EMPLOYMENT AGREEMENT
Exhibit
10.30
THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is
made
and entered into effective as of November 30, 2007 (the “Effective Date”), by
and between Cognigen Networks, Inc., a Colorado corporation (the “Company”) and
Xxxxxxx
Xxxxx, an individual (the “Employee”).
RECITAL
WHEREAS,
pursuant to the terms of that certain Asset Purchase and Reorganization
Agreement (the “Purchase Agreement“)
dated November 30, 2007 by and among the Company and Commission River Inc.
(“Commission
River”), the Company proposes to acquire substantially all of the assets
of Commission River in exchange for shares of voting common stock of the
Company
(the “Transaction”);
WHEREAS,
an essential condition to the Transaction is the execution of an Employment
Agreement to be entered into between the Employee and the Company;
and
WHEREAS,
the Company desires to employ Employee and the Employee desires to be employed
by the Company, upon the terms and subject to the conditions hereinafter
set
forth.
NOW,
THEREFORE, in consideration of the mutual premises and agreements hereinafter
set forth, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Company and Employee, intending
to
be legally bound, agree as follows:
AGREEMENT
1. Employment. Commencing
on the Effective Date and continuing throughout the term of this Agreement,
the
Company hereby agrees to employ the Employee as the Vice President of the
Company and President and General Manager of Commission River Operations
or a
similar position with a subsidiary of the Company, and the Employee hereby
accepts employment with the Company or subsidiary of the Company, upon
the terms
and subject to the conditions set forth herein.
2. Term. The
Employee shall be employed by the Company for a period of three (3) years
from
the Effective Date or until the Employee’s employment with the Company is
terminated in accordance with Section
6.
3. Duties.
(a) General
Duties. The Employee will initially be employed as the Vice
President of the Company and President and General Manager of Commission
River
Operations, and will have and perform those duties and responsibilities
which
are appropriate and customary to the position held by the Employee and
assigned
or delegated to the Employee from time to time by the Company’s Board of
Directors (the “Board”), President
or
Chief Executive Officer. The Board or the Company’s President or
Chief
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239277.2
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Executive
Officer may, in their sole discretion, alter, modify, or change the Employee’s
duties, offices, positions, responsibilities and obligations set forth
in this
Agreement at any time (including employing the Employee with a subsidiary
of the
Company), consistent with the Employee’s status as Vice President of the Company
and President and General Manager of Commission River Operations.
(b) Performance. To
the best of the Employee’s ability and experience, the Employee will at all
times loyally and conscientiously perform all duties, and discharge all
responsibilities and obligations, required of and from the Employee pursuant
to
the terms hereof, and to the satisfaction of the
Company. Notwithstanding the foregoing, the Employee shall be free to
engage in the business management and ownership of, or employment by, Telarus,
Inc. (“Telarus”), as
long as
such engagement does not materially interfere with his employment with
the
Company. For purposes of this Agreement, the scope of Telarus’
business in which Employee may be engaged shall be limited to (i) ownership
of
common shares of Telarus, and (ii) sales, marketing and consulting services
in
the area of commercial information technology, including without limitation
telecommunications services and devices, networking services and devices,
residential broadband sales and services through xxx.xxxx0XXX.xxx, software
and software as a service (collectively, the “Telarus
Business”). Additional products, services and business pursuits may
be added to the Telarus Business by written consent of the Company which
consent
will not be unreasonably withheld.
(c) Place
of
Performance. In connection with the Employee’s employment by
the Company and unless the parties hereto mutually agree otherwise, the
Employee
will be based at the Company’s offices in Draper, Utah, except for required
travel on Company business.
4. Compensation
and Related
Matters.
(a) Salary
and
Bonus. In consideration for services rendered to the Company
as provided herein, the Company will pay to the Employee a base salary
(the
“Base Salary”)
at a rate of: (x) $72,000 per annum for the first thirteen (13) months
following
the Effective Date; and (y) $100,000 per annum thereafter during the term
of
this Agreement. The Base Salary shall be paid as
follows:
(i) For
the
first thirteen (13) months following the Effective Date and calculated
on a per
annum basis: (x) $24,000 of the Base Salary will be paid in cash according
to
the Company’s standard payroll policy as in effect from time to time, which
currently provides for payments to be made twice a month, in arrears; and
(y)
$48,000 of the Base Salary will be paid within thirty (30) days of the
Company’s
fiscal year end, and shall be paid in shares of common stock of the Company
(the
“Shares”). The
Company shall issue such Shares to Employee based on the stock price of
$.03 per
share of common stock of the Company. The Company shall issue the
Shares in compliance with all applicable state and federal securities
laws.
