ADVANCE NANOTECH, INC. DIRECTOR COMPENSATION AND CONFIDENTIAL INFORMATION AGREEMENT
DIRECTOR
COMPENSATION AND
CONFIDENTIAL
INFORMATION AGREEMENT
This
Director Compensation and Confidential Information Agreement (this “Agreement”),
effective ________ (the “Effective
Date”),
is
entered into by and between Advance Nanotech, Inc., a Delaware corporation
(the
“Company”),
and
[INSERT NAME OF DIRECTOR] (the “Director”),
residing at ________________________________________.
WHEREAS,
the
Company seeks to attract, retain and motivate qualified directors, to enhance
the long-term mutuality of interest between directors and stockholders, and
to
protect the proprietary and confidential aspects of the Company’s business, and,
therefore, sees fit to compensate the Director as described further
herein;
WHEREAS,
as a
member or prospective member of the Board of Directors of the Company (the
“Board”),
Director has or will have access to and receive information regarding the
Company, it products, services, and business processes and business plans and
other confidential and proprietary information, as described further
herein;
WHEREAS,
execution of this Agreement is a condition of Director’s election, access to
confidential and proprietary information of the Company and compensation
hereunder;
NOW,
THEREFORE,
in
consideration of the mutual promises and covenants contained herein, and other
good and valid consideration that is mutually acceptable to the parties, the
receipt and sufficiency of which are hereby acknowledged, the Company and
Director (the “Parties”)
hereby
agree, and, if Director is currently a member of the Board, the terms and
conditions of Director’s election to the Board are hereby amended and restated,
as follows:
1. Covenants
of Company and Director.
a. In
reliance upon the representations and warranties of Director as set forth
herein, the Company agrees to provide certain Confidential Information (as
hereinafter defined) to Director in Director’s capacity as a member of the
Board, from time to time.
b. Director
agrees, represents, and warrants to maintain the confidentiality of such
Confidential Information (as hereinafter defined) as set forth
herein.
c. Director
hereby affirms and agrees that the covenants contained herein are made by
Director in consideration of Director (i) being elected to the Board; (ii)
being
granted access to and receiving Confidential Information (as hereinafter
defined); and (iii) the compensation provided herein.
2. Identification
of Confidential Information.
a. The
term
“Confidential
Information”
shall
mean all financial, technical and other information pertaining to the business,
plan, or operations of Company or as otherwise designated as Confidential
Information by the Company at the time it is disclosed to Director pursuant
to
subparagraph 2(b) below, including all copies thereof (including, without
limitation, all non-identical copies, regardless of origin or location),
including but not limited to algorithms, books, brochures, pamphlets, memoranda
(including those of telephone or oral conversations), letters, electronic mail,
reports, charts, graphs, notes, telegrams, and records, photographic imaging,
computer tapes and discs, and video and audio tapes, agreements, files, books,
logs, charts, records, studies, reports, surveys, schedules, plans, maps,
statistical information, and models which may be furnished or disclosed to
Director by, or acquired by Director directly or indirectly from, the Company.
Such term shall also include all memoranda, notes, reports, documents and other
media containing Confidential Information, as well as any copies and extracts
of
Confidential Information and any computer-generated documents and data
containing Confidential Information prepared by or for the benefit of
Director.
b. Information
considered to be Confidential Information by the Company may be disclosed orally
or in writing. Oral disclosures of Confidential Information shall be orally
noted, at the time of disclosure, to comprise Confidential Information. Written
disclosures of Confidential Information or summaries of Confidential Information
need not be marked “Confidential” or “Secret” or contain terms of similar import
in order to be deemed Confidential Information hereunder. All communications
at
all meetings of the Board, or any committee thereof, and all records of said
communications shall be deemed Confidential Information.
3. Exceptions:
Public Information.
For
purposes of this Agreement, Confidential Information shall not include, and
the
obligations herein shall not apply to, information that: (a) is now or
subsequently becomes generally available to the public through no fault of
Director; (b) Director can demonstrate, by clear and convincing evidence, was
rightfully in Director’s possession prior to disclosure to Director by Company;
(c) Director rightfully obtains from a third party without restriction and
without breach of this Agreement; (d) is released or approved for release by
Company without restriction; or (e) is inherently disclosed in the use, lease,
sale, or other distribution of any present or future product or service produced
by, for, or under authorization of Company or in publicly available supporting
documentation for any such product or service.
4. Director’s
Obligations.
a. Fiduciary
Duties.
Director acknowledges and agrees that he is subject to obligations to the
Company as a member of the Board including a duty of loyalty which requires
that
Director exercise Director’s powers in the interests of the Company, and not in
the Directors’ own interest or in the interest of another person (e.g.,
family
members). Director’s duty of loyalty also incorporates a duty to maintain the
confidentiality of all matters involving the Company until such time as there
has been a general public disclosure.
b. General
Standard of Care.
Director agrees, represents, and warrants to use reasonable care, but in all
events at least the same degree of care that Director uses to protect Director’s
own confidential and proprietary information of similar importance, to prevent
the unauthorized use, disclosure, or availability of Confidential Information
of
the Company. Director agrees to be responsible and liable for any negligent
or
willful act or omission by Director resulting in an unauthorized use or
disclosure of the Confidential Information.
c. Specific
Obligations of Director.
Director agrees, represents, and warrants to take precautions to avoid any
unauthorized use or disclosure of the Confidential Information. Such precautions
shall include but not be limited to: (i) securing writings, documents,
electronic communications and other media containing such Confidential
Information in a safe or locked file cabinet or the equivalent; (ii) limiting
Director’s copying of media or materials which contain Confidential Information
to only those copies reasonably necessary under the standard of Paragraph 5
of
this Agreement; (iii) preventing Director’s own distribution of such media or
materials unless specifically authorized by Company to do so; (iv) maintaining
a
log of all persons, if applicable, who are given access to Confidential
Information by Director after receiving the Company’s authorization to do so;
and (v) maintaining a written agreement with each person, if applicable, who
Director may give access to such Confidential Information sufficient to comply
with the terms of this Agreement.
d. Acknowledgement.
Director acknowledges and agrees that the confidentiality obligations contained
in paragraph 4b and 4c above are in addition to, and not in substitution for,
Director’s fiduciary obligations as a director of the Company described in
paragraph 4a above. Any remedies specifically provided for in this Agreement
for
breach of Director’s obligations under paragraph 4b and 4c shall be cumulative
and in addition to any other remedies available at law or in equity for breach
of Director’s fiduciary obligations to the Company and any other provision of
this Agreement.
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e. Notice.
Director shall advise the Company immediately in writing in the event Director
learns or has reason to believe any person to whom Director has allowed access
to the Confidential Information has violated, or intends to violate, any
provision of this Agreement.
5. Limitations
on Use and Disclosure.
a. Authorized
Use.
Director
may use the Confidential Information only in connection with and for purposes
of
Director’s acting as a member of the Board and as the Company, its officers and
directors may direct.
b. Authorized
Disclosure.
Director may disclose the Confidential Information only to persons, if
applicable, who (i) have a “need to know” such Confidential Information in order
to enable Director to use such Confidential Information for purposes in support
of the Company’s products or services, and (ii) are legally bound to use and
disclose such Confidential Information in accordance with the terms of this
Agreement. Director may make a reasonable number of copies of materials or
media
containing such information as appropriate to accomplish the purpose agreed
to
by the Company. Director shall notify the Company in writing of any disclosures
made pursuant to this paragraph.
c. Compelled
Disclosure.
Director may, in addition, use or disclose Confidential Information if and
to
the extent: (i) required by any request or order of any government authority;
(ii) otherwise required by law; or (iii) necessary to establish Director’s
rights under this Agreement; provided,
however, that in each case, Director will first notify Company of such
requirement, permit Company to contest such requirement if reasonably
appropriate, and cooperate with Company in limiting the scope of the proposed
use or disclosure and/or obtaining appropriate further means for protecting
the
confidentiality of the Confidential Information.
