EXHIBIT 10.85
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") effective the 1st day of July, 2002,
entered into by and between Aubrey McAuley, 7811 Kincheon Ct., Austin, Texas,
78749 ("Executive") and Vertical Computer Systems, Inc. a Delaware corporation
("the Company") or any of its affiliates ("Affiliates"), with its principal
place of business at 6336 Wilshire Blvd. Los Angeles, California 90048. This
Agreement may be unilaterally transferred to an affiliate of the Company,
without economic detriment to the Employee.
RECITALS
A. The Company has been established for the purpose of software development
and related Internet business operations; and
B. The Company desires to employ Executive as Executive VP, Product
Development and Sales Support and Executive desires to be so employed.
NOW, THEREFORE, the parties desire to memorialize herein the terms and
conditions of Executive's employment. In consideration of the mutual covenants
and promises contained herein and other good and valuable consideration, the
parties hereby acknowledge the receipt and sufficiency of which hereto, the
parties agree as follows:
1. POSITION. Executive shall serve as Executive VP, Product Development
and Sales Support upon the terms set forth in this Agreement. Executive shall
have the responsibilities inherent in this position, including, without
limitation, (i) operational responsibility and management for customer sales
support, customer implementation projects, and product research and development,
combining business and technical perspectives to guide product development such
that Company and product are well positioned to capitalize on the markets of the
future. Executive shall report to the President, or as otherwise designated by
the Board of Directors, and Executive shall perform any other duties reasonably
required by Company's President.
2. TERM OF EMPLOYMENT. Subject to the provisions of this Agreement, the
term of Executive's employment under this Agreement shall commence on July 1,
2002 and shall continue up to July 1, 2004 (the "Term" or "Period of
Employment").
3. COMPENSATION, BONUS, STOCK, PERFORMANCE OF DUTIES, AND BENEFITS.
3.1 SALARY. The Company shall pay Executive an annual base salary
of One Hundred Twenty Thousand Dollars ($120,000.00) during the term
of Executive's employment, payable in accordance with the Company's
semi-monthly payroll disbursement cycle ("Base Compensation").
Executive's Base Compensation shall be reviewed and increased each
year during the term of Executive's employment, provided that the
Company's performance criteria are achieved as set forth by the Board
of Directors each year.
3.2 BONUS. Executive shall receive an annual bonus One Hundred
Twenty (120) days after the end of the Company's fiscal year from a pool equal
to five (5) percent of the Company taxable income from the federal tax return
filed before depreciation. Executive's share of the bonus pool is equal to the
percentage of his annual base compensation to the total combined annual base
compensation of all executives of Company in bonus pool.
3.3. WARRANTS AND ISSUANCE OF SERIES "C" SHARES. Executive
confirms the receipt of warrants and employee stock options in 2001 at a strike
price of $0.025 to purchase an aggregate total of 900,000 shares of Company
common stock. Both parties acknowledge and agree that there were 15,000 shares
of Company's Series C 4% Cumulative Convertible preferred stock ("Series C
stock") out of a pool of 15,000 shares of Series C stock that was designated for
former Enfacet employees who are employed by Company one (1) year after the
closing of the sale of Enfacet to Company. Each share of Series C stock is
convertible into 400 shares of Company's common stock. In consideration and as
incentive for Executive to execute this Employment Agreement and diligently
perform the services provided in connection with the Employment Agreement,
Executive shall receive 7,500 shares of Series "C" stock, which may be converted
into 3,000,000 shares of Company's common stock. The Company shall register the
underlying shares of common stock in its forthcoming SB-2. Executive agrees that
the underlying common stock shares shall be subject to a lock-up agreement which
shall run for a period that begins thirty (30) days after the filing date of the
Registration Statement and ends one (1) year later.
3.4 SERVICE WITH THE COMPANY. During the Period of Employment
this Agreement, Executive shall perform such reasonable employment duties,
commensurate with Executive's position, as the President, shall, from time to
time, assign to Executive;
3.5 PERFORMANCE OF DUTIES. Executive shall serve the Company
faithfully and to the best of his ability and devote full business time,
attention, skill and effort exclusively to the performance of the duties
described in this Agreement. Executive shall comply with all policies,
procedures, budgets, and reporting requirements established by the Company in
the performance of his duties and responsibilities. During the Period of
Employment, (i) Executive's entire working time, energy, skill and best efforts
shall be devoted to the performance of Executive's duties hereunder in a manner
which will faithfully and diligently further the business and interests of
Company; and (ii) Executive shall not accept any other employment, or engage,
directly or indirectly, in any other business, commercial, or professional
activity (whether or not providing compensation) that is or may be competitive
with Company or any Affiliate that might create a conflict of interest with
Company or any Affiliate or that otherwise might interfere with the business of
Company or any Affiliate. Executive may engage in charitable, civic, fraternal,
professional and trade association activities that do not interfere materially
with Executive's obligations to Company;
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3.6 VACATION AND SICK LEAVE. Executive will be entitled to two
(2) weeks of vacation and sick leave equal to six (6) days per year. Vacation
time and sick leave shall not be accumulated after the end of any year.
Executive's use of vacation time shall be subject to the prior approval of the
President of the Company. Sick leave shall accumulate at the rate of one half
day per month;
3.7 EXPENSES. The Company shall reimburse Executive for all
expenses incurred in connection with Executive's duties on behalf of the
Company, provided that Executive shall keep, and present to the Company, records
and receipts relating to reimbursable expenses incurred by him. Such records and
receipts shall be maintained and presented in a format, and with such
regularity, as the Company reasonably may require in order to substantiate the
Company's right to claim income tax deductions for such expenses. Without
limiting the generality of the foregoing, Executive shall be entitled to
reimbursement for any business-related travel, business-related entertainment,
whether at Executive's residence or otherwise, or other costs and customary
business expenses reasonably incident to the performance of Executive's duties
on behalf of the Company. Executive will be entitled to reimbursement of all
reasonable, customary business expenses incurred by him in the performance of
Executive's duties.
3.8 BENEFITS. Executive will be entitled to participate in the
employee benefit plans or programs of the Company, including medical and life
insurance and profit sharing, to the fullest extent possible, subject to the
rules and regulations applicable hereto and to standard eligibility and vesting
requirements of any coverage and shall be furnished with other services and
perquisites appropriate to Executive's position. Without limiting the generality
of the foregoing, Executive shall be entitled to the following benefits, subject
to any policies of the benefits provider: (a) Comprehensive medical insurance
for Executive, Executive's spouse and dependent children, with twenty-five
percent (25%) deductibles;
(b) Dental insurance for Executive, Executive's spouse and
dependent children;
(c) Group term life insurance with death benefits equal to a
minimum one hundred percent (100%) of Executive's annual base salary;
(d) Annual physical examinations;
(e) Vacation leave in the amount of two (2) weeks annually.
Any unused vacation time shall not accumulate from year to year.
