EXHIBIT 10.12
ADVANCE NANOTECH, INC.
DIRECTOR COMPENSATION AND
CONFIDENTIAL INFORMATION AGREEMENT
This Director Compensation and Confidential Information Agreement (this
"AGREEMENT"), effective ________ (the "EFFECTIVE DATE"), is entered into by and
between Advance Nanotech, Inc., a Colorado corporation (the "COMPANY"), having
offices at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 and Xxxxxxx Xxxxxxxxx (the
"DIRECTOR"), residing at _______________________________.
WHEREAS, the Company seeks to attract, retain and motivate qualified
directors, to enhance the long-term mutuality of interest between directors and
stockholders, and to protect the proprietary and confidential aspects of the
Company's business, and, therefore, sees fit to compensate the Director as
described further herein;
WHEREAS, as a member or prospective member of the Board of Directors of
the Company (the "BOARD"), Director has or will have access to and receive
information regarding the Company, it products, services, and business processes
and business plans and other confidential and proprietary information, as
described further herein;
WHEREAS, execution of this Agreement is a condition of Director's
election, access to confidential and proprietary information of the Company and
compensation hereunder;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valid consideration that is mutually
acceptable to the parties, the receipt and sufficiency of which are hereby
acknowledged, the Company and Director (the "PARTIES") hereby agree, and, if
Director is currently a member of the Board, the terms and conditions of
Director's election to the Board are hereby amended and restated, as follows:
1. COVENANTS OF COMPANY AND DIRECTOR.
a. In reliance upon the representations and warranties
of Director as set forth herein, the Company agrees to provide certain
Confidential Information (as hereinafter defined) to Director in his capacity as
a member of the Board, from time to time.
b. Director agrees, represents, and warrants to maintain
the confidentiality of such Confidential Information (as hereinafter defined) as
set forth herein.
c. Director hereby affirms and agrees that the covenants
contained herein are made by Director in consideration of Director (i) being
elected to the Board; (ii) being granted access to and receiving Confidential
Information (as hereinafter defined); and (iii) the compensation provided
herein.
2. IDENTIFICATION OF CONFIDENTIAL INFORMATION.
a. The term "CONFIDENTIAL INFORMATION" shall mean all
financial, technical and other information pertaining to the business, plan, or
operations of Company or as otherwise designated as Confidential Information by
the Company at the time it is disclosed to Director pursuant to subparagraph
2(b) below, including all copies thereof (including, without limitation, all
non-identical copies, regardless of origin or location), including but not
limited to algorithms, books, brochures, pamphlets, memoranda (including those
of telephone or oral conversations), letters, electronic mail, reports, charts,
graphs, notes, telegrams, and records, photographic imaging, computer tapes and
discs, and video and audio tapes, agreements, files, books, logs, charts,
records, studies, reports, surveys, schedules, plans, maps, statistical
information, and models which may be furnished or disclosed to Director by, or
acquired by Director directly or indirectly from, the Company.
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Such term shall also include all memoranda, notes, reports, documents and other
media containing Confidential Information, as well as any copies and extracts of
Confidential Information and any computer-generated documents and data
containing Confidential Information prepared by or for the benefit of Director.
b. Information considered to be Confidential Information
by the Company may be disclosed orally or in writing. Oral disclosures of
Confidential Information shall be orally noted, at the time of disclosure, to
comprise Confidential Information. Written disclosures of Confidential
Information or summaries of Confidential Information need not be marked
"Confidential" or "Secret" or contain terms of similar import in order to be
deemed Confidential Information hereunder. All communications at all meetings of
the Board, or any committee thereof, and all records of said communications
shall be deemed Confidential Information.
3. EXCEPTIONS: PUBLIC INFORMATION. For purposes of this
Agreement, Confidential Information shall not include, and the obligations
herein shall not apply to, information that: (a) is now or subsequently becomes
generally available to the public through no fault of Director; (b) Director can
demonstrate, by clear and convincing evidence, was rightfully in his or her
possession prior to disclosure to Director by Company; (c) Director rightfully
obtains from a third party without restriction and without breach of this
Agreement; (d) is released or approved for release by Company without
restriction; or (e) is inherently disclosed in the use, lease, sale, or other
distribution of any present or future product or service produced by, for, or
under authorization of Company or in publicly available supporting documentation
for any such product or service.