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(ii) Subsequent
to the first thirteen (13) months following the Effective Date and calculated
on
a per annum basis, the Base Salary will be paid in cash according to the
Company’s standard payroll policy as in effect from time to time, which
currently provides for payments to be made twice a month, in
arrears.
(iii) The
Employee shall also be eligible to receive bonuses (each a “Bonus”), payable
in
cash within forty-five (45) days after the Company’s fiscal year
end. Each Bonus will be based upon the Employee achieving certain
performance objectives established and provided to the Employee by the
Board or
the Company’s President or Chief Executive Officer.
Subject
to Section 6(a)(iv) hereof, the Base Salary may be increased from time
to time
in accordance with normal business practices of the Company.
(b) Expenses. The
Employee will be entitled to receive reimbursement for reasonable expenses
incurred by the Employee in performing services hereunder, including expenses
for travel and living expense while away from home on business in the service
of
the Company; provided that
all
expenses are incurred, documented, and accounted for in accordance with
the
policies and procedures as are from time to time established by the Company
and
expenses in excess of $5,000 are approved in advance by the President,
Chief
Executive Officer or Chief Financial Officer of the Company.
(c) Employee
Benefit
Plans. During the term of this Agreement, the Employee is
entitled to participate in any employee benefit plans which may be made
available by the Company to its employees generally, including, but not
limited
to, cafeteria plans and health, life, hospitalization, stock purchase plans,
option plans, dental, disability or other insurance plans as may be in
effect
from time to time and in accordance with rules established from time to
time for
individual participation in such plans.
(d) Paid
Leave. The Employee will be entitled to the number of paid
leave days in each calendar year as is determined in accordance with the
Company’s paid leave policy as in effect from time to time. The
Employee will also be entitled to all paid holidays given by the Company
to its
employees. Use of paid leave (and, if applicable, accrual of and
compensation for unused paid leave) will be subject to the Company’s
policies.
5. Facilities
and Services
Furnished. The Company will furnish the Employee with office
space, and such other facilities, furniture, equipment, and services as
it may
determine to be reasonably necessary for the performance of the Employee’s
duties as set forth herein.
6. Termination.
(a) Termination
Events. The Employee’s employment hereunder may be terminated
under any of the following circumstances:
(i) Death. The
Employee’s employment hereunder shall terminate upon the Employee’s
death.
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(ii) Disability. If
the Employee is determined to be “disabled” in accordance with this Section 6(a)(ii), the
Company may terminate the Employee’s employment hereunder. For
purposes of this Agreement, the Employee shall be considered “disabled”
if in
the
reasonable, good faith judgment of a licensed physician selected jointly by the
Company and the Employee (or the Employee’s personal representative), the
Employee is unable, after any accommodation required by applicable law,
to
perform the Employee’s customary duties as an employee of the Company because of
a physical or mental impairment for a period of three (3) consecutive
months. The determination by the physician selected by the Company
and the Employee (or the Employee’s personal representative) shall be binding
and conclusive for all purposes. If the Company and the Employee (or
the Employee’s personal representative) cannot agree on a single physician, the
Company and the Employee (or the Employee’s personal representative) may each
designate a physician. If the two (2) physicians do not agree on
whether the Employee is “disabled” as defined in this Section 6(a)(ii),
they shall jointly appoint a third (3rd) physician, whose judgment concerning
whether the Employee is disabled shall be binding and conclusive on all
parties. The Employee agrees to submit to such physical examinations
as may be ordered by any physician selected pursuant to this Section
6(a)(ii).
