EXHIBIT 10.5
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment"), effective October 31,
2004 ("Effective Date"), is made between NS8 Corporation, a Delaware corporation
("Company"), and Xxxxxxx Xxxxxx ("Principal") (together referred to herein as
the "Parties").
WHEREAS the Parties acknowledge and affirm that Principal has previously
executed an Employment Agreement with the Company, dated June 7, 2002 (attached
hereto as Attachment A), and amended pursuant to the Amendment to Principal
Employment Agreement, effective January 7, 2004 (attached hereto as Attachment
B) (together the "Prior Agreements").
NOW THEREFORE in consideration of the mutual covenants herein contained,
and other good and valuable consideration, the sufficiency and receipt of which
is hereby acknowledged, the Parties hereto agree to amend the Prior Agreements
as follows:
The parties agree and acknowledge that by entering into this Amendment, the
Prior Agreements are impliedly and explicitly deemed cancelled and void as of
November 1, 2004 ("Date of Cancellation"), except as specifically set forth
below, and that any sums which would have been due under the Prior Agreements
cease to accrue as of that Date of Cancellation. The parties also agree that
any accrued sums due prior to the Date of Cancellation under the Prior
Agreements will be paid on a pro rata basis at the discretion of the Board of
Directors as such funds become available.
Principal herein affirms the survival of the following obligations to the
Company:
1. Covenant Not To Compete. During Principal's employment by the
Company and for a period expiring two (2) years after the termination of
Principal's employment for any reason, Principal covenants and agrees that
Principal will not:
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a. Directly, indirectly, or otherwise, own, manage, operate,
control, serve as a consultant to, be employed by, participate in, or be
connected, in any manner, with the ownership, management, operation or control
of any business that competes with the Business or that competes with the
Company or any of its affiliates or that is engaged in any type of business
which, at any time during Principal's employment with the Company or any of its
affiliates planned to develop.
b. Hire, offer to hire, entice away or in any other manner
persuade or attempt to persuade any officer, Principal or agent of the Company,
or any of its affiliates, to alter or discontinue a relationship with the
Company or to do any act that is inconsistent with the interests of the Company
or any of its affiliates;
c. Directly or indirectly solicit, divert, take away or attempt to
solicit, divert or take away any customers of the Company or any of its
affiliates; or
d. Directly or indirectly solicit, divert, or in any other manner
persuade or attempt to persuade any supplier of the Company or any of its
affiliates to alter or discontinue its relationship with the Company or any of
its affiliates.
For the purposes of this Section 1, businesses that are deemed to compete
with the Company include, without limitation, businesses engaged in software
development, digital media communications, and the development and operation of
Internet websites and services. Because the Company does business in the United
States and Canada, the geographic scope of the prohibitions in this Section 1
shall be the United States and Canada. Notwithstanding Principal's obligations
under this Section 1, Principal will be entitled to own, as a passive investor,
up to five percent (5%) of any publicly traded company without violating this
provision.
Employer and the Company agree that: this provision does not impose an
undue hardship on Principal and is not injurious to the public; that this
provision is necessary to protect the business of the Company and its
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affiliates; the nature of Principal's responsibilities with the Company under
this Amendment require Principal to have access to confidential information
which is valuable and confidential to all of the Business; the scope of this
Section 1 is reasonable in terms of length of time and geographic scope; and
adequate consideration supports this Section 7, including consideration herein.
2. Confidential Information. Principal recognizes that the
Company's Business and continued success depend upon the use and protection of
confidential and proprietary business information, including, without
limitation, the information and technology developed by or available through
licenses to the Company related to its decision support and expert systems, to
which Principal has access (all such information being "Confidential
Information"). For purposes of this Amendment, the phrase "Confidential
Information" includes, for the Company and its current or future subsidiaries
and affiliates, without limitation, and whether or not specifically designated
as confidential or proprietary: all business plans and marketing strategies;
information concerning existing and prospective markets and customers; financial
information; information concerning the development of new products and
services; information concerning any personnel of the Company (including,
without limitation, skills and compensation information); and technical and
non-technical data related to software programs, designs, specifications,
compilations, inventions, improvements, methods, processes, procedures and
techniques; provided, however, that the phrase does not include information that
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(a) was lawfully in Principal's possession prior to disclosure of such
information by the Company; (b) was, or at any time becomes, available in the
public domain other than through a violation of this Amendment; (c) is
documented by the Company as having been developed by Principal outside the
scope of Principal's employment and independently; or (d) is furnished to
Principal by a third party not under an obligation of confidentiality to the
Company. Principal agrees that during Principal's employment and after
termination of employment irrespective of cause, Principal will use Confidential
Information only for the benefit of the Company and will not directly or
indirectly use or divulge, or permit others to use or divulge, any Confidential
Information for any reason, except as authorized by the Company. Principal's
obligation under this Amendment is in addition to any obligations Principal has
under state or federal law. Principal agrees to deliver to the Company
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immediately upon termination of Principal's employment, or at any time the
Company so requests, all tangible items containing any Confidential Information
(including, without limitation, all memoranda, photographs, records, reports,
manuals, drawings, blueprints, prototypes, notes taken by or provided to the
Company, and any other documents or items of a confidential nature belonging to
the Company), together with all copies of such material in Principal's
possession or control. Principal agrees that in the course of Principal's
employment with the Company, Principal will not violate in any way the rights
that any entity has with regard to trade secrets or proprietary or confidential
information. Principal's obligations under this Section 2 are indefinite in
term and shall survive the termination of this Amendment.
