EXHIBIT 10.7 EMPLOYMENT AGREEMENT ~ L. XXXX XXXXXX
EMPLOYMENT AGREEMENT
(L. Xxxx XxXxxx)
This EMPLOYMENT AGREEMENT between Sequiam Software, Inc. and L. Xxxx XxXxxx
(this "Agreement") is made effective as of the 1st day of December 2002 (the
"Effective Date"), by and between L. XXXX XXXXXX, an individual ("Employee"),
and SEQUIAM SOFTWARE, INC., a California corporation (the "Corporation"), with
reference to the following recitals:
A. The Corporation has agreed to employ and Employee has agreed to act
as the Corporation's Chief Technology Officer.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements set forth herein, the Merger Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Employee and the Corporation hereby agree as follows:
1. Employment. The Corporation hereby affirms, renews and extends the
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employment of Employee as the Corporation's Chief Technology Officer, and
Employee hereby affirms, renews and accepts such employment by the Corporation,
for the "Term" (as defined in Section 3 below), upon the terms and conditions
set forth herein.
2. Duties. During the Term, the Employee shall serve the Corporation
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faithfully, diligently and to the best of his ability, under the direction of
the Board of Directors of the Corporation. The Employee shall render such
services during the Term at the Corporation's principal place of business, as
the Corporation may from time to time reasonably require of him, and shall
devote all of his business time to the performance thereof. Employee shall have
those duties and powers as generally pertain to the office of President, subject
to the control of the Board of Directors. The precise services and duties that
the Employee is obligated to perform hereunder may from time to time be changed,
amended, extended or curtailed by the Board of Directors of the Corporation.
3. Term. The "Term" of this Agreement shall commence on the Effective
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Date and continue thereafter for a term of two (2) years, as may be extended or
earlier terminated pursuant to the terms and conditions of this Agreement. The
Term of this Agreement shall automatically renew for successive one (1) year
periods unless, within sixty (60) days of the expiration of the then existing
Term, the Corporation or Employee provides written notice to the other party
that it elects not to renew the Term. Upon delivery of such notice, this
Agreement shall continue until expiration of the Term, whereupon this Agreement
shall terminate and neither party shall have any further obligation thereafter
arising under this Agreement, except as explicitly set forth herein to the
contrary.
4. Compensation.
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4.1 Salary. The Corporation shall pay to Employee an minimum
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annual salary of Seventy Five Thousand Dollars ($75,000), payable in equal
installments at the end of such regular payroll accounting periods as are
established by the Corporation, or in such other installments upon which the
parties hereto shall mutually agree. In addition, the Corporation may adjust
the salary from time to time, and award bonuses in cash, stock or stock options
or other property and services.
4.2 Benefits. During the Term, Employee shall be entitled to
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participate in all medical and other employee benefit plans, including vacation,
sick leave, retirement accounts, profit sharing, stock
Exhibit 10.7- Page 1
option plans, stock appreciation rights, and other employee benefits, provided
by the Corporation to employees similarly situated. The Corporation represents
that it is completing the process necessary to finalize an approved qualified
stock option plan for its executive officers, including Employee, to be
implemented by June 30, 2003. Employee shall be eligible to receive options for
500,000 shares of the Corporation's common stock, to be vested 1/3 at the end of
twelve (12) months, and 1/3 at the end of each subsequent twelve (12) month
period, and to expire five (5) years after adoption of the plan. The option
price per share will be equal to the average closing trading price per share for
the ten (10) trading days immediately preceding the granting of the options to
purchase 500,000 shares of the Corporation's common stock. The remaining terms
shall be subject to the qualified incentive stock option plan for employees to
be adopted by the Corporation's Board of Directors by June 30, 2003. If the
Corporation's Board of Directors has not adopted as IRS-approved qualified stock
option plan by June 30, 2003, the employee will select between the following
alternatives:
4.2.1 Alternative I. Employee may elect to participate in an
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IRS-approved qualified stock option plan adopted by the Board of Directors after
June 30, 2003, with said adoption occurring by June 30, 2004. Participation in
such plan would be under the same terms and conditions as outlined above.
