EMPLOYMENT, ROYALTY AND NON-DISCLOSURE AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the 15th day of May, 1996,
by and between ENVIROMETRICS PRODUCTS COMPANY, a corporation organized under the
laws of the State of South Carolina and including its agents, representatives,
divisions, subdivisions, subsidiaries, wholly or partly owned, parent
corporations, affiliates, assignees, related entities and successors in interest
(hereafter "the Company"), and XXX XXXXXX, an individual resident of the State
of North Carolina ("Employee").
WITNESSETH:
WHEREAS, the Company is engaged in the Business of the Company and, in the
course of such activity, has acquired or developed certain Trade Secrets,
Confidential Information, Intellectual Property and Proprietary Information (as
such terms are hereinafter defined) not generally known in the Company's
industry or otherwise;
WHEREAS, the Company understands that the Employee has brought to the
Company and provided the Company with certain proprietary technology allowing
the Company advantages in the marketplace it would not otherwise enjoy; and
WHEREAS, such Trade Secrets, Confidential Information, Intellectual
Property and Proprietary Information provide the Company with a competitive
advantage in the marketplace;
WHEREAS, Employee has been, and after and by virtue of the execution of
this Agreement will continue to be, employed by the Company in a position
involving the trust and confidence of the Company; and
WHEREAS, in the course of his employment with the Company, or through his
use of the Company's facilities or resources, Employee has had and will have
access to, and has developed and may develop or contribute to the development
of, Trade Secrets, Confidential Information, Intellectual Property and
Proprietary Information, all solely in connection with his activities as an
employee of the Company; and
WHEREAS, Employee understands and agrees that substantial benefits and
consideration will inure to him under this Agreement that he would not otherwise
enjoy were he not to execute the same.
NOW THEREFORE, in consideration of and as an express condition to the
continuance of employment of Employee by the Company, the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows: 1. DEFINITIONS.
(a) "Bonus" has the meaning ascribed to it in Section 4 hereof.
(b) "Business of the Company" means and includes the business and
commercial activities of the Company, as such business is conducted while this
Agreement is in effect, including, without limitation, designing, developing,
testing, manufacturing, advertising, distributing and selling industrial hygiene
and environmental air monitoring and related products.
(c)"Cause" means (i) fraud, dishonesty, demonstrated incompetence in the
performance of professional duties; (ii) excessive unexcused absences from work;
(iii) engaging in activities prohibited by the policies of the Company as
communicated in writing to Employee or expressly prohibited by the terms of this
Agreement; or injury, accident, illness or other incapacity which wholly, or
continuously and materially, disables Employee from performing his duties
hereunder for a period of ninety (90) days and thereafter for ten (10) days
after the Company shall have given Employee written notice of the Company's
intention to terminate this Agreement and its employment relationship with
Employee because of such disability. The Company will at all times during his
employment with the company and at no cost to the Employee provide the Employee
with disability insurance sufficient to provide Employee with a minimum of sixty
(60) percent of his earnings until recovery or age sixty-five (65) and will
furnish Employee with a current copy of such policy and immediately notify
Employee of any changes or amendments made to such policy.
(d) "Colorimetric Device" means any device that indicates through
corresponding changes in its reflectance or absorbance of light, the presence
and/or level of exposure to an indicated chemical(s) or substance.
(e) "Company" means ENVIROMETRICS PRODUCTS COMPANY, its agents,
representatives, divisions, subdivisions, subsidiaries, wholly or partly owned,
parent corporations, affiliates, assignees, related entities and successors in
interest.
(f) "Competing Business" means any person or entity in the same business or
substantially the same business as the Business of Company.
(g) "Competing Product" means any good that performs substantially the same
function(s) as any of the Products.
(h) "Confidential Information" means any and all data and information
relating to the Business of the Company (whether constituting a Trade Secret or
not) which is or has been developed by or disclosed to Employee or of which
Employee became aware as a consequence of or through his relationship with the
Company and which has value to the Company and is not generally known by its
competitors.
(i) "Copyrights" means all original "works of authorship", "compilations",
and/or "derivation" including, without limitation, literary, artistic,
pictorial, graphic and other intellectual works owned or claimed by Company
which are registered with the United States Copyright Office or the copyright
office of any other jurisdiction, or are eligible to be so registered, or are
entitled to protection by and under the copyright laws and treaties of the
United States or under the equivalent laws of any other jurisdiction.
(j) "Gross Sales" means the total, without geographical limitations, of all
sales of the Products by Company at invoice prices reduced by discounts,
rebates, and return of products defined herein.
(k) "Intellectual Property" means the Copyrights, Marks and Patents,
collectively or in combination, as the context suggests.
(l) "Marks" Means all trade names, word marks, trademarks, service marks
and logos or designs (including any trade dress that is susceptible to
protection under the laws of the United States or any other political
subdivision in the world), whether or not registered with the United States
Patent and Trademark Office or trademark office or registry of any jurisdiction
in the world, placed upon or used in connection with the Business of the Company
or the sale, distribution, promotion and marketing of the Products or of any
other goods or services provided or distributed by Company from time to time,
and includes, without limitation, "ACT and design" , "Air-Chem Technologies"
and "The ACT Monitoring Card System".
(m) "Patents" Means all inventions or letters patent owned or licensed by
or on behalf of the Company, and which are registered with the United States
Patent and Trademark Office or the patent office or registry in any jurisdiction
in the world or are eligible for registration and/or other protection under the
laws and treaties of the United States or of any such jurisdiction
(n) "Products" means any chemical based colorimetric device(s) developed by
the Company and/or produced by the Company or licensee(s) or other agent(s) of
the Company to perform the function of quantitatively or qualitatively measuring
and/or indicating chemicals present in the atmosphere.
(o) "Proprietary Information" Means all of the following materials and
information, whether or not patentable or protected by a copyright, trademark,
or service xxxx, to which Employee receives or has received access or which
Employee develops or has developed as a result of his employment with the
Company or during the term of his employment with the Company or through the use
of any of the Company's facilities or resources, or those of its affiliates or
of its agents or distributors:
(i) Production processes, purchasing information, price lists, performance
and scheduling information and data, and other materials or information relating
to the Business of the Company;
(ii) Discoveries, concepts and ideas, and the embodiment(s) thereof,
whether or not actually constituting Intellectual Property hereunder, and the
nature and results of research and development activities and "know-how"
acquired while in the employ of the Company;
(iii) Any other materials or information related to the Business of the
Company which are not generally known to others engaged in similar business or
activities;
(iv) All inventions and ideas which are derived from or related to
Employees's access to knowledge of any of the above enumerated materials and
information while in the employ of the Company; and
(v) Any trade secrets, confidential information or proprietary information
which the Company has acquired or may in the future acquire from any third party
during employee's service to the company, including, without limitation,
operating principles, documentation, drawings, programs and performance
specifications and results provided to the Company by such third parties
pursuant to agreements, understandings and/or acknowledgments to the effect that
such trade secrets and confidential or proprietary information provided to the
Company by such third parties (collectively "Third Party Confidential
Information") is the proprietary and/or confidential information of such
respective third part and is to be treated by the Company as if such Third Party
Confidential Information were the Company's Confidential Information.
(p) "Royalty" means two and one-half percent of Gross Sales of the Products
described herein.
(q) "Salary" has the meaning ascribed to it in Section 4 hereof.
(r) "Term" means the Initial Term and any Renewal Term, as such terms are
defined below.
(s) "Trade Secrets" means the whole or any portion or phase of any data or
information developed, owned or licensed from a third party by the Company to
which Employee has gained access as a result of his employment with the Company,
including any formula, pattern, compilation, program, device, method technique,
improvement, or process that:
(i) derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by a proper means by,
other persons who can obtain economic value from its disclosure or use; and
(ii) Is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy.
