Exhibit 10.34
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of the 1st day of May 2002, by and between Category 5 Technologies, Inc., a Utah
corporation ("C5" or the "Company") and Xxxxx Xxxxxxxx (hereinafter referred to
as the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive was an owner of CaptureQuest, Inc., which was
purchased by the Company as of the date hereof; and
WHEREAS, the Company desires to have the benefit of the Executive's
efforts and services, both for and on behalf of the Company; and
WHEREAS, the Company has determined that it is appropriate and in the
best interests of the Company to provide to the Executive protection in the
event of certain terminations of the Executive's employment relationship with
the Company in accordance with the terms and conditions contained herein and the
Executive desires to have such protection.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
1. DEFINITIONS. Whenever used in this Agreement, the following terms
shall have the meanings set forth below:
(a) "Accrued Benefits" shall mean the amount payable not later than
ten (10) days following an applicable Termination Date and which
shall be equal to the sum of the following amounts:
(i) All salary earned or accrued through the Termination Date;
(ii) Reimbursement for any and all monies advanced in connection
with the Executive's employment for reasonable and
necessary expenses incurred by the Executive through the
Termination Date;
(iii) Any and all other cash benefits previously earned through
the Termination Date and deferred at the election of the
Executive or pursuant to any deferred compensation plans
then in effect;
(iv) The full amount of any stated bonus payable to the
Executive in accordance with Section 6(b) herein with
respect to the year in which termination occurs; and
(v) All other payments and benefits to which the Executive may
be entitled under the terms of any benefit plan of the
Company.
(b) "Act" shall mean the Securities Exchange Act of 1934;
(c) "Affiliate" shall have the same meaning as given to that term in
Rule 12b-2 of Regulation 12b promulgated under the Act;
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(d) "Base Period Income" shall be an amount equal to the Executive's
"annualized includable compensation" for the "base period" as
defined in Sections 280G(d)(1) and (2) of the Code and the
regulations adopted thereunder;
(e) "Beneficial Owner" shall have the same meaning as given to that
term in Rule 13d-3 of the General Rules and Regulations of the
Act, provided that any pledge of Company voting securities shall
not be deemed to be the Beneficial Owner thereof prior to its
disposition of, or acquisition of voting rights with respect to,
such securities;
(f) "Board" shall mean the Board of Directors of C5, Inc.;
(g) "Cause" shall mean any of the following:
(i) The engaging by the Executive in fraudulent conduct, as
evidenced by a determination in a binding and final
judgment, order or decree of a court or administrative
agency of competent jurisdiction, in effect after
exhaustion or lapse of all rights of appeal, in an action,
suit or proceeding, whether civil, criminal, administrative
or investigative, which the Board determines, in its sole
discretion, has a significant adverse impact on the Company
in the conduct of the Company's business;
(ii) Conviction of a felony, as evidenced by a binding and final
judgment, order or decree of a court of competent
jurisdiction, in effect after exhaustion or lapse of all
rights of appeal, which the Board determines, in its sole
discretion, has a significant adverse impact on the Company
in the conduct of the Company's business;
(iii) Neglect or refusal by the Executive to perform the
Executive's duties or responsibilities (unless
significantly changed without the Executive's consent); or
(iv) A significant violation by the Executive of the Company's
established policies and procedures.
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Notwithstanding the foregoing, Cause shall not exist under subparagraphs (iii)
and (iv) above unless the Company furnishes written notice to the Executive of
the specific offending conduct and the Executive fails to correct such offending
conduct within the thirty (30) day period commencing on the receipt of such
notice.
