least nine (9) months’ advance notice, or without a reasonable increase in Executive’s compensation commensurate with the increased cost of living in the new locale to which the Company has requested the Executive to relocate, or without providing reasonable relocation benefits to make the Executive whole for all reasonable costs relative to the requirement that he relocate his family residence from Austin, Texas to elsewhere; or (c) a Change in Control (as defined below) occurs. If any such events occur, then Executive shall be deemed to have been constructively discharged and Executive shall have the right to terminate his employment for Good Reason and receive the severance benefits described in this Agreement, provided that Executive notifies the Board of his election to terminate employment for Good Reason within sixty (60) days following any such event and the Board has not cured such event within ten (10) business days after the Board receives such notification. Notwithstanding anything herein to the contrary, if Executive’s employment terminates during the Term due to the Good Reason trigger set forth in the foregoing subsection (c), (i) Imation shall be solely responsible for payment of the Severance Payment, (ii) such Severance Payment shall be paid through the Company’s payroll, and Imation shall wire the Severance Payment to the payroll provider designated by the Company within three (3) days prior to the date of payment thereof, and (iii) the Company and its agents shall hold any such wire transfers to the Company or its agents for the benefit of Executive until the net amounts of same are paid to Executive and any lawful deductions from same are deposited as employment tax deposits with the appropriate depositary institution(s).
For purposes of this Section 9 of the Agreement, “Change in Control” means the occurrence of any of the following events that qualifies as a “change in control event” (within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i)) with respect to the Company:
(1) | a majority of the members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; |
(2) | any one person, or more than one person acting as a group (as determined under Treasury Regulation Section 1.409A-3(i)(5)(vii)(C)) acquires substantially all of the Company’s assets (an “Asset Sale”), unless the individuals who comprise the Board immediately prior to such Asset Sale constitute a majority of the board of directors or other governing body of either the entity that acquired such assets in such Asset Sale or its parent; or |
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(3) | any other transaction is consummated with respect to the Company that qualifies as a “change in control event” (within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i)). |
(a) During the Restricted Period (as defined below), Executive shall not, whether on Executive’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly;
(i) solicit or encourage any employee of the Company or its affiliates to leave the employment of the Company or its affiliates;
(ii) hire any such employee who was employed by the Company or its affiliates as of the date of Executive’s termination of employment with the Company or who left the employment of the Company or its affiliates coincident with, or within one (1) year prior to or after, the termination of Executive’s employment with the Company;
(iii) solicit or encourage any person that serves as a contractor or consultant of the Company or its affiliates to discontinue providing services to the Company or any affiliate of the Company;
(iv) call on, solicit or service any customer or client of the Company or its affiliates with the intent of selling or attempting to sell any service or product the same or substantially similar to the services or products sold by the Company or its affiliates; or
(v) in any way materially interfere with the relationship between the Company or its affiliates and any customer, supplier, licensee or other business relation (or any prospective customer, supplier, licensee or other business relationship) of the Company or any of its affiliates (including, without limitation, by making any negative or disparaging statements or communications regarding the Company, any of its affiliates or any of their operations, officers, directors or investors).
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(b) It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section to be reasonable, if a final judicial determination is made by an arbitrator or court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction or arbitrator finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.
(c) For purposes of this Agreement, “Restricted Period” shall mean the period commencing on the Closing and ending twelve (12) months following the conclusion of Executive’s employment or the cessation of severance payments, whichever is shorter, whether such employment ends prior to or at the conclusion of the Term.
(d) The existence of any claim or cause of action by Executive against the Company or any of its affiliates, whether predicated on this Agreement or otherwise, will not constitute a defense to the enforcement by the Company of the provisions of Sections 11, 12 or 13, which Sections will be enforceable notwithstanding the existence of any breach by the Company. Notwithstanding the foregoing, Executive will not be prohibited from pursuing such claims or causes of action against the Company. Executive consents to the Company notifying any future employer of Executive’s obligations under Section 11, 12 and 13 of this Agreement and Company agrees to provide Executive copies of any such written notices contemporaneously with any such transmittal to others.
(e) In the event of any breach or violation by Executive of this Section 11, the Restricted Period will be tolled until such breach or violation has been duly cured.1
(a) During the Restricted Period, Executive shall not (without the express written agreement of the Board), whether on Executive’s own behalf or on behalf of or in conjunction with any other person or entity, directly or indirectly whether as owner, partner, investor, consultant, agent, executive, co-venturer or otherwise (other than through ownership of publicly-traded capital stock of a corporation which represents less than two percent (2%) of the outstanding capital stock of such corporation), (i) compete with the Company or any parent, subsidiary or affiliate hereof in any business activities relating to the data storage industry in any state in the United States which the Company or any parent, subsidiary or affiliate thereof conducts business or sells products or services relating to the data storage industry, or (ii) undertake any planning for any business competitive with the Company or any parent, subsidiary or affiliate thereof relating to the data storage industry in any state in the United States which the Company or any parent, subsidiary or affiliate thereof conducts such business or sells such products or services.
1The non-prevailing party to any action or proceeding to enforce any provision of this Agreement or to obtain damages as a result of a breach of this Agreement or to enjoin any breach of this Agreement shall reimburse the prevailing party for any and all reasonable costs and expenses (including attorneys’ fees) incurred by the prevailing party in connection with such action or proceeding.
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(b) It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section to be reasonable, if a final judicial determination is made by an arbitrator or court of competent jurisdiction that the time or territory’ or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction or arbitrator finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein or any other provision of this Agreement.
(c) The existence of any claim or cause of action by Executive against the Company or any of its affiliates, whether predicated on this Agreement or otherwise, will not constitute a defense to the enforcement by the Company of the provisions of Sections 11, 12 or 13, which Sections will be enforceable notwithstanding the existence of any breach by the Company. Notwithstanding the foregoing. Executive will not be prohibited from pursuing such claims or causes of action against the Company. Executive consents to the Company notifying any future employer of Executive’s obligations under Sections 11, 12, and 13 of this Agreement and Company agrees to provide Executive copies of any such written notices contemporaneously with any such transmittal to others.
(d) In the event of a breach or violation by Executive of this Section 12 the Restricted Period will be tolled until such breach or violation has been duly cured.
(e) The non-prevailing party to any action or proceeding to enforce any provision of this Agreement or to obtain damages as a result of a breach of this Agreement or to enjoin any breach of this Agreement shall reimburse the prevailing party for any and all reasonable costs and expenses (including attorneys’ fees) incurred by the prevailing party in connection with such action or proceeding.
14. Proprietary Information and Inventions Agreement. Executive will be required, as a condition of employment with the Company, to sign the Company’s Proprietary Information and Inventions Agreement, a copy of which is attached hereto as Exhibit A.
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(a) For the avoidance of doubt, the Proprietary Information and Inventions Agreement does not prohibit or restrict Executive (or Executive’s attorney) from responding to any inquiry about the Agreement or its underlying facts and circumstances by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), any other self-regulatory organization or governmental entity, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. Executive understands and acknowledges that he does not need the prior authorization of the Company to make any such reports or disclosures and that he is not required to notify the Company that he has made such reports or disclosures.
(b) Executive understands that Executive may, without informing the Company prior to any such disclosure, disclose Proprietary Information, as defined in the Proprietary Information and Inventions Agreement (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, without informing the Company prior to any such disclosure, if Executive files a lawsuit against the Company for retaliation for reporting a suspected violation of law, Executive may disclose Proprietary Information to his attorney and use the Proprietary Information in the court proceeding or arbitration, provided that Executive files any document containing the Proprietary Information under seal and does not otherwise disclose the Proprietary Information, except pursuant to court order. Without prior authorization of the Company, however, the Company does not authorize Executive to disclose to any third party (including any government official or any attorney Executive may retain) any communications that are covered by the Company’s attorney-client privilege.
(b) Governing Law; Arbitration.
(i) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas or applicable federal law, except that the Federal Arbitration Act shall govern the arbitration clauses of this Agreement.
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The following claims are not subject to arbitration under this Agreement: (1) claims for workers’ compensation benefits, state disability benefits, state unemployment benefits; (2) administrative charges filed with a federal, state or local government office or agency, such as the Equal Employment Opportunity Commission (“EEOC”) or any comparable state anti-discrimination agency, or the National Labor Relations Board (“NLRB”); and (3) any claims that, as a matter of law, cannot legally be subject to arbitration. Nothing in these provisions shall preclude either Executive or the Company from seeking temporary or injunctive relief in a court prior to determining the claim in arbitration.
To the maximum extent permitted by law, Executive hereby waives any right to bring on behalf of persons other than Executive, or to otherwise participate with other persons in, any class or collective action (a type of lawsuit in which one or several persons xxx on behalf of a larger group of persons).
