Fill and Sign the Employee Property Form

EMPLOYEE INTELLECTUAL PROPERTY AGREEMENT BY and BETWEEN: N(2)H(2), INC. (the "COMPANY"), a Washington corporation and ERIC H. POSNER ("EMPLOYEE"). In the course of employment with the Company, Employee has had and/or will have access to information, products, processes, tools, know-how and other intellectual properties that are confidential, proprietary or licensed to the Company. There is currently an understanding and agreement between the Company and Employee regarding these confidentiality and intellectual property matters, which was documented in part by a certain N(2)H(2) Employee Confidentiality and Nondisclosure Agreement. As a condition of Employee's continuing employment, the parties now wish to have this Agreement supersede and replace all previous agreements of the parties on matters of confidentiality and intellectual property rights. NOW THEREFORE, in consideration of the employment relationship between the parties, the parties agree, promise and covenant to each other as follows: 1. SCOPE OF AGREEMENT. (a) The parties acknowledge and agree that this Agreement addresses only certain issues relating to patent, copyright, trade secret and other intellectual property rights. This Agreement is not a contract of employment and does not address or modify any of the terms and conditions of employment, including but not limited to duration of employment, compensation, non-compete covenants, and other employment-related issues. (b) This Agreement and Executive Employment Agreement constitute the entire agreement of the parties with respect to the subject matter thereof, and may not be modified, amended or waived except in a writing signed by both parties. In the event of any inconsistency between this Agreement and Executive Employment Agreement, the provisions of this Agreement will control. This Agreement shall be effective as of the beginning of the employment relationship between the parties. 2. DEFINITIONS. For purposes of this Agreement, the capitalized terms set forth below shall have the meanings assigned to them as follows: (a) "Development" shall mean any information, product, process, invention, discovery, technique, idea, design, work of authorship, improvement or modification, in whatever form and whether or not patentable, copyrightable or otherwise protectable under law, that is created, 14 15 made, conceived, developed, expressed in tangible form or reduced to practice by Employee (either alone or with others). (b) "Protected Development" shall mean any Development that: (i) results from the use of equipment, supplies, facility, Protected Information and any property or proprietary rights (whether tangible or intangible) that are owned, leased or contracted for by the Company; (ii) relates directly to the business of the Company, or to the Company's actual or demonstrably anticipated research or development; or (iii) results from any work or services performed by Employee for the Company. In particular, Protected Development shall include, without limitation, any computer design, programming and documentation; source code and object code for software; database, model, documentation, and information to whose creation Employee contributes during the course of Employee's employment by the Company. (c) "Protected Information" shall mean all information, in whatever form or format, that is identified by the Company or is reasonably understood as private or confidential, or that qualifies for protection under law as a trade secret or proprietary information of the Company, its affiliated companies, its suppliers or its customers. Protected Information shall include, but is not limited to: (i) inventions, discoveries, ideas, techniques, drawings, specifications, models, database, software, documentation; (ii) customer-related information; (iii) sales and marketing plans, projections and analysis; (iv) any and all information related to the business operations of the Company, its affiliated companies, its suppliers or its customers; and (v) any and all information provided to the Company by third parties which the Company is obligated to keep confidential. Notwithstanding the foregoing, Protected Information does not include any information that is or becomes part of the public domain through no act or failure to act on the part of Employee. 3. ASSIGNMENT OF INTELLECTUAL RIGHTS TO THE COMPANY. (a) Subject to the limitation of Subsection 3(b), Employee hereby grants, transfers and assigns to the Company all of the Employee's right, title, and interest in or to: (i) the Protected Developments; and (ii) any proprietary rights therefrom. Employee agrees that any copyrightable Protected Development, to the extent created by Employee within the scope of Employee's employment with the Company, shall be deemed to be a "work made for hire," pursuant to the United States Copyright Act (17 U.S.C. Section 101). (b) In compliance with Washington state law (RCW 49.44.140), Employee hereby acknowledges that Employee has been advised and notified by the Company via this Agreement that the Agreement does not apply to an invention for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on Employee's own time, unless: (i) the invention relates (A) directly to the business of the 15 16 Company, or (B) to the Company's actual or demonstrably anticipated research or development; or (ii) the invention results from any work performed by Employee for the Company. (c) Employee shall promptly disclose all Developments to the Company and keep records relating to the conception, tangible expression and reduction to practice of all such Developments. Employee acknowledges and agrees that