EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as of this
7th day of January, 2000 (the "EFFECTIVE DATE"), by and between TELENETICS
CORPORATION, a California corporation (the "COMPANY"), and T. XXXXX XXXX
("EMPLOYEE").
R E C I T A L S
---------------
A. The Company, Employee and certain other individuals have entered
into a Stock Purchase Agreement of even date herewith (the "STOCK PURCHASE
AGREEMENT") pursuant to which the Company is purchasing all of the outstanding
capital stock of eflex Wireless, Inc., a Delaware corporation ("EFLEX").
B. The parties acknowledge that Employee is currently employed by eflex
and has abilities and expertise that are unique and valuable to the Company and,
in connection with the Stock Purchase Agreement, the Company desires to retain
the services of Employee, and Employee wishes to accept such employment.
C. The Company and Employee have determined that such engagement of
Employee is mutually beneficial and should be subject to a mutually acceptable
written agreement, and that Employee's employment by eflex shall be terminated
concurrently with the effectiveness of this Agreement.
A G R E E M E N T
-----------------
NOW, THEREFORE, in consideration of the foregoing premises, the
following mutual covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each of the parties hereto, the parties hereto agree, intending
to be legally bound, as follows:
1. EMPLOYMENT.
Employee agrees to serve the Company in such capacities as may be
requested from time to time by the Board of Directors of the Company (the
"BOARD"). Employee's office will be located in the Tampa, Florida area and/or
such other locations as the Company may in its sole and absolute discretion
determine. During the term of this Agreement, Employee will devote his full
time, care and exclusive attention to, and use his best efforts to advance, the
business and welfare of eflex and the Company. During the term of this
Agreement, Employee will not engage in any other business activity or
occupation, whether or not such business activity or occupation is pursued for
gain, profit or other pecuniary advantage; PROVIDED, HOWEVER, that nothing
contained in this Agreement shall be deemed to prevent or limit the right of
Employee to invest any of his surplus funds in any partnership, corporation or
other entity or venture not directly competitive with eflex or the Company.
Employee represents and warrants to the Company that he is not a party to or
1
bound by any presently effective agreement or contract, whether of employment or
otherwise, with any third person or entity that would in any way restrict or
prohibit Employee from undertaking or performing his obligations on the terms
and conditions set forth in this Agreement. Employee covenants with the Company
that he shall not, during the Term, enter into any such agreement, contract or
understanding described in this SECTION 1 so as to cause the Company, eflex or
any of the Company's other subsidiaries or affiliated companies, to be liable in
connection therewith.
2. EMPLOYMENT TERM.
The Company agrees to employ Employee, and Employee agrees to serve, on
the terms and conditions of this Agreement, for a period commencing on the
Effective Date and continuing for a period of three years unless terminated
earlier pursuant to the terms of this Agreement (the "TERM").
3. COMPENSATION AND BENEFITS.
The Company shall pay to Employee for his services, and Employee agrees
to accept as his full compensation under this Agreement, the following:
3.1 BASE SALARY. The Company shall pay Employee a base salary of
$7,083.00 per month (the "BASE SALARY"). The Base Salary shall be earned and
payable at such intervals and otherwise in such manner as is consistent with the
normal payroll practices of the Company for remuneration of its employees, less
such deductions or amounts to be withheld as shall be required by applicable
law.
3.2 INCENTIVE COMPENSATION. In addition to the Base Salary, Employee
shall be eligible to receive additional compensation ("BONUS") of up to
$15,000.00 per year, which shall be earned and payable, if at all, at the times
and in the amounts determined by the Board, in its sole discretion, based upon
Employee's achievement of mutually agreeable goals and objectives set by the
Company and Employee at the beginning of each year of the Term.
3.3 OPTIONS. As additional compensation, concurrently with the
execution of this Agreement, Employee shall receive an option to purchase shares
of Common Stock of the Company, a copy of which option shall be attached hereto
as EXHIBIT A and incorporated herein by reference.
3.4 SIGNING BONUS. As additional compensation, Employee shall receive a
signing bonus of $10,000, which amount shall be paid to Employee within 120 days
following the Effective Date.