3. Work Product and Copyrights. Principal agrees that all right,
title and interest in and to the materials resulting from the performance of
Principal's duties at the Company and all copies thereof, including works in
progress, in whatever media, (the "Work"), will be and remain in Employer upon
their creation. Principal will xxxx all Work with the Company's copyright or
other proprietary notice as directed by the Company. Principal further agrees:
3.1 To the extent that any portion of the Work constitutes a work
protectable under the copyright laws of the United States (the "Copyright Law"),
that all such Work will be considered a "work made for hire" as such term is
used and defined in the Copyright Law, and that the Company will be considered
the "author" of such portion of the Work and the sole and exclusive owner
throughout the world of copyright therein; and
3.2 If any portion of the Work does not qualify as a "work made for
hire" as such term is used and defined in the Copyright Law, that Principal
hereby assigns and agrees to assign to the Company, without further
consideration, all right, title and interest in and to such Work or in any such
portion thereof and any copyright therein and further agrees to execute and
deliver to the Company, upon request, appropriate assignments of such Work and
copyright therein and such other documents and instruments as the Company may
request to fully and completely assign such Work and copyright therein to the
Company, its successors or nominees, and that Principal hereby appoints the
Company as attorney-in-fact to execute and deliver any such documents on
Principal's behalf in the event Principal should fail or refuse to do so within
a reasonable period following the Company's request.
4. Inventions and Patents. For purposes of this Amendment,
"Inventions" includes, without limitation, information, inventions,
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contributions, improvements, ideas, or discoveries, whether protectable or not,
and whether or not conceived or made during work hours. Principal agrees that
all Inventions conceived or made by Principal during the period of employment
with the Company belong to the Company, provided they grow out of Principal's
work with the Company or are related in some manner to the Business, including,
without limitation, research and product development, and projected business of
the Company or its affiliated companies. Accordingly, Principal will:
4.1 Make adequate written records of such Inventions, which
records will be the Company's property;
4.2 Assign to the Company, at its request, any rights Principal
may have to such Inventions for the U.S. and all foreign countries;
4.3 Waive and agree not to assert any moral rights Principal may
have or acquire in any Inventions and agree to provide written waivers from time
to time as requested by the Company; and
4.4 Assist the Company (at the Company's expense) in obtaining and
maintaining patents or copyright registrations with respect to such Inventions.
Principal understands and agrees that the Company or its designee will
determine, in its sole and absolute discretion, whether an application for
patent will be filed on any Invention that is the exclusive property of the
Company, as set forth above, and whether such an application will be abandoned
prior to issuance of a patent. The Company will pay to Principal, either during
or after the term of this Amendment, the following amounts if Principal is sole
inventor, or Principal's proportionate share if Principal is joint inventor:
$750.00 upon filing of the initial application for patent on such Invention; and
$1,500.00 upon issuance of a patent resulting from such initial patent
application, provided Principal is named as an inventor in the patent.
Principal further agrees that Principal will promptly disclose in writing
to the Company during the term of Principal's employment and for one (1) year
thereafter, all Inventions whether developed during the time of such employment
or thereafter (whether or not the Company has rights in such Inventions) so that
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Principal's rights and the Company's rights in such Inventions can be
determined. Except as set forth on the initialed Exhibit A (List of Inventions)
to this Amendment, if any, Principal represents and warrants that Principal has
no Inventions, software, writings or other works of authorship useful to the
Company in the normal course of the Business, which were conceived, made or
written prior to the date of this Amendment and which are excluded from the
operation of this Amendment.
NOTICE: In accordance with Washington law, this Section 10 does not apply
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to Inventions for which no equipment, supplies, facility, or trade secret
information of the Company was used and which was developed entirely on
Principal's own time, unless: (a) the Invention relates (i) directly to the
business of the Company or (ii) to the Company's actual or demonstrably
anticipated research or development, or (b) the Invention results from any work
performed by Principal for the Company .
4.5 Reassignment of Inventions Patents and Works to Principal. If
the Principal assigns or transfers any Inventions, Patents, Works or other
intellectual property rights (collectively, "Intellectual Property") to the
Company, or any of its affiliates or subsidiaries, before or during the terms of
this Amendment, and the Company becomes insolvent or can no longer continue to
successfully commercialize the Intellectual Property, then Principal shall have
the right to absolutely reacquire such Intellectual Property from the Company,
or its affiliates or subsidiaries, as the case may be, upon request and the
payment of the sum of $10.00 to the party to whom the Intellectual Property has
been assigned or transferred. The Company or its affiliates or subsidiaries, as
the case may be, shall then absolutely transfer and assign all right, title and
interest in and to the Intellectual Property to the Principal free and clear of
all claims and encumbrances whatsoever. Provided, however that if the Company,
or any of its affiliates or subsidiaries (as the case may be) transfers, or
enters into a binding agreement to transfer, the Intellectual Property, or any
part of it, to a bona fide third party for value then Principal agrees to grant
a full release of its rights hereunder to reacquire that part of the
Intellectual Property that was or is agreed to transferred to such bona fide
third party.
All of the terms, provisos and conditions of this Amendment are hereby
incorporated into the Prior Agreements by reference and shall form a part
thereof for all purposes.
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IN WITNESS WHEREOF, the parties have duly signed and delivered this
Amendment as of the day and year first above written.
NS8 CORPORATION
By_________________________________
Name:
Title:
PRINCIPAL
/s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
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EXHIBIT A
LIST OF INVENTIONS
Refer to intellectual properties and filings of corporation for key inventor
credits and contributions.
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