(iii) Cause. The
Company may terminate the Employee’s employment hereunder for Cause (as defined
below) at any time upon delivery of written Notice of Termination (as defined
below) to the Employee. For purposes of this Agreement, “Cause”
shall
mean (1)
the conviction of (or the plea of guilty or no contest to) a felony, as
evidenced by a judgment, order or decree of, or acceptance of a plea of
nolo
contendere (or similar
plea) by, a
court of competent jurisdiction, which the Board reasonably determines
is likely
to have a material adverse effect on the ability of the Employee to effectively
perform the Employee’s duties, (2) unreasonable neglect or refusal by the
Employee to perform the Employee’s duties or responsibilities that remains
uncured for at least ten (10) days following the Employee’s receipt of written
notice of such neglect or refusal from the Board, (3) the Employee’s performance
of an act or failure to perform an act which, if the Employee were prosecuted
and convicted, would constitute a felony, (4) a material violation by the
Employee of the Company’s established policies and procedures that remains
uncured for at least ten (10) days following the Employee’s receipt of written
notice of such violation from the Board, (5) the breach by the Employee
of any
of the Employee’s material obligations under this Agreement that remains uncured
for at least ten (10) days following the Employee’s receipt of written notice of
such breach from the Board; provided that
the
Employee shall not have any opportunity to cure any material breach of
Section 8 or Section
9 hereof, or
(6) the Employee’s commission of an act of fraud, misappropriation or
embezzlement against the Company. A determination of whether the
Employee’s actions justify termination for Cause and the date on which such
termination is effective shall in each case be made in good faith by the
Board;
provided that the mere allegation of any act described in clause (3) or
(6)
above shall not constitute a sufficient basis for “Cause” under such clause (3)
or
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(6),
as
applicable, and the Employee shall be given in advance of such determination
a
full and detailed written statement of the basis of such claim and shall
be
given the opportunity to provide contrary proof before the Board, except
that
such opportunity will not be required to be given in the event of actual
conviction of the type of felony referred to above.
(iv) Other
Events of
Termination. The Employee’s employment hereunder may be
terminated (1) by the Company at any time for any other reason or no reason
by
providing written Notice of Termination to the Employee; (2) by the Employee,
upon the Company’s breach of any material provision of this Agreement that is
not cured by the Company within ten (10) days of the Company’s written receipt
of written notice of such breach from Employee; or (3) by the Employee
for “Good
Reason” at any time, which shall mean (i) a change in the Employee’s position
that materially reduces his level of authority or responsibility; (ii)
a change
in Employee’s reporting authority to the Company’s Chief Executive Officer or
the Board; (iii) the Company’s failure to pay any amount due or owing to the
Employee under the terms of this Agreement; (iv) the Company’s reduction of the
Base Salary to an amount less than the amount provided for in Section 4(a)
above; or (v) the Company’s breach of any material provisions of this Agreement
not involving the payment of money and the expiration of ten (10) business
days
after the Company’s receipt of written notice of such breach from the Employee
unless cured within twenty (20) business days following the notice
period.
(b) Notice
of
Termination. “Notice
of
Termination” shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth
in
reasonable detail the facts and circumstances claimed to provide a basis
for
termination of the Employee’s employment under the provision so
indicated.
(c) Effect
of
Termination. In the event the Employee’s employment is
terminated, all obligations of the Company and the Employee under this
Agreement
shall cease, except that if the Employee is terminated pursuant to Section
6(a)(i), 6(a)(ii) or 6(a)(iii) hereof, the terms of Section 7 through
Section 11
shall survive such termination. Upon termination for any reason, the
Employee or the Employee’s representative or estate shall be entitled to receive
any applicable compensation, benefits, and reimbursements set forth in
Section
7. The Employee acknowledges that, upon termination of the
Employee’s employment, the Employee is entitled to no other compensation,
severance or other benefits other than those specifically set forth under
Section 7(b) or any other provision of this Agreement.
7. Compensation
and Severance
Upon Termination.
(a) In
the
event the Employee’s employment hereunder is terminated pursuant to Section
6(a)(i), 6(a)(ii) or 6(a)(iii) above, the Employee or his estate shall
only be
entitled to receive the amount of the Base Salary payable through the date
of
termination, and shall not be entitled to any salary, compensation or benefits
from the Company
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thereafter,
except as otherwise specifically provided for under the Company’s employee
benefit plans or as otherwise expressly required by applicable
law.