The arbitration shall be conducted by a single neutral arbitrator in accordance with the then-current Employment Arbitration and Mediation Procedures of the American Arbitration Association (“AAA”), which can be viewed at xxxx://xxx.xxx.xxx/xxxxxxxxxx. The Company will provide Executive with a copy of these rules upon request. The arbitration shall take place in the county of the state in which Executive is or was last employed by the Company, with the understanding the such location is currently Austin, Texas. The Company will pay the arbitrator’s fee and will bear all administrative charges by AAA. All parties shall be entitled to engage in reasonable pre-hearing discovery to obtain information to prosecute or defend the asserted claims. Any disputes between the parties regarding the nature or scope of discovery shall be decided by the arbitrator. The arbitrator shall hear and issue a reasoned written ruling upon any dispositive motions brought by either party, including but not limited to, motions for summary judgment or summary adjudication of issues.
After the hearing, the arbitrator shall issue a reasoned written decision setting forth the award, if any, and explaining the basis therefore. The arbitrator shall have the powder to award any type of relief that would be available in court. The arbitrator’s award shall be final and binding upon the parties and may be entered as a judgment in any court of competent jurisdiction. In the event of any conflict in the arbitration procedures set forth in this Agreement and the AAA rules specified above, the AAA rules shall control.
Notwithstanding the foregoing, and regardless of what is provided by AAA’s rules, to the extent that it is legally permissible to do so, the arbitrator will not have authority or jurisdiction to consolidate claims of different employees into one proceeding, nor shall the arbitrator have authority or jurisdiction to hear the arbitration as a class action. As noted above, Executive has waived any right to bring any class or collective action. To the extent that the class or collective action waiver described above is not enforceable, the issue of whether to certify any alleged or putative class for a class action proceeding must be decided by a court of competent jurisdiction. The arbitrator will not have authority or jurisdiction to decide class certification or collective action issues. Until any class certification or collective action issues are decided by the court, all arbitration proceedings shall be stayed, and the arbitrator shall take no action with respect to the matter. However, once any issues regarding class certification or collective action have been decided by the court, the arbitrator will have authority to decide the substantive claims.
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This arbitration provision is governed by the Federal Arbitration Act (9 U.S.C. § 1, et seq.) and evidences a transaction involving commerce. If the Federal Arbitration Act is held not to apply, the arbitration law of the State of Texas shall apply. We intend that this Agreement be limited to those claims that may legally be subject to a pre-dispute arbitration agreement under applicable law. A court or arbitrator construing this Agreement may therefore modify or interpret it to render it enforceable.
(h) Prior Agreements. This Agreement supersedes all prior agreements and understandings (including verbal agreements) between Executive and the Company or Imation and/or their affiliates regarding the terms and conditions of Executive’s employment with the Company and/or its affiliates.
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(i) Corporate Opportunities. Executive will submit to the Board all business, commercial and investment opportunities or offers presented to Executive or of which Executive becomes aware which relate to the businesses of the Company or its subsidiaries as such businesses of the Company or its subsidiaries exist at any time during the period in which Executive is employed by the Company (“Corporate Opportunities”). Unless approved by the Board, Executive will not accept or pursue, directly or indirectly, any Corporate Opportunities on Executive’s own behalf.
[Signature Page Follows]
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“COMPANY” | |
Nexsan Corporation |
By: | /s/ Xxxxx Xxxxx | |
Name: | Xxxxx Xxxxx | |
Title: | Secretary |
“IMATION” (solely as to Sections 3, 4, 9(b) and 10) | |
Imation Corp. |
By: | /s/ Xxxxxx X. Xx Xxxxx | |
Name: | Xxxxxx X. Xx Xxxxx | |
Title: | Non-Executive Chairman |
“EXECUTIVE” | |
/s/ Xxxxxx X. Xxxxxxxxx | |
Xxxxxx X. Xxxxxxxxx |
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Exhibit A
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
The following confirms my agreement with Nexsan Corporation (“Company”) and I, Xxxxxx X. Xxxxxxxxx, that is a material part of the consideration for my employment by Company:
1. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict with this Agreement or my employment with Company. I will not violate any agreement with or rights of any third party or. except as expressly authorized by Company in writing hereafter, use or disclose any own or any third party’s confidential information or intellectual property when acting within the scope of my employment or otherwise on behalf of Company. Further, I have not retained anything containing any confidential information of a prior employer or other third party, whether or not created by me.
