Non-competition Covenants and Protection of Trade Secrets and Other Intellectual Property in Employment Agreements

by Lee Carl Bromberg
Bromberg & Sunstein LLP
Boston, Massachusetts
April 23, 1996

Drafting Termination Documents
MCLE, Inc. 1996

EMPLOYMENT, NON-DISCLOSURE AND NON-COMPETITION AGREEMENT

AGREEMENT made as of the 1st day of June, 1995 by and between LABLAW, Inc., a Delaware Corporation with offices at 33 Apple Drive, Newton, Massachusetts ("LABLAW"), and Sam Sheepish of 25 Puddle Street, Watertown, Massachusetts (the "Employee"). For purposes of this Agreement, unless the context otherwise requires, the term LABLAW, shall include LABLAW and each of its subsidiaries.

RECITALS

The Employee desires to continue to be employed by LABLAW and LABLAW desires to continue to employ the Employee in accordance with the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the Company's agreement to continue to employ the Employee as set forth herein, and the granting of 1,200 shares of stock options under the Company's ISO Plan, and the mutual consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

Employment. The Employee is currently employed by LABLAW as Senior Scientist. LABLAW reserves the right, in its sole discretion, to change the Employee's title and responsibilities at any time.
Compensation. The Employee's current salary is $60,000.00. The Employee's salary shall be subject to periodic review and adjustment by LABLAW in its sole discretion. Payment of any bonuses will be at the sole discretion of LABLAW. LABLAW maintains certain benefit plans and programs for its employees. The Employee's eligibility for and participation in these plans are subject to the terms and conditions of each plan. LABLAW reserves the right to modify or terminate any plan or program at any time.
Loyalty and Best Efforts. The Employee agrees that he/she shall be a full-time employee, devoting his/her entire time, undivided loyalty and best efforts to the business of LABLAW. The Employee shall not during the term of his employment be engaged in any other occupation, professional or business activity. As a representative of LABLAW, the Employee further agrees to always conduct himself in accordance with the highest ethical and moral standards during both working and non-working hours. Attached to this Agreement as Appendices A and B, respectively, are LABLAW's "Conflicts of Interest Policy" and "Guidelines of Company Principles and Practices". By executing this Agreement, the Employee represents and warrants that he/she has reviewed carefully the Policy and Guidelines and agrees to abide by the Policy and Guidelines, as they may be updated and modified by LABLAW from time to time.
Term and Termination.

  (a) LABLAW may terminate the Employee's employment for cause at any time without prior notice if the Employee shall (i) commit fraud, theft, misappropriation, embezzlement, misrepresentation or the like, or (ii) materially violate any provisions of this Agreement, or (iii) be insubordinate or grossly incompetent in the course of his/her employment; or (iv) violate any provisions of LABLAW's Guidelines of Company Principles and Practices or Conflicts of Interest Policy, or any other published LABLAW policies or guidelines, as they may be amended from time to time.

  (b) LABLAW may terminate Employee's employment without cause upon twenty-eight (28) days written notice to the Employee. In such event, the Employee, if requested by LABLAW, shall continue to render his/her services and shall be paid his/her regular compensation up to the date of termination.

  (c) The Employee may resign his/her employment with LABLAW without cause at any time upon twenty-eight (28) days written notice to LABLAW. In such event, the Employee shall continue to render his/her services and shall be paid his/her regular compensation up to the date of termination.

  (d) The Employee's employment with LABLAW shall terminate immediately upon the Employee's death.
Protection of Proprietary Information.
  (a) LABLAW has developed or acquired materials and information (whether or not reduced to writing, patentable or protectable by copyright) relating to LABLAW's operating procedures, products, methods, service techniques, engineering and manufacturing data machines, devices, apparatus, "know-how", formulae, software, processes, plans, designs, specifications, trade secrets, company data regarding costs, profits, markets and sales, customer lists, plans for present and future research, development and marketing, and other proprietary information not available to the public (collectively "Proprietary Information") which gives it a special competence in its various fields of endeavor, all of which have been acquired at considerable Expense to LABLAW.

  (b) The Employee recognizes that LABLAW is engaged in a continuous program of research and development of such Proprietary Information. The Employee understands that as part of his/her employment he/she is expected to make contributions of value to LABLAW, including the development of Proprietary Information. He/She acknowledges that his/her employment creates a relationship of confidence and trust between him/herself and LABLAW with respect to information of a confidential nature which is discovered, made known to, or learned by him/her during the period of his employment, including Proprietary Information.

  (c) The Employee will not without the express authorization from an authorized LABLAW officer, during or after the term of his/her employment, disclose any Proprietary Information, or anything relating to it, to any person other than authorized LABLAW personnel. Nor shall the Employee use any such information for his/her personal benefit or disclose or use for his/her personal benefit any information furnