EXHIBIT 10.8
ASSIGNED CONSULTANT SERVICES AGREEMENT FOR MICHAEL
MERGENTHALER RESTATED AS EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of January 1, 2002 (the "EFFECTIVE
DATE"), by and between CDEX-Inc., a Nevada corporation (the "COMPANY"), and
Michael Mergenthaler (the "EMPLOYEE").
Whereas a Consultant Services Agreement dated July 24, 2001 (the "CONSULTANT
SERVICES AGREEMENT"), among several named Consultants (including the Employee),
the Company and Dynamic Management Resolutions LLC ("DMR") currently is in
effect and provides for Employee to provide services to Company under certain
terms.
Whereas on January 1, 2002, that Consultant Services Agreement was amended to
allow assignment of the Consultant Services Agreement as related to any named
Consultant upon written approval of that Consultant and the Company.
Whereas, Employee and Company desire to have Employee provide services noted in
the Consultant Services Agreement directly to the Company as an employee of the
Company,
The undersigned covenant and agree as follows:
First, the obligations, rights and benefits of DMR in the Consultant Services
Agreement as related to Employee are hereby assigned to the Company. (By the
undersigned signature of the DMR representative, DMR reflects agreement with
this assignment.)
Second, the Employee and Company agree that as of the Effective Date note above,
Employee will provide service to Company as an employee pursuant to the terms of
the Consultant Services Agreement, whose terms have been amended in part.
Employee, Company and DMR agree that the terms stated below are the amended
Consultant Services Agreement as related to Employee.
1. EMPLOYMENT AGREEMENT. Subject to the terms and conditions set forth in this
Agreement, the Company agrees to employ the Employee, and the Employee accepts
employment with the Company, in accordance with the terms and provisions of this
Agreement.
2. TERM. This agreement shall remain in effect until terminated pursuant to the
termination provisions provided herein.
3. SERVICES OF THE EMPLOYEE. The Employee shall serve initially as the Manager
of Business Development and, as the needs of the Company dictate, in other
positions as directed
by the Company. The Employee shall faithfully perform such services for the
business and affairs of the Company (the "SERVICES"). The Employee shall devote
his best efforts and attention to the performance of the Services and shall
expend such time as may be required to perform the Services. The Employee shall
not perform services that are similar in nature to the Services for any other
person or entity for compensation.
4. PLACE OF PERFORMANCE. The Employee shall be based initially at such office
of the Company as the Company and the Employee shall determine, except for
reasonable travel on Company business. If the Company requires that the Employee
relocate his place of performance to a location more than 100 miles from the
then-current office, the Company shall pay or reimburse the Employee for the
reasonable moving and relocation expenses incurred by the Employee and his
family to establish a personal residence at the new location.
5. SALARY.
5.1. SALARY. The Company shall pay to the Employee a salary based on an
annual amount of $210,000 (the "SALARY"). The Company shall review the Salary on
an annual basis. The Salary shall be payable in equal monthly installments, or
in installments as required by applicable State law. Until January 1, 2003, to
the extent that the financial posture of the Company is such that paying the
full monthly installment to Employee would not be in the Company's best
interest, at the option of the Company monthly compensation in excess of $7,500
may be deferred until January 1, 2003 and paid in cash or paid in restricted
stock or stock options of the Company. Such stock of the Company shall be
subject to all applicable federal and state laws, rules and regulations related
to restricted stock. The Company shall impose no other restrictions in relation
to such restricted stock except for those that arise by application of federal
or state laws, rules or regulations relating to such restricted stock.
5.2 BONUS. At the discretion of Company, the Employee shall be eligible for
an annual performance bonus. Bonuses (including stock bonuses) may be
distributed based on Company performance and the Employee's role in that
performance.
5.3. BENEFITS. The Employee shall be entitled to receive such benefits as
the Company may make available to its employees from time to time. Nothing
contained in this Agreement shall prevent the Company, at any time or from time
to time, from effecting modifications in the benefits, including eliminating any
or all of such benefits.
