Privileged and Confidential
September 18, 2001
[ ] Consultant's Copy
[X] Company's Copy
ENGLISH LANGUAGE LEARNING & INSTRUCTION SYSTEM, INC.
NON-DISCLOSURE, INTELLECTUAL PROPERTY AND NONCOMPETITION AGREEMENT
To Xx. Xxxxx Xxxx:
By accepting and continuing your role as a consultant with English Language
Learning & Instruction System, Inc., a Delaware corporation (the "Company"),
you acknowledge that you perform services for the Company in a position that
allows you access to various trade secrets and confidential information
belonging to the Company and its affiliates. You agree that the Company has a
legitimate business Interest in preserving its confidential information and
business secrets from unauthorized disclosure, in protecting its goodwill, and
in protecting its special investment in your extensive and specialized
training. You agree to the provisions of this Agreement in consideration of
the Company's use of you as a consultant and the payments you will receive
from the Company (or its successor or transferee) in your role as a
consultant.
Secrecy
Preserving Company Confidences -- Your role as a consultant with the Company
under, and if applicable, before this Agreement, has given or will give you
access to Confidential Information (as defined below). You acknowledge and
agree that using, disclosing, or publishing any Confidential Information in an
unauthorized or improper manner could cause the Company or "Company Group"
(consisting of the Company and its direct or indirect parent, successors,
assigns, or subsidiaries) to incur substantial loss and damages that could not
be readily calculated and for which no remedy at law would be adequate.
Accordingly, you agree with the Company that you will not at any time, except
in performing your consulting duties to the Company or the Company Group (or
with the Board's prior written consent), directly or indirectly, use,
disclose, or publish, or knowingly or negligently permit others not so
authorized to use, disclose, or publish any Confidential Information that you
may learn or become aware of, or may have learned or become aware of, because
of your prior or continuing role as a consultant, ownership, or association
with the Company or the Company Group or any of their predecessors, or use any
such information in a manner detrimental to the interests of the Company or
the Company Group.
Preserving Others' Confidences -- You agree not to use in working for the
Company Group and not to disclose to the Company Group any trade secrets or
other information you do not have the right to use or disclose and that the
Company Group is not free to use without liability of any kind. You agree to
inform the Company promptly in writing of any patents, copyrights,
trademarks, or other proprietary rights known to you that the Company or the
Company Group might violate because of information you provide.
Confidential Information -- "Confidential Information" includes, without
limitation, any matters protected under the Uniform Trade Secrets Act and any
information that the Company or the Company Group has not previously disclosed
to the public or to the trade with respect to the Company's or the Company
Group's present or future business, including its operations, services,
products, research, inventions, invention disclosures, discoveries, drawings,
designs, plans, processes, models, technical information, facilities, methods,
systems, trade secrets, copyrights, software, source code, object code, patent
applications, procedures, manuals, specifications, any other intellectual
property, confidential reports, price lists, pricing formulas, customer lists,
financial information (including the revenues, costs, or profits associated
with any of the Company's or the Company Group's products or services),
business plans, lease structure, projections, prospects, opportunities or
strategies, acquisitions or mergers, advertising or promotions, personnel
matters, legal matters, any other confidential and proprietary information,
and any other information not generally known outside the Company or the
Company Group that may be of value to the Company or the Company Group, but
excludes any information already properly in the public domain. "Confidential
Information" also includes confidential and proprietary information and trade
secrets that third parties entrust to the Company or the Company Group in
confidence. You understand and agree that the rights and obligations set
forth in this Secrecy Section will continue indefinitely and will survive
termination of this Agreement and your consulting arrangement with the Company
or the Company Group.