4. TERMINATION.
4.1 DUE TO DISABILITY.
(a) If Executive becomes unable to perform the duties specified
hereunder due to partial or total disability or incapacity resulting from a
mental or physical illness, injury or any other cause, Company will continue the
payment of Executive's base salary at its then current rate for a period of
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ninety (90) days following the date Executive is first unable to perform such
duties due to such disability or incapacity. Thereafter, Company shall have no
obligation for base salary, bonus or other compensation payments to Executive
during the continuance of such disability or incapacity. Company will continue
to provide benefits to Executive so long as Executive remains employed;
(b) If Executive is unable to perform the duties specified hereunder
due to partial or total disability or incapacity resulting from a mental or
physical illness, injury or any other cause for a period of ten (10) consecutive
weeks or for a cumulative period of seventy (70) business days during any five
(5) month period ("Disability"), then, to the extent permitted by law, Company
shall have the right to terminate this Agreement thereafter, in which event
Company shall have no further obligations or liabilities hereunder after the
date of such termination except Executive will be deemed disabled and eligible
for the payments outlined in paragraph 4.1 (a). EXECUTIVE REPRESENTS THAT TO THE
BEST OF EXECUTIVE'S KNOWLEDGE HE HAS NO MEDICAL CONDITION THAT COULD CAUSE
PARTIAL OR TOTAL DISABILITY THAT WOULD RENDER HIM UNABLE TO PERFORM THE DUTIES
SPECIFIED IN THIS AGREEMENT OTHERWISE THE BENEFITS IN PARAGRAPH 4.1(a) SHALL BE
NULL AND VOID.
4.2 DUE TO DEATH. If Executive dies during the period of
employment, Executive's employment with Company shall terminate as of
the end of the calendar month in which the death occurs. Company
shall have no obligation to Executive or Executive's estate for Base
Compensation or other form of compensation or benefit other than
amounts accrued through the date of Executive's death, except as
otherwise required by law or by benefit plans provided at Company
expense.
In the event of the termination of Executive's employment due to
Executive's death or Disability, Executive or Executive's legal representatives,
as the case may be, shall be entitled to:
(a) In the case of death, unpaid Base Compensation earned or accrued
through Executive's date of death and continued Base Compensation at a rate in
effect at the time of death, through the end of six (6) months after which
Executive's death occurs or the end of the employment term, which ever is the
lesser amount.
(b) Any performance or special incentive bonus earned but not yet
paid;
(c) A pro rata performance bonus for the year in which employment
terminates due to death or Disability based on the performance of Company for
the year during which such termination occurs or, if performance results are not
available, based on the performance bonus paid to Executive for the prior year;
and
(d) Any other compensation and benefits to which Executive or
Executive's legal representatives may be entitled under applicable plans,
programs and agreements of Company to the extent permitted under the terms
hereof.
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4.3 FOR CAUSE. Company may terminate Executive's employment
relationship with Company at any time and with ten (10) days prior
notice for Cause.
(a) For purposes of this Agreement, termination of employment of
Executive by the Company for cause means termination for the following reasons:
(i) frequent and unjustifiable absenteeism, other than solely by reason of
Executive's illness or physical or mental disability; (ii) failing to follow the
reasonable instructions of the President or the Board of Directors; (iii) proven
dishonesty materially injurious to the Company or to its business, operations,
assets or condition (an "Adverse Effect"); or gross violation of Company policy
or procedure after being warned, notified, or Executive's acknowledged, gross or
willful misconduct, or willful neglect to act, which misconduct or neglect is
committed or omitted by Executive in bad faith and had an Adverse Effect; and
(b) Company shall have no obligation to Executive for Base
Compensation or other form of compensation or benefits, except as otherwise
required by law, other than (a) amounts accrued through the date of termination,
and (b) reimbursement of appropriately documented expenses incurred by Executive
before the termination of employment, to the extent that Executive would have
been entitled to such reimbursement but for the termination of employment.
4.4 WITHOUT CAUSE. At any time, Company may terminate Executive
for any reason, without cause, by providing Executive ten (10) days'
advance written notice with payment of the balance of Base
Compensation for the remaining term of this Agreement. Thereafter,
all obligations of Company under this Agreement shall cease. Company
may dismiss Executive without cause notwithstanding anything to the
contrary contained in or arising from any statements, policies, or
practices of Company.
4.5 TERMINATION OBLIGATIONS.
(a) All tangible Company Property shall be returned promptly to
Company upon termination of the Period of Employment;
(b) All benefits to which Executive is otherwise entitled shall cease
upon Executive's termination, unless explicitly continued either under this
Agreement or under any specific written policy or benefit plan of Company;
(c) Upon termination of the Period of Employment, Executive shall be
deemed to have resigned from all offices and directorships then held with
Company or any Affiliate;
(d) Executive's obligations under this Section 4.5 on Termination
Obligations, Section 5 on Confidentiality and Non-Disclosure, Section 7 on
Inventions, Section 8 on Arbitration, and Section 10 on Non-Competition shall
survive the termination of the Period of Employment and the expiration or
termination of this Agreement; and
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(e) Following any termination of the Period of Employment, Executive
shall cooperate fully with Company in all matters relating to completing pending
work on behalf of Company and the orderly transfer of work to other employees of
Company. Executive shall also cooperate in the defense of any action brought by
any third party against Company that relates in any way to Executive's acts or
omissions while employed by Company.
5. CONFIDENTIALITY AND NON-DISCLOSURE.
Executive agrees to abide by the terms of the Confidentiality and
Non-Disclosure Agreement appended hereto as Exhibit A and to comply with such
confidentiality, non-disclosure, and proprietary information policies now in
effect by the Company or as may be established in the future.
6. COMPANY PROPERTY.
All products, records, designs, patents, plans, data, manuals,
brochures, memoranda, devices, lists and other property delivered to Executive
by or on behalf of the Company, all confidential information including, but not
limited to, lists of potential customers, prices, and similar confidential
materials or information respecting the business affairs of the Company, such as
hardware manufacturers, software developers, networks, strategic partners,
business practices regarding technology and schedules, legal actions and
personnel information, and all records compiled by Executive which pertain to
the business of the Company, and all rights, title and interest now existing or
that may exist in the future in and to any intellectual property rights created
by Executive for the Company, in performing Executive's duties during the term
of this Agreement shall be and remain the property of the Company. Executive
agrees to execute and deliver at a future date any further documents that the
Company, in its sole discretion, determines may be necessary or desirable to
perfect the Company's ownership in any intellectual or other property rights.
7. INVENTIONS.
7.1 Subject to the limitations of California Labor Code ss. 2870, a
copy of which is attached as Exhibit B, "Inventions" shall mean any and all
writings, original works or authorship, inventions, ideas, trademarks, service
marks, patents, copyrights, know-how, improvements, processes, designs,
formulas, discoveries, technology, computer hardware or software, procedures
and/or techniques which Executive may make, conceive, discover, reduce to
practice or develop, either solely or jointly with any other person or persons,
at any time during the Period of Employment, whether or not during working hours
and whether or not at the request or upon the suggestion of Company, which
relate to or are useful in connection with any business now or hereafter carried
on or contemplated by Company, including developments or expansions of its
present fields of operations;
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7.2 Executive shall make full disclosure to Company of all Inventions
and shall do everything necessary or desirable to vest the absolute title
thereto in Company. Executive shall write and prepare all specifications and
procedures regarding such inventions, improvements, processes, procedures and
techniques and otherwise aid and assist Company so that Company can prepare and
present applications for copyright or Letters Patent therefor and can secure
such copyright or Letters Patent wherever possible, as well as reissues,
renewals, and extensions thereof, and can obtain the record title to such
copyright or patents so that Company shall be the sole and absolute owner
thereof in all countries in which it may desire to have copyright or patent
protection. Executive shall not be entitled to any additional or special
compensation or reimbursement regarding any Invention;
7.3 All Inventions shall be the sole and exclusive property of
Company. Executive agrees to, and hereby does, assign to Company all of
Executive's right, title, and interest (throughout the United States and in all
foreign countries), free and clear of all liens and encumbrances, in and to each
Invention.
7.4 CONTINUING OBLIGATIONS. The rights and obligations of Executive
and Company set forth in this Section shall survive the termination of
Executive's employment and the expiration of this Agreement.