3.5 OTHER BENEFITS. During the Term, except as may be otherwise
provided herein, Employee shall be eligible to participate in all group
insurance plans and shall be entitled to other employee benefits, including
vacation and holiday pay, that the Company, in its sole and absolute discretion,
may provide from time to time to other employees of the Company with similar
duties and responsibilities.
2
3.6 REIMBURSEMENT OF BUSINESS EXPENSES. The Company shall, during the
Term, reimburse Employee for all reasonable documented business expenses
actually and necessarily incurred by Employee in the course of, and in
connection with, his employment by the Company pursuant to this Agreement;
PROVIDED, HOWEVER, that such expenses must be approved in advance by the
Company. Employee shall keep detailed and accurate records of expenses incurred
in connection with his employment by the Company, and reimbursement therefor
shall be made in accordance with policies and procedures established by the
Company's management from time to time.
4. TERMINATION. Anything in this Agreement to the contrary notwithstanding:
4.1 GOOD CAUSE. Employee's employment may be terminated by the Company
for Good Cause (as defined below) effective upon delivery of written notice to
Employee given at any time. "GOOD CAUSE" shall exist if:
(a) Employee is convicted of a felony, or a misdemeanor
constituting moral turpitude;
(b) Employee in bad faith commits any act (including, but not
limited to, any act that would constitute fraud, misappropriation,
dishonesty, or embezzlement) or in bad faith omits to take any action
to the material detriment of the Company or any of its affiliates;
(c) Employee intentionally commits during the course of his
employment any act of material misconduct (including, but not limited
to, sexual harassment, racial vilification, or unlawful
discrimination);
(d) Employee fails or refuses to perform duties assigned to
him by the Company and fails to correct such breach within five days
after notice is given to Employee by the Company of such breach;
(e) Employee becomes physically or mentally incapacitated or
disabled or otherwise unable fully to discharge his duties hereunder
for a period of more than 30 consecutive days or more than 45 days
within any two-month period;
(f) In the opinion of a medical doctor retained by the
Company, after a physical examination and reasonable diagnostic
procedures, Employee is found to be addicted to any drug, including
alcohol;
(g) Employee breaches any term of this Agreement and fails to
correct such breach within five days after notice is given to Employee
by the Company of such breach; or
(h) Employee resigns in anticipation of discharge for any
reason mentioned in SECTION 4.1(a) through SECTION 4.1(g), or the
Company accepts Employee's resignation in lieu of a formal discharge
for any reason mentioned in SECTION 4.1(a) through SECTION 4.1(g).
3
4.2 TERMINATION FOR GOOD CAUSE, UPON DEATH OR BY VOLUNTARY RESIGNATION.
If Employee is terminated for Good Cause, dies during the Term or resigns other
than as described in SECTION 4.1(h), Employee's employment shall terminate on
such date, whereupon Employee (or in the case of Employee's death, Employee's
estate) shall be entitled to receive Employee's Base Salary through the date of
termination, plus any other accrued but unpaid benefits or compensation due
pursuant to this Agreement.
4.3 EARLY TERMINATION. The Company may, in its sole and absolute
discretion, terminate Employee's employment without Good Cause at any time (an
"EARLY TERMINATION"). If the Company elects an Early Termination of Employee,
the Company shall pay to Employee upon the effective date of the Early
Termination (the "EARLY TERMINATION DATE") Employee's Base Salary accrued up to
such Early Termination Date, plus any other accrued but unpaid benefits or
compensation due pursuant to this Agreement. In addition, for the period
commencing on the Early Termination Date and ending on the date the Term
otherwise would have expired pursuant to SECTION 2, the Company shall pay to
Employee as liquidated damages his Base Salary for such period, at such
intervals and otherwise in such manner as Base Salary would have been paid if
Employee had remained in the active service of the Company.
4.4 EFFECT OF TERMINATION. Employee agrees that the payments
contemplated by this SECTION 4 shall constitute the exclusive and sole remedy of
Employee for any termination of this Agreement, and Employee covenants not to
assert or pursue any other remedies, at law or in equity, with respect to any
termination of this Agreement.