4.2.2 Alternative II. Employee may elect to accept payments
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of additional compensation to be calculated and paid as follows:
166,667 shares multiplied by the average closing trading price
per share for the 10 days immediately preceding June 30, 2004 = X
Less 166,667 shares multiplied by the average closing trading
price per share for the 10 days immediately preceding June 30, 2003 = (X)
Additional compensation to be paid to employee on June 30, 2004.
X
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PLUS
166,667 shares multiplied by the average closing trading price
per share for the 10 days immediately preceding June 30, 2005 = X
Less 166,667 shares multiplied by the average closing trading
price per share for the 10 days immediately preceding June 30, 2003 = (X)
Additional compensation to be paid to employee on June 30, 2005.
X
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PLUS
166,667 shares multiplied by the average closing trading price
per share for the 10 days immediately preceding June 30, 2006 = X
Less 166,667 shares multiplied by the average closing trading
price per share for the 10 days immediately preceding June 30, 2003 = (X)
Additional compensation to be paid to employee on June 30, 2006.
X
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Exhibit 10.7- Page 2
4.3 Expense Reimbursement. The Corporation shall reimburse
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Employee for reasonable and necessary expenses incurred by him on behalf of the
Corporation in the performance of his duties hereunder during the Term, provided
that such expenses are adequately documented in accordance with the
Corporation's then customary policies.
5. Other Employment. Employee shall devote as much of his business and
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professional time and effort, attention, knowledge, and skill to the management,
supervision and direction of the Corporation's business and affairs as is
necessary to ensure the success of the Corporation as determined solely by
Employee. Employee may, during the term hereof, be interested directly or
indirectly, in any manner, as partner, officer, director, stockholder, advisor,
employee or in any other capacity in any other business; and nothing herein
contained shall prevent or limit the right of Employee to invest any of his
surplus funds in the capital stock or other securities of any corporation,
company or limited partnership, or whose stock or securities are publicly owned
or are regularly traded on any public exchange; nor shall anything herein
contained prevent Employee from investing or limit Employee's right to invest
his surplus funds in real estate; nor shall anything herein contained prevent
Employee from serving in a volunteer capacity as officer, director, or advisor
for professional organizations with which he is affiliated.
6. Indemnification.
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6.1 Third Party Actions. The Corporation hereby indemnifies
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Employee in the event that Employee is a party, or is threatened to be made a
party, to any proceeding (other than an proceeding by or in the right of the
Corporation to procure a judgment in the Corporation's favor) by reason of
Employee's status as an officer, director, agent or employee of the Corporation,
against expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with such proceeding if Employee acted in good
faith and in a manner that Employee reasonably believed to be in the
Corporation's best interests and, in the case of a criminal proceeding, Employee
had no reasonable cause to believe Employee's conduct was unlawful. The
termination of any proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent shall not, of itself, create
any presumption that (a) Employee did not act in good faith or in a manner which
Employee reasonably believed to be in the Corporation's best interests or (b)
Employee had no reasonable cause to believe that Employee's conduct was
unlawful.
6.2 Actions By the Corporation. The Corporation hereby
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indemnifies Employee in the event that Employee was or is a party, or is
threatened to be made a party, to any threatened, pending, or completed action
by or in the right of the Corporation to procure a judgment in the Corporation's
favor by reason of Employee's status as an officer, director, agent or employee
of the Corporation, against expenses actually and reasonably incurred by
Employee in connection with the defense or settlement of that action, if
Employee acted in good faith and in a manner Employee believed to be in the best
interests of the Corporation and the Corporation's shareholders. No
indemnification shall be made under this Section 6.2 with respect to any claim,
issue, or matter on which Employee has been adjudged to be liable to the
Corporation in the performance of Employee's duty to the Corporation and/ or the
Corporation's shareholders, unless and only to the extent that the court in
which such proceeding is or was pending shall determine on application that, in
view of all the circumstances of the case, Employee is fairly and reasonably
entitled to indemnity for expenses and then only to the extent that the court
shall determine.