5.4 VACATION; HOLIDAYS. The Employee shall be entitled to all public
holidays as are observed by the Company and vacation days in accordance with the
applicable vacation policies of the Company. The Employee shall take holidays at
a reasonable time or times for the Company.
5.5 EQUITY PARTICIPATION. Pursuant to the Consultant Services Agreement,
600,000 shares of restricted common stock of the Company (the "INITIAL STOCK")
have been issued to Employee, subject to the graduated repayment provisions set
forth below. The Employee agrees to comply strictly with all legal requirements
regarding the stock, including those related to
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distribution of the stock and restrictions associated with the stock.
5.5.1. REPAYMENT. Notwithstanding the remainder of the Section, if the
Employee's services to the Company are terminated because of death or disability
(defined as the inability to substantially perform the Services by reason of any
medically determined physical or mental impairment that is or will be a
permanent condition or one that will continue for at least three months), the
Employee has no obligation to repay any of the Initial Stock. The Employee shall
repay in accordance with the following repayment schedule part of the shares of
the Initial Stock (or other equivalent shares of the Company stock) if the
Employee's services are terminated prior to July 24, 2004 by the Company for
"Cause" or by Employee without "Good Reason" as those terms are defined in this
Section 5.5. In either event, then within sixty (60) days thereafter, Employee
shall repay to the Company a portion of that Initial Stock in accordance with
the following schedule.
(a) if termination occurs prior to January 24, 2002, the
Employee shall repay seventy percent (70%) of the Initial Stock;
(b) if termination occurs after January 23, 2002 but prior to
July 24, 2002, the Employee shall repay fifty percent (50%) of the Initial
Stock;
(c) if termination occurs after July 23, 2002 but prior to July
24, 2003, the Employee shall repay thirty percent (30%) of the Initial Stock;
and
(d) if termination occurs after July 23, 2003 but prior to July
24, 2004, Employee shall repay fifteen percent (15%) of the Initial Stock.
5.5.2 TERMINATION FOR CAUSE. Termination by the Company for "CAUSE"
shall be limited to any of the following:
(i) The conviction of the Employee of, or a plea of nolo contendere
by the Employee to, a felony;
(ii) The intentional fraud by the Employee on, or willful
misappropriation by the Employee of, funds or property belonging to or claimed
by the Company and exceeding $1000.00 in an aggregate amount;
(iii) Intentional misconduct by the Employee in connection with the
performance of duties, or the Employee's failure to perform the Services in the
best interests of the Company (including, without limitation, material breach by
the Employee in performance of the Services but not minor violations of rules
and policies of the Company) that substantially and adversely impacts the
Company;
(iv) The Employee's chronic use of alcohol, drugs or other similar
substances affecting work performance;
(v) The material breach by the Employee of the performance of any
material part of the Services or the material breach by the Employee of any
agreement that is referenced in Section 9 that substantially and adversely
impacts the Company; or
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(vi) The material breach by the Employee of any provision of this
Agreement that substantially and adversely impacts the Company.
5.5.3 TERMINATION FOR GOOD REASON. Termination by the Employee for "Good
Reason" shall be limited to any of the following:
(i) The occurrence of a material breach by the Company of any
provision of this Agreement that significantly and adversely impacts the
Employee;
(ii) A significant reduction or modification in the Services of
Employee that is inconsistent with Employee's title or position;
(iii) Removal of the current President, CEO, Chairman of the Board,
or Senior Vice President of Operations, that significantly and adversely impacts
Employee;
(iv) The approval of a plan by the Board of Directors of the Company
involving the dissolution of the Company that is not rescinded within thirty
(30) days after its approval; or
(v) The involuntary or voluntary filing for bankruptcy of the
Company that is not dismissed within ninety (90) days after the date of filing.
5.5.4 REPURCHASE RIGHTS. In the event that the Employee's employment is
terminated, then the Company shall have the right, but not the obligation, to
repurchase all or a part of the Initial Stock then owned by the Employee at a
price equal to fair market value, less any appropriate discounts for the
restrictive nature of, and the minority interest represented by, the Initial
Stock. In the event that the parties can not mutually agree on the fair market
value of the Initial Stock, the value shall be determined by arbitration in
accordance with the provisions of Section 12, except that the arbitrators shall
each be qualified appraisers having at least ten years experience in valuing
commercial businesses, similar in nature to that of the Company, in the
metropolitan Washington D.C area, and the decision of the arbitrator(s) shall be
final and conclusive on both parties.
5.5.5 COMPLIANCE. The Employee acknowledges that the issuance and/or
registration of the Company's stock must comply with all applicable laws and
regulations relating thereto. Accordingly, the Employee agrees that he shall
accept shares of the Company's stock subject to all applicable laws and
regulations, and shall provide and deliver to the Company all information,
certifications, and other documentation as may be requested by the Company as
part of the Company's compliance with any applicable laws and regulations
relating to the issuance and/or registration of any of the Company's stock,
including but not limited to the Initial Stock.
6. EXPENSES. The Company shall reimburse the Employee for all reasonable
business expenses incurred by the Employee that are authorized by the Company.
Reimbursement shall be made in accordance with the policies of the Company
related to reimbursable expenses.
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7. TERMINATION OF EMPLOYMENT. The Employee's services for the Company will
continue until terminated in accordance with the provisions of this Section.
Employment hereunder may be terminated (i) by either party upon two weeks prior
written notice (the "NOTICE OF TERMINATION"), or (ii) immediately upon the death
of the Employee. All Parties acknowledge that Employee is an employee at will.
The date given in the Notice of Termination as the last day of the Employee's
employment shall be deemed the "DATE OF TERMINATION". This Agreement shall
terminate on the Date of Termination except as otherwise provided in Section
13.4. The Company shall pay the Employee the then current Salary of Employee
through the Date of Termination and all other unpaid amounts, if any, to which
the Employee is entitled as of the Date of Termination, such as expenses
(Section 6).
8. TERMINATION OF EMPLOYMENT BEFORE JULY 24, 2004. If before July 24, 2004,
Company terminates Employee for other than "CAUSE" (defined in Section 5.5.2) or
Employee terminates for "GOOD REASON" (defined in Section 5.5.3), Company shall
pay to Employee severance compensation in accordance with the following
schedule:
8.1 If termination occurs before January 1, 2003, payment of an amount equal
to two years of the then current annual Salary and Company stock equal to three
times the amount of Initial Stock provided at the direction of Employee.
8.2 If termination occurs on or after January 1, 2003 but before July 24,
2004, payment of an amount equal to one year of the then current annual Salary
or the monthly Salary through July 2004 with a minimum of four months Salary,
whichever is less, and Company stock equal to 30% of the amount of Initial Stock
provided to Employee.
9. CDEX AGREEMENTS. As an express condition for the Company's agreement to
enter into this Agreement, and as a pre-condition to the effectiveness of this
Agreement, the Employee agrees to (i) keep the confidential and proprietary
information and the intellectual property of the Company confidential; (ii)
assign to the Company all of the ownership rights in and to any intellectual
property relating to the Company and its business that is developed, created, or
discovered during the term of this Agreement; and (iii) agree not to compete
with the Company and its business or solicit the Company's customers or
employees during the period of employment with the Company and for a period of
three (3) years thereafter. To further provide for the implementation of this
provision, the Employee shall execute a CDEX Non-disclosure and Confidentiality
Agreement and a CDEX Non-Compete and Non-Solicitation Agreement (jointly, the
"CDEX AGREEMENTS"), copies of which are attached hereto as Exhibit A, the terms
and conditions of which are specifically incorporated herein by reference. A
breach by the Employee of a provision in any of the CDEX Agreements shall be
deemed a material breach of this Agreement by the Employee.
10. OWNERSHIP OF INTELLECTUAL PROPERTY.
10.1. THE BUSINESS. The parties acknowledge that the Company is engaged in
the development, marketing and sale of certain proprietary technologies,
processes and related products in the areas of chemical detection, technical
processes, and technical/business services,
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and that the Company may also from time to time become or may intend to become
engaged in other business endeavors (individually and collectively, the
"BUSINESS"). The Company shall be deemed to intend to become engaged in a
business endeavor if it has devoted or expended any significant resources,
either financial or human resources, towards the proposed endeavor, either in
planning or implementing the undertaking of such planned endeavor.