5. PROPRIETARY INFORMATION AND INVENTIONS.
5.1 EMPLOYEE ACKNOWLEDGMENTS. Employee recognizes that the Company is
engaged in a continuous program of research, development, design and production
respecting its business, present and future, and understands that as part of his
employment by the Company or any of its subsidiaries or affiliates, he is, or
may be expected, to make new contributions and inventions of value to the
Company or any of its subsidiaries or affiliates. Employee understands that his
employment by the Company or any of its subsidiaries or affiliates creates in
him a duty of trust and confidentiality to the Company or any of its
subsidiaries or affiliates with respect to any information (i) related,
applicable or useful to the business of the Company or any of its subsidiaries
or affiliates, including the Company's or any of its subsidiaries' or
affiliates' anticipated research and development; (ii) resulting from tasks
assigned to Employee by the Company or any of its subsidiaries or affiliates;
(iii) resulting from the use of equipment, supplies or facilities owned, leased
or contracted for by the Company or any of its subsidiaries or affiliates; or
(iv) related, applicable or useful to the business of any client or customer of
(A) the Company or (B) any of the Company's subsidiaries or affiliates, which
may be made known to him by the Company or any of the Company's subsidiaries or
affiliates, or by any client or customer of (A) the Company or (B) any of the
Company's subsidiaries or affiliates, or learned by him during the Term.
5.2 ASSIGNMENT OF PROPRIETARY INFORMATION AND INVENTIONS TO THE
COMPANY. Employee agrees that all Proprietary Information (as defined on EXHIBIT
B hereto) and Inventions (as defined on EXHIBIT B hereto) shall be the sole
property of the Company and its assigns, and the Company and its assigns shall
be the sole owner of all patents, trademarks, service marks, copyrights and
4
other rights (collectively referred to herein as "RIGHTS") pertaining to
Proprietary Information and Inventions in any part of the world. Employee hereby
assigns to the Company any rights he may have or acquire in Proprietary
Information or Inventions or Rights pertaining to Proprietary Information or
Inventions or Rights. Employee further agrees as to all Proprietary Information
or Inventions to assist the Company or any person designated by it in every
proper way to obtain and from time to time enforce Rights relating to said
Proprietary Information or Inventions in any and all countries. Employee shall
execute all documents for use in applying for, obtaining and enforcing such
Rights on such Proprietary Information or Inventions as the Company may desire,
together with any assignments thereof to the Company or persons designated by
it. Employee's obligation to assist the Company or any person designated by it
in obtaining and enforcing Rights relating to Proprietary Information or
Inventions shall continue beyond the date of the termination of this Agreement
(the "TERMINATION DATE"), but the Company shall compensate Employee at a
reasonable rate after the Termination Date for time actually spent by Employee
upon the Company's request for such assistance. In the event the Company is
unable, after reasonable effort, to secure Employee's signature on any document
or documents needed to apply for or to enforce any Right relating to Proprietary
Information or to an Invention, whether because of Employee's physical or mental
incapacity or for any other reason whatsoever, Employee hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents
as his agents and attorneys-in-fact to act on his behalf and in his stead in the
execution and filing of any such application and in furthering the application
for and enforcement of Rights with the same legal force and effect as if such
acts were performed by Employee. Employee hereby acknowledges that all original
works of authorship which are made by Employee (solely or jointly with others)
within the scope of his employment and which are protectable by copyright are
"works for hire" as that term is defined in the United States Copyright Act (17
USCA Section 101).
5.3 DISCLOSURE OF DISCOVERIES, ETC. TO THE COMPANY. Employee will
promptly and from time to time disclose in writing to the Company, and the
Company hereby agrees to receive such disclosures in confidence, all
discoveries, developments, designs, improvements, inventions, formulas, software
programs, processes, techniques, know-how, negative know-how and data, whether
or not patentable or registrable under patent, copyright or similar statutes, or
reduced to practice, made, conceived or learned by Employee, either alone or
jointly with others during the Term, for the purpose of permitting the Company
to determine whether they constitute Inventions. In order to facilitate the
complete and accurate disclosures described above, Employee agrees to maintain
complete written records of all Inventions, and of all work, study and
investigation done by him during the Term, which records shall be the property
of the Company.
5.4 EMPLOYEE ACTS. Employee shall not knowingly do anything to imperil
the validity of any such patent, design or protection or any application
therefor and shall, at the reasonable cost of the Company, render all possible
assistance to the Company both in obtaining and maintaining such patent, design
or other protection, and Employee shall not, either during the Term or
thereafter, exploit or make public or disclose any such Invention or give any
information in respect thereof except to the Company or as it may direct.
