FORM OF ADVANCE NANOTECH, INC. DIRECTOR COMPENSATION AND CONFIDENTIAL INFORMATION AGREEMENT
FORM
OF
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 Colorado corporation
(the
“Company”),
having offices at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 and ____________
(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 his 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 his or her 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 his 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 he or she uses to protect his
or
her 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 his 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.
e. Notice.
Director shall advise the Company immediately in writing in the event he or
she
learns or has reason to believe any person to whom he or she 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
his 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 his or her
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.
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 his capacity as a director
of the Company and during or in consequence of his performance of his 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 his capacity as a director
of the Company and during or in consequence of his performance of his 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 his/her 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 and Committee Compensation.
Director shall be entitled to an annual retainer for his services in the amount
of Twenty Thousand ($20,000.00) Dollars. In addition, each Chairman of the
Company’s Compensation Committee, Audit Committee and Governance Committee shall
be entitled to compensation for his services thereon in the amount of
Twenty-Five Thousand ($25,000.00) Dollars, This annual retainer and compensation
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. Expenses.
Upon
submission of appropriate invoices or vouchers, the Company shall pay or
reimburse Director for all reasonable expenses incurred by him in the
performance of his 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.
c. 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.
10. Miscellaneous.
a. This
Agreement will be governed by and construed in accordance with the laws of
the
State of Colorado, 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 Colorado, without giving effect to any choice of law or conflict
of
law rules or provisions (whether of the State of Colorado or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than those of the State of Colorado.
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 he or she
has read and understands this Agreement, that he or she has had the opportunity
to consult with and obtain independent legal advice from his attorneys
concerning the terms and conditions of this Agreement, including but not limited
to the scope and duration of this Agreement, that he or she is signing this
Agreement voluntarily and that he or she intends to be bound by the Agreement
and each of its terms.
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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