8. ARBITRATION.
8.1 ARBITRABLE CLAIMS. To the fullest extent permitted by law,
all disputes between Executive (and Executive's attorneys, successors
and assigns) and Company (and its Affiliates, shareholders,
directors, officers, employees, agents, successors, attorneys and
assigns) of any kind whatsoever, including, without limitation, all
disputes arising under this Agreement ("Arbitrable Claims"), shall be
resolved by arbitration. All persons and entities specified in the
preceding sentence (other than Company and Executive) shall be
considered third-party beneficiaries of the rights and obligations
created by this Section on Arbitration. Arbitrable Claims shall
include, but are not limited to, contract (express or implied) and
tort claims of all kinds, as well as all claims based on any federal,
state or local law, statute or regulation, excepting only claims
under applicable workers' compensation law and unemployment insurance
claims. By way of example and not in limitation of the foregoing,
Arbitrable Claims shall include any claims arising under Title VII of
THE CIVIL RIGHTS ACT OF 1964, THE AGE DISCRIMINATION IN EMPLOYMENT
ACT, THE AMERICANS WITH DISABILITIES ACT and THE CALIFORNIA FAIR
EMPLOYMENT AND HOUSING ACT;
8.2 PROCEDURE. Arbitration of Arbitrable Claims shall be in
accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association, as amended ("AAA
Employment Rules"), as augmented in this Agreement. Arbitration shall
be initiated as provided by the AAA Employment Rules, although the
written notice to the other party initiating arbitration shall also
include a statement of the claim(s) asserted and the facts upon which
the claim(s) are based. Arbitration shall be final and binding upon
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the parties and shall be the exclusive remedy for all Arbitrable
Claims. Either party may bring an action in court to compel
arbitration under this Agreement and to enforce an arbitration award.
Otherwise, neither party shall initiate or prosecute any lawsuit or
administrative action in any way related to any Arbitrable Claim.
Notwithstanding the foregoing, either party may, at its option, seek
injunctive relief pursuant to section 1281.8 of the California Code
of Civil Procedure. All arbitration hearings under this Agreement
shall be conducted in Los Angeles, California. THE PARTIES HEREBY
WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO
ARBITRABLE CLAIMS, INCLUDING, WITHOUT LIMITATION, ANY RIGHT TO TRIAL
BY JURY AS TO THE MAKING, EXISTENCE, VALIDITY OR ENFORCEABILITY OF
THE AGREEMENT TO ARBITRATE;
8.3 ARBITRATOR SELECTION AND AUTHORITY. All disputes involving
Arbitrable Claims shall be decided by a single arbitrator. The
arbitrator shall be selected by mutual agreement of the parties
within thirty (30) days of the effective date of the notice
initiating the arbitration. If the parties cannot agree on an
arbitrator, then the complaining party shall notify the AAA and
request selection of an arbitrator in accordance with the AAA
Employment Rules. The arbitrator shall have authority to award
equitable relief, damages, costs and fees to the same extent that,
but not greater than, a court would have. The fees of the arbitrator
shall be split between both parties equally, unless this would render
this Section of Arbitration unenforceable, in which case the
arbitrator shall apportion said fees so as to preserve
enforceability. The arbitrator shall have exclusive authority to
resolve all Arbitrable Claims, including, but not limited to, whether
any particular claim is arbitrable and whether all or any part of
this Agreement is void or unenforceable;
8.4 CONTINUING OBLIGATIONS. The rights and obligations of
Executive and Company set forth in this Section on Arbitration shall
survive the termination of Executive's employment and the expiration
of this Agreement.
9. PRIOR AGREEMENTS; CONFLICTS OF INTEREST. Executive represents to
Company: (a) that there are no restrictions, agreements or understandings, oral
or written, to which Executive is a party or by which Executive is bound that
prevent or make unlawful Executive's execution or performance of this Agreement;
(b) none of the information supplied by Executive to Company or any
representative of Company or placement agency in connection with Executive's
employment by Company misstated a material fact or omitted information necessary
to make the information supplied not materially misleading; and (c) Executive
does not have any business or other relationship that creates a conflict between
the interests of Executive and the Company.
10. NON-COMPETITION. During the term of this Agreement Executive shall
not:
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10.1 Start employment with, offer consulting services to, or
otherwise become involved in, advise or participate on behalf of any
other company, entity or individual, in the field of the Company; and
10.2 Individually or through any agent, for himself or on behalf
of any other person or entity (i) solicit employees of the Company,
to entice them to leave the Company; or (ii) solicit or induce and
third party now or at any time during the term of this Agreement who
is providing services to the Company, through license, contract,
partnership, or otherwise to terminate or reduce their relationships
with the Company.
11. MISCELLANEOUS PROVISIONS.
11.1 AUTHORITY.Each party hereto represents and warrants that it
has full power and authority to enter into this Agreement and to
perform this Agreement in accordance with its terms.
11.2 GOVERNING LAW. This Agreement shall be construed,
interpreted and enforced in accordance with the laws of the State of
California.
11.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.
11.4 CAPTIONS. The captions of the sections of this Agreement are
for convenience of reference only and in no way define, limit or
affect the scope or substance of any section of this Agreement.
11.5 SEVERABILITY. In the event that any provision of this
Agreement shall be invalid, illegal or otherwise unenforceable, the
validity, legality and enforceability of the remaining provisions
shall in no way be affected or impaired thereby.
11.6 AMENDMENT. This Agreement may be amended only in writing
executed by the parties hereto.
11.7 ATTORNEY'S FEES. In the event of a dispute the prevailing
party shall be entitled to be reimbursed for its legal fees by the
other party.
11.8 FINALITY OF AGREEMENT. The document, when executed by the
parties, supersedes all other agreements of the parties with respect
to the matters discussed.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the day and year first set forth above.
"EXECUTIVE"
---------------------------------------------
Aubrey McAuley
VERTICAL COMPUTER SYSTEMS, INC.
By:
----------------------------------------
Richard Wade, President
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EXHIBIT "A"
CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
THIS NONDISCLOSURE AND NON-DISLCOSURE AGREEMENT (the "NDA Agreement") is
made and entered into on July 1, 2002, by and between Aubrey McAuley (the
"Receiving Party") and Vertical Computer Systems, Inc., and its affiliates
(including, but not limited to, NOW Solutions, LLC, Globalfare.com, Inc.,
Enfacet, iNetPurchasing LLC, Vertical Zap J.V., et al) (the "Disclosing Party")
for the purpose of preventing the unauthorized use or disclosure of Confidential
Information (as defined below) of the Disclosing Party.
For purposes of this NDA Agreement, Confidential Information shall mean
any and all information regarding the business of the Disclosing Party. The
Disclosing Party is in the web services, internet, and software businesses.
Confidential Information includes all information that has or could have
commercial value or other utility in the business in which the Disclosing Party
is engaged or in which it contemplates engaging. Confidential Information also
includes all information of which the unauthorized disclosure is or could be
detrimental to the interests of the Disclosing Party, whether or not such
information is identified as Confidential Information by the Disclosing Party.
By example and without limitations, Confidential Information includes any and
all information concerning teaching techniques, processes, formulas, trade
secrets, inventions, discoveries, improvements, research or development and test
results, specifications, data, know-how, formats, marketing plans, business
plans, strategies, forecasts, unpublished financial information, budgets,
projections, and customer and supplier identities, characteristics, and
agreements.
In consideration of the Disclosing Party's disclosure of Confidential
Information to the Receiving Party, the Receiving Party hereby agrees as
follows:
1. The Receiving Party shall hold and maintain the Confidential
Information in strictest confidence and in trust for the sole and exclusive
benefit of the Disclosing Party during the term of this NDA Agreement and for a
period of three (3) years thereafter.