5
5.5 CONFIDENTIALITY. Employee will keep all Proprietary Information,
Inventions and Rights in the strictest confidence and trust, and Employee will
not disclose, use or induce or assist in the use or disclosure of any
Proprietary Information, Inventions or Rights pertaining to Proprietary
Information, or anything related thereto except as (i) may be necessary in the
ordinary course of performing his duties as an employee of the Company, (ii) may
be required by law, (iii) authorized by the Board, (iv) such Proprietary
Information, Inventions or Rights are or become available to the general public
though no fault of Employee or are disclosed to Employee without restriction on
disclosure by a third party who had the lawful right to make such disclosure.
Employee recognizes that the Company has received and in the future will receive
from third parties their confidential or proprietary information subject to a
duty on the Company's part to maintain the confidentiality of such information
and to use it only for certain limited purposes. Employee agrees that he owes
the Company and such third parties a duty to hold all such confidential or
proprietary information in the strictest confidence, and he shall not disclose,
use or induce or assist in the use or disclosure of any such confidential or
proprietary information without the prior express written consent of the
Company, except as may be necessary in the ordinary course of performing his
duties as an employee of the Company consistent with the Company's agreement
with such third party or as required by law. The covenants and agreements
contained in this SECTION 5.5 shall survive the expiration or other termination
of this Agreement.
5.6 NONCOMPETITION; NONSOLICITATION. Employee expressly promises and
agrees that he will fully comply with the covenants and provisions contained in
EXHIBIT E attached hereto and incorporated herein by reference, as if such
provisions were set forth in full herein.
5.7 DELIVERY OF MATERIALS TO THE COMPANY. Upon the termination of the
Term, Employee shall deliver to the Company all devices, records, sketches,
reports, proposals, lists, correspondence, equipment, documents, photographs,
photostats, negatives, undeveloped film, notes, drawings, specifications, tape
recordings or other electronic recordings, programs, data and other materials or
property of any nature belonging to the Company or pertaining to Employee's work
with the Company. Employee shall not take with him any of the foregoing or any
reproduction of any of the foregoing.
5.8 PRIOR INVENTIONS OF EMPLOYEE. Listed in ITEM 1 of EXHIBIT C
attached hereto are all inventions or improvements relevant to the subject
matter of Employee's employment which have been made, conceived of or first
reduced to practice by Employee alone or jointly with others prior to the Term
and which Employee desires to remove from the operation of this Agreement.
Employee represents and warrants that such list is complete. If there is no such
list in ITEM 1 of EXHIBIT C, Employee represents and warrants that he has made
no such inventions or improvements prior to the Term.
5.9 PRIOR CONFIDENTIALITY AGREEMENTS. Employee represents and warrants
that his performance of all of the terms and provisions of this Agreement as an
employee of the Company does not and will not breach any agreement to keep in
confidence proprietary information acquired by Employee in confidence or in
trust prior to his employment by the Company. Employee also represents and
warrants that he has not entered into, and covenants that he will not enter
into, any agreement, either written or oral, in conflict herewith.
6
5.10 MATERIALS OR DOCUMENTS OF A FORMER EMPLOYER. Employee represents
and warrants to and covenants with the Company that he has not brought and will
not bring with him to the Company, or use in his employment with the Company,
any materials or documents of a former employer (which term, for purposes of
this SECTION 5, shall also include persons, firms, corporations and other
entities for which Employee has acted as an independent contractor or
consultant), other than materials and documents of eflex relating to its
business and acquired by the Company under the Stock Purchase Agreement, which
are not generally available to the public, unless he has obtained express
written authorization from any such former employer for their possession and
use. The materials or documents of a former employer (other than eflex) which
are not generally available to the public but which he will bring to the Company
for use in his employment are identified in ITEM 2 of EXHIBIT C attached hereto.
As to each such item, Employee represents and warrants that he has obtained
prior to the effective date of his employment hereunder express written
authorization for their possession and use in his service to the Company.
Employee also understands that, in his service to the Company, he is not to
breach any obligation of confidentiality that he has to former employers, and he
shall fulfill all such obligations during his employment hereunder.