Trade Secrets shall not include any data or information (i) that has been
voluntarily disclosed to the public by the Company or has become generally known
to the public (except when such public disclosure has been made by or through
Employee, or by a third person or entity with the knowledge of Employee, without
authorization from the Company); (ii) that has been independently developed and
disclosed to parties other than the Company, and the public generally or to
Employee with a breach of obligation of confidentiality by any such parties
running directly or indirectly to the Company; or (iii) that otherwise enters
the public domain through lawful means.
2. TERMS OF ENGAGEMENT; DUTIES.
(a) Capacity. The Company hereby employs Employee as Research Chemist and
Employee accepts such employment in such capacity by the Company subject to the
terms and conditions hereof.
(b) Duties. Employee recognizes and agrees that he shall: (i) devote all of
his time, energy and skill during regular business hours to faithfully and
industriously develop colormetric technology and products and other technology
and products as directed by the Company exclusively for the use and benefit of
the Company (vacation time and reasonable sick leave excepted); (ii) diligently
follow and implement all policies and decisions communicated to him by the
Company, to the best of his ability with the resources provided by the Company,
including without limitation, those concerning the production, sale of or
further research and development concerning, the Products; and (iii) faithfully
and to the best of his ability perform the duties and obligations set forth in
this Agreement.
3. TERM; TERMINATION.
(a) Initial term. The term of the employment of Employee by the Company
hereunder shall commence on the date hereof and shall end on December 31, 2000
(the "Initial Term").
(b) Renewal Terms(s). At the expiration of the Initial Term, this Agreement
shall be automatically renewed for separate and successive two (2) year terms
(individually, a "Renewal Term" and, collectively, "Renewal Terms"); provided,
however, the parties may agree in writing to modify the compensation to be paid
pursuant to Section 4 hereof during any such Renewal Term, but shall not be
bound to do so; provided, further, this Agreement shall not be automatically
renewed if either party shall give to the other party written notice of his or
its intent not to renew this Agreement no fewer than thirty (30) days prior to
the expiration of the Initial Term or any Renewal Term, as applicable.
(c) Voluntary Termination by Employee. Employee may terminate this
Agreement at any time during the Term upon no fewer than sixty (60), but no more
than ninety (90) days prior written notice to the Company, in which event this
Agreement and all of the Company's obligations hereunder shall terminate as of
the date contained in such notice except that the Royalty shall be payable as
provided as in Section (f) hereof. Notwithstanding the foregoing, in the event
Employee shall terminate this Agreement as a result of a major illness or
disability which prevents him from performing his services hereunder, Employee
shall thereafter be entitled to receive Salary (as defined below)for a period of
ninety (90) days following the date of the occurrence of such injury or
disability, and all of the other terms of this Agreement, including all Benefits
payable by the Company on behalf of the Employee, shall continue until the end
of the Annual Term in which such termination occurs, and all Royalty shall be
payable as provided in Section (f) hereof and Section 4(c).
(d) Termination by the Company for cause. This Agreement may be terminated
by the Company for Cause at any time during the Term, upon ten (10) days prior
written notice to Employee, in which event this Agreement and all of the
Company's obligations hereunder shall terminate as of the notice date, except
that the Royalty shall be payable as provided in Section (f) hereof and Section
4(c).
(e) Termination by the Company other Than for Cause. In the event the
Company terminates this Agreement during the Term for reasons other than for
Cause, then, in addition to any other remedy available at law or equity,
Employee shall be entitled to continue to receive his Salary, plus all Benefits
to be paid by the Company on behalf of Employee for a period equal to one month
for every full year of service, but not to exceed six months, after such
termination occurs, plus the Royalty as provided in Section (f) hereof and
Section 4(c).