(h) "Change of Control" shall mean a change in ownership or managerial
control of the stock, assets or business of the Company resulting
from one or more of the following circumstances:
(i) A change in control of the Company, of a nature that would
be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Act,
or any successor regulation of similar import, regardless
of whether the Company is subject to such reporting
requirement;
(ii) A change is ownership of the Company through a transaction
or series of transactions, such that any Person or Persons
(other than any current officer of the Company or member of
the Board) is (are) or become(s), in the aggregate, the
Beneficial Owner(s), directly or indirectly, of securities
of the Company representing thirty percent (30%) or more of
the Company's then outstanding securities;
(iii) Any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or
pursuant to which shares of the common stock of the Company
would be converted into cash (other than cash attributable
to dissenters' rights), securities or other property
provided by a Person or Persons other than the Company,
other than a consolidation or merger of the Company in
which the holders of the common stock of the Company
immediately prior to the consolidation or merger have
approximately the same proportionate ownership of common
stock of the surviving corporation immediately after the
consolidation or merger;
(iv) The shareholders of the Company approve a sale, transfer,
liquidation or other disposition of all or substantially
all of the assets of the Company to a Person or Persons;
(v) During any period of two (2) consecutive years, individuals
who, at the beginning of such period, constituted the Board
of Directors of the Company cease, for any reason, to
constitute at least a majority thereof, unless the election
or nomination for election of each new director was
approved by the vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the
beginning of the period;
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(vi) The filing of a proceeding under Chapter 7 of the Federal
Bankruptcy Code (or any successor or other statute of
similar import) for liquidation with respect to the
Company; or
(vii) The filing of a proceeding under Chapter 11 of the Federal
Bankruptcy Code (or any successor or other statute of
similar import) for reorganization with respect to the
Company if in connection with any such proceeding, this
Agreement is rejected, or a plan of reorganization is
approved an element of which plan entails the liquidation
of all or substantially all the assets of the Company.
A "Change of Control" shall be to occur on the actual date on
which any of the foregoing circumstances shall occur;
provided, however, that in connection with a "Change of
Control" specified in Section 1(h)(vii), a "Change of Control"
shall be deemed to occur on the date of the filing of the
relevant proceeding under Chapter 11 of the Federal Bankruptcy
Code (or any successor or other statute of similar import).
(i) "Change of Control Period" shall mean the period commencing on the
date a Change of Control occurs and ending on the second
anniversary of such Change of Control;
(j) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(k) "Disability" shall mean a physical or mental condition whereby the
Executive is unable to perform on a full-time basis the customary
duties of the Executive under this Agreement.
(l) "Federal Short Term-Rate" shall mean the rate defined in Section
1274(d)(1)(C)(i) of the Code;
(m) "Good Reason" shall mean:
(i) The required relocation of the Executive, without the
Executive's consent, to an employment location which is
more than twenty-five (25) miles from the Executives
employment location on the day preceding the date of this
Agreement;
(ii) The removal of the Executive from or any failure to reelect
the Executive to any of the positions held by the Executive
as of the date of this Agreement or any other positions to
which the Executive shall thereafter be elected or assigned
except in the event that such removal or failure to reelect
relates to the termination by the Company of the
Executive's employment for Cause or by reason of death,
Disability or voluntary retirement;
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(iii) A significant adverse change, without the Executive's
written consent, in the nature or scope of the Executive's
authority, powers, functions, duties or responsibilities,
or a material reduction in the level of support services,
staff, secretarial an d other assistance, office space and
accoutrements available to a level below that which was
provided to the Executive on the day preceding the date of
this Agreement and that which is necessary to perform any
additional duties assigned to the Executive following the
date of this Agreement, which change or reduction is not
generally effective for all executives employed by the
Company (or its successor) in the Executive's class or
category; or
(iv) Breach or violation of any material provision of this
Agreement by the Company;
(n) "Gross Income" shall mean the greater of the amounts payable
pursuant to paragraph 6 or the Executive's average compensation
(base salary plus cash bonus) for the prior two (2) taxable years,
plus any other compensation payable to the Executive by the
Company for the same period, whether taxable or non-taxable;
(o) "Notice of Termination" shall mean the notice described in Section
14 herein.
(p) "Person" shall mean any individual, partnership, joint venture,
association, trust, corporation or other entity, other than an
employee benefit plan of the Company or an entity organized,
appointed or established pursuant to the terms of any such benefit
plan.
(q) "Termination Date" shall mean except as otherwise provided in
Section 14 herein, shall mean:
(i) The Executive's date of death;
(ii) Thirty (30) days after the delivery of the Notice of
Termination terminating the Executive's employment on
account of Disability pursuant to Section 9 herein, unless
the Executive returns on a full-time basis to the
performance of his or her duties prior to the expiration of
such period;
(iii) Thirty (30) days after the delivery of the Notice of
Termination if the Executive's employment is terminated by
the Executive voluntarily; and
(iv) Thirty (30) days after the delivery of the Notice of
Termination if the Executive's employment is terminated by
the Company for any reason other than death or Disability.