6.3 Successful Defense By Employee. To the extent that Employee
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has been successful on the merits in defense of any proceeding referred to in
Sections 6.1 or 6.2, or in defense of any claim, issue, or matter therein, the
Corporation shall indemnify Employee against expenses actually and reasonably
incurred by Employee in connection therewith.
Exhibit 10.7- Page 3
6.4 Required Approval. Except for the indemnifications expressly
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authorized by Sections 6.1, 6.2 and 6.3, any indemnification of Employee by the
Corporation shall be made only if authorized in the specific case, after a
determination that indemnification of Employee is proper in the circumstances by
one of the following:
6.4.1 A majority vote of a quorum consisting of directors who
are not parties to such proceeding;
6.4.2 Independent legal counsel in a written opinion if a
quorum of directors who are not parties to such a proceeding is not available;
6.4.3 Either (a) the affirmative vote of a majority of shares
in the Corporation entitled to vote represented at a duly held meeting at which
a quorum is present; or (b) the written consent of holders of a majority of the
outstanding shares entitled to vote; provided however that for purposes of this
Section 6.4.3, the shares owned by Employee shall not be considered outstanding
or entitled to vote thereon); or
6.4.4 The court in which the proceeding is or was pending, on
application made by the Corporation, Employee or any attorney or other person
rendering services in connection with the defense, whether or not such
application is opposed by the Corporation.
6.5 Advances. Expenses incurred in defending any proceeding shall
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be advanced by the Corporation before the final disposition of such proceeding
upon receipt of an undertaking by or on behalf of Employee to repay such amounts
if it shall be determined ultimately that Employee is not entitled to be
indemnified as authorized in this Section 7.
6.6 Other Contractual Rights. The indemnification provided by
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this Section 6 shall be deemed cumulative, and not exclusive, of any other
rights to which Employee may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office. Nothing in this section shall affect any right to indemnification to
which Employee may be entitled by contract or otherwise.
6.7 Limitations. No indemnification or advance shall be made
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under this Section 6, except as provided in Sections 6.4.3 or 6.4.4, in any
circumstance if it appears that it would be inconsistent with (a) an agreement
in effect at the time of the accrual of the alleged cause of action asserted in
the proceeding in which expenses were incurred or other amounts were paid, which
prohibits or otherwise limits indemnification; or (b) any condition expressly
imposed by a court in approving settlement.
6.8 Insurance. To the extent available at commercially reasonable
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rates and limits, the Corporation shall purchase and maintain insurance on
behalf of Employee insuring against any liability asserted against or incurred
by Employee in that capacity or arising out of Employee's status as such,
whether or not the Corporation has the power to indemnify Employee against that
liability under the provisions of this Section 6.
6.9 Survival. The rights provided by this Section 6 shall survive
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the expiration or earlier termination of this Agreement pursuant hereto and
shall inure to the benefit of Employee' heirs, executors, and administrators.
Exhibit 10.7- Page 4
6.10 Amendment. Any amendment, repeal, or modification of the
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Corporation's articles or bylaws shall not adversely affect Employee's right or
protection existing at the time of such amendment, repeal, or modification.
6.11 Settlements. The Corporation shall not be liable to
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indemnify Employee under this Section 6 for (i) any amounts paid in settlement
of any action or claim effected without the Corporation's written consent, which
consent shall not be unreasonably withheld, or (ii) any judicial award, if the
Corporation was not given a reasonable and timely opportunity to participate, at
the Corporation's expense, in the defense of such action.