2. During the term of this NDA Agreement and for a period of three (3)
years thereafter, the Receiving Party shall not, without the prior written
approval of the Disclosing Party, use for its own benefit, publish or otherwise
disclose to others, or permit the use by others for their benefit or to the
detriment of the Disclosing Party any of the Confidential Information.
3. During the term of this NDA Agreement and for a period of three (3)
years thereafter, the Receiving Party shall take all necessary action to protect
the confidentiality of the Confidential Information and hereby agrees to
indemnify the Disclosing Party against any and all losses, damages, claims, or
expenses incurred or suffered by the Disclosing Party as a result of the
Receiving Party's breach of this NDA Agreement.
4. In consideration of the Receiving Party's access to the Confidential
Information, the Receiving Party will not, during the term of this NDA
Agreement, or for a period of one (1) year after termination of this NDA
Agreement, directly or indirectly, solicit any customers of the Disclosing
Party, or potential customers of the Disclosing Party, for the purpose of
performing services for such customers similar to those performed by the
Disclosing Party.
5. The term of this NDA Agreement shall continue in full force and
effect until July 16, 2004, except that the Receiving Party's obligations
hereunder shall not extend to any of the Confidential Information which the
Receiving Party can demonstrate:
(a) was received by an unrelated third party;
(b) was in the public domain on the date of this NDA Agreement or
at the time of the disclosure; or
(c) was an established industry standard on the date of this NDA
Agreement or at the time of the disclosure.
6. The Receiving Party understands and acknowledges that any disclosure
or misappropriation of any of the Confidential Information in violation of this
NDA Agreement may cause the Disclosing Party irreparable harm, the amount of
which may be difficult to ascertain and, therefore, agrees that the Disclosing
Party shall have the right to apply to a court of competent jurisdiction for an
order restraining any such further disclosure or misappropriation and for such
other relief as the Disclosing Party shall deem appropriate. Such right of the
Disclosing Party is to be in addition to the remedies otherwise available to the
Disclosing Party at law or in equity.
7. The Receiving Party shall return to the Disclosing Party any and all
records, notes, and other written, printed, or tangible materials pertaining to
the Confidential Information immediately on the Disclosing Party's written
request.
8. This NDA Agreement and the Receiving Party's obligations hereunder
shall be binding on the representatives, assignees, and successors of the
Receiving Party and shall inure to the benefit of the assigns and successors of
the Disclosing Party.
9. This NDA Agreement shall be governed by and construed in accordance
with the laws of the State of California and subject to the venue and
jurisdiction of the state and federal courts of Los Angeles, California.
10. If any action at law or in equity is brought to enforce or interpret
the provisions of this NDA Agreement, the prevailing party in such action shall
be entitled to reasonable attorneys' fees and court costs.
11. This NDA Agreement constitutes the sole understanding of the parties
about the subject matter hereof and may not be amended or modified except in
writing signed by each of the parties to the agreement.
"Receiving Party"
-----------------------------------
Aubrey McAuley, an individual
"Disclosing Party"
For the Company: VCSY
By:
--------------------------------
Richard Wade, President
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AMENDMENT TO EMPLOYMENT AGREEMENT
This AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") is entered
into as of August 5, 2002 by and between Aubrey McAuley ("Executive") and
Vertical Computer Systems, Inc. (the "Company").
A. Executive and Company entered into that certain Employment Agreement
dated July 1, 2002 (the "Agreement"). Capitalized terms in this Amendment shall
have the same meaning ascribed to them in the Agreement, unless otherwise
provided herein.
B. Executive and the Company desire by this Amendment to amend the
Agreement as herein provided.
In consideration of the mutual agreements herein contained, and other
good and valuable consideration, the receipt and sufficiency of which the
parties hereby acknowledge, the parties agree as follows:
1. The period at the end of Section 2 is deleted and replaced by a
comma, and the following language inserted: "unless earlier terminated pursuant
to Section 4, as amended."
2. The following language is inserted at the beginning of Section 3.5:
"Except as otherwise provided in the last sentence of this Section 3.5"; a comma
is inserted thereafter and before the word "Executive."
3. The last sentence of Section 3.5 is replaced with the following
language: "Notwithstanding any of the above, the Company hereby expressly
permits Executive to (a) engage in charitable, civic, fraternal, professional
and trade association activities that do not interfere materially with
Executive's obligations to Company, and (b) continue to provide software-related
services to the Austin-based company where Executive is currently employed (the
"Other Entity") described in Appendix 1 attached hereto and incorporated herein
by this reference, pursuant to the agreement attached to Appendix 1, as may be
amended from time (the "Other Employment and/or Consulting Agreement"), provided
however, that nothing contained herein shall be deemed to include, expressly, by
implication, or otherwise, any right of Executive to use or disclose to any
third parties, including without limitation the Other Entity, any Company
Intellectual Property (as defined below) or any Company Confidential Information
(as defined below) in the provision of services to the Other Entity pursuant to
the Other Employment or Consulting Agreement and the limited right granted to
Executive herein. Executive represents and warrants that Executive has not
knowingly used Company Intellectual Property or disclosed Confidential
Information in the course of performing services for any third party without
Company's or Enfacet's permission, during a period that begins with his
employment with Enfacet and continues to the execution of the Amendment. The
permission granted by Company set forth subsections (a) and (b) above, is
subject to the following conditions: (i) Executive shall continue to fully
perform his duties under the terms of Employment Agreement and (ii) Executive
shall work a minimum of 40 hours per week for Company. Executive warrants and
represents that he has not, as of the date of this Agreement, executed any other
employment or consulting agreements with any third party, including the Other
Entity, and, in the event that the Other Entity presents Executive with any
employment or consulting agreement or a confidentiality agreement for execution,
Executive shall provide the Company with a copy of same, and send the Other
Entity the terms of this Section 3.5. In the event that (a) the Other Entity
requests or indicates, whether expressly, by implication, or otherwise, that
Executive is or should be obligated, permitted, or expected, under the Other
Employment or Consulting Agreement, or in any manner associated thereof, to use
or disclose (in whole or in part) any such Company Intellectual Property or
Company Confidential Information, or (b) Executive in good faith believes that
his performance of his services in connection with the Other Employment or
Consulting Agreement would require Executive to use or disclose such Company
Intellectual Property or Company Confidential Information, Executive hereby
agrees and acknowledges that he will not make any such use or disclosure, and
Executive agrees that nothing contained herein shall permit Executive to make
such use or disclosure of Company Intellectual Property or Company Confidential
Information, and Executive shall send the Other Entity a copy of this entire
Section and shall immediately provide Company with the name and address of the
Other Entity as well as the nature of such request. Except as expressly set
forth herein, Company agrees that nothing within this Section 3.5 shall obligate
the Executive to disclose the Other's Entity's confidential information or
intellectual property to the Company. In consideration of the rights granted in
this Section 3.5 with respect to the Other Entity and the Other Employment or
Consulting Agreement, Executive hereby agrees that as soon as commercially
practicable after execution of this Amendment, Executive shall inform the Other
Entity in writing of Executive's rights and obligations pursuant to Section 3.5,
and, if requested by the Company on a case by case basis, shall attach a copy of
this Amendment to such written communication. For purposes of this Agreement,
including, without limitation, this Section 3.5, the term "Company Intellectual
Property" means any Intellectual Property (as defined below) generated,
developed, invented, created, conceived, reduced to practice, acquired, licensed
by or on behalf of the Company. "Intellectual Property" means any one or more of
the following materials or intellectual property [(other than trademarks)] now
existing or hereinafter developed: (a) unpatentable technical information,
know-how, trade secrets, designs, techniques, drawings, diagrams, structures,
prototypes, features, ideas, concepts, specifications; (b) inventions (whether
patentable or unpatentable, and whether or not reduced to practice), patent
applications, continuation patent application, continuation-in-part patent
applications, divisional patent applications, any corresponding foreign patent
applications that may claim a priority date of the patent applications referred
to above, and patents that may be granted on any of the above, including reissue
patents, reexamined patents and patent extensions based on those applications;
(c)copyrightable works, copyrights and applications registrations and renewals
in connection therewith; (d) mask works and applications, registrations and
renewals in connection therewith; (e) Confidential Information; (f) computer
software (including data and related documentation); (g) other proprietary
rights; (h) licenses or other transfers of proprietary rights; (i) copies or
tangible embodiments of any one or more of the foregoing; and (j) improvements,
enhancements or modifications of, or embodying, or deriving from, any of the
above. Company Intellectual Property shall include, without limitation, the
items described in Sections 6 and 7 of the Agreement. For purposes of this
Agreement, including, without limitation, this Section 3.5, "Company
Confidential Information" means any Confidential Information (as defined in
Exhibit A to the Agreement) of the Company.