(r) "Termination Payment" shall mean the payment described in Section
13 herein;
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(s) "Total Payments" shall mean the sum of the Termination Payment and
any other "payments is the nature of compensation" (as defined in
Section 280G of the Code and the regulations adopted thereunder)
to or for the benefit of the Executive, the receipt of which is
contingent on a Change of Control and to which Section 280G of the
Code applies.
2. EMPLOYMENT. The Company hereby agrees to employ the Executive and
the Executive hereby agrees to serve the Company, on the terms and conditions
set forth herein.
3. TERM. The employment of the Executive by the Company pursuant to the
provisions of this Agreement shall commence on the date hereof and end on
December, 31, 2004, unless further extended or sooner terminated as hereinafter
provided. On December 31, 2004, and on the last day of December each year
thereafter, the term of the Executive's employment shall, unless sooner
terminated as hereinafter provided, be automatically extended for an additional
one year period from the date thereof unless, at least thirty (30) days before
such December 31, the Company shall have delivered to the Executive or the
Executive shall have delivered to the Company written notice that the term of
the Executive's employment hereunder will not be extended beyond its existing
duration (the term of employment and any extensions thereto shall be referred to
as the "Period of Employment").
4. POSITIONS AND DUTIES. The Executive shall serve as an Executive Vice
President of the Company and in such additional capacities as may be assigned to
the Executive by the Board. In connection with the foregoing positions, the
Executive shall have such duties, responsibilities and authority as may from
time to time be assigned to the Executive by the Board. The Executive shall
devote substantially all the Executive's working time and efforts to the
business and affairs of the Company.
5. PLACE OF PERFORMANCE. In connection with the Executive's employment
by the Company, the Executive shall be based at the offices of the Company in
Salt Lake City, Utah, except for required travel on Company business.
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6. COMPENSATION AND RELATED MATTERS.
(a) Salary. The Company shall pay to the Executive $150,000, as his
annualized base salary (subject to adjustment as provided herein)
in equal installments (as nearly as practicable), in accordance
with the Company's standard payroll policy (as in effect from time
to time), which currently provides for payments to be made every
two weeks, in arrears. Such annualized base salary may be
increased from time to time in accordance with normal business
practices of the Company provided, however, that such salary be
increased by $50,000 per year upon meeting mutually agreed upon
benchmarks and/or performance criteria established by the Company
and Executive. The annualized base salary of the Executive shall
not be decreased below its then existing amount during the term of
this Agreement.
(b) Bonus. The Executive shall be entitled to receive annual bonuses
of up to the Executive's Base Salary by meeting mutually agreed
upon benchmarks and/or performance criteria established by the
Company and Executive
(c) Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the
Executive in performing services hereunder, including all expenses
for travel and living expenses while away from home on business or
at the request of and in the service of the Company, provided that
such expenses are incurred and accounted for in accordance with
the policies and procedures established from time to time by the
Company.
(d) Other Benefits. The Company shall provide Executive with all other
benefits normally provided to an employee of the Company similarly
situated to Executive, including being added as a named officer on
the Company's existing directors' and officers' liability
insurance policy. At a minimum, the benefits will include:
(i) Health Insurance (medical, dental, vision);
(ii) Life Insurance - $1 million in personal coverage;
(iii) 401(k) - 50% employer match on up to 6% of employee
contribution;
(iv) Paid vacation;
(v) Car allowance, $800 per month plus insurance, gas, and
maintenance; and
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(vi) Participation in Employee Stock Option Plan; initially
100,000 options, to vest over 3-year period.
(e) Vacations. The Executive shall be entitled to the number of
vacation days in each calendar year, and to compensation in
respect of earned but unused vacation days, determined in
accordance with the Company's vacation plan, but in no event less
than twenty (20) days. The Executive shall also be entitled to all
paid holidays given by the Company to its executives.
(f) Services Furnished. The Company shall furnish the Executive with
office space, and such other facilities and services as shall be
suitable to the Executive's position and adequate for the
performance of the Executive's duties as set forth in Section 4
hereof.
7. OFFICES. The Executive agrees to serve without additional
compensation, if elected or appointed thereto, as a member of the Board of
Directors of any parent or any subsidiary of the Company; provided, however,
that the Executive is indemnified for serving in any and all such capacities on
a basis no less favorable than is currently provided in the Company's bylaws, or
otherwise.