this disclosure obligation applies to all Developments, whether or not they qualify as Protected Developments, for the purpose of determining rights of Employee and the Company in such inventions. Any and all disclosure records, to the extent related to a Protected Development, shall remain the sole and exclusive property of the Company, and the Employee shall surrender possession of such records to the Company upon request or upon any suspension or termination of the Employee's employment with the Company. (d) Employee shall render and provide the Company with all information, documentation and assistance, and shall sign and deliver all such assignments, affidavits, declarations and other documents that the Company may request to perfect, enforce, or defend any proprietary rights in or based on the Protected Developments. The Company shall pay reasonable compensation for such information, documentation and assistance if they are provided by Employee after any suspension or termination of Employee's employment. (e) The Company, in its sole discretion, shall determine the extent of the proprietary rights, if any, to be protected in any Protected Development. 4. NONDISCLOSURE OF PROTECTED INFORMATION. (a) Unless otherwise specified in writing, Employee shall assume that any and all information disclosed by the Company to Employee, in whatever form, is Protected Information, whether or not designated as private or confidential. (b) During the period of employment and thereafter, Employee shall hold in trust and the strictest confidence any and all Protected Information. Employee shall not disclose any Protected Information to others without the prior written permission of the Company, or use any Protected Information for any purpose other than for the performance of services for the Company. In addition, Employee shall take all necessary precautions to prevent any person or entity with whom Employee comes into contact from acquiring, disclosing or using such Protected Information. (c) Employee hereby acknowledges and agrees that the obligations with respect to any particular Protected Information shall be in force and binding as long as such information qualifies as Protected Information under this Agreement, regardless of any suspension or termination of employment relationship between the parties, and regardless of any termination of this Agreement for any reason. (d) All Protected Information is the Company's sole and exclusive property. Upon request or upon any suspension or termination of Employee's employment, Employee shall promptly return and surrender to the Company all items and materials in Employee's possession or control, in 16 17 whatever form and medium and including any and all copies, which contain or embody any Protected Information. (e) Nothing contained in this Agreement shall be construed as granting to or conferring on Employee any proprietary right or interest in any Protected Information. (f) Unless otherwise agreed in writing, the Company shall be free to use and to disclose in any way it deems appropriate any information provided to the Company by Employee. Employee agrees not to disclose to the Company any information which is confidential or private to Employee or to any third party that Employee does not want so used or disclosed. 5. MISCELLANEOUS PROVISIONS. (a) Remedies. Employee acknowledges and agrees that any violation of this Agreement will cause irreparable harm for which the Company may not be fully or adequately compensated by recovery of monetary damages. Accordingly, in the event of any such violation or threatened violation, the Company shall be entitled to injunctive relief from a court of competent jurisdiction in addition to any other remedy available at law or in equity. (b) Attorney Fees. If any action at law or in equity is brought to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover, at trial and on appeal, in addition to any other relief that may be granted, reasonable amounts of legal, accounting and other professional fees, together with other allowable costs and expenses. (c) Applicable Law and Jurisdiction. The parties agree that this Agreement will be governed by the laws of the State of Washington, without regard to Washington choice of law principles. Law suits relating to this Agreement shall be brought in the appropriate court in the State of Washington, and the parties agree to submit to the jurisdiction of such court. (d) Amendment and Assignment. All modifications to this Agreement must be in writing, signed by the parties hereto. Except by operation of law, neither party shall assign or delegate its rights or duties under this Agreement without the prior written consent of the other party. (e) Independence of Provisions. Each provision herein shall be treated as a separate and independent clause, and the invalidity or unenforceability of any one clause shall in no way impair the validity or enforceability of any other clauses herein. (f) Successors and Assigns. This Agreement shall be binding on Employee's heirs, executors, estate administrators and legal representatives and shall be for the benefit of the Company, its successors or assigns. 17 18 IN WITNESS THEREOF, the parties hereby execute this Agreement. The undersigned has read and understood the foregoing and agrees to be bound thereby. EMPLOYEE: Signed: /s/ ERIC H. POSNER ----------------------------- Print Name: Eric H. Posner Date: September 8, 1999 The foregoing was executed by the Employee and accepted on behalf of the Company. N(2)H(2), INC.: Signed: /s/ DAVID ARNOLD ----------------------------- By: David Arnold Title: Vice President- Chief Operating Officer Date: September 8, 1999