4. Add the following to the beginning of the second sentence of Section
3.8(e): "Except as otherwise prohibited under California law," and replace "Any"
with "any."
2
5. Add after the heading of Section 4.3, the words "by the Company."
6. Add after the heading of Section 4.4 the words "by the Company."
7. Insert a new Section after the current Section 4.4. The heading of
the new Section 4.5 will be "By Executive for Cause." Insert the following
language after the heading: "In the event the Company fails to pay Executive in
accordance with Section 3.1 above within five (5) business days for the
applicable pay period, Executive may terminate this Agreement upon two (2) days
prior notice to the Company and elect to convert his employment relationship to
the Company into an independent contractor consulting relationship upon the
terms and conditions set forth in the form subcontractor agreement attached
hereto as Appendix 2 (the "Subcontractor Agreement"). In the event that Company
pays Executive all of Executive's past net salary so that Executive is current
through the most recently accrued pay period and Executive has not elected to
terminate by the date on which Company has made such payment, then Executive
shall be deemed to have waived his right to terminate with respect only to prior
pay periods. As a subcontractor of the Company, Executive will provide services
(the "Subcontractor Services") to current Company customers as of the date of
this Agreement and such other Company customers as may later be designated by
the Company (the "Customer(s)") solely in the name of, and solely as an agent
of, the Company. All amounts earned by Executive in connection with providing
Subcontractor Services ("Subcontractor Income") during each month of the
remaining term of Executive's employment term shall be used to offset any
amounts due to Executive for the balance of the portion of the Base Compensation
that has accrued during that month ("Subcontractor Offset"). If the Company
makes a "Reasonable Request" (as hereinafter defined) to Executive to provide
Subcontracting Services to a Customer and Executive is unable (except in the
case of illness, disability, death, or family emergency; or in the case of a
vacation for which Executive has given thirty (30) days prior notice to Company)
or elects not to provide such services, then Executive will be deemed to have
refused to provide service to Company's Customer ("Refuses Customer" or "Refused
Customer"). In the case that Executive Refuses Customer, the Company may offset
the consideration that Company receives for the Company's performance of those
services which constitute Subcontracting Services against the balance of the
portion of the Base Compensation that would have accrued for those pay periods
("Accrued Base Compensation") in which Company performs said services on its own
behalf ("Company Offset"). A "Reasonable Request" means the following: (a) the
Company must make the request in writing thirty (30) days prior to the
commencement of services unless waived by Executive; (b) Executive's
consideration for his performance of Subcontractor Services must be reasonable;
(c) Executive has the knowledge and skills reasonably required to perform the
Subcontractor Services within the time frame that is contemplated; and (d) the
performance of Executive's Subcontracting Services are subject to Executive's
prior reasonable consulting commitments, provided that Executive provides
written notice to the Company of any such commitments in reasonable detail prior
to accepting such engagements. The Company Offset may not exceed in any given
month the amount of the difference between the Subcontractor Offset and the
Accrued Base Compensation for that same month. Company has the right to continue
to make the Company Offset in subsequent months for Subcontractor Services for
any particular engagement with a Customer that exceeds one (1) month where
Executive Refused Customer, and, in such a case the Company is not obligated to
give Executive an opportunity to provide said Subcontracting Services to the
Customer in the next month. However, if Executive was unable to perform
Subcontracting Services for the Customer for any other reason, the Company must
3
continue to give Executive an opportunity to provide said Subcontracting
Services to the Customer in the next month that Executive is able to perform
said Subcontracting Services.
8. Change the number of Section 4.5 of the Agreement to Section 4.6. Add
the following after the heading of the new Section 4.6: "Except as otherwise
provided in the Subcontractor Agreement and Section 4.5 above:"
9. Delete subsection (d) of the "Termination Obligations" Section and
rename the current subsection (e), subsection (d).
10. Add new Section 4.7. Add new heading: "Other Consulting Work." Add
new language after the heading: "Upon termination of this Agreement, Executive
shall have no right or license (whether express, implied, or otherwise) to use
any of the Company Intellectual Property or Company Confidential Information, or
conduct any business in the name of the Company, or in any way represent himself
as associated with the Company, except, pursuant to an executed Subcontractor
Agreement. Subject to the first sentence of this Section 4.7, nothing contained
in this Agreement shall otherwise be deemed to in any way prohibit, limit or
restrict Executive's freedom, right and ability to provide consulting services
to or seek employment with any individual or entity, whether that individual or
entity competes with the business of the Company or not."
11. Add new Section 4.8. Add new heading: "Survival." Add new language
after heading: "The provisions of Sections 3.5, 4, 5, 6, 7, and 8, and any other
provision which by its terms is meant to survive termination of this Agreement,
shall survive termination of this Agreement."
12. Replace the first sentence of Section 8.1 with the following
language: "All disputes arising pursuant to this Agreement, except disputes
related to Executive's breach of its obligations with respect to the Company
Intellectual Property or the Company Confidential Information, shall be resolved
pursuant to binding arbitration and be deemed `Arbitrable Claims.'"
13. Add to the beginning of the first sentence of Section 10.1: "Except
as otherwise permitted in accordance with Section 3.5 above with respect to the
Other Entities and the Other Employment or Consulting Agreements," and replace
"Start" with "start."
14. Add to the end of Section 11.2 before the period, a comma, and the
following language: "without reference to its conflict of laws provisions."
15. Except as amended by this Amendment, the Agreement and the terms
thereof shall continue in full force and effect.
16. This Amendment may be executed in several counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same Amendment.
4
IN WITNESS HEREOF, the parties have executed this Amendment to be
effective as of the date first written above.
AUBREY McAULEY VERTICAL COMPUTER SYSTEMS, INC.