6.12 Subrogation. In the event of payment under this Section 6,
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the Corporation shall be subrogated to the extent of such payment to all
Employee's rights of recovery; and Employee shall execute all papers required
and shall do everything necessary or appropriate to secure such rights,
including the execution of any documents necessary or appropriate to the
Corporation effectively bringing suit to enforce such rights.
6.13 No Duplication Of Payments. The Corporation shall not be
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liable under this Section 6 to make any payment in connection with any claim
made against Employee to the extent Employee has otherwise actually received
payment, whether under a policy of insurance, agreement, vote, or otherwise, of
any amount which is otherwise subject to indemnification under this Section 6.
6.14 Proceedings And Expenses. For the purposes of this Section 6,
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"proceeding" means any threatened, pending, or completed action or proceeding,
whether civil, criminal, administrative, or investigative; and "expenses"
includes, without limitation, attorney fees and any expenses of establishing a
right to indemnification under this Section 6.
7. Confidential Information/ Inventions.
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7.1 Employee shall not, in any manner, for any reasons, either
directly or indirectly, divulge or communicate to any person, firm or
corporation, any confidential information concerning any matters not generally
known in the document management software industry or otherwise made public by
the Corporation which affects or relates to the Corporation's business,
finances, marketing and/ or operations, research, development, inventions,
products, designs, plans, procedures, or other data (collectively, "Confidential
Information") except in the ordinary course of business or as required by
applicable law. Without regard to whether any item of Confidential Information
is deemed or considered confidential, material, or important, the parties hereto
stipulate that as between them, to the extent such item is not generally known
in the property casualty insurance industries, such item is important, material,
and confidential and affects the successful conduct of the Corporation's
business and good will, and that any breach of the terms of this Section 7.1
shall be a material and incurable breach of this Agreement.
7.2 Employee further agrees that all documents and materials
furnished to Employee by the Corporation and relating to the Corporation's
business or prospective business are and shall remain the exclusive property of
the Corporation as the case may be. Employee shall deliver all such documents
and materials to the Corporation upon demand therefor and in any event upon
expiration or earlier termination of this Agreement. Any payment of sums due
and owing to Employee by the Corporation upon such expiration or earlier
termination shall be conditioned upon returning all such documents and
materials, and Employee expressly authorizes the Corporation to withhold any
payments due and owing pending return of such documents and materials.
7.3 All ideas, inventions, and other developments or improvements
conceived or reduced to practice by Employee, alone or with others, during the
term of this Agreement, whether or not
Exhibit 10.7- Page 5
during working hours, that are within the scope of the business of the
Corporation or that relate to or result from any of the Corporation's work or
projects or the services provided by Employee to the Corporation pursuant to
this Agreement, shall be the exclusive property of the Corporation. Employee
agrees to assist the Corporation during the term, at the Corporation's expense,
to obtain patents and copyrights on any such ideas, inventions, writings, and
other developments, and agrees to execute all documents necessary to obtain such
patents and copyrights in the name of the Corporation.
8. Covenant Not to Compete. Except as expressly permitted in Section 5
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above, during the term of this Agreement, Employee shall not engage in any of
the following competitive activities: (a) engaging directly or indirectly in any
business or activity substantially similar to any business or activity engaged
in (or proposed to be engaged in) by the Corporation; (b) engaging directly or
indirectly in any business or activity competitive with any business or activity
engaged in (or proposed to be engaged in) by the Corporation; (c) soliciting or
taking away any employee, agent, representative, contractor, supplier, vendor,
customer, franchisee, lender or investor of the Corporation, or attempting to so
solicit or take away; (d) interfering with any contractual or other relationship
between the Corporation and any employee, agent, representative, contractor,
supplier, vendor, customer, franchisee, lender or investor; or (e) using, for
the benefit of any person or entity other than the Corporation, any Confidential
Information of the Corporation. The foregoing covenant prohibiting competitive
activities shall survive the termination of this Agreement and shall extend, and
shall remain enforceable against Employee, for the period of one (1) year
following the date this Agreement is terminated. In addition, during the
two-year period following such expiration or earlier termination, Employee shall
not make or permit the making of any negative statement of any kind concerning
the Corporation.