4. DIRECTOR'S OBLIGATIONS.
a. FIDUCIARY DUTIES. Director acknowledges and agrees
that he is subject to obligations to the Company as a member of the Board
including a duty of loyalty which requires that Director exercise his powers in
the interests of the Company, and not in the Directors' own interest or in the
interest of another person (E.G., family members). Director's duty of loyalty
also incorporates a duty to maintain the confidentiality of all matters
involving the Company until such time as there has been a general public
disclosure.
b. GENERAL STANDARD OF CARE. Director agrees,
represents, and warrants to use reasonable care, but in all events at least the
same degree of care that he or she uses to protect his or her own confidential
and proprietary information of similar importance, to prevent the unauthorized
use, disclosure, or availability of Confidential Information of the Company.
Director agrees to be responsible and liable for any negligent or willful act or
omission by Director resulting in an unauthorized use or disclosure of the
Confidential Information.
c. SPECIFIC OBLIGATIONS OF DIRECTOR. Director agrees,
represents, and warrants to take precautions to avoid any unauthorized use or
disclosure of the Confidential Information. Such precautions shall include but
not be limited to: (i) securing writings, documents, electronic communications
and other media containing such Confidential Information in a safe or locked
file cabinet or the equivalent; (ii) limiting Director's copying of media or
materials which contain Confidential Information to only those copies reasonably
necessary under the standard of Paragraph 5 of this Agreement; (iii) preventing
his own distribution of such media or materials unless specifically authorized
by Company to do so; (iv) maintaining a log of all persons, if applicable, who
are given access to Confidential Information by Director after receiving the
Company's authorization to do so; and (v) maintaining a written agreement with
each person, if applicable, who Director may give access to such Confidential
Information sufficient to comply with the terms of this Agreement.
d. ACKNOWLEDGEMENT. Director acknowledges and agrees
that the confidentiality obligations contained in paragraph 4b and 4c above are
in addition to, and not in substitution for, Director's fiduciary obligations as
a director of the Company described in paragraph 4a above. Any remedies
specifically provided for in this Agreement for breach of Director's obligations
under paragraph 4b and 4c shall be cumulative and in addition to any other
remedies available at law or in equity for breach of Director's fiduciary
obligations to the Company and any other provision of this Agreement.
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e. NOTICE. Director shall advise the Company immediately
in writing in the event he or she learns or has reason to believe any person to
whom he or she has allowed access to the Confidential Information has violated,
or intends to violate, any provision of this Agreement.
5. LIMITATIONS ON USE AND DISCLOSURE.
a. AUTHORIZED USE. Director may use the Confidential
Information only in connection with and for purposes of his acting as a member
of the Board and as the Company, its officers and directors may direct.
b. AUTHORIZED DISCLOSURE. Director may disclose the
Confidential Information only to persons, if applicable, who (i) have a "need to
know" such Confidential Information in order to enable Director to use such
Confidential Information for purposes in support of the Company's products or
services, and (ii) are legally bound to use and disclose such Confidential
Information in accordance with the terms of this Agreement. Director may make a
reasonable number of copies of materials or media containing such information as
appropriate to accomplish the purpose agreed to by the Company. Director shall
notify the Company in writing of any disclosures made pursuant to this
paragraph.
c. COMPELLED DISCLOSURE. Director may, in addition, use
or disclose Confidential Information if and to the extent: (i) required by any
request or order of any government authority; (ii) otherwise required by law; or
(iii) necessary to establish his or her rights under this Agreement; PROVIDED,
however, that in each case, Director will first notify Company of such
requirement, permit Company to contest such requirement if reasonably
appropriate, and cooperate with Company in limiting the scope of the proposed
use or disclosure and/or obtaining appropriate further means for protecting the
confidentiality of the Confidential Information.