(b) In
the
event the Employee’s employment hereunder is terminated pursuant to Section
6(a)(iv) above, Employee shall be entitled receive the following payments
(all
such payments will be made according to the Company’s standard payroll policy as
in effect from time to time):
(i) If
Employee’s employment is terminated within the twelve (12) month period from the
Effective Date, the Company shall pay to the Employee an amount that is
equal to
the sum of: (1) twelve (12) months of the Base Salary payable pursuant
to
Section 4(a)(x), and (2) any Bonus earned by the Employee in accordance
with
Section 4(a) hereof, all paid in cash pro rata over the twelve (12) month
period
commencing on the date of termination, plus the full medical, dental and
vision
premiums for continuation coverage under COBRA for the Employee and his
dependents who qualify for continuation coverage under COBRA for one (1)
year
following the date of termination.
(ii) If
Employee’s employment is terminated at any time on or after the first
anniversary of the Effective Date, the Company shall pay to the Employee
an
amount that is equal to the sum of three (3) months of the Base Salary
for the
year in which the termination occurred, plus the full medical, dental and
vision
premiums for continuation coverage under COBRA for the Employee and his
dependents who qualify for continuation coverage under COBRA for three
(3)
months following the date of termination.
8. Confidentiality
and
Inventions Assignment.
(a) Confidential
Information and
Work for Hire. The Employee and the Company hereby acknowledge
and agree that in connection with the employment of the Employee, the Employee
has been and will be provided with or shall otherwise be exposed to or
receive
certain confidential and/or proprietary information of the Company or of
third
parties and may develop certain products, services, methods, know-how,
procedures, formulae, processes, specifications, and information of a similar
nature that relate to the services provided by the Employee to the
Company. The Employee shall abide by the terms of this Section
8.
(b) Definitions. As
used herein:
(i)
“Confidential
Information” shall mean any and all tangible and intangible information,
whether oral or in writing or in any other medium, relating to the management,
business, strategy, plans, intellectual property, operations, products,
inventions, financial condition, financial results, and financial projections
of
Commission River or the Company, including without limitation, any and
all trade
secrets, know-how, designs, drawings, schematics, formulations, ingredients,
samples, processes, machines, prototypes, mock-ups, processing and control
information, product performance data, manuals, supplier lists, customer
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lists,
purchase and sales records, marketing information and computer programs,
whether
developed by Commission River or the Company or furnished to Commission
River or
the Company by other third parties; and all information which relates
to the
analysis and evaluation of the Confidential Information and/or the use
thereof
developed or compiled by Commission River or the Company. Confidential
Information shall not include Excluded Information (as defined
below).
(ii)
“Excluded
Information” shall refer to information, if any, that would otherwise
constitute Confidential Information and that (1) is generally available
to or
known by the public other than as a result of a disclosure made by Employee
in
breach of this Agreement; (2) was available to Employee on a nonconfidential
basis prior to disclosure to Employee by the Company; (3) is disclosed
to
Employee on a nonconfidential basis from a source other than the Company;
provided that
Employee is not, in good faith after reasonable inquiry, aware that such
source
is or was bound by a confidentiality agreement with the Company or otherwise
prohibited from transmitting the information to Employee by any contractual,
legal, or fiduciary obligation or by any other obligation enforceable by
law or
in equity; (4) is hereafter independently developed or compiled by Employee
without the aid, application, or use of the Confidential Information; or
(5) was
available to the Employee or is hereinafter independently developed, compiled
or
obtained by the Employee while the Employee was engaged in the Telarus
Business. Excluded Information does not include information that
would otherwise constitute Confidential Information during the period from
the
date the information was disclosed by the Company to Employee and the date
that
such information became Excluded Information.
(iii)
“Person,”
whether or not the term is capitalized, will be interpreted very broadly
and
will include, without limitation, any individual, corporation (including
a
business trust), partnership, joint stock company, limited liability company,
trust, estate, unincorporated association, joint venture, or other entity,
or a
government or any political subdivision or agency thereof, whether or not
any
such person is an officer, director, employee, or agent of the
Company.
(c) Use
of Confidential
Information. The Confidential Information will be used by the
Employee solely for the purposes of performing services for the
Company. The Confidential Information will not, without the prior
written consent of the Company, be used by the Employee, directly or indirectly,
for any other purpose. Such use shall cease at any time when this
Agreement has terminated in accordance with its terms.