5.11 SERVICES PROVIDED AS A CONSULTANT; DELIVERY OF THE TERMINATION
CERTIFICATE BY EMPLOYEE. The terms and conditions of this SECTION 5 shall apply
to any period, if any, during which Employee performs services for the Company
as a consultant or independent contractor, as well as any time during which he
is employed directly by the Company. Upon the termination of the Term, Employee
agrees to sign and deliver the "Termination Certificate" attached hereto as
EXHIBIT D. Employee's failure to sign such Termination Certificate, however,
shall not affect his obligations under this Agreement, nor shall it affect the
Company's obligations, if any, to Employee under this Agreement.
6. REMEDIES; LIQUIDATED DAMAGES PAID BY EMPLOYEE.
If Employee commits a breach, or threatens to commit a breach, of any
of the provisions of SECTION 5 hereof, the Company shall have, among other
rights, (i) the right to have such provisions specifically enforced by any court
having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company, and (ii)
the right to require Employee to account for and pay over to the Company all
compensation or profits derived or received by Employee as a result of any
breach of any of the provisions of such SECTION 5, and Employee hereby agrees to
account for and pay over such compensation or profits to the Company. The
invalidity or unenforceability of all or any portion of SECTION 5 shall not
affect the validity or enforceability of any other provision or portion hereof
or thereof, and if any provision or portion of this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable or
otherwise invalid as written, then each such provision or portion shall be
enforced and validated to the full extent permitted by law.
7. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
Company and its respective successors and assigns and shall be binding upon and
inure to the benefit of Employee and his executors and administrators. This
Agreement, and Employee's rights and obligations hereunder, may not be assigned
by Employee. The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company to assume expressly and to agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
7
8. WAIVER OF BREACH.
The waiver by the Company or Employee of a breach of any provision of
this Agreement by the other party shall not be construed as a waiver of any
subsequent breach of the same provision or of any other provision of this
Agreement.
9. NOTICES.
All notices, requests, demands and other communications submitted
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or by express service or if mailed by first-class registered
mail, return receipt requested, postage and registry fees prepaid, and addressed
as follows:
(a) If to the Company: Telenetics Corporation
00000 Xxxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: President
with a copy to: Xxxxx X. Xxxxxxx, Esq.
Xxxxx & Xxxxxx, LLP
000 Xxxxx Xxxx., 00xx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
(b) If to Employee: T. Xxxxx Xxxx
8831 Treasure Bayou
Xxxxxxxxx, Xxxxxxx 00000
or at such other address as either party shall furnish to the other pursuant to
this provision.
10. MISCELLANEOUS.
10.1 ACKNOWLEDGMENTS. The parties hereto agree and acknowledge that the
damages that would be suffered by a nonbreaching party as a result of any breach
of the provisions of SECTION 5 may not be calculable and that an award of a
monetary judgment for such a breach would be an inadequate remedy. Consequently,
a nonbreaching party shall have the right, in addition to any other rights it
may have, to obtain, in any court of competent jurisdiction, injunctive relief
to restrain any breach or threatened breach of any provision of SECTION 5 or
otherwise to specifically enforce any of the provisions hereof. This remedy is
in addition to damages directly or indirectly suffered by a nonbreaching party
and reasonable attorneys' fees. The parties hereto agree that the restraint,
duration and area for which the covenants in SECTION 5 are to be effective are
reasonable in light of the business and activities of the parties hereto. In the
event that any court finally determines that the time period or the geographic
scope of any such covenant is unreasonable or excessive and any covenant is to
8
that extent made unenforceable, the parties agree that the restrictions in
SECTION 5 shall remain in full force and effect for the greatest time period and
within the greatest geographic area that would not render it unenforceable. The
parties intend that each of the covenants in SECTION 5 shall be deemed to be a
separate covenant.
10.2 INDEPENDENT COVENANT. All of the covenants in SECTIONS 5 shall be
construed as an agreement independent of any other provision of this Agreement,
and the existence of any claim or cause of action of a nonbreaching party
against a breaching party, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by any party of such
covenants.
10.3 OTHER MISCELLANEOUS.
(a) This Agreement, together with the Stock Purchase Agreement
and the exhibits and schedules hereto and thereto, incorporate the entire
understanding of the parties with respect to the subject matter hereof and
supersede all previous oral and written and all contemporaneous oral
negotiations, commitments, writings, and understandings. In addition, the
parties expressly agree that this Agreement supersedes and replaces any previous
employment arrangements with eflex, and that such previous employment
arrangements are of no further force or effect.