6. RETURN OF CONFIDENTIAL INFORMATION.
a. Upon the Company's request, at any time, Director
will either return or, if requested by the Company, destroy all copies of any
media or materials containing Confidential Information. Upon the Company's
request, Director agrees to certify that it has completed such requested action.
b. Director's obligations under Sections 5 and 6 shall
survive termination of Director's elected term and/or term of employment, or
both, for any reason or the return of Confidential Information which is the
subject of this Agreement.
7. REMEDIES FOR NON-COMPLIANCE. It is agreed that the
unauthorized use or disclosure of any Confidential Information by Director in
violation of this Agreement or failure to disclose, hold in trust, and assign to
the Company all Director's right, title, and interest in and to any and all
Inventions, as defined in Section 8a will cause severe and irreparable injury to
the Company for which there is no adequate remedy at law and that it may not be
possible to measure damages for such injury with reasonable certainty. In the
event of any violation of this Agreement, Director agrees that the Company shall
be authorized and entitled to obtain from any court of competent jurisdiction
preliminary and/or permanent injunctive relief, as well as any other relief
permitted by applicable law, restraining Director from engaging in activities
prohibited by this Agreement. Director agrees to waive any requirement that the
Company post bond as a condition for obtaining any such relief. Director shall
notify the Company immediately, and cooperate with the Company at the Company's
reasonable request, upon Director's discovery of any loss or compromise of the
Company's Confidential Information. The Parties expressly agree that it shall
not be a defense in such an injunction action that the Company had previously
breached this Agreement.
8. ASSIGNMENT OF INVENTIONS.
a. Director agrees that Director has and will promptly
make full written disclosure to the Company, will hold in trust for the sole
right and benefit of the Company, and hereby assigns to the Company, or its
designee, all Director's right, title, and interest in and to any and all
inventions, original works of authorship,
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developments, concepts, improvements, designs, discoveries, ideas, trademarks or
trade secrets, whether or not patentable or registrable under copyright or
similar laws, which Director has or may solely or jointly conceive or develop or
reduce to practice, or cause to be conceived or developed or reduced to
practice, and any patentable improvements thereto which Director may solely or
jointly conceive or develop or reduce to practice, in his capacity as a director
of the Company and during or in consequence of his performance of his duties as
a director of the Company (collectively referred to as "INVENTIONS"). Director
further acknowledges that all original works of authorship which are made by
Director (solely or jointly with others) in his capacity as a director of the
Company and during or in consequence of his performance of his duties as a
director of the Company and which are protectible by copyright are "works made
for hire," as that term is defined in the United States Copyright Act. Director
understands and agrees that the decision whether or not to commercialize or
market any Invention developed by Director solely or jointly with others is
within the Company's sole discretion and for the Company's sole benefit and that
no royalty will be due to Director as a result of the Company's efforts to
commercialize or market any such Invention.
b. Notwithstanding any provision of clause (a) of
Section 8 hereof to the contrary, the Parties hereby agree and acknowledge that
"Inventions" (as used in such clause (a)) shall not apply to, and Company shall
have no right (ownership or otherwise) in or to, any invention which is
developed by Director on his/her own time without using any trade secret or
other intellectual property information, right or property of the Company unless
the invention relates, at the time of conception or reduction to practice of the
invention, directly to the business of Company, or actual or demonstrably
anticipated research or development of the Company.
c. Director's obligations under this Section 8 shall
survive the expiration or termination of Director's term of election or
employment by the Company for any reason.
9. DIRECTOR COMPENSATION AND BENEFITS.
a. ANNUAL RETAINER. Director shall be entitled to an
annual retainer of for his services in the amount of Twenty Thousand
($20,000.00) Dollars. This annual retainer shall be payable in equal cash
installments in arrears on the first day of each month for the preceding month's
service commencing ___________, consistent with the Company's standard payroll
practices for its directors. Director compensation shall be reviewed annually by
the Board and set by the Board.
b. SEMI-ANNUAL BONUS. Director shall be entitled to
receive a semi-annual bonus of $5,000 payable in cash in arrears on the first
day of the seventh month and the last day of the twelfth month of each year of
Director's term of election. This semi-annual bonus shall be reviewed annually
by the Board and set by the Board.