(f) Survival of Royalty Payments. The Royalty as defined in Section 4(c) of
this Agreement shall continue to be paid to Employee notwithstanding termination
for any reason of this Agreement until the first occurrence of one of the
following events:
(i) Employee dies, in which event any Royalty accrued and payable on the
date of death shall be paid to Employee's estate, and the Royalty shall not
thereafter be payable to any other person or entity;
(ii) Employee develops Competing Products for any Competing Business, or
any employer, person, or entity other than the Company or its affiliates, in
which event the Royalty shall cease being paid to Employee or any other person
or entity; or
(iii) Employee becomes employed by or affiliated with a Competing Business
as, without limitation, an employee, officer, director, agent, consultant, or
advisor, in which capacity Employee develops, or assists the Competing Business
or its affiliates, employees, officers, directors, agents, consultants, or
advisors in the development of, Competing Products, in which event the Royalty
shall cease being paid to Employee or any other person or entity.
(g) Return of Embodiments of Proprietary Information Upon Termination. All
notes, data, reference materials, sketches, drawings, memoranda and records in
any way relating to any of the Proprietary Information or the Business of the
Company and any other physical embodiment of the Proprietary Information shall
belong exclusively to the Company, and Employee agrees to turn over to the
Company the originals and all copies of such materials developed or generated by
the Employee or coming into his possession during the term of or as a result of
his employment by the Company at the request of the Company or, in the absence
of such a request, upon termination (for whatever reason) of Employees
employment with the Company.
(h) Survival of Covenants. The Covenants of Employee set forth in Section 5
hereof shall survive the termination of this Agreement for any reason whatsoever
and shall not be extinguished thereby so long as the Royalty is paid in
accordance with Section 4(c) and Section 3(f).
4. COMPENSATION.
(a) Salary. During the Term, the Company shall pay Employee an annual
salary of Sixty Thousand and No/100 Dollars ($60,000.00) (the "Salary"), which
Salary shall be payable in the manner and at the times which the Company
regularly compensates its employees, less applicable state and federal taxes. In
addition, but subject to conditions of termination set forth above, the Company
shall pay Employee the Bonus and Royalty, as defined herein. If the Bonus
outlined in 4(b), when added to the base salary at the end of each year does not
equal the cost of living based on the U.S. Dept Of Labor cost of living index,
the Company shall make an adjustment to the base salary for the following year
equal to the cost of living index.
(b) Bonus. The Company shall pay Employee a bonus equal to Five Thousand
and No/100 Dollars ($5000.00) plus grant a ten-year option to purchase Five
Thousand (5000) shares of the Company's (EVRM) Common Stock. Such options will
be granted at the then market price of the Stock and shall be fully vested at
issuance. This bonus will be awarded for each additional chemical for which
monitoring device(s) is developed by Employee (the "Bonus"); provided, however,
the chemical must be approved by the Marketing Department of the Company. The
monitoring device(s) indicating such chemical will be considered "developed" for
purposes hereof upon the completion of the standard validation protocol and an
algorithm defining the devices'(s') performance has been developed and/or an
acceptable color match(s) has been identified in the case of qualitative
device(s). Bonus shall be paid to Employee within thirty (30) days after
monitoring device has been "developed".
(c) Royalty. By the thirtieth (30th) day after the last day of each
calendar year quarter (each a "Royalty Quarter"), the Company shall pay to
Employee a Royalty (The "Royalty") equal to Two and One-Half Percent (2.5%) of
Gross Sales of the Products as defined herein for the immediate preceding
calendar quarter. A written statement of the value and quantity of each
colorimetric device sold during the "Royalty Quarter" shall be given to Employee
with each quarterly payment. In the event that such a written statement is not
provided employee shall have the right to examine any of Company's State Sales
Tax Reports for sale of Products as defined herein. Employee shall also have the
right to examine all books of account recording Gross Sales as defined herein.