6. Return
of Confidential Information.
a. Upon
the
Company’s request, at any time, Director will either return or, if requested by
the Company, destroy all copies of any media or materials containing
Confidential Information. Upon the Company’s request, Director agrees to certify
that it has completed such requested action.
b. Director’s
obligations under Sections 5 and 6 shall survive termination of Director’s
elected term and/or term of employment, or both, for any reason or the return
of
Confidential Information which is the subject of this Agreement.
7. Remedies
for Non-Compliance.
It is
agreed that the unauthorized use or disclosure of any Confidential Information
by Director in violation of this Agreement or failure to disclose, hold in
trust, and assign to the Company all Director’s right, title, and interest in
and to any and all Inventions, as defined in Section 8a will cause severe and
irreparable injury to the Company for which there is no adequate remedy at
law
and that it may not be possible to measure damages for such injury with
reasonable certainty. In the event of any violation of this Agreement, Director
agrees that the Company shall be authorized and entitled to obtain from any
court of competent jurisdiction preliminary and/or permanent injunctive relief,
as well as any other relief permitted by applicable law, restraining Director
from engaging in activities prohibited by this Agreement. Director agrees to
waive any requirement that the Company post bond as a condition for obtaining
any such relief. Director shall notify the Company immediately, and cooperate
with the Company at the Company’s reasonable request, upon Director’s discovery
of any loss or compromise of the Company’s Confidential Information.
The
Parties expressly agree that it shall not be a defense in such an injunction
action that the Company had previously breached this Agreement.
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8. Assignment
of Inventions.
a. Director
agrees that Director has and will promptly make full written disclosure to
the
Company, will hold in trust for the sole right and benefit of the Company,
and
hereby assigns to the Company, or its designee, all Director’s right, title, and
interest in and to any and all inventions, original works of authorship,
developments, concepts, improvements, designs, discoveries, ideas, trademarks
or
trade secrets, whether or not patentable or registrable under copyright or
similar laws, which Director has or may solely or jointly conceive or develop
or
reduce to practice, or cause to be conceived or developed or reduced to
practice, and any patentable improvements thereto which Director may solely
or
jointly conceive or develop or reduce to practice, in Director’s capacity as a
director of the Company and during or in consequence of Director’s performance
of Director’s duties as a director of the Company (collectively referred to as
“Inventions”).
Director further acknowledges that all original works of authorship which are
made by Director (solely or jointly with others) in Director’s capacity as a
director of the Company and during or in consequence of Director’s performance
of Director’s duties as a director of the Company and which are protectible by
copyright are “works made for hire,” as that term is defined in the United
States Copyright Act. Director understands and agrees that the decision whether
or not to commercialize or market any Invention developed by Director solely
or
jointly with others is within the Company’s sole discretion and for the
Company’s sole benefit and that no royalty will be due to Director as a result
of the Company’s efforts to commercialize or market any such
Invention.
b. Notwithstanding
any provision of clause (a) of Section 8 hereof to the contrary, the Parties
hereby agree and acknowledge that “Inventions” (as used in such clause (a))
shall not apply to, and Company shall have no right (ownership or otherwise)
in
or to, any invention which is developed by Director on Director’s own time
without using any trade secret or other intellectual property information,
right
or property of the Company unless the invention relates, at the time of
conception or reduction to practice of the invention, directly to the business
of Company, or actual or demonstrably anticipated research or development of
the
Company.
c. Director’s
obligations under this Section 8 shall survive the expiration or termination
of
Director’s term of election or employment by the Company for any
reason.
9. Director
Compensation and Benefits.
a. Annual
Retainer.
Director shall be entitled to an annual retainer of for Director’s services in
the amount of Twenty Thousand ($20,000.00) Dollars. This annual retainer shall
be payable in equal quarterly cash installments in arrears commencing
___________, consistent with the Company's standard payroll practices for its
directors. Director compensation shall be reviewed annually by the Board and
set
by the Board.
b. Committee
Chairs.
Any
director who is the Chairman of a committee of the Board shall be entitled
to
receive an additional annual retainer of $5,000 payable in equal quarterly
cash
installments in arrears for each year in which such director serves as a
Chairman.
c. Bonus.
Director shall be entitled to receive such bonuses as may be established from
time to time by the Board.
d. Meeting
Fees.