(d) Nondisclosure. The
Employee agrees to safeguard the confidentiality of the Confidential Information
and not to disclose any part of it to any Person except to those employees
of
the Company who need to know such information for the purposes of performing
services for the Company.
(e) Return
of Confidential
Information. Promptly upon the request of the Company, the
Employee will return to the Company all copies of Confidential
7
Information
furnished to the Employee by the Company, together with all copies of
any of the
same (whether in hard-copy form or on intangible media, such as electronic
mail
or computer files), or any part thereof, made by the Employee. All
notes, studies, reports, memoranda, and other documents prepared by the
Employee
that contain or reflect the Confidential Information shall also be returned
to
the Company.
(f) Dispute
as to Confidential
Nature of Information. In the event of a dispute or litigation
between the Employee and the Company, the Employee shall have the burden
of
proving that any information disclosed to the Employee by the Company or
used by
the Employee, and which information the Employee claims does not constitute
Confidential Information, is not in fact Confidential Information or a
derivative thereof.
(g) Subpoena;
Court Order; Other
Legal Requirement. If the Employee is requested, under the
terms of a subpoena or order or other compulsory instrument issued by or
under
the authority of a court of competent jurisdiction or by a governmental
agency,
or is advised in writing by counsel for any such party that there is otherwise
a
legal obligation to disclose (i) all or any part of the Confidential
Information, (ii) the fact that the Confidential Information has been made
available to the Employee, or (iii) any of the terms, conditions, or other
facts
with respect to the Employee’s employment with the Company or the services
provided by the Employee to the Company, the Employee agrees to, at the
Company’s expense: (1) provide the Company with prompt written notice of the
existence, terms, and circumstances surrounding such request or requirement;
(2)
consult with the Company on the advisability of taking steps to resist
or narrow
that request; (3) if disclosure of Confidential Information is required,
furnish
only such portion of the Confidential Information as the Employee is advised
in
writing by the Employee’s counsel is legally required to be disclosed; and (4)
cooperate with the Company, at the request of the Company and at the Company’s
expense, in its efforts to obtain an order excusing the Confidential Information
from disclosure, or an order or other reliable assurance that confidential
treatment will be accorded to that portion of the Confidential Information
that
is required to be disclosed.
(h) Inventions
and Other
Intellectual Property
(i) Attached
hereto as Schedule
A is a list describing all inventions, original works of authorship,
developments, improvements, and trade secrets which were owned or developed
by
the Employee prior to the Employee’s relationship with Commission River or the
Company, which relate to the Company’s proposed businesses and products, and
which are not assigned to the Company pursuant to this Section
8(h). If no such list is attached, the Employee represents
that there are no such inventions. The Employee agrees to promptly make
full
written disclosure to the Company, to hold in trust for the sole right
and
benefit of the Company, and to assign to the Company all of the Employee’s
right, title, and interest in and to any and all inventions, original works
of
authorship, developments, improvements, discoveries, ideas, know-how, processes,
methods, formulae, techniques or trade secrets, whether or not patentable
or
copyrightable, which the Employee has solely or jointly conceived or developed
or reduced to practice, may solely or jointly conceive or develop or
8
reduce
to
practice, or cause to be conceived or developed or reduced to practice,
during
the Employee’s relationship with the Company, whether as an officer, employee or
other service provider. The Employee acknowledges and understands
that this Section
8(h) will not apply to an invention as to which the Employee can prove
the following:
(1)
It was created by the Employee entirely on the Employee’s own time;
(2)
It was not conceived, developed, reduced to practice or created by the
Employee:
(A)
within the scope of the Employee’s engagement or employment;
(B)
on the Company’s time; or
(C)
with the aid, assistance or use of any of the Company’s property, equipment,
facilities, supplies, resources or intellectual property;
(3)
It does not result from any work, services or duties performed by the Employee
for the Company;
(4)
It does not relate to the industry or trade of the Company; and
(5)
It does not relate to the current or demonstrably anticipated business,
research
or development of the Company.