Exclusive Property
You confirm that all Confidential Information is and must remain the exclusive
property of the Company or the relevant member of the Company Group. Any
office equipment (including computers) you receive from the Company Group in
the course of your consulting arrangement and all business records, business
papers, and business documents you keep or create, whether on digital media or
otherwise, in the course of your consulting arrangement with the Company
relating to the Company or any member of the Company Group must be and remain
the property of the Company or the relevant member of the Company Group. Upon
the termination of your consulting arrangement with the Company or upon the
Company's request at any time, you must promptly deliver to the Company or to
the relevant member of the Company Group any such office equipment (including
computers) and any Confidential Information or other materials (written or
otherwise) not available to the public or made available to the public in a
manner you know or reasonably should recognize the Company did not authorize,
and any copies, excerpts, summaries, compilations, records, or documents you
made or that came into your possession during your consulting arrangement. You
agree that you will not, without the Company's consent, retain copies,
excerpts, summaries, or compilations of the foregoing information and
materials. You understand and agree that the rights and obligations set forth
in this Exclusive Property Section will continue indefinitely and will survive
termination of this Agreement and your consulting arrangement with the
Company Group.
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Copyrights, Discoveries, Inventions, and Patents
You agree that all records, in whatever media (including written works),
documents, papers, notebooks, drawings, designs, technical information, source
code, object code, processes, methods or other copyrightable or otherwise
protected works you conceive, create, author, prepare derivative works from,
make, invent, or discover that relate to or result from any work you perform
or performed for the Company or the Company Group or that arise from the use
or assistance of the Company Group's facilities, materials, personnel, or
Confidential Information in the course of your consulting arrangement (whether
or not during usual working hours), whether conceived, created, authored,
discovered, made, or invented individually or jointly with others, will be and
remain the absolute property of the Company (or another appropriate member of
the Company Group, as specified by the Company), as will all the worldwide
patent, copyright, trademark, service xxxx, trade secret, or other
intellectual property rights in all such works. (All references in this
section to the Company include the members of the Company Group, unless the
Company determines otherwise.) You irrevocably and unconditionally waive all
rights, wherever in the world enforceable, that vest in you (whether before,
on, or after the date of this Agreement) in connection with your authorship of
any such copyrightable works in the course of your consulting arrangement with
the Company Group or any predecessor. Without limitation, you waive the right
to be identified as the author, inventor, creator, or facilitator (whether
solely or jointly) of any such copyrightable works and the right not to have
any such works subjected to derogatory treatment. You recognize any such works
are "works for hire" for which the Company Group retains all rights, title,
and interest to any underlying intellectual property rights, including
copyright protections. You will promptly disclose, and hereby grant, and
assign all rights, title, and interest in ownership to the Company (or other
member of the Company Group, as specified by the Company) for its or their
sole use and benefit any and all intellectual property, including all ideas,
processes, inventions, invention disclosures, discoveries, improvements,
technical information, trademarks, service marks, and copyrightable works
(whether patentable or not) that you develop, acquire, conceive, reduce to
practice, author, or prepare derivative works from (whether or not during
usual working hours) while you are a consultant with the Company or the
Company Group. You will promptly disclose and hereby grant and assign
ownership to the Company of all intellectual property, including utility and
design patents, copyrights, and trademarks, or service marks, including any
associated registrations, applications, renewals, extensions, continuations,
continuations-in-part, divisions, or reissues thereof or any foreign
equivalents thereof (such intellectual property and related rights being
referred to collectively as "Protected Interests"), that may at any time be
filed or granted for or upon any such intellectual property. In connection
therewith:
You will, without charge but at the Company's expense, promptly execute
and deliver such applications, assignments, descriptions, and other
instruments as the Company may consider reasonably necessary or proper to
vest title to any Protected Interests in the Company and to
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enable it to obtain and maintain the entire worldwide right and title
thereto; and
You will provide to the Company at its expense all such assistance as the
Company may reasonably require in the prosecution of applications for
such Protected Interests, in the prosecution or defense of interferences
that may be declared involving any such Protected Interests, and in any
litigation in which the Company or the Company Group may be involved
relating to any such Protected Interests. The Company will reimburse you
for reasonable out-of-pocket expenses you incur and pay you reasonable
compensation for your time if the Company Group no longer uses your
services as a consultant.
You and the Company agree that Exhibit A lists and briefly describes works,
inventions, discoveries, proprietary information, patents and patent
applications, and copyrighted or copyrightable works (including contemplated
works) that the Company will not contest are owned (or will be owned) by you
or any entity to which you have assigned them. You agree that you have no
ownership interest in any other such works or related patents or copyrights
that relate in any way to the business of the Company or the Company Group.