8. TERMINATION AS A RESULT OF DEATH. If the Executive shall die during
the term of this Agreement, the Executive's employment shall terminate on the
Executive's date of death and the Executive's surviving spouse, or the
Executive's estate if the Executive dies without a surviving spouse, shall be
entitled to the Executive's Accrued Benefits as of the Termination Date and any
applicable Termination Payment.
9. TERMINATION FOR DISABILITY. If, as a result of the Executive's
Disability, the Executive shall have been unable to perform the Executive's
duties hereunder on a full-time basis for four (4) consecutive months and within
thirty (30) days after the Company provides the Executive with a Termination
Notice, the Executive shall not have returned to the performance of the
Executive's duties on a full-time basis, the Company may terminate the
Executive's employment, subject to Section 14 herein. During the term of the
Executive's Disability prior to termination, the Executive shall continue to
receive all salary and benefits payable under Section 6 herein, including
participation in all employee benefit plans, programs and arrangements in which
the Executive was entitled to participate immediately prior to the Disability;
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provided, however, that the Executive's continued participation is permitted
under the terms and provisions of such plans, programs and arrangements. In the
event that the Executive's participation in any such plan, program or
arrangement is barred as the result of such Disability, the Executive shall be
entitled to receive an amount equal to the contributions, payments, credits or
allocations which would have been paid by the Company to the Executive, to the
Executive's account or on the Executive's behalf under such plans, programs and
arrangements. In the event the Executive's employment is terminated on account
of the Executive's Disability in accordance with this Section 9, the Executive
shall receive the Executive's Accrued Benefits as of the Termination Date and
shall remain eligible for all benefits provided by any long-term disability
programs of the Company in effect at the time of such termination. The Executive
shall also be entitled to the Termination Payment described in Section 13(a).
(a) TERMINATION FOR CAUSE. If the Executive's employment with the
Company is terminated by the Company for Cause, subject to the
procedures set forth in Section 14 herein, the Executive shall be
entitled to receive the Executive's Accrued Benefits as of the
Termination Date. The Executive shall not be entitled to receipt
of any Termination Payment.
11. OTHER TERMINATION BY COMPANY. If the Executives employment with the
Company is terminated by the Company other than by reason of death, Disability
or Cause, or as described in paragraph 13(f) below, subject to the procedures
set forth in Section 14 herein, the Executive (or in the event of the
Executive's death following the Termination Date, the Executive's surviving
spouse or the Executive's estate if the Executive dies without a surviving
spouse) shall receive the applicable Termination Payment. The Executive shall
not, in connection with any consideration receivable in accordance with this
Section 11, be required to mitigate the amount of such consideration by securing
other employment or otherwise and such consideration shall not be reduced by
reason of the Executive securing other employment or for any other reason.
12. VOLUNTARY TERMINATION BY EXECUTIVE. Provided that the Executive
furnishes thirty (30) days prior written notice to the Company, the Executive
shall have the right to voluntarily terminate this Agreement at any time. If the
Executive's voluntary termination is without Good Reason, the Executive shall
not be entitled to any Termination Payment. If the Executive's voluntary
termination (other than a termination described in paragraph 13(f) below) is for
Good Reason, the Executive (or in the event of the Executive's death following
the Termination Date, the Executive's surviving spouse or the Executive's estate
if the Executive dies without a surviving spouse) shall receive the applicable
Termination Payment. The Executive shall not, in connection with any
consideration receivable in accordance with this Section 12, be required to
mitigate the amount of such consideration by securing other employment or
otherwise and such consideration shall not be reduced by reason of the Executive
securing other employment or for any other reason.
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13. TERMINATION PAYMENT.
(a) If the Executive's employment is terminated as a result of death
or disability, the lump sum Termination Payment payable to the
Executive shall be equal to the greater of Executive's Gross
Income for the six (6) months preceding the Termination Date, or
the amount set forth in paragraph 6 on an annualized basis.
(b) If the Executive's employment is terminated by the Executive for
Good Reason or by the Company for any reason other than death,
disability or Cause, the Termination Payment payable to the
Executive by the Company or an affiliate of the Company shall be
equal to the greater of Executive's Gross Income for the year
preceding the Termination Date, or the amount set forth in
paragraph 6 on an annualized basis.
(c) If, during a Change of Control Period, the Executive's employment
is terminated by the Executive for Good Reason or by the Company
for any reason other than death, Disability, or Cause, the
Termination Payment payable to the Executive by the Company or an
affiliate of the Company shall be equal to the greater of
Executive's Gross Income for the year preceding the Termination
Date, or the amount set forth in paragraph 6 on an annualized
basis.