2. Company shall own all right, title and interest (including all intellectual property rights of any sort throughout the world) relating to any and all inventions, works of authorship, designs, know-how, ideas and information made or conceived or reduced to practice, in whole or in part, by me in connection with my employment with Company to and only to the fullest extent allowed by law (“Inventions”) and I will promptly disclose all Inventions to Company. This provisions in this Agreement requiring you to assign, or offer to assign, any of your rights in an Invention shall not apply to an Invention that you developed entirely on your own time without using the Company’s equipment, supplies, facilities, or trade secret information except for those inventions that either (A) Relate at the time of conception or reduction to practice of the invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company; or (B) Result from any work performed by the you for Company. Without disclosing any third party confidential information. I will disclose anything I believe is excluded by this Agreement so that the Company can make an independent assessment. I hereby make all assignments necessary to accomplish the foregoing. I shall assist Company, at Company’s expense, to further evidence, record and perfect such assignments, and to perfect, obtain, maintain, enforce, and defend any rights specified to be so owned or assigned. I irrevocably designate and appoint Company as my agent and attorney-in-fact, coupled with an interest and with full power of substitution; to act for and in my behalf to execute and file any document and to do all other lawfully permitted acts to further the purposes of the foregoing. If I wish to clarify anything created by me prior to my employment that relates to Company’s actual or proposed business, I have listed it on the attached disclosure in a manner that does not violate any third party rights or disclose any confidential information. Without limiting the above or Company’s other rights and remedies, if, when acting within the scope of my employment or otherwise on behalf of Company, I use or disclose my own or any third party’s confidential information or intellectual property (or if any Invention cannot be fully made, used, reproduced, or distributed without using or violating the foregoing). Company will have and I hereby grant Company a perpetual, irrevocable, worldwide, royalty-tree, fully paid-up, non-exclusive, sublicensable right and license to exploit and exercise all such confidential information and intellectual property rights.
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3. To the extent allowed by law, the foregoing paragraph includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights,” “artist’s rights,” “droit moral” or the like (collectively “Moral Rights”). To the extent I retain any such Moral Rights under applicable law, I hereby ratify and consent to any action that may be taken with respect to such Moral Rights by or authorized by Company and agree not to assert any Moral Rights with respect thereto. I will confirm any such ratifications, consents and agreements from time to time as requested by Company.
4. I agree that all Inventions and all other business, technical and financial information (including, without limitation, the identity of and information relating to customers or employees) I develop, learn or obtain during the my employment that relate to Company or the business or demonstrably anticipated business of Company or that are received by or for Company in confidence, constitute “Proprietary Information.” I will hold in confidence and not disclose or. except within the scope of my employment, use any Proprietary Information. Upon termination of my employment, I will promptly return to Company all items containing or embodying Proprietary Information (including all copies), except that I may keep my personal copies of (i) my compensation records, (ii) materials distributed to shareholders or Directors generally (to the extent I remain a Director) and (iii) this Agreement. I also recognize and agree that I have no expectation of privacy with respect to Company’s telecommunications, networking or information processing systems (including, without limitation, stored computer files, email messages and voice messages) and that my activity and any files or messages on or using any of those systems may be monitored at any time without notice.
5. I agree that my obligations under this Agreement shall continue in effect after termination of my employment, regardless whether such termination is voluntary or involuntary on my part, and that Company is entitled to communicate my obligations under this Agreement to any future employer or potential employer of mine, provided that I receive a copy of such communications in a timely manner.
6. This Agreement is fully assignable and transferable by Company, but any purported assignment or transfer by me is void. I also understand that any breach of this Agreement will cause irreparable harm to Company for which damages would not be an adequate remedy, and, therefore, Company will be entitled to injunctive relief with respect thereto in addition to any other remedies and without any requirement to post bond.
I HAVE READ THIS PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT CAREFULLY AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS WHICH IT IMPOSES UPON, ME WITHOUT RESERVATION.
November 22, 2016 | /s/ Xxxxxx X. Xxxxxxxxx | |
Xxxxxx X. Xxxxxxxxx | ||
Accepted and Agreed to: |
/s/ Xxxxx Xxxxx | |
By: Xxxxx Xxxxx | |
Title: Secretary |
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Disclosure of Inventions
Title | Date | Identifying Number or Brief Description | ||
Disclosure of Advisory Activities
Title | ||
I-O Switch | ||
SSG | ||
FLM TV | ||
__ No inventions or improvements
__ Additional Sheets Attached
Signature of Employee: | /s/ Xxxxxx X. Xxxxxxxxx |
Print Name of Employee: | Xxxxxx X. Xxxxxxxxx |
Date: November 22, 2016
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