10.2. THE INTELLECTUAL PROPERTY. In connection with this Agreement and the
performance of the Services, the Employee acknowledges that there may exist now
or may exist in the future trade secrets, confidential information, technical
information, know-how, inventions, patents, discoveries (whether or not
patentable), copyrights, trademarks, service marks, techniques, data, systems,
methods, processes, improvements, developments, enhancements, and modifications,
whether oral or written, or in recorded form, tangible or intangible, and other
proprietary rights, which are or may be conceived, developed, designed or
otherwise created, modified or improved by the Employee, in whole or in part, or
which the Employee may receive, produce, obtain, or learn about, in whole or in
part, in connection with the performance of the Services or relating in any way
or manner to, or arising out of, the Business and the operations of the Company
during the term of this Agreement, or which the Employee may develop or make
from or by reason of knowledge gained from employment (collectively, the
"INTELLECTUAL PROPERTY"). The Employee agrees that all rights, title and
interest in and to the Intellectual Property shall belong to the Company and
shall be considered as "work made for hire". The Employee shall make prompt and
complete disclosure from time to time to the Company of all Intellectual
Property developed by the Employee, either solely or in conjunction with others.
10.3. ASSIGNMENT OF RIGHTS TO INTELLECTUAL PROPERTY. The Employee hereby
assigns to the Company any and all right, title and interest that the Employee
has now or may have in the future in and to the Intellectual Property. The
Employee agrees to execute any instruments and to do all things reasonably
requested by the Company, both during and after the term of this Agreement, to
vest the Company with all ownership rights in the Intellectual Property. If any
Intellectual Property can be protected by copyrights, patents, trademarks, or
service marks, then such copyright, patent, trademark, or service mark, as may
be applicable, shall be owned solely, completely and exclusively by the Company,
and the Employee shall execute such assignments and other documents and provide
such assistance as the Company may reasonably request in order to protect the
Company's ownership of the Intellectual Property. The Employee hereby appoints
the Company as his attorney-in-fact to execute any document that the U.S. Patent
and Trademark Office, the U.S. Copyright Office, or any other similar
governmental or quasi-governmental entity in any state or foreign country shall
require in order to establish, protect, and record the Company's ownership of
all of the rights, title and interests in and to the Intellectual Property. This
appointment of the Company as the attorney-in-fact for the Employee to act
hereunder is irrevocable.
10.4. SURVIVORSHIP. The terms of Section 10 shall survive the termination of
this Agreement and shall continue until the later of (i) five (5) years after
the Date of Termination, or (ii) fifty (50) years after the Effective Date.
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11. DEFAULT. The Employee acknowledges that many of the provisions herein are of
a special and unusual character that have and will have a unique value to the
Company, the loss of which cannot adequately be compensated in damages in an
action at law. Any violation or attempted violation of any provisions of Section
9, Section 10 or any provisions of any of the CDEX Agreements by the Employee
shall be deemed to be a material breach of this Agreement. The Employee hereby
agrees to indemnify, defend and hold harmless the Company from any and all
claims, losses, actions, injuries, damages, fines, penalties, or other
liabilities, including but not limited to loss of profits and other economic
losses, attorneys' fees and court costs, resulting from or related to a material
breach of this Agreement by the Employee.
11.1. EQUITABLE RELIEF. The parties acknowledge that any damages incurred by
the Company as a result of any breach of Section 9, Section 10 or the breach of
any other material provision of this Agreement will be great and irreparable and
difficult to quantify. Without prejudice to the rights and remedies otherwise
available, and without the need for posting any bond or surety, the Company
shall be entitled to equitable relief, such as for an injunction or specific
performance, if the Employee should breach or threaten to breach any of the
provisions of this Agreement.
11.2. REMEDIES AVAILABLE. Subject to the requirement for arbitration under
Section 12, nothing herein shall be construed as prohibiting the Company from
pursuing any remedies, both federal and state, legal or equitable, available to
the Company for any breach or threatened breach by the Employee.