This Copyrights, Discoveries, Inventions and Patents section does not apply to
an invention that you conceived, developed, reduced to practice, or created
entirely on your own time except for any invention that is, in whole or part,
an "employment invention" because (a) you conceived, developed, reduced to
practice, or created it (i) within the scope of your consulting arrangement,
(ii) while working as a consultant for the Company, or (iii) with the aid,
assistance, or use of the Company's property, equipment, facilities, supplies,
or intellectual property, (b) it results from any work, services, or duties
you performed for the Company, (c) it relates to the Company's industry or
trade, or (d) it relates to the Company's current or demonstrably anticipated
business research or development. You agree for this purposes of this
paragraph that the Company includes any member of the Company Group for which
you have provided services.
To the extent, if any, that you own rights to works, inventions, discoveries,
proprietary information, and copyrighted or copyrightable works, or other
forms of intellectual property that have been or become incorporated in the
work product you create for the Company Group, you agree that the Company
(and/or, as the Company specifies, other members of the Company Group) will
have an unrestricted, non-exclusive, royalty-free, perpetual, transferable
license in such intellectual property, including the rights to make, use,
sell, offer for sale, and sublicense (through multiple tiers), reproduce,
prepare derivative works from, distribute copies of, publicly perform, or
publicly display such works and property in whatever form, and you hereby
grant such license to the Company (and the Company Group).
No Competition
You will not, directly or indirectly, be employed by, lend money to, or engage
in any Competing Business within the Market Area (each as defined below). That
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prohibition includes, but is not limited to, acting, either singly or jointly
or as agent for, or as an employee of or consultant to, any one or more
persons, firms, entities, or corporations directly or indirectly (as a
director, independent contractor, representative, consultant, member, or
otherwise) that constitutes such a Competing Business. You also will not
invest or hold equity or options in any Competing Business, provided that you
may own up to 3% of the outstanding capital stock of any corporation that is
actively publicly traded without violating this No Competition covenant, so
long as you have no involvement beyond passive investing in such business and
you comply with the second sentence of this paragraph, You further agree not
to use, incorporate, or otherwise create any business organization or domain
name using, any name confusingly similar to "English Language Learning and
Instruction System, Inc." "XXXXX" or any other name under which the Company
does business.
You acknowledge that, during the portion of the Restricted Period that follows
your consulting arrangement, you may engage in any business activity or
gainful employment of any type and in any place except as described above. You
acknowledge that you will be reasonably able to earn a livelihood without
violating the terms of this Agreement.
You understand and agree that the rights and obligations set forth in this No
Competition Section will continue and will survive through the Restricted
Period.
Definitions
Competing Business -- Competing Business means any service or product of any
person or organization other than the Company and its successors, assigns, or
subsidiaries (collectively, the "Company Group") that competes with any
service or product of the Company Group provided by any member of the Company
Group during your consulting arrangement or upon which or with which you have
worked for the Company or the Company Group or about which you acquire
knowledge while working for the Company or the Company Group. Competing
Business includes any enterprise engaged in the provision of English as a
Second Language software products.
Market Area -- The Market Area consists of the United States. You agree that
the Company provides goods and services both at its facilities and at the
locations of its customers or clients and that, by the nature of its
business, it operates globally.
Restricted Period -- For purposes of this Agreement, the Restricted Period
begins on the date you sign this Agreement and ends at the first anniversary
of the date your consulting arrangement with the Company Group ends for any
reason.
No Interference; No Solicitation
During the Restricted Period, you agree that you will not, directly or
indirectly, whether for yourself or for any other individual or entity (other
than the Company or its affiliates or subsidiaries), intentionally
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solicit any person or entity who is, or was, within the 24 months
preceding the end of your consulting arrangement with the Company, a
customer, prospect (with respect to which any member of the Company Group
has incurred substantial costs or with which you have been involved), or
client of the Company Group within the Market Area, with the 24 month
period reduced to 12 months for prospects with which you have not been
involved;
hire away or endeavor to entice away from the Company Group any employee
or any other person or entity whom the Company Group engages to perform
services or supply products and including, but not limited to, any
independent contractors, consultants, engineers, or sales representatives
or any contractor, subcontractor, supplier, or vendor; or
hire any person whom the Company Group employs or employed within the
prior 12 months.