c. MEETING FEES. Director shall receive a fee of
$1,000.00, payable in cash, for each quarterly meeting of the Board of
Directors. Unless otherwise provided by the Board, no fee is payable with
respect to attendance at any other meeting of the Board of Directors, including
special meetings, or committee meetings.
d. EXPENSES. Upon submission of appropriate invoices or
vouchers, the Company shall pay or reimburse Director for all reasonable
expenses incurred by him in the performance of his duties as a member of the
Board, or any committee thereof, and in furthering the business, and in keeping
with the policies, of the Company.
e. STOCK PLANS. As part of the annual retainer
compensation provided in paragraph 9a above, during the Director's term of
election, Director may be included in any stock incentive, stock option, or
stock compensation plan as the Board may determine. Such plans may be documented
by the Board, the administrator of such a plan, if any, and Director from time
to time. Without limiting the foregoing, Director shall be granted stock options
for a minimum of 20,000 shares of Common Stock of the Company, 10,000 to vest at
the end of each twelve month period of Director's elected term, or a pro rata
portion thereof, in
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accordance with the Advance Nanotech, Inc. Stock Option Plan, subject to that
plan being approved by the Company's stockholders. Such stock option grant is
further subject to execution and delivery by Director of such agreements as may
be required under the Advance Nanotech, Inc. Stock Option Plan and by the Board,
including this Agreement. The Option Price (as defined in the Stock Option Plan)
for options granted hereunder shall be $3.50 per share.
10. MISCELLANEOUS.
a. This Agreement will be governed by and construed in
accordance with the laws of the State of Colorado, as it would apply to
contracts negotiated, executed, delivered and performed solely in such
jurisdiction. All issues and questions concerning the construction, validity,
enforcement, and interpretation of this Agreement shall be governed by, and
construed in accordance with, the laws of the State of Colorado, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Colorado or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than those of the State of
Colorado.
b. This Agreement states the entire agreement between
the Parties concerning the subject matter hereof and supersedes any prior and
contemporaneous agreements between the Parties relating thereto. No amendment,
modification or waiver of this Agreement shall be binding or effective for any
purpose unless it is made in a writing signed by the party against which
enforcement of such amendment, modification or waiver is sought. No failure or
delay by a Party hereto in enforcing any right, power or privilege created
hereunder shall operate as an implied waiver thereof, nor shall any single or
partial enforcement thereof preclude any other or further enforcement thereof or
the enforcement of any other right, power or privilege.
c. The parties acknowledge that the terms and conditions
of this Agreement and the existence of the discussions between them are
confidential, and shall not be disclosed, except as provided elsewhere in this
Agreement, without the written consent of the other party.
d. This Agreement may not be assigned by Director. This
Agreement shall inure to the benefit of Company, its successors, and assigns.
e. In the event that any provision of this Agreement
should be held to be void, voidable, or unenforceable, the remaining portions
hereof shall remain in full force and effect.
f. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no caption had been used in this Agreement.
g. This Agreement is a legally binding document.
Director acknowledges that he or she has read and understands this Agreement,
that he or she has had the opportunity to consult with and obtain independent
legal advice from his attorneys concerning the terms and conditions of this
Agreement, including but not limited to the scope and duration of this
Agreement, that he or she is signing this Agreement voluntarily and that he or
she intends to be bound by the Agreement and each of its terms.
h. The construction and interpretation of any clause or
provision of this Agreement shall be construed without regard to the identity of
the party that prepared this Agreement, and no presumption shall arise as a
result that this Agreement was prepared by one party or the other.
i. In the event a dispute arises regarding this
Agreement, the prevailing party shall be entitled to recover all attorneys' fees
and expenses incurred.
j. Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use all commercially reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
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things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including using all commercially reasonable efforts to remove any legal
impediment to the consummation or effectiveness of such transactions and to
obtain any consents and approvals required under this Agreement.
k. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which, when
taken together, constitute one and the same document. The signature of any party
to any counterpart shall be deemed a signature to, and may be appended to, any
other counterpart.
WHEREFORE, the Parties have executed this Agreement.
ADVANCE NANOTECH, INC. DIRECTOR
By:
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Name:
Title:
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Date: Date:
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