The
Employee acknowledges that all original works of authorship which are made
by
the Employee (solely or jointly with others) within the scope of the Employee’s
work related to the Company and which are protectable by copyright are
“works
made by hire,” as that term is defined in the United States Copyright Act (17
U.S.C.A. § 101). The Employee further agrees that, with respect to
any “works made by hire” by the Employee (solely or jointly with others), the
Employee will receive no royalty or other consideration therefor.
(ii)
Maintenance
of
Records. The Employee agrees to keep and maintain adequate and
current written records of all inventions and original works of authorship
made
by the Employee (solely or jointly with others) during the term of the
Employee’s relationship with the Company, whether as an officer, employee or
other service provider, which will be in the form of notes, sketches, drawings,
and any other format that may be specified by the Company; provided that
the
Employee shall not be required to maintain such records for any invention
or
original work of authorship made by the Employee in connection with the
Employee’s services to Telarus related to the Telarus Business, as permitted
hereunder. Except as limited by the foregoing sentence, the records
will be
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available
to and remain the sole property of the Company at all times. The
records will include, but will not be limited to information as to all
inventions, as well as information as to any studies or research projects
undertaken on the Company’s behalf or with the aid, assistance or use of any of
the Company’s property, equipment, facilities, supplies, resources or
intellectual property, describing in detail the procedures employed and
the
results achieved, and any other information the Company
requires.
(iii)
Inventions Assigned
to
the United States. The Employee agrees to assign to the United
States government or any state or local government all of the Employee’s right,
title, and interest in and to any and all inventions, original works of
authorship, developments, improvements or trade secrets whenever such full
title
is required to be in the United States or any state or local government
by
contract between the Company and the United States government or any state
or
local government if applicable, except for inventions, original works of
authorship, developments, improvements or trade secrets that are expressly
excluded in this Agreement.
(iv) Obtaining
Letters Patent and
Copyright Registrations. The Employee agrees that the Employee
will apply, at the Company’s expense and request, for United States and foreign
letters patent or copyrights, either in the Employee’s name or otherwise as the
Company desires, covering inventions and original works of authorship assigned
hereunder to the Company. The Employee further agrees that the
Employee’s obligation to assist the Company to obtain such United States or
foreign letters patent and copyright registrations will continue beyond
the
termination of the Employee’s relationship with the Company, whether as an
officer, employee or other service provider, but the Company shall compensate
the Employee for such assistance at a reasonable rate for time actually
spent by
the Employee beyond termination of the Employee’s relationship with the Company
at the Company’s request. If the Company is unable because of the
Employee’s mental or physical incapacity or for any other reason to secure the
Employee’s signature to apply for or to pursue any application for any United
States or foreign letters patent or copyright registrations covering inventions
or original works of authorship assigned to the Company pursuant to this
Agreement, then the Employee hereby irrevocably designates and appoints
the
Company and its duly authorized officers and agents as the Employee’s agent and
attorney in fact, to act for and in the Employee’s behalf and stead to execute
and file any such applications and to do all other lawfully permitted acts
to
further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed
by the
Employee. The Employee hereby waives and quitclaims to the Company
any and all claims, of any nature whatsoever, which the Employee now or
may
hereafter have for infringement of any patents or copyright resulting from
any
application for letters patent or copyright registrations assigned hereunder
to
the Company.
9. Non-Competition
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(a) Non-Competition
Provision is
Integral Part of Agreement. The Company and the Employee have
negotiated the non-competition provisions as an integral part of this
Agreement. The Company and the Employee agree to the non-competition
and other provisions contained herein and agree that such provisions are
reasonable and are necessary to induce the Company and the Employee to
enter
into this Agreement. If, at the time of enforcement of any provision
of this Agreement, a court or other tribunal shall hold that the restrictions
herein are unreasonable or unenforceable under circumstances then existing,
the
Employee agrees that the maximum period, scope or geographical area reasonable
under such circumstances shall be substituted for the period, scope or
area
stated herein.