(d) It is the intention of the Company and the Executive that no
portion of the Termination Payment and any other "payments in the
nature of compensation" (as defined in Section 280G of the Code
and the regulations adopted thereunder) to or for the arrangement,
be deemed to be an "excess parachute payment" as defined in
Section 280G of the Code. It is agreed that the present value of
the Total Payments shall not exceed an amount equal to the greater
of Executive's Gross Income for the year preceding the Termination
Date, or the amount set forth in paragraph 6 on an annualized
basis without becoming subject to the tax imposed by Section 4999
of the Code or which the Company may pay without loss of deduction
under Section 280G(a) of the Code. Present value for purposes of
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this Agreement shall be calculated in accordance with the
regulations issued under Section 280G of the Code. Within sixty
(60) days following delivery of the Notice of Termination or
notice by the Company to the Executive of its belief that there is
a payment or benefit due the Executive which will result in an
excess parachute payment as defined in Section 280G of the Code,
the Executive and the Company shall, at the Company's expense,
obtain such opinions as more fully described hereafter, which need
not be unqualified, of legal counsel and certified public
accountants or a firm of recognized executive compensation
consultants. The Executive shall select said legal counsel,
certified public accountants and executive compensation
consultants; provided, however, that if the Company does not
accept one (1) or more of the parties selected by the Executive,
the Company shall provide the Executive with the names of such
legal counsel, certified public accountants and/or executive
compensation consultants as the Company may select; provided,
further, however, that if the Executive does not accept the party
or parties selected by the Company, the legal counsel, certified
public accountants and/or executive compensation consultants
selected by the Executive and the Company, respectively, shall
select the legal counsel, certified public accountants and/or
executive compensation consultants, whichever is applicable, who
shall provide the opinions required by this Section 13(d). The
opinions required hereunder shall set forth (a) the amount of the
Base Period Income of the Executive, (b) the present value of
Total Payments and (c) the amount and present value of any excess
parachute payments. In the event that such opinions determine that
there would be an excess parachute payment, the Termination
Payment or any other payment determined by such counsel to be
includable in Total Payments shall be reduced or eliminated as
specified by the Executive in writing delivered to the Company
within thirty (30) days of his or her receipt of such opinions or,
if the Executive fails to so notify the Company, then as the
Company shall reasonably determine, so that under the bases of
calculation set forth in such opinions there will be no excess
parachute payment. The provisions of this Section 13(d), including
the presumption that the compensation and other benefits,
including but no limited to the Accrued Benefits, earned on or
after the date of Change of Control by the Executive pursuant to
the Company's compensation programs if such payments would have
been made in the future in any event, even though the timing of
such payment is triggered by the Change of Control, are reasonable
compensation for services rendered prior to the Change of Control;
provided, however, that in the event legal counsel so requests in
connection with the opinion required by this Section 13 (d), a
firm of recognized executive compensation consultants, selected by
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the Executive and the Company pursuant to the procedures set forth
above, shall provide an opinion, upon which such legal counsel may
rely, as to the reasonableness of any item of compensation as
reasonable compensation for services rendered prior to the Change
of Control by the Executive. In the event that the provisions of
Sections 280G and 4999 of the Code are repealed without
succession, this Section 13(d) shall be of not further force or
effect.
(e) The Termination Payment shall be payable in a lump sum not later
than twenty (20) days following the Executive's Termination Date.
Such lump sum payment shall not be reduced by any present value or
similar factor. Further, the Executive shall not be required to
mitigate the amount of such payment by securing other employment
or otherwise and such payment shall not be reduced by reason of
the Executive securing other employment or for any other reason.
(f) Notwithstanding anything to the contrary herein, in no event will
a termination of Executive's employment with the Company be deemed
to trigger a right to receive a Termination Payment if the
termination is effected by the mutual agreement of the Company and
the Executive to accommodate a reassignment of Executive to an
entity created or acquired by the Company, or to which the Company
has contributed rights to technology, assets or business plans. In
the event of any such termination, the Executive shall only be
entitled to receive the Executive's Accrued Benefits as of the
Termination Date.
14. TERMINATION NOTICE. Any termination by the Company or the Executive
of the Executive's employment during the Employment Period shall be communicated
by written Notice of Termination to the Executive, if such Notice of Termination
is delivered by the Company, and to the Company, if such Notice of Termination
is delivered by the Executive all in the following procedures:
(a) The notice of Termination shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances alleged to provide a
basis for termination;
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(b) Any notice of Termination by the Company shall be approved by a
resolution duly adopted by a majority of the directors of the
Company then in office;
(c) If the Executive shall in good faith furnish a Notice of
Termination for Good Reason and the Company notifies the Executive
that a dispute exists concerning the termination, within the
fifteen (15) day period following the Company's receipt of such
notice, the Executive shall continue the Executive's employment
during such dispute. If it is thereafter determined that (i) Good
Reason did exist, the Executive's Termination Date shall be the
earlier of (A) the date on which the dispute is finally
determined, either by mutual written agreement of the parties of
pursuant to Section 19, (B) the date of the Executives death or
(C) one day prior to the second (2nd) anniversary of a Change of
Control, and the Executive's Termination Payment, if applicable,
shall reflect events occurring after the Executive delivered the
Executive's Notice of Termination; or (ii) Good Reason did not
exist, the employment of the Executive shall continue after such
determination as if the Executive had no delivered the Notice of
Termination asserting Good Reason; and
If the Executive gives notice to terminate his or her employment for Good Reason
and a dispute arises as to the validity of such dispute, and the Executive does
not continue his employment during such dispute, and it is finally determined
that the reason for termination set forth in such Notice of Termination did not
exist, if such notice was delivered by the Executive, the Executive shall be
deemed to have voluntarily terminated the Executive's employment other than for
Good Reason.15. NONDISCLOSURE OF PROPRIETARY INFORMATION. Recognizing that the
Company is presently engaged, and may hereafter continue to be engaged, in the
research and development of processes, the manufacturing of products or
performance of services, which involve experimental and inventive work and that
the success of its business depends upon the protection of the processes,
products and services by patent, copyright or by secrecy and that the Executive
has had, or during the course of his engagement as an employee or consultant may
have, access to Proprietary Information, as hereinafter defined, of the Company
or other information and data of a secret or proprietary nature of the Company
which the Company wishes to keep confidential and the Executive has furnished,
or during the course of his engagement may furnish, such information to the
Company, the Executive agrees that:
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a. "Proprietary Information" shall mean any and all methods,
inventions, improvements or discoveries, whether or not patentable
or copyrightable, and any other information of a similar nature
related to the business of the Company disclosed to the Employee
or otherwise made known to him as a consequence of or through his
engagement by the Company (including information originated by the
Executive) in any technological area previously developed by the
Company or developed, engaged in, or researched, by the Company
during the term of the Executive's engagement, including, but not
limited to, trade secrets, processes, products, formulae,
apparatus, techniques, know-how, marketing plans, data,
improvements, strategies, forecasts, customer lists, and technical
requirements of customers, unless such information is in the
public domain to such an extent as to be readily available to
competitors.
b. The Executive acknowledges that the Company has exclusive property
rights to all Proprietary Information and the Executive hereby
assigns all rights he might otherwise possess in any Proprietary
Information to the Company. Except as required in the performance
of his duties to the Company, the Executive will not at any time
during or after the term of his engagement, which term shall
include any time in which the Executive may be retained by the
Company as a consultant, directly or indirectly use, communicate,
disclose or disseminate any Proprietary Information or any other
information of a secret, proprietary, confidential or generally
undisclosed nature relating to the Company, its products,
customers, processes and services, including information relating
to testing, research, development, manufacturing, marketing and
selling.
c. All documents, records, notebooks, notes, memoranda and similar
repositories of, or containing, Proprietary Information or any
other information of a secret, proprietary, confidential or
generally undisclosed nature relating to the Company or its
operations and activities made or compiled by the Executive at any
time or made available to him prior to or during the term of his
engagement by the Company, including any and all copies thereof,
shall be the property of the Company, shall be held by him in
trust solely for the benefit of the Company, and shall be
delivered to the Company by him on the termination of his
engagement or at any other time on the request of the Company.
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d. The Executive will not assert any rights under any inventions,
copyrights, discoveries, concepts or ideas, or improvements
thereof, or know-how related thereto, as having been made or
acquired by him prior to his being engaged by the Company or
during the term of his engagement if based on or otherwise related
to Proprietary Information.
16. ASSIGNMENT OF INVENTIONS.
e. For purposes of this Paragraph16, the term "Inventions" shall mean
discoveries, concepts, and ideas, whether patentable or
copyrightable or not, including but not limited to improvements,
know-how, data, processes, methods, formulae, and techniques, as
well as improvements thereof or know-how related thereto,
concerning any past, present or prospective activities of the
Company which the Executive makes, discovers or conceives (whether
or not during the hours of his engagement or with the use of the
Company's facilities, materials or personnel), either solely or
jointly with others during his engagement by the Company or any
affiliate and, if based on or related to Proprietary Information,
at any time after termination of such engagement. All Inventions
shall be the sole property of the Company, and Executive agrees to
perform the provisions of this paragraph16 with respect thereto
without the payment by the Company of any royalty or any
consideration therefore other than the regular compensation paid
to the Executive in the capacity of an employee or consultant.
f. The Executive shall maintain written notebooks in which he shall
set forth, on a current basis, information as to all Inventions,
describing in detail the procedures employed and the results
achieved as well as information as to any studies or research
projects undertaken on the Company's behalf. The written notebooks
shall at all times be the property of the Company and shall be
surrendered to the Company upon termination of his engagement or,
upon request of the Company, at any time prior thereto.
g. The Executive shall apply, at the Company's request and expense,
for United States and foreign letters patent or copyrights either
in the Executive's name or otherwise as the Company shall desire.
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h. The Executive hereby assigns to the Company all of his rights to
such Inventions, and to applications for United States and/or
foreign letters patent or copyrights and to United States and/or
foreign letters patent or copyrights granted upon such Inventions.
i. The Executive shall acknowledge and deliver promptly to the
Company, without charge to the Company, but at its expense, such
written instruments (including applications and assignments) and
do such other acts, such as giving testimony in support of the
Executive's inventorship, as may be necessary in the opinion of
the Company to obtain, maintain, extend, reissue and enforce
United States and/or foreign letters patent and copyrights
relating to the Inventions and to vest the entire right and title
thereto in the Company or its nominee. The Executive acknowledges
and agrees that any copyright developed or conceived of by the
Executive during the term of Executive's employment which is
related to the business of the Company shall be a "work for hire"
under the copyright law of the United States and other applicable
jurisdictions.
j. The Executive represents that his performance of all the terms of
this Agreement and as an employee of or consultant to the Company
does not and will not breach any trust prior to his employment by
the Company. The Executive agrees not to enter into any agreement
either written or oral in conflict herewith and represents and
agrees that he has not brought and will not bring with him to the
Company or use in the performance of his responsibilities at the
Company any materials or documents of a former employer which are
not generally available to the public, unless he has obtained
written authorization from the former employer for their
possession and use, a copy of which has been provided to the
Company.
k. No provisions of this Paragraph shall be deemed to limit the
restrictions applicable to the Executive under Paragraphs15,
17and18.
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17. SHOP RIGHTS. The Company shall also have the royalty-free right to
use in its business, and to make, use and sell products, processes and/or
services derived from any inventions, discoveries, concepts and ideas, whether
or not patentable, including but not limited to processes, methods, formulas and
techniques, as well as improvements thereof or know-how related thereto, which
are not within the scope of Inventions as defined in Paragraph16 but which are
conceived or made by the Executive during the period he is engaged by the
Company or with the use or assistance of the Company's facilities, materials or
personnel.
18. NON-COMPETE. The Executive hereby agrees that during the Period of
Employment and the Consulting Period, and for a period of two years from the
termination thereof, the Executive will not:
(a) Within any jurisdiction or marketing area in the United States in
which the Company or any subsidiary thereof is doing business,
own, manage, operate or control any business of the type and
character engaged in and competitive with the Company or any
subsidiary thereof. For purposes of this paragraph, ownership of
securities of not in excess of five percent (5%) of any class of
securities of a public company shall not be considered to be
competition with the Company or any subsidiary thereof; or
(b) Within any jurisdiction or marketing area in the United States in
which the Company or any subsidiary thereof is doing business, act
as, or become employed as, an officer, director, employee,
consultant or agent of any business of the type and character
engaged in and competitive with the Company or any of its
subsidiaries; or
(C) Solicit any similar business to that of the Company's for, or sell
any products that are in competition with the Company's products
to, any company in the United States, which is, as of the date
hereof, a customer or client of the Company or any of its
subsidiaries, or was such a customer or client thereof within two
years prior to the date of this Agreement; or
(d) Solicit the employment of, or hire, any full time employee
employed by the Company or its subsidiaries as of the date of
termination of this Agreement.