By:
----------------------- ---------------------------------
Its:
---------------------------------
5
APPENDIX 1
OTHER ENTITY
An Austin-based software-related services firm
OTHER EMPLOYMENT OR CONSULTING AGREEMENT
[attach]
6
APPENDIX 2
SUBCONTRACTOR AGREEMENT (FORM)
THIS SUBCONTRACTOR AGREEMENT (the "AGREEMENT") is entered as of _________,
____, 200_ (the "EFFECTIVE DATE"), by and between VERTICAL COMPUTER SYSTEMS,
INC., a Delaware corporation located at 6336 Wilshire Blvd., Los Angeles, CA
90048 (the "COMPANY"), and AUBREY McAULEY, an individual residing at 7811
Kincheon Ct., Austin, Texas, 78749 ("SUBCONTRACTOR") (collectively the
"PARTIES" and each a "PARTY").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as follows:
1. SUBCONTRACTED SERVICES. Company hereby retains Subcontractor to, subject to
Company's ("REASONABLE REQUEST"), provide software maintenance, support,
installation, and/or customization services (collectively, the
"SUBCONTRACTED SERVICES") to current Company customers as of the date of the
Employment Agreement, dated July 1, 2002 and such other Company customers as
may later be designated by the Company, as identified in Appendix 1 attached
hereto, as such may be amended from time to time by mutual agreement of the
Parties (the "SERVICED COMPANIES"), solely in the name of, and solely as an
agent of, the Company, pursuant and subject to, the terms and conditions of
certain license agreements and other written agreements entered into by and
between the Company and the Serviced Companies (collectively, the "COMPANY
AGREEMENTS"). Notwithstanding the foregoing, Serviced Companies shall also
include any customers of Company that Subcontractor has been providing
services to on behalf of Company as an employee at the time of termination
of his employment with Company and Company shall not be obligated to make a
Reasonable Request for any ongoing services prior to the Effective Date of
this Agreement. A Reasonable Request means the following: (a) the Company
must make the request in writing thirty (30) days prior to the commencement
of services unless waived by Subcontractor; (b) Subcontractor's
consideration for his performance of Subcontractor Services must be
reasonable; (c) Subcontractor has the knowledge and skills reasonably
required to perform the Subcontractor Services within the time frame that is
contemplated; and (d) the performance of Subcontractor's Subcontracting
Services are subject to Subcontractor's prior reasonable consulting
commitments, provided that Subcontractor provides written notice to the
Company of any such commitments in reasonable detail within one (1) day
after Subcontractor's acceptance of such engagements. Subcontractor agrees
to provide the Subcontracted Services within the time frame, and using the
knowledge and skill, reasonably necessary to permit the Company to meet its
obligations under the Company Agreements. The Company and the Subcontractor
recognize that: (a) Contractor's original cost and time estimates may be too
low due to unforeseen events, or to factors unknown to Subcontractor when
this Agreement was made; (b) Client may desire a mid-project change in
Subcontractor's services that would add time and cost to the project and
possibly inconvenience Subcontractor, or (c) Other provisions of this
Agreement may be difficult to carry out due to unforeseen circumstances.
2. TERM. This Agreement shall begin on the Effective Date and continue until
July 1, 2004, unless earlier terminated as provided for in this Agreement
(the "TERM").
7
3. CONSIDERATION. Except to the extent otherwise provided in the last sentence
of this Section 3, as full and complete payment for the Subcontracted
Services rendered hereunder (the "COMPENSATION"), Subcontractor shall be
entitled to receive all amounts collected by the Company from Customers of
the Company pursuant to any maintenance, support, software development,
customization, consulting or other similar agreements, entered into by the
Company and any one of its customers for Subcontractor Services provided by
Subcontractor. Any amounts collected by Company shall be paid to
Subcontractor within twenty-four (24) hours after the amounts collected have
been cleared by the Company's financial institution where the payments were
deposited. Upon Subcontractor's written request, Company will set up a
separate account on Subcontractor's behalf for deposit of all payments for
Subcontractor's Subcontractor Services made by Customers and upon which
Subcontractor shall have the right to receive and withdraw funds
("Subcontractor Services Account"). Company shall deposit any amounts
collected by Company into the Subcontractor Services Account within
twenty-four (24) hours after the amounts have been actually received.
Company shall not have the right to withdraw funds from said account without
Executive's express written permission, not to be unreasonably withheld.
Upon termination of this Agreement, all amounts earned under this
Subcontractor Agreement by Subcontractor shall be promptly paid. Except as
otherwise set forth in this Agreement, termination of this Agreement shall
not affect Subcontractor's rights to receive monies under Paragraph 4.5 of
the Employment Agreement, as Amended on August 5, 2002.
4. AUDIT. During the term of the Subcontractor Agreement, Executive shall be
entitled to, upon request, (a) receive copies of all invoices sent, and
collections made by the Company on account of the Subcontractor Services,
and/or (b) audit the Company's records regarding such invoices and
collections, once every month, at the Company's expense, provided that the
Company shall have thirty (30) days notice and the audit shall not have any
material impact on Company's ability to conduct its business operations. If,
and to the extent that, the Company incurs any costs and expenses,
including, without limitation, the imposition of any taxes or other levies,
but excluding overhead, salaries for accounting personnel, and other
expenses associated with the Company's ordinary business activities, in
connection with the transfer of all payments associated with the
Subcontractor Services, as demonstrated by written records of the Company
(such costs and expenses, collectively referred to hereinafter as the
"Specific Expenses"), such Specific Expenses shall be deducted from payments
transferred to Executive or reimbursed to the Company from funds deposited
in the Subcontractor Services Account.
5. LOCATION. Subcontractor will perform the Subcontracted Services at the
location(s) specified in the Company Agreement(s), or as otherwise agreed
upon in writing by and between the Company and any applicable Serviced
Company.
6. This Agreement consists of this Cover Page, the attached Exhibits A, B, and
C, and Appendix 1, all of which are incorporated herein by this reference
and made part of the Agreement as if fully set forth herein.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
Effective Date.
8
VERTICAL COMPUTER SYSTEMS, INC. AUBREY McAULEY
By: _______________________ Social Security Number: _________________
Title: ______________________ Signed: ________________________________
9
EXHIBIT A
STANDARD TERMS AND CONDITIONS OF SUBCONTRACTOR AGREEMENT
1. INDEPENDENT CONTRACTOR STATUS. Subcontractor is an independent contractor
and not a Company employee. Nothing herein creates or is intended to create
any employment relationship between Subcontractor and Company. Subcontractor
shall not be eligible to participate in or receive any benefit from any
benefit plan or program available to Company employees. Company shall not
provide workers' compensation coverage for Subcontractor. Subcontractor
shall comply with all applicable laws and regulations and shall have sole
responsibility for the payment of all applicable taxes and withholdings with
respect to Compensation paid to Subcontractor. The Subcontractor Agreement
is personal to Subcontractor and Subcontractor may not assign this Agreement
to any third party, except that Subcontractor has the right to hire
assistants to provide the services required by this Agreement, provided that
Subcontractor remain primarily liable for any services performed by such
assistants. Subcontractor retains sole and absolute discretion in the manner
and means of carrying out the Subcontracted Services, subject to the terms
and conditions of the Company Agreements, which Subcontractor agrees to be
bound by, in the provision of the Subcontracted Services.
2. REPORTS; MEETINGS. Subcontractor shall provide to Company written periodic
reports of his activities in a manner and format reasonably acceptable to
Company, and shall provide related work records, meeting reports and similar
documents as requested by Company. Subcontractor agrees to be available for
meetings with Company employees and contractors, and with employees and
contractors of the Serviced Companies.
3. REPRESENTATION BY SUBCONTRACTOR. Subcontractor represents and warrants that,
to the best of Subcontractor's knowledge, any and all information, practices
or techniques to be described, demonstrated, divulged or made known to the
Serviced Companies and/or to the Company during the performance of the
Subcontracted Services may be divulged without any obligation to, or
violation of, any right of others.
4. CONFIDENTIALITY. To govern the exchange of any and all confidential,
proprietary, and other similarly sensitive information, the Parties will
execute and be bound by the terms of the Confidentiality and Non-Disclosure
Agreement attached as Exhibit B to the Agreement.