(b) This Agreement shall be governed by, and construed in
accordance with, the laws of California without regard to its conflict of laws
statutes, as if this Agreement were executed and performed entirely within
California. The parties hereby consent, in any dispute, action, litigation or
other proceeding concerning this Agreement, to the jurisdiction of the state or
federal courts having jurisdiction over and located in Orange County,
California.
(c) The invalidity of any section, provision or portion of
this Agreement shall not affect the validity of any other section, provision or
portion of this Agreement, and each such section, provision or portion shall be
enforced to the full extent permitted by law. This Agreement may not be modified
or amended, or any term or provision hereof waived or discharged, except by a
written instrument signed by the party against which such amendment,
modification, waiver or discharge is sought to be enforced. The headings of this
Agreement are for the purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
9
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
THE COMPANY: TELENETICS CORPORATION,
a California corporation
By: /s/ Xxxxxxx X. Armani
--------------------------------------
Xxxxxxx X. Armani, President
EMPLOYEE: /s/ T. Xxxxx Xxxx
--------------------------------------
T. Xxxxx Xxxx
10
EXHIBIT A
---------
Copy of Stock Option Agreement
(attached hereto)
EXHIBIT B
---------
"PROPRIETARY INFORMATION" DEFINED:
---------------------------------
For purposes of this Agreement, "PROPRIETARY INFORMATION" shall mean
information that has been created, discovered, developed or otherwise become
known to Employee or the Company or in which property rights have been assigned
or otherwise conveyed to Employee or the Company, which Employee may have
learned or discovered, or may make, learn of or discover while in employment of
the Company, whether before the commencement of this Agreement or during the
term hereof, which information has material economic value or potential material
economic value to the business in which the Company is or will be engaged.
Proprietary Information shall include, but not be limited to, trade secrets,
processes, formulas, data, know-how, negative know-how, improvements,
discoveries, developments, designs, ideas, Inventions, techniques, all technical
data, customer and supplier lists, and any modifications or enhancements
thereto, programs and information (whether or not in writing) which have actual
or potential economic value to the Company, together with any copyright or
patent therein. For purposes of this Agreement, Proprietary Information shall
not include information that has become public knowledge through legal means
without fault by Employee, or is already public knowledge prior to disclosure of
the same by the Company and/or its subsidiaries or affiliates to Employee.
"INVENTIONS" DEFINED:
--------------------
For purposes of this Agreement, "INVENTIONS" shall mean all
discoveries, developments, designs, improvements, inventions, formulas, software
programs, processes, techniques, know-how, negative know-how and data, whether
or not patentable or registrable under patent, copyright or similar statutes,
that are related to or useful in the business or future business of the Company
or result from use of premises or other property owned, leased or contracted for
by the Company. Without limiting the generality of the foregoing, Inventions
shall also include anything that 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 or use.
11
EXHIBIT C
---------
ITEM 1:
The following is a complete list of all inventions or improvements
relevant to the subject matter of Employee's employment by the Company that have
been made or conceived of or first reduced to practice by Employee alone or
jointly with others prior to his employment by the Company:
None.
ITEM 2:
The following is a complete list of all materials and documents of a
former employer that are not generally available to the public that Employee
will bring or have brought to the Company or have used or will use in his
employment by the Company:
None.
12
EXHIBIT D
---------
TERMINATION CERTIFICATION
I certify as follows:
1. When I signed the attached Employment Agreement (the "Agreement"), I
read and understood the terms of the Agreement.
2. I hereby acknowledge that I have fully complied with the terms of
the Agreement, including, without limitation, the disclosure and assignment to
Telenetics Corporation (or its successors or assigns) (the "Company") of any
Inventions covered by that Agreement, and the return of any documents and other
materials of any nature relating to my employment with the Company.
3. I hereby acknowledge and agree to comply with my continuing
obligations under this Agreement, including, without limitation, my obligation
not to use for personal benefit or to disclose to others any Proprietary
Information of the Company.