Director
shall receive a fee of $2,000.00, payable in cash, for each quarterly meeting
of
the Board of Directors. Unless otherwise provided by the Board, no fee is
payable with respect to attendance at any other meeting of the Board of
Directors, including special meetings, or committee meetings.
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e. Expenses.
Upon
submission of appropriate invoices or vouchers, the Company shall pay or
reimburse Director for all reasonable expenses incurred by Director in the
performance of Director’s duties as a member of the Board, or any committee
thereof, and in furthering the business, and in keeping with the policies,
of
the Company.
f. Stock
Plans.
As part
of the annual retainer compensation provided in paragraph 9a above, during
the
Director’s term of election, Director may be included in any stock incentive,
stock option, or stock compensation plan as the Board may determine. Such plans
may be documented by the Board, the administrator of such a plan, if any, and
Director from time to time. Without limiting the foregoing, upon acceptance
of
appointment as a director of the Company, Director shall receive a grant
of
100,000 shares of the Company’s common stock pursuant to the Company’s
applicable plan, which stock shall be registered by the Company on Form S-8
or
other applicable registration form and shall be free trading.
10. Miscellaneous.
a. This
Agreement will be governed by and construed in accordance with the laws of
the
State of Delaware, as it would apply to contracts negotiated, executed,
delivered and performed solely in such jurisdiction. All issues and questions
concerning the construction, validity, enforcement, and interpretation of this
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Delaware, without giving effect to any choice of law or conflict
of
law rules or provisions (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than those of the State of Delaware.
b. This
Agreement states the entire agreement between the Parties concerning the subject
matter hereof and supersedes any prior and contemporaneous agreements between
the Parties relating thereto. No amendment, modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in
a
writing signed by the party against which enforcement of such amendment,
modification or waiver is sought. No failure or delay by a Party hereto in
enforcing any right, power or privilege created hereunder shall operate as
an
implied waiver thereof, nor shall any single or partial enforcement thereof
preclude any other or further enforcement thereof or the enforcement of any
other right, power or privilege.
c. The
parties acknowledge that the terms and conditions of this Agreement and the
existence of the discussions between them are confidential, and shall not be
disclosed, except as provided elsewhere in this Agreement, without the written
consent of the other party.
d. This
Agreement may not be assigned by Director. This Agreement shall inure to the
benefit of Company, its successors, and assigns.
e. In
the
event that any provision of this Agreement should be held to be void, voidable,
or unenforceable, the remaining portions hereof shall remain in full force
and
effect.
f. The
captions used in this Agreement are for convenience of reference only and do
not
constitute a part of this Agreement and shall not be deemed to limit,
characterize or in any way affect any provision of this Agreement, and all
provisions of this Agreement shall be enforced and construed as if no caption
had been used in this Agreement.
g. This
Agreement is a legally binding document. Director acknowledges that Director
has
read and understands this Agreement, that Director has had the opportunity
to
consult with and obtain independent legal advice from Director’s attorneys
concerning the terms and conditions of this Agreement, including but not limited
to the scope and duration of this Agreement, that Director is signing this
Agreement voluntarily and that Director intends to be bound by the Agreement
and
each of its terms.
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h. The
construction and interpretation of any clause or provision of this Agreement
shall be construed without regard to the identity of the party that prepared
this Agreement, and no presumption shall arise as a result that this Agreement
was prepared by one party or the other.
i. In
the
event a dispute arises regarding this Agreement, the prevailing party shall
be
entitled to recover all attorneys' fees and expenses incurred.
j. Subject
to the terms and conditions herein provided, each of the parties hereto agrees
to use all commercially reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable
to consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, including using all commercially reasonable
efforts to remove any legal impediment to the consummation or effectiveness
of
such transactions and to obtain any consents and approvals required under this
Agreement.
k. This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original and all of which, when taken together, constitute one and
the
same document. The signature of any party to any counterpart shall be deemed
a
signature to, and may be appended to, any other counterpart.
WHEREFORE,
the Parties have executed this Agreement.
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DIRECTOR
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By:
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Title:
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Name:
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Date:
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Date:
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