19. REMEDIES AND JURISDICTION.
(a) The Executive hereby acknowledges and agrees that a breach of the
agreements contained in Sections 15,16, 17 and 18 of this
Agreement will cause irreparable harm and damage to the Company,
that the remedy at law for the breach or threatened breach of the
agreements set forth in Sections15, 16,17 and 18 of this Agreement
will be inadequate, and that, in addition to all other remedies
available to the Company for such breach or threatened breach
(including, without limitation, the right to recover damages), the
Company shall be entitled to injunctive relief for any breach or
threatened breach of the agreements contained in Sections15, 16,17
and 18 of this Agreement;
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(b) All claims, disputes and other matters in question between the
parties arising under this Agreement, shall, unless otherwise
provided herein, be decided by arbitration in Salt Lake City,
Utah, in accordance with the Model Employment Arbitration
Procedures of the American Arbitration Association (including such
procedures governing selection of the specific arbitrator or
arbitrators), unless the parties mutually agree otherwise. The
losing party shall pay the costs of any such arbitration. The
award by the arbitrator or arbitrators shall be final, and
judgment may be entered upon it in accordance with applicable law
in any state or Federal court having jurisdiction thereof.
20. INDEMNIFICATION. The Company hereby agrees to indemnify Executive
against any action, claim, suit or proceeding involving the Executive in his
capacity as an officer of the Company.
21. ATTORNEYS' FEES. In the event that either party hereunder
institutes any legal proceedings in connection with its rights or obligations
under this Agreement, the prevailing party in such proceeding shall be entitled
to recover from the other party, all costs incurred in connection with such
proceeding, including reasonable attorneys' fees, together with interest thereon
from the date of demand at the rate of twelve percent (12%) per annum.
22. SUCCESSORS. This Agreement and all rights of the Executive shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, estates, executors, administrators, heirs and beneficiaries. In
the event of the Executive's death, all amounts payable to the Executive under
this Agreement shall be paid to the Executive's surviving spouse, or the
Executive's estate if the Executive dies without a surviving spouse. This
Agreement shall inure to the benefit of, be binding upon and be enforceable by,
any successor, surviving or resulting corporation or other entity to which all
or substantially all of the business and assets of the Company shall be
transferred whether by merger, consolidation, transfer or sale.
22. ENFORCEMENT. The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part hereof are declared invalid
or unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts hereof and the
applicability thereof shall not be affected thereby.
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23. AMENDMENT OR TERMINATION. This Agreement may not be amended or
terminated during its term, except by written instrument executed by the Company
and the Executive.
24. SURVIVABILITY. The provisions of paragraphs 15, 16, 17,18 and 19
shall survive termination of this Agreement.
25. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
between the Executive and the Company with respect to the subject matter hereof,
and supersedes all prior oral or written agreements, negotiations, commitments
and understandings with respect thereto.
26. VENUE; GOVERNING LAW. This Agreement and the Executive's and
Company's respective rights and obligations hereunder shall be governed by and
construed in accordance with the laws of the State of Utah without giving effect
to the provisions, principles, or policies thereof relating to choice or
conflict laws.
27. NOTICE. Notices given pursuant to this Agreement shall be in
writing and shall be deemed given when received, and if mailed, shall be mailed
by United States registered or certified mail, return receipt requested,
addressee only, postage prepaid, if to the Company, to:
Category 5 Technologies, Inc.
0000 X. Xxxxxxxxxx Xxxxxxx, 0xx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
or to such other address as the Company shall have given to the Executive or, if
to the Executive, to such address as the Executive shall have given to the
Company.
28. NO WAIVER. No waiver by either party at any time of any breach by
the other party of, or compliance with, any condition or provision of this
Agreement to be performed by the other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
29. HEADINGS. The headings herein contained are for reference only and
shall not affect the meaning or interpretation of any provision of this
Agreement.
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30. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but IN WITNESS
WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer, and the Executive has executed this Agreement, on the date
and year first above written.
CATEGORY 5 TECHNOLOGIES, INC.
By:_____________________________________
Its:____________________________________
EXECUTIVE
________________________________________
Xxxxx Xxxxxxxx
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