4. I understand and acknowledge that should I fail to comply with my
obligations under the Agreement, the Company shall have the right to injunctive
relief against me, including, without limitation, an injunction prohibiting me
from disclosing Proprietary Information to a third party.
Dated as of: ___________________
--------------------------------------
Signature of Employee
--------------------------------------
Print Name
13
EXHIBIT E
---------
NON-COMPETITION AND NON-SOLICITATION COVENANTS
DEFINITIONS. For purposes of this EXHIBIT E, the following terms shall
have the following meanings:
"BUSINESS" shall mean the development, production, manufacture, sale,
lease or distribution of the Technology and/or products and services relating to
the Technology, as developed, in development or conducted by eflex as of, or
immediately preceding the date of this Agreement, or conducted, developed or in
development by the Company or by eflex or their respective affiliates,
successors or assigns during the Non-Competition Period, the Employee
Non-Solicitation Period or the Customer Non-Solicitation Period;
"BUSINESS TERRITORY" shall mean the world, including all countries and
political subdivisions thereof.
"COMPETE" shall mean, with respect to the Business: (i) managing,
supervising or otherwise participating in a management or sales capacity; or
(ii) otherwise managing, operating, controlling, participating in the ownership,
management or control of, or being connected with or having any interest in, as
a stockholder, agent, partner, lender, consultant, advisor or otherwise, any
business or person that provides goods, products or services competitive with
those provided by the Business; provided, however, that nothing contained herein
will prohibit Employee from owning less than one percent of any class of
securities listed on a national securities exchange or traded publicly in the
over-the-counter market or from performing his duties in accordance with the
terms of this Agreement.
"CUSTOMER NON-SOLICITATION PERIOD" shall mean the period commencing on
the Effective Date and continuing for a period of two years after the
termination of this Agreement or Employee's employment relationship with the
Company, eflex or any of their respective successors, assigns, subsidiaries or
affiliates; provided, however, that the Customer Non-Solicitation Period shall
be extended by the number of days in which Employee is or was engaged in
activities constituting a breach of PARAGRAPH 3 below.
The term "CUSTOMERS" shall mean any person that, as of or immediately
preceding the date of this Agreement, or during the Non-Competition Period, the
Employee Non-Solicitation Period or the Customer Non-Solicitation Period, is or
was a client or customer of the Company, eflex or any of their respective
subsidiaries or affiliates.
The words "DIRECTLY OR INDIRECTLY," as they modify the word "Compete"
or "Competing," shall mean: (i) acting as an agent, representative, consultant,
officer, director, member, independent contractor or employee of any person that
is Competing with the Business; (ii) participating in any such Competing person
or enterprise as an owner, partner, limited partner, joint venturer, member,
creditor or shareholder (except as expressly permitted herein); or (iii)
communicating to any such Competing person or enterprise the names or addresses
or any other information concerning any Customer or any other confidential
information of the Business.
14
"EMPLOYEES" shall mean: (i) any employee of the Company, eflex or any
of their respective subsidiaries or affiliates as of, or immediately prior to
the date of this Agreement or during the Non-Competition Period, the Employee
Non-Solicitation Period or the Customer Non-Solicitation Period; or (ii) any
former employee of the Company, eflex or any of their respective subsidiaries or
affiliates whose employment with the Company, eflex or any of their respective
successors, assigns, subsidiaries or affiliates ceased less than one year before
the date of co-venturing, solicitation, inducement or recruitment.
"EMPLOYEE NON-SOLICITATION PERIOD" shall mean the period commencing on
the Effective Date and continuing for a period of two years after the
termination of Employee's employment or consulting relationship with the
Company, eflex or any of their respective successors, assigns, subsidiaries or
affiliates; provided, however, that the Employee Non-Solicitation Period shall
be extended by the number of days in which Employee is or was engaged in
activities constituting a breach of PARAGRAPH 2 below.
"NON-COMPETITION PERIOD" shall mean the period commencing on the
Effective Date and continuing for a period of two years after the termination of
Employee's employment or consulting relationship with the Company, eflex or any
of their respective successors, assigns, subsidiaries or affiliates; provided,
however, that the Non-Competition Period shall be extended by the number of days
in which Employee is or was engaged in activities constituting a breach of
PARAGRAPH 1 below.
The term "PERSON" shall mean any natural person, firm, partnership,
association, corporation, company, limited liability company, limited
partnership, trust, business trust, Governmental Entity or other entity.