5. OTHER EMPLOYMENT. During the Term, Subcontractor will not, without the prior
written consent of the Company, enter into any engagement or consulting
agreement or relationship with any third party if such engagement or
employment agreement or relationship that would require or permit
Subcontractor to make use of the intellectual property set forth in Exhibit
C (the "COMPANY INTELLECTUAL PROPERTY"), or the Confidential Information (as
defined in Exhibit B). This paragraph shall not apply to LIONMANE, provided
that these ENTITIES/COMPANIES have a valid license from the Company for the
foregoing use.
6. NO SOLICITATION. During the Term and for a period of one (1) year following
the expiration or earlier termination of the Agreement, Subcontractor will
not directly or indirectly solicit or induce or attempt to solicit or induce
any customer (including, without limitation, any of the Serviced Companies),
vendor, employee, sales representative, agent, contractor or subcontractor
of Company to terminate or adversely alter their employment, representation
or other business relationship or association with the Company.
7. ASSIGNMENT OF RIGHTS. Subcontractor hereby assigns and agrees to assign to
Company all of Subcontractor's rights in and to any work papers, reports,
documentation, prototypes and other materials (hereinafter, "Items")
generated by Subcontractor during the Term in any media, to the extent such
Items derive from or embody any Company Intellectual Property. Subcontractor
also hereby assigns and agrees to assign to Company all of Subcontractor's
rights in and to any discoveries, inventions and improvements (hereinafter
"Inventions"), whether patentable or not, made, conceived or suggested,
either alone or jointly with others by Subcontractor, whether in the course
of Subcontractor's engagement, with the use of Company's time, material or
facilities, provided that the Inventions are in any way within, or related
to, any Company Intellectual Property. Except as otherwise prohibited by
law, any Item or Invention directly derivative of Company's planned or
existing products or services, developed or under development during
Subcontractor's engagement and made, conceived or suggested by
Subcontractor, either alone or jointly with others, within one (1) year
following termination of Subcontractor's engagement under the Agreement or
any successor agreements, shall be irrebuttably presumed to have been made,
conceived or suggested in the course of Subcontractor's engagement and with
the use of Company's time, materials or facilities.
8. USE OF COMPANY PROPERTY. Upon execution by the parties of the Subcontractor
Agreement, Executive shall have the right to (a) use the Company
Intellectual Property and the Company Confidential Information to provide
the Subcontractor Services.
9. REMEDIES. Subcontractor acknowledges that the actual or threatened
disclosure of Confidential Information or any breach of the provisions of
Sections 4, 5, 6, 7 or 8 of this Exhibit A may give rise to irreparable
injury to Company that cannot be adequately compensated with monetary
damages, and Subcontractor agrees that Company may seek and obtain
injunctive relief against the breach or threatened breach of any of the
aforementioned paragraphs or specific enforcement of such provisions in
addition to any other legal or equitable remedies that may be available.
10. NO ASSIGNMENT. Except as otherwise expressly provided in the Agreement,
Subcontractor shall not assign or subcontract any right or obligation
arising under the Agreement without the Company's prior written consent. Any
assignment in violation of this Section 10 shall be void. The Agreement
shall be binding on and inure to the benefit of each Party's heirs,
executors, legal representatives, successors and permitted assigns.
11. TERMINATION FOR CAUSE. Either Party may with prior written notice terminate
this Agreement for cause in case of breach by the other Party that is not
cured within thirty (30) days of notice of such breach. Notwithstanding the
foregoing, the Company may, effective upon written notice, terminate this
Agreement for any of the following: a breach of Subcontractor's duties under
the Confidentiality and Non-Disclosure Agreement (Exhibit B); frequent and
unjustifiable refusal to provide Subcontractor Services; proven dishonesty
materially injurious to the Company or its business, operations, assets or
conditions (an "Adverse Effect); and gross violation of Company policy or
2
procedure after being warned, notified, or Subcontractor's acknowledged,
gross or willful misconduct, or willful neglect to act, which conduct or
neglect is committed or omitted by Executive in bad faith and had an Adverse
Effect. In the event of termination for cause by Company, Company shall not
be liable to Subcontractor for Compensation or damages of any kind
whatsoever, including direct, incidental or consequential damages, as well
as any monies under Paragraph 4.5 of the Employment Agreement, as Amended on
August 5 2002, incurred as a result of such termination, other than
Compensation payable for Subcontracted Services performed prior to
termination. Notwithstanding the first sentence of this Section 11, the
Subcontractor may, upon prior written notice to the Company, terminate this
Agreement for cause, if the Company fails to send payment to Subcontractor
within one (1) business day after the amounts collected have been cleared by
the Company's financial institution where the payments were deposited, or
fails to deposit any amounts collected by Company into the Subcontractor
Services Account, if applicable, within one (1) business day after the
amounts have been actually received, and if the Company does not cure such
breach within five (5) days of notice of such breach. In the case of
termination of this Agreement for cause by Subcontractor, termination of
this Agreement shall not affect Subcontractor's rights to receive monies
under Paragraph 4.5 of the Employment Agreement, as Amended on August 5,
2002.
12. NOTICES. Whenever notice is to be served hereunder, service shall be made
personally, by facsimile transmission, by overnight courier or by registered
or certified mail, return receipt requested. Notice shall be effective only
upon receipt by the Party being served, except notice shall be deemed
received seventy-two (72) hours after posting by the United States Post
Office, by method described above.
13. FURTHER ASSURANCES. From time to time, each Party hereto shall execute and
deliver such instrument(s) as may be reasonably necessary to carry out the
purposes and intent of the Agreement. In addition, Subcontractor shall
promptly disclose all Items and Inventions to Company and shall perform all
acts necessary or desirable to assist Company, at its expense, in obtaining
and enforcing the full benefits, enjoyment, rights and title throughout the
world in the Items and Inventions, pursuant to Section 7 above.
14. ENTIRE AGREEMENT. The Agreement (including Exhibits A, B, and C and Appendix
1 attached thereto) contains the entire agreement and understanding of the
Parties with respect to the subject matter hereof, and merges and supersedes
all prior agreements, discussions and writings with respect thereto, except
for the provisions of paragraphs 4.5 and 8 of the Employment Agreement, as
amended on August 5, 2002. No modification or alteration of the Agreement
shall be effective unless made in writing and signed by both Subcontractor
and Company.
15. SURVIVAL. The provisions of Sections 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14,
15, 16, 18, 19, and 20, as well as any other terms of this Exhibit A,
Exhibit B or Exhibit C that expressly extend or by their nature should
extend beyond termination or expiration of the Agreement, shall survive and
continue in full force and effect after any termination or expiration of the
Agreement.
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16. GOVERNING LAW. The Agreement shall be governed by California law, without
reference to its rules regarding conflicts of law. Any dispute arising out
of the Agreement will be submitted to a state or federal court sitting in
Los Angeles, California, which will have the exclusive jurisdiction
regarding the dispute and to whose jurisdiction and venue the Parties
irrevocably submit.
17. COUNTERPARTS. The Agreement may be executed in multiple counterparts, each
of which shall constitute an original and all of which together shall
constitute one instrument.
18. SEVERABILITY. If any term of provision of the Agreement, or the application
thereof to any person or circumstance, shall to any extent be found to be
invalid, void, or unenforceable, the remaining provisions of the Agreement
and any application thereof shall, nevertheless, continue in full force and
effect without being impaired or invalidated in any way.
19. WAIVER. No waiver of any term, provision or condition of the Agreement,
whether by conduct or otherwise, in any one or more instances, shall be
deemed to be or be construed as a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition of the Agreement.
4
EXHIBIT B
CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
This Confidentiality and Non-Disclosure Agreement (the "NDA") is entered
into on the Effective Date of the Agreement (as defined below), by and between
VERTICAL COMPUTER SYSTEMS, INC., a Delaware corporation located at 6336 Wilshire
Blvd., Los Angeles, CA 90048 (the "DISCLOSER"), and AUBREY McAULEY, an
individual residing at _____________________________ Austin, Texas _____ (the
"RECIPIENT") (collectively the "PARTIES" and each a "PARTY").