(b) Non-Competition. The
Employee agrees that during the term of the Employee’s employment with the
Company and for a period of two (2) years thereafter (the “Restrictive
Period”),
the Employee will not, unless otherwise agreed by the Company in writing,
directly or indirectly, as promoter, shareholder, agent, representative,
manager, director, officers, owner, independent contractor or otherwise
or in
connection with any consultant, employee, agent, partner, relative, or
affiliate
of the Employee:
(i) Anywhere
in the world (the “Restricted Area”)
own, manage, operate or control any business of the type and character
engaged
in and competitive with the Company or any affiliate thereof (for purposes
of
this paragraph, ownership of securities of not in excess of two percent
(2%) of
any class of securities of a public company shall not be considered to
be
competition with the Company or any affiliate thereof);
(ii) Anywhere
in the Restricted Area, act as an employee, officer, director, manager,
member,
advisor, representative, partner, consultant or agent for any business
of the
type and character engaged in and competitive with the Company, or any
of its
affiliates; or
(iii) Solicit
the employment of any employee or independent contractor of the Company
or any
of its affiliates.
The
Company hereby acknowledges and agrees that any of the Employee’s ownership
interest in, or services to, Telarus during the Restricted Period shall
not be
deemed a breach of this Section 9 or any other provision of this agreement,
provided that Telarus does not engage, directly or indirectly, in business
other
than the Telarus Business.
(c) Definitions. For
purposes of this Agreement, the term “competitive
with the
Company” shall mean any business (other than the Telarus Business)
located anywhere in the Restricted Area that (i) conducts business similar
to
the Company during the Employee’s employment with the Company or (ii) is engaged
in the business of providing services and/or products similar to those
of the
Company during Employees employment with the Company related to providing
technology, tools, and products to
11
affiliate
marketers and creating and managing affiliate programs for product vendors,
but
shall expressly exclude the Employee’s ownership of, providing services to, or
employment by, Telarus. As used in this Agreement, the term “affiliate”
shall
mean
any individual, joint venture, partnership, corporation, limited liability
company, or shareholder which controls, is controlled by, or is under common
control with, the Company, or in which the Company owns any interest, as
required by the context of this Agreement.
10. Availability
of Equitable
Remedies. The Employee hereby acknowledges and agrees that a
breach of any of the agreements contained in 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 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 will be entitled to injunctive relief
for
any breach or threatened breach of the agreements contained in this
Agreement.
11. Representations
and
Warranties.
(a) Restricted
Securities. The Employee understands that any Shares that may
be issued to Employee hereunder have not been, and will not be, registered
under
the Securities Act of 1933, as amended (the “Securities Act”), by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature
of
the investment intent and the accuracy of the Employee’s representations as
expressed herein. The Company understands that the Shares are
“restricted securities” under applicable U.S. federal and state securities laws
and that, pursuant to these laws, the Employee must hold the Shares indefinitely
unless they are registered with the SEC and qualified by state authorities,
or
an exemption from such registration and qualification requirements is
available. The Employee acknowledges that the Company has no
obligation to register or qualify the Shares for resale. The Employee
further acknowledges that if an exemption from registration or qualification
is
available, it may be conditioned on various requirements including, but
not
limited to, the time and manner of sale, the holding period for the Shares,
and
on requirements relating to the Company which are outside of the Employee’s
control, and which the Company is under no obligation and may not be
able to
satisfy.
(b) Limited
Market. The Employee understands that the Shares are quoted on
the Over-the-Counter Bulletin Board and that a limited public market exists
for
the Shares. The Company has made no assurances that an active public
market will ever exist for the Shares.
(c) Legends. The
Employee understands that the Shares and any securities issued in respect
of or
exchange for the Shares, may bear one or all of the following
legends:
(i)
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH
A
12
VIEW
TO,
OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY
THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”
(ii)
Any legend required by the securities laws of any state to the extent such
laws
are applicable to the Shares represented by the certificate with such
legend.
(d) Adequate
Knowledge; No
Reliance Upon Representations.
(i)
The Employee acknowledges and confirms that he has been given a reasonable
opportunity to review all documents, books, records and materials of the
Company
pertaining to the Shares, has been supplied with all additional information
concerning the Company and the Shares that has been requested, has had
a
reasonable opportunity to ask questions of and receive answers from the
Company
or its authorized representatives concerning the Shares and that all questions
have been answered to the full satisfaction of Employee.