11.3. RECOVERY OF COSTS. In the event that any enforcement action is taken
by either party hereunder, including filing an action in court or in
arbitration, the prevailing party shall be entitled to recover from the losing
party its costs and expenses, including its reasonable attorneys' fees and court
costs.
12. ARBITRATION. Any failure to perform, controversy or claim arising out of or
relating to this Agreement or the breach, termination or validity thereof, other
than an action for equitable relief, shall be determined exclusively by
arbitration in accordance with the provisions of this Section 12 and in
accordance with the rules of the American Arbitration Association for
arbitrating commercial matters. The arbitration shall be held in Washington,
D.C., the surrounding metropolitan area of Maryland, or such other location as
the parties shall mutually agree. The arbitrators shall base their award on
applicable Maryland law and judicial precedent, and shall accompany their award
with written findings of fact and conclusions of law. The decision of the
arbitrators shall be binding on the parties, except that either party may appeal
the arbitrators' decision by filing an action to reconsider the decision of the
arbitrators in a court having jurisdiction hereunder. In any such action the
arbitrators' findings of fact shall be conclusive and binding on both parties
and the sole questions to be determined by the court shall be (i) whether or not
the arbitrators' decision was contrary to Maryland law and judicial precedent,
and (ii) if the court determines that the arbitrators' decision was contrary to
Maryland law and judicial precedent, then how the dispute shall be resolved
based on the arbitrators' findings of facts and Maryland law and judicial
precedent. The decision of the court as to the resolution of the dispute under
Maryland law and judicial precedent shall supercede the
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arbitrators' decision. Judgment upon the award rendered by the arbitrators, as
modified by the court, if applicable, may be entered in any court having
jurisdiction in accordance herewith.
12.1 SELECTION OF ARBITRATORS. An arbitrator shall be selected by each of
the parties, and the arbitrators shall mutually select another arbitrator to
serve with them so that there shall be an odd number of arbitrators.
Alternatively, the parties may agree to accept a single arbitrator to be
mutually agreed upon by the parties. Each person serving as an arbitrator
hereunder shall be a professional with excellent academic and professional
credentials who has had experience as an arbitrator and at least ten years
experience in the field of resolving commercial disputes in the Washington
Metropolitan area.
12.2 DISCOVERY. Each party shall, upon the written request of the other
party, provide the other with copies of documents relevant to the issues raised
thereby. Other discovery may be ordered by the arbitrators to the extent the
arbitrators deem additional discovery appropriate, and any dispute regarding
discovery, including disputes as to the need therefor or the relevance or scope
thereof, shall be determined by the arbitrators, which determination shall be
conclusive.
12.3 ARBITRATION EXPENSES. All expenses and fees of the arbitrator and
expenses for hearing facilities, stenographers, including reasonable attorneys'
fees and the costs of expert witnesses, and other expenses of the arbitrators
shall be borne by the non-prevailing party; provided, however, that the
arbitrators may allocate a portion of such expenses to the other party if the
arbitrators believe such a measure is justified by the conduct of the parties
during the arbitration.
12.4 CONFIDENTIALITY OF PROCEEDINGS. The arbitration proceedings conducted
pursuant hereto shall be confidential. Neither party shall disclose any
information about the evidence adduced by the other in the arbitration
proceeding or about documents provided by the other in connection with the
proceeding except in the course of a judicial, regulatory or arbitration
proceeding or as may be requested by a governmental authority. Before making any
disclosure permitted by the preceding sentence, the party intending to make such
disclosure shall give the other party reasonable written notice of the intended
disclosure and afford the other party opportunity to protect its interests. The
arbitrators, expert witnesses and stenographic reporters shall sign appropriate
nondisclosure agreements in order to effectuate this agreement of the parties as
to confidentiality.
12.5 EQUITABLE RELIEF. Notwithstanding anything herein to the contrary, any
action brought by the Company for injunctive relief or specific performance is
not subject to the requirements for arbitration hereunder, and may be sought in
any court having jurisdiction in accordance herewith without resorting to
arbitration.