9. Survival. Employee agrees that the provisions of Sections 7 and 8
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shall survive expiration or earlier termination of this Agreement for any
reasons, whether voluntary or involuntary, with or without cause, and shall
remain in full force and effect thereafter.
10. Injunctive Relief. Employee acknowledges and agrees that the
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covenants and obligations of Employee set forth in Sections 7 and 8 with respect
to non-competition, non-solicitation, confidentiality and the Corporation's
property relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations will cause the
Corporation irreparable injury for which adequate remedies are not available at
law. Therefore, Employee agrees that the Corporation shall be entitled to an
injunction, restraining order or such other equitable relief (without the
requirement to post bond) as a court of competent jurisdiction may deem
necessary or appropriate to restrain Employee from committing any violation of
the covenants and obligations referred to in this Section 10. These injunctive
remedies are cumulative and in addition to any other rights and remedies the
Corporation may have at law or in equity.
11. Termination
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11.1 Termination by Employee. Employee may terminate this
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Agreement without cause at any time and for any reason upon thirty (30) days
notice to the Corporation. Employee may immediately terminate this Agreement
for cause at any time by written notice to the Corporation. For purposes of
this Agreement, the term "cause" for termination by Employee shall be (a) a
material breach by the Corporation of any material covenant or obligation
hereunder; or (b) the voluntary or involuntary dissolution of the Corporation.
The written notice given hereunder by Employee to the Corporation shall specify
in reasonable detail the cause for termination, and, in the case of the cause
described in (a) above, such termination notice shall not be effective until
thirty (30) days after the Corporation's receipt of such notice, during which
time the Corporation shall have the right to respond to Employee's notice and
cure the breach or other event giving rise to the termination.
Exhibit 10.7- Page 6
11.2 Termination by the Corporation. Subject to the severance
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payments set forth in Section 11.3 below, the Corporation may terminate its
employment of Employee under this Agreement without cause at any time and for
any reason upon thirty (30) days notice to Employee. The Corporation may
terminate its employment of Employee under this Agreement for cause at any time
by written notice to Employee. For purposes of this Agreement, the term "cause"
for termination by the Corporation shall be (a) a conviction of or plea of
guilty or nolo contendere by Employee to a felony; (b) the consistent refusal by
Employee to perform his material duties and obligations hereunder; or (c)
Employee's willful and intentional misconduct in the performance of his material
duties and obligations. The written notice given hereunder by the Corporation
to Employee shall specify in reasonable detail the cause for termination. In
the case of a termination for the cause described in (a) above, such termination
shall be effective upon receipt of the written notice. In the case of the
causes described in (b) and (c) above, such termination notice shall not be
effective until thirty (30) days after Employee's receipt of such notice, during
which time Employee shall have the right to respond to the Corporation's notice
and cure the breach or other event giving rise to the termination.
11.3 Severance. Upon a termination of this Agreement without
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cause by Employee or with cause by the Corporation, the Corporation shall
immediately pay to Employee all accrued and unpaid compensation as of the date
of such termination. In addition, in the case of termination with cause by the
Corporation (but not without cause by Employee), Employee shall continue after
termination to vest his options pursuant to Section 4.2 above. Upon a
termination of this Agreement with cause by Employee or without cause by the
Corporation, the Corporation shall immediately pay to Employee all accrued and
unpaid compensation as of the date of such termination and the "Severance
Payment," and Employee shall continue after termination to vest his options
pursuant to Section 4.2 above. The "Severance Payment" shall equal the total
amount of salary payable to Employee under Section 4.1 of this Agreement from
the date of such termination until the end of the term of this Agreement
(prorated for any partial month). The accrued compensation due and payable at
termination together with any Severance Payment due hereunder shall bear
interest at the lesser of eight percent (8%) per annum or the maximum rate
permitted by law until such amounts are paid in full.
12. Termination Upon Death. If Employee dies during the term of this
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Agreement, this Agreement shall terminate, except that Employee's legal
representatives shall be entitled to receive any earned but unpaid compensation
due hereunder.
13. Termination Upon Disability. If, during the term of this
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Agreement, Employee suffers and continues to suffer from a "Disability" (as
defined below), then the Corporation may terminate this Agreement by delivering
to Employee sixty (60) calendar days prior written notice of termination based
on such Disability, setting forth with specificity the nature of such Disability
and the determination of Disability by the Corporation. For the purposes of
this Agreement, "Disability" means Employee's inability, with reasonable
accommodation, to substantially perform Employee's duties, services and
obligations under this Agreement due to physical or mental illness or other
disability for a continuous, uninterrupted period of ninety (90) calendar days.
14. Personnel Policies, Conditions, And Benefits. Except as otherwise
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provided herein, Employee's employment shall be subject to the personnel
policies and benefit plans which apply generally to the Corporation's employees
as the same may be interpreted, adopted, revised or deleted from time to time,
during the term of this Agreement, by the Corporation in its sole discretion.
During the term hereof, Employee shall receive the following:
14.1 Term Life Insurance. In addition to Employee's participation
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in any life insurance plan or plans available to all employees of the
Corporation, the Corporation shall provide Employee with term life insurance in
the amount of One Million Dollars ($100,000.00) if available at
Exhibit 10.7- Page 7
standard rates or, in the alternative, term life insurance in such lesser amount
as the standard, unrated premium for coverage of $100,000.00 will purchase.
14.2 Vacation. Employee shall be entitled to vacation during each
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year of the term at the rate of three (3) weeks per year; provided that no
vacation shall accrue from year to year during the term.
15. Beneficiaries of Agreement. This Agreement shall inure to the
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benefit of the Corporation and any affiliates, successors, assigns, parent
corporations, subsidiaries, and/or purchasers of the Corporation as they now or
shall exist while this Agreement is in effect.
16. No Waiver. No failure by either party to declare a default based
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on any breach by the other party of any obligation under this Agreement, or
failure of such party to act quickly with regard thereto, shall be considered to
be a waiver of any such obligation, or of any future breach.
17. Modification. No waiver or modification of this Agreement or of
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any covenant, condition, or limitation herein contained shall be valid unless in
writing and duly executed by the parties to be charged therewith.
18. Choice Of Law/Jurisdiction. This Agreement shall be governed by
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and construed in accordance with the laws of the State of Florida, without
regard to any conflict-of-laws principles. The Company and Employee hereby
consent to personal jurisdiction before all courts in the County of Orange,
State of Florida, and hereby acknowledge and agree that Orange County, Florida
is and shall be the most proper forum to bring a complaint before a court of
law.
19. Entire Agreement. This Agreement embodies the whole agreement
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between the parties hereto and there are no inducements, promises, terms,
conditions, or obligations made or entered into by the Corporation or Employee
other than contained herein.
20. Severability. All agreements and covenants contained herein are
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severable, and in the event any of them, with the exception of those contained
in Sections 1 and 4 hereof, shall be held to be invalid by any competent court,
this Agreement shall be interpreted as if such invalid agreements or covenants
were not contained herein.
21. Headings. The headings contained herein are for the convenience of
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reference and are not to be used in interpreting this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
the "CORPORATION"
SEQUIAM SOFTWARE, INC., a California corporation
By: /s/ Nicolaas Van den Brekel
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Nicolaas Van den Brekel, Chairman and CEO
By: /s/ Xxxx X. Xxxxxxxxxxx
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Xxxx X. Xxxxxxxxxxx, Secretary and CFO
Exhibit 10.7- Page 8
"Employee"
/s/ L. Xxxx XxXxxx
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L. XXXX XXXXXX, an individual
Exhibit 10.7- Page 9