The term "PROSPECTIVE CUSTOMER" shall mean any person that the Company,
eflex or any of their respective subsidiaries or affiliates has contacted, or
has developed a strategy or plan to contact, for the purpose of acquiring such
person as a customer or client during the period from January 1, 1999 through
the expiration of the Customer Non-Solicitation Period.
"TECHNOLOGY" shall have the definition set forth in the Stock Purchase
Agreement.
1) NON-COMPETITION. During the Non-Competition Period, Employee shall
not, and shall not permit any of Employee's affiliates to,
directly or indirectly Compete with the Business in the Business
Territory.
2) NON-SOLICITATION OF EMPLOYEES. Employee recognizes that the
Employees are a valuable resource of eflex or the Company.
Accordingly, during the Employee Non-Solicitation Period, Employee
shall not, either alone or in conjunction with any other person or
entity, directly or indirectly go into business with any Employee
or solicit, induce or recruit any Employee to leave the employ of
eflex, the Company, or any of their respective successors,
assigns, subsidiaries or affiliates.
3) NON-SOLICITATION OF CUSTOMERS. Employee recognizes that the
Customers and Prospective Customers are a valuable resource of
eflex and the Company. Accordingly, during the Customer
Non-Solicitation Period, Employee shall not, either alone or in
conjunction with any other person or entity, directly or
15
indirectly call on, solicit, take away, accept as a client,
customer or prospective client or customer, or attempt to call on,
solicit, take away, accept as a client, customer or prospective
client or customer a Customer or Prospective Customer for the
purpose of Competing with the Business.
4) ADDITIONAL AGREEMENTS. Employee hereby expressly agrees and
acknowledges that:
(i) eflex and the Company have protectable business
interests throughout the Business Territory, and that competition with
and against such business interests would be harmful to eflex or the
Company, as the case may be;
(ii) the covenants contained in this EXHIBIT E are
reasonable as to time and geographical area and do not place any
unreasonable burden upon Employee's ability to earn a livelihood;
(iii) the public will not be harmed as a result of
enforcement of the covenants contained in this EXHIBIT E;
(iv) the personal legal counsel for Employee has
reviewed the covenants contained in this EXHIBIT E, and/or Employee has
had ample opportunity but has knowingly and willingly declined to take
advantage of such opportunity for his personal legal counsel to review
the covenants contained in this EXHIBIT E;
(v) the parties have entered into the covenants
contained herein in connection with and as a condition precedent to the
consummation of the Stock Purchase Agreement, pursuant to which the
Company shall acquire eflex; the agreements, actions, covenants, and
promises contained herein are intended to protect and ensure the value
of Business, including its goodwill, which actions, covenants, and
promises are a material consideration to the Company in connection with
the Agreement; and, to the extent that the laws of any jurisdiction in
which this Agreement shall be interpreted, construed, and/or enforced
distinguish between covenants given in connection with the sale of a
business and its goodwill and covenants given in connection with
employment, this covenant will be given the broader interpretation
customarily given to covenants in connection with the sale of a
business and the transfer of goodwill to the Company, notwithstanding
any employment or engagement as a consultant of Employee by eflex or
the Company following the Closing;
(vi) the Company and Employee each agree that the
provisions of this EXHIBIT E shall survive the execution and
termination of this Agreement; and
(vii) Employee understands and agrees to each and
every term and condition contained in this EXHIBIT E.
5) REMEDIES; ENFORCEABILITY. Employee recognizes and acknowledges
that irreparable damage will result to the Company in the event of
a breach by Employee or any of Employee's affiliates of the
provisions of this EXHIBIT E, and, accordingly, in the event of
such a breach, the Company will be entitled, in addition to any
other legal or equitable damages and remedies to which it may be
16
entitled or which may be available, to an injunction to restrain
the violation thereof. If any provision of this EXHIBIT E shall be
adjudicated by a court of competent jurisdiction to be invalid or
unenforceable because of the scope, duration, area of its
applicability, or any other reason, the court making such
determination will have the power to modify such scope, duration,
or area, or all of them, or to strike an invalid or unenforceable
provision, in whole or in part, to the extent necessary to make
such scope, duration, area, or provision valid and enforceable.
17