(ii)
The Employee has received no representations, written or oral, from the
Company
or its officers, directors, employees, attorneys or agents other than those
contained in this Agreement. In making the decision to receive the Shares
as a
portion of the Base Salary, the Employee has relied solely upon his review
of
the Company’s books and records, this Agreement, the Purchase Agreement and
independent investigations made by him.
12. Miscellaneous.
(a) Severability.
In the
event that a court of competent jurisdiction determines that any portion
of this
Agreement is in violation of any statute or public policy, then only the
portions of this Agreement which violate such statute or public policy
shall be
stricken. All portions of this Agreement which do not violate any
statute or public policy shall continue in full force and
effect. Further, any court order striking any portion of this
Agreement shall modify the stricken terms to give as much effect as possible
to
the intentions of the parties under this Agreement.
(b) Notices. All
notices, demands, and other communications provided for hereunder shall
be in
writing (including facsimile or similar transmission) and mailed (by U.S.
certified mail, return receipt requested, postage prepaid), sent, or delivered
(including by way of overnight courier service), (i) if to the Company,
to
Cognigen Networks, Inc., 0000 Xxxxx Xxxxxxxxxx Xxx, Xxxx, Xxxx, Attn: Xxx
Bench,
and in the case of facsimile transmission, to facsimile number (000) 000-0000;
(ii) if to the Employee, to the address set forth opposite the Employee’s name
on the signature page, and in the case of facsimile transmission, to the
facsimile number set forth opposite the Employee’s name on the signature page
or, as to each party, to such other person and/or
13
at
such
other address or number as shall be designated by such party in a written
notice
to the other party. All such notices, demands, and communications, if
mailed, shall be effective upon the earlier of (1) actual receipt by
the
addressee, (2) the date shown on the return receipt of such mailing,
or (3)
three (3) days after deposit in the mail. All such notices, demands,
and communications, if not mailed, shall be effective upon the earlier
of (A)
actual receipt by the addressee, (B) with respect to facsimile and similar
electronic transmission, the earlier of (x) the time that electronic
confirmation of a successful transmission is received, or (y) the date
of
transmission, if a confirming copy of the transmission is also mailed
as
described above on the date of transmission, and (C) with respect to
delivery by
overnight courier service, the day after deposit with the courier service,
if
delivery on such day by such courier is confirmed with the courier or
the
recipient orally or in writing.
(c) Governing
Law. This Agreement shall be governed by the laws of the State
of Utah without regard to its conflict of law provisions, and all claims
or
disputes arising hereunder shall be subject to the jurisdiction of the
state and
federal courts in the State of Utah.
(d) Successors
and
Assigns. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company. This Agreement is for the unique personal
services of the Employee, and the Employee shall not be entitled to assign
any
of Employee’s rights or obligations hereunder.
(e) Entire
Agreement;
Amendment. This Agreement constitutes the entire agreement and
understanding between the parties with respect to the subject matter hereof,
and
supersedes all prior agreements and understandings with respect
thereto. This Agreement can be amended or modified only in a writing
signed by the Employee and the Company.
(f) 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.
(g) Headings. The
headings herein contained are for reference only and shall not affect the
meaning or interpretation of any provision of this Agreement.
(h) Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original but all of which together will constitute one
and the
same instrument.
(i) Attorneys’
Fees. In the event of any action at law, equity, or under this
Agreement to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys’ fees and court costs in
addition to any other relief to which such party may be entitled.
14
(j) Section
409A of the Internal
Revenue Code. To the extent any payments under this
Agreement are subject to the provisions of Section 409A of the Internal
Revenue
Code (the “Code”), it
is
intended that the Agreement will comply fully with and meet all the requirements
of Code Section 409A.
(Remainder
of Page Intentionally Left Blank)
15
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
THE
COMPANY:
COGNIGEN
NETWORKS, INC.
______________________________
By: ________________________________
Its: ________________________________
THE
EMPLOYEE:
____________________________________
Xxxxxxx
Xxxxx
|
|
Address:
|
00000
Xxxxx 000 Xxxx
|
|
|
Xxxxx
X-0
|
Facsimile
Number: 000-000-0000
16
SCHEDULE
A
LIST
OF
PRIOR INVENTIONS
AND
ORIGINAL WORKS OF AUTHORSHIP
Title
Brief
Description Identifying
Number
NONE
17