The parties expressly agree that the payment of the Royalty as described in this
Agreement shall survive any termination of this Agreement except as provided in
Section 3(f) of this agreement. In the event of bankruptcy either voluntary or
involuntary, or the non-payment of Royalty payments to the Employee by the
Company as specified in this Agreement and not cured in ten (10) days after
written notification of delinquency by the Employee, all obligations of Employee
under this agreement or which could or might be imposed by statutory or common
law shall be extinguished. In the event that the technology required to produce
the Product is transferred through sale or any other means to any other entity,
the Royalty as defined herein shall be paid by such entity.
(d) Payment on Death. In the event Employee dies during the Term of
Agreement, and so long as this Agreement was not the subject of a notice of
terminating as provided in Section 3 hereof, the Company shall pay to his estate
any Salary, Royalty or Bonus that would have been payable up until the end of
the month in which Employee dies.
(e) Benefits. Employee shall be entitled to participate in any retirement,
profit sharing, hospital, medical, disability and life insurance programs
regularly maintained by the Company for its employees.
(f) Expense Reimbursement. The Company will reimburse Employee for all
ordinary, reasonable necessary expense incurred by him in carrying out his
duties under this Agreement upon Employee's presentation to the Company from
time to time of an itemized account of the receipts for such expenses in such
form as may be required by the Company; provided, however, such reimbursement
shall be conditioned upon deductibility by the Company of such expenses from
gross income for federal tax purposes.
(g) Product Liability. The Employee is in no way responsible for any
product liability. The Company accepts full and complete responsibility for the
Product and any claims made by the Company regarding the Product or its
capabilities or performance, and the Company will maintain at all times product
liability insurance specifically protecting the employee against any legal
claims made against him in his capacity as developer of the Product. The Company
will furnish the Employee with evidence of such insurance and notify employee
immediately of any cancellation, modification or amendment thereto.
5. COVENANTS OF EMPLOYEE.
(a) Ownership of Trade Secrets, Confidential Information, Proprietary
Information and Intellectual Property. Employee agrees that the Trade Secrets,
Confidential Information, Proprietary Information, Intellectual Property, and
all physical embodiments thereof (collectively the "Information") to which the
employee has come into possession of as a result of or during the term of his
employment by the Company; are, and shall at all times remain, the sole and
exclusive property of the Company, and that any of the Information produced or
developed by him as an employee of the Company shall be considered work for hire
under United States law. Employee agrees to (a) immediately disclose or transfer
to the Company all Information developed in whole or part by him during the
Term, (b) assign to the Company any right, title or interest he may have in such
Information, and (c) at the request and expense of the Company, to do all things
and sign all documents or instruments reasonably necessary to eliminate any
ambiguity as to the ownership of the Company of such Information including,
without limitation, providing to the Company his full cooperation in any
litigation or other proceedings to establish, protect or obtain such rights
while he is in the employee of the Company.
(b) Non-Disclosure or Use of Trade Secrets or Confidential Information.
During the term of his employment with the Company and at any and all times
following the termination of such employment, Employee agrees not to use,
reveal, report, publish, disclose or transfer, directly or indirectly, any Trade
Secret or Confidential Information of which he came into possession as a result
of his employment by the Company for any purpose including, without limitation,
the solicitation of existing company customers of which the Employee is aware,
except in the course of performing duties assigned to him by the Company.
(c) Non-Disclosure or Use of Proprietary Information. During the term of
his employment with the Company and for a period of one (1) year after
termination (for whatever reason) of such employment, Employee agrees not to
use, reveal, report, publish, disclose or transfer, directly or indirectly, any
Proprietary Information for any purpose.
(d) No Solicitation. Employee covenants and agrees that, while he is
employed by the Company and for a period of two (2) years following termination
(for any reason) of such employment, he will not, directly or indirectly,
solicit, induce or hire away, or assist any third person or entity in inducing,
diverting, soliciting or hiring away, (i) any employee of the Company, whether
such employee is employed pursuant to a written contract, is for a determined
period or is at will, or (ii) any person or entity which, at the time of
termination of employment, was a client or customer of the Company or with whom
or which, at the time of termination of employment, the Company was negotiating
regarding the sale or distribution of the Company's services or products.
(e) Return of Company Property. Employee covenants and agrees that, upon
termination (for any reason) of this Agreement, he will return or turn over to
the Company all physical embodiments of the Information including without
limitation, all notes, data reference materials sketches, drawings, memoranda,
records, laboratory equipment, chemicals, tools, implements, computers, drives,
diskettes, tapes, renditions, models, mock-ups, prototypes, evaluations,
measurements, and tests, and all originals copies or other physical embodiments
thereof, which in any way relate to any of the Information or to the Business of
the Company which belong to the Company or were developed or generated while in
the employment of the Company.
(f) Additional Provisions. Employee recognizes and agrees: (i) that the
covenants and agreements contained in Section 5 of this Agreement are of the
essence of this Agreement; (ii) that each of such covenants is reasonable and
necessary to protect and preserve the interests and properties of the Company
and the Business of the Company; (iii) that loss and damage may be suffered by
the Company should Employee breach any of such covenants or agreements; (iv)
that each of such covenants and agreements is separate, distinct and severable
from the other and remaining provisions of this Agreement.
6. MISCELLANEOUS PROVISIONS.
(a) Binding Effect. This Agreement shall inure to the benefit of, and shall
be binding upon, the parties hereto and their respective heirs, successors,
assigns and legal representatives.
(b) Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or the unenforceability of any one or more of the
provisions hereof shall not affect the validity or enforceability of the other
provisions hereof.
(d) Notices. All notices and other communications which are required or
permitted hereunder shall be in writing and shall be sufficient if delivered by
hand or mailed by certified mail return receipt requested, postage prepaid, to
the addresses set forth below or to such other address as the parties shall
specify by notice in writing to the other party. All such notices and
communications made by mail shall be deemed to have been received on the date of
actual delivery or on the fifth (5th) business day after the mailing thereof,
whichever is earlier:
Company: Envirometrics Products Company
0000 Xxxxxxx Xx.
Xxxxxxxxxx, XX 00000
Employee: Xxxxxx X. Xxxxxx
0000 Xxxxxx Xxxxxxx Xx.
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
(e) Entire Agreement. This Agreement contains the entire agreement between
the parties hereto and supersedes and terminates any and all prior written
agreements and understandings between the parties hereto with respect to the
employment of, or work performed in the capacity of an independent contractor by
the Employee or payments to Employee by the Company for any reason or work
product, including, without limitation, the Employee Invention Assignment
Agreement and the Employee Non-Disclosure and Non-Competition Agreement, both
Agreements executed on or about March 13, 1992, and any subsequent amendments,
modifications and understandings related thereto.
(f) Amendments and Waivers. This Agreement may not be modified or amended
except by an instrument or instruments in writing signed by the party against
whom enforcement of any such modification or amendment is sought, Either party
hereto may by an instrument in writing waive compliance by the other party of
any other provision of this Agreement on the part of such other party. The
waiver by any party of a breach of any term or provision shall not be construed
as a waiver of any subsequent breach.
(g) Section Headings. The section headings contained in this Agreement are
for reference purposes only and shall not be deemed to control or affect the
meaning or construction of any provision.
The Company is a corporation in good standing under the laws of South
Carolina and is duly authorized to carry on the business presently conducted by
it and its signers of this Agreement are properly authorized to execute, deliver
and perform this Agreement on behalf of the Company and that this Agreement
constitutes a valid and legally binding obligation of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date and year first written above.
ATTEST The Company: Envirometrics Products Company
__________________________ __________________________________________
Secretary By: Xxxxxx X. Xxxxxxx, III, President
[CORPORATE SEAL]
EMPLOYEE:
__________________________________________
Xxxxxx X. Xxxxxx