Maximum Limits
If any of the provisions of this Agreement are ever deemed to exceed the time
or activity limitations the law permits, you and the Company agree to reduce
the limitations to the maximum permissible limitation, and you and the Company
authorize a court or arbitrator having jurisdiction to reform the provisions
to the maximum time and activity limitations the law permits; provided,
however, that such reductions apply only with respect to the operation of such
provision in the particular jurisdiction with respect to which such
adjudication is made.
Injunctive Relief
Without limiting the remedies available to the Company, you acknowledge:
that a breach of any of the covenants in this Agreement may result in
material irreparable injury to the Company and Company Group for which
there is no adequate remedy at law, and
that it may not be possible to measure damages for such injuries
precisely.
You agree that, if there is a breach or threatened breach, the Company or any
member of the Company Group may be entitled to obtain a temporary restraining
order and/or a preliminary or permanent injunction restraining you from
engaging in activities prohibited by any provisions of this Agreement or such
other relief as may be required to specifically enforce any of the covenants
in this Agreement. The Company or any member of the Company Group will, in
addition to the remedies provided in this Agreement, be entitled to avail
itself of all such other remedies as may now or hereafter exist at law or in
equity for compensation and for the specific enforcement of the covenants
contained in this Agreement. Resort to any remedy provided for in this Section
or provided for by law will not prevent the concurrent or subsequent
employment of any other appropriate remedy or remedies, or preclude the
Company's or the Company Group's recovery of monetary damages and
compensation. You also agree that the period during which the covenants
hereunder by their terms survive xxxx
Xxxx 6 of 9
extend for all periods for which a court with personal jurisdiction over you
finds that you violated this Agreement.
Assignment
The Company may assign or otherwise transfer this Agreement and any and all of
its rights, duties, obligations, or interests under it to:
any parent, affiliate, or subsidiary of the Company or
any business entity that at any time by merger, consolidation, or
otherwise acquires all or substantially all of the Company's stock or
assets or to which the Company transfers its assets or that acquires all
or substantially all of the stock or assets of the division or subsidiary
to which you primarily provide services.
Upon such assignment or transfer, any such business entity will be deemed to
be substituted for the Company for all purposes. This Agreement binds and
benefits the Company, its successors or assigns, and your heirs and the
personal representatives of your estate. You may not assign or delegate this
Agreement.
Severability
If the final determination of an arbitrator or a court of competent
jurisdiction declares, after the expiration of the time within which judicial
review (if permitted) of such determination may be perfected, that any term or
provision of this Agreement is invalid or unenforceable, the remaining terms
and provisions will be unimpaired, and the invalid or unenforceable term or
provision will be deemed replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid
or unenforceable term or provision.
Amendment; Waiver
Neither you nor the Company may modify, amend, or waive the terms of this
Agreement other than by a written instrument signed by you and a duly
authorized officer of the Company. Either party's waiver of the other party's
compliance with any provision of this Agreement is not a waiver of any other
provision of this Agreement or of any subsequent breach by such party of a
provision of this Agreement.
Governing Law
The laws of the State of Utah (other than its conflict of laws provisions)
govern this Agreement.
No Effect on Service Relationship
Nothing in this Agreement restricts the Company's rights or those of any of
its affiliates to terminate your consulting arrangement or other relationship
at any time, with or without cause. The termination of your consulting
arrangement or other relationship, whether by the Company or any of its
affiliates or otherwise, and regardless of the reason for such termination,
has the consequences provided for under any applicable consulting agreement.
Please sign and date below to indicate your agreement to these provisions. We
encourage you to consult with advisers you choose to help you understand your
obligations under this Agreement.
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English Learning Language and Instruction System, Inc.
Accepted and agreed:
/s/ Xxxxx Xxxx
---------------------------
Xx. Xxxxx Xxxx
Dated: September 19, 2001
English Language Learning and Instruction System Inc.
By: /s/ Xxx Xxxx
------------------------------------------------
Name: XXX XXXX
Title: PRESIDENT, CEO