13 MISCELLANEOUS.
13.1 NOTICES. All notices, demands, requests or other communications
required or permitted to be given or made hereunder shall be in writing and
shall be hand-delivered or shall be mailed such as to provide assurance of
delivery.
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13.2 REPRESENTATIONS. The Employee agrees to execute any proper oath or
verify any proper document required to carry out the terms of this Agreement.
The Employee represents that this Agreement has been duly executed and delivered
by the Employee and constitutes the valid and binding obligations of the
Employee; that the execution, delivery and performance of this Agreement by the
Employee will not violate any provision of any contract or other agreement,
including but not limited to a non-compete or non-disclosure agreement, to which
the Employee is a party or which purports to be binding upon the Employee; that
the Employee has carefully read and reviewed the provisions set forth herein,
and having done so he agrees that those provisions, including but not limited to
the provisions relating to the ownership of the Intellectual Property, the
non-disclosure of confidential information, and the non-competition and
non-solicitation requirements, are fair and reasonable and are reasonably
required for the protection of the legitimate business interests of the Company;
and that the Employee has had the opportunity to obtain counsel of his own
selection to review this Agreement on his behalf.
13.3 SEVERABILITY. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which shall remain in full force and
effect.
13.4 SURVIVAL. It is the express intention and agreement of the parties
hereto that the provisions of Sections 9, 10, and 12 hereof and the CDEX
Agreements shall survive the termination of this Agreement. In addition, all
obligations of the Employee to repay any shares of stock, if applicable, and all
rights of the Company to repurchase the Initial Stock shall also survive any
termination of this Agreement on the terms and conditions set forth herein.
13.5 ASSIGNMENT. The rights and obligations of the parties to this Agreement
shall not be assignable or delegable, except that the rights and obligations of
the Company hereunder shall be assignable and delegable in connection with any
subsequent merger, consolidation, sale of all or substantially all of the assets
of the Company or similar reorganization of a successor corporation.
13.6 BINDING EFFECT. Subject to any provisions hereof restricting
assignment, this Agreement shall be binding upon and shall inure to the benefit
of the parties and their respective heirs, devisees, executors, administrators,
legal representatives, successors and assigns.
13.7 AMENDMENT; WAIVER. This Agreement shall not be amended, altered or
modified except by an instrument in writing duly executed by the parties hereto.
Neither the waiver by either of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure of either of the
parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, shall thereafter be
construed as a waiver of any subsequent breach or default of a similar nature,
or as a waiver of any such provisions, rights or privileges hereunder.
13.8 HEADINGS. Section and subsection headings contained in this Agreement
are inserted for convenience of reference only, shall not be deemed to be a part
of this Agreement for
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any purpose, and shall not in any way define or affect the meaning, construction
or scope of any of the provisions hereof.
13.9 GOVERNING LAW. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of Maryland (but not
including the choice of law rules thereof). Any action filed in relation to this
Agreement and the performance of the parties hereunder shall be filed in the
appropriate state court or the U.S. District Court having jurisdiction over
Rockville, Maryland, the parties hereto waiving any other venue to which they
may be entitled by virtue of domicile or otherwise. Each of the parties hereto
waives a trial by jury in regard to any claims or disputes relating to this
Agreement.
13.10 ENTIRE AGREEMENT. This Agreement and the CDEX Agreements constitute
the entire agreement between the parties respecting the employment of the
Employee, there being no representations, warranties or commitments except as
set forth herein.
13.11 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or
have caused this Agreement to be duly executed on their behalf effective as of
the day and year first hereinabove written.
CDEX-Inc.
By: /s/ Malcolm H. Philips, Jr.
-----------------------------
Name: Malcolm H. Philips, Jr.
Title: President and CEO
Employee:
By: /s/ Michael Mergenthaler
-----------------------------
Name: Michael Mergenthaler
Dynamic Management Resolutions
By: /s/ Wade Poteet
-----------------------------
Name: Wade Poteet
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EMPLOYMENT AGREEMENTS
EXHIBIT A
1. CDEX Non-disclosure and Confidentiality Agreement, signed by the Company
and the Employee
2. CDEX Non-Compete and Non-Solicitation Agreement, signed by the Company
and the Employee
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