WHEREAS, Discloser possesses confidential information relating to its
business (including, but not limited to, WebOS/SiteFlash OMF technology), which
it desires to disclose to Recipient in connection with Recipient's engagement to
provide the Subcontracted Services to the Serviced Companies pursuant to the
Subcontractor Agreement entered into by Discloser and Recipient as of
_______________, 2002 (the "Agreement"), or which the Discloser has disclosed to
the Recipient pursuant to the Employment Agreement entered into by the Parties
on July 1, 2002, as amended on August 5, 2002;
WHEREAS, Recipient is willing to accept all such Discloser's information
confidentially subject to the terms of this NDA.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. "CONFIDENTIAL INFORMATION" means any information furnished or disclosed, in
whatever form or medium, by the Discloser to the Recipient relating to the
business of the Discloser, and includes, without limitation, information
regarding materials, the identity and any information related to such
Customers, equipment, tooling, know-how, contract terms, financial
information, business procedures, processes, techniques, methods, ideas,
discoveries, inventions, processes, developments, records, product designs,
source code, product planning, and trade secrets, all of which is deemed
confidential and proprietary.
2. The Recipient will use the Discloser's Confidential Information only in
connection with the Recipient's provision of Subcontracted Services pursuant
to the Agreement, and will make no use of the Discloser's Confidential
Information, in whole or in part, for any other purpose. The Recipient
agrees to refrain from disclosing the Discloser's Confidential Information
to third parties, unless the Discloser has given its prior written
authorization pursuant to the Company Agreements (as defined on the Cover
Page), the Agreement or otherwise. The Recipient further agrees to keep
confidential all of the Discloser's Confidential Information and take all
reasonable steps to preserve the confidential and proprietary nature of such
Confidential Information.
3. Notwithstanding any other provisions of this NDA, each Party acknowledges
that Confidential Information will not include any information that the
Recipient can demonstrate: (a) was publicly available at the time of
disclosure, or later became publicly available through no act or omission of
the Recipient; or (b) was rightfully received by the Recipient after the
Effective Date from a third party without any obligation of confidentiality.
4. In the event that the Recipient is requested or required by subpoena or
other court order to disclose any of the Discloser's Confidential
Information, the Recipient will provide immediate notice of such request to
the Discloser and will use reasonable efforts to resist disclosure, until an
appropriate protective order may be sought, or a waiver of compliance with
the provisions of this NDA granted. If, in the absence of a protective order
or the receipt of a waiver hereunder, the Recipient is nonetheless, in the
written opinion of his counsel, legally required to disclose the Discloser's
Confidential Information, then, in such event, the Recipient may disclose
such information without liability hereunder, provided that the Discloser
has been given a reasonable opportunity to review the text of such
disclosure before it is made and that the disclosure is limited to only the
Confidential Information specifically required to be disclosed.
5. The Discloser may elect to terminate further access to its Confidential
Information upon Recipient's breach of the NDA. Upon written request, the
Recipient will return to the Discloser all Confidential Information in any
form and promptly destroy any and all material or information derived from
the Confidential Information, including any copies or tangible objects
embodying the Confidential Information.
6. Nothing contained in this NDA will be construed as granting or conferring
any rights upon Recipient, by license or otherwise, express or implied, or
otherwise for any patents, copyrights, trademarks, know-how or other
proprietary rights of Discloser.
7. Regardless of the termination of any business relationship between the
Parties, this Agreement and the obligations of confidentiality and
nondisclosure contained herein will remain in full force and effect for five
(3) years after the expiration or earlier termination of the Agreement, or
such longer time as the Parties may agree in writing.
8. The Confidential Information protected by this NDA is of a special
character, such that money damages would not be sufficient to award or
compensate for any unauthorized use or disclosure of the Confidential
Information. The Parties agree that injunctive and other equitable relief
would be appropriate to prevent any such actual or threatened unauthorized
use or disclosure. The remedy stated above may be pursued in addition to any
other remedies available at law or in equity, and the Recipient agrees to
waive any requirement for the securing or posting of any bond in connection
with such remedy. In the event of litigation to enforce any provision
hereof, the prevailing Party will be entitled to recover all costs,
including his or its reasonable attorneys' fees and costs, incurred in
connection with the litigation.
9. This NDA is to evidence the Recipient's agreement to maintain the
confidentiality of the Discloser's Confidential Information, and will not
constitute any commitment or obligation on the part of either Party to enter
into or continue any specific contractual arrangement of any nature
whatsoever.
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10. The Discloser does not make any representations or warranties as to the
accuracy, completeness or fitness of a particular purpose of any information
disclosed to the Recipient hereunder. Neither the Discloser nor its
representatives will have any liability or responsibility to the Recipient
(except as pursuant to this NDA or any applicable provision in the Company
Agreements (as defined in the Cover Page)) or to any other person or entity
resulting from the use of any information so furnished or otherwise
provided.
11. California law will govern the interpretation of this NDA, without reference
to rules regarding conflicts of law. Any dispute arising out of this NDA
will be submitted to a state or federal court sitting in Los Angeles,
California which will have the exclusive jurisdiction regarding the dispute
and to whose jurisdiction and venue the Parties irrevocably submit.
12. No waiver of any term, provision or condition of this NDA, whether by
conduct or otherwise, in any one or more instances, will be deemed to be or
be construed as a further or continuing waiver of any such term, provision
or condition or as a waiver of any other term, provision or condition of
this NDA.
13. If any provision of this NDA is determined by any court of competent
jurisdiction to be invalid or unenforceable, such provision shall be
interpreted to the maximum extent to which it is valid and enforceable, all
as determined by such court in such action, and the remaining provisions of
this NDA will, nevertheless, continue in full force and effect without being
impaired or invalidated in any way.
14. This NDA, the Agreement, Exhibit A and C and Appendix 1 attached to the
Agreement, together constitute the Parties' entire agreement with respect to
the subject matter hereof and supersede any and all prior statements or
agreements, both written and oral. This NDA may not be amended except by a
writing signed by the Parties.
IN WITNESS WHEREOF the Parties have caused this NDA to be executed by their duly
authorized representatives.
VERTICAL COMPUTER SYSTEMS, INC., a Delaware AUBREY McAULEY, an individual
Corporation
By: _______________________ ____________________________
Title:_______________________
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EXHIBIT C
COMPANY INTELLECTUAL PROPERTY
COMPANY INTELLECTUAL PROPERTY SHALL INCLUDE:
SOLUTIONS BASED ON WEBOS/SITEFLASH OMF CORE TECHNOLOGY, INCLUDING BUT NOT
LIMITED TO:
o SiteFlash (incorporating WebOS, OMF), a general-purpose Web site content
management and ecommerce software solution.
o NewsFlash (incorporating WebOS, OMF), a newspaper Web site content
management software solution.
o ResponseFlash (incorporating WebOS, OMF), a Web site content management
and ecommerce software solution for emergency response applications.
o UniversityFlash (incorporating WebOS, OMF), a Web site content
management and ecommerce software solution for emergency response
applications.
o BizFlash (incorporating WebOS, OMF), a Web ecommerce software solution
for online storefronts.
SOLUTIONS BASED ON MLE CORE LANGUAGE, INCLUDING BUT NOT LIMITED TO:
o Emily, an XML scripting shell.
o XML Enabler Agent, an application for extracting database information
into an XML format
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APPENDIX 1
SERVICED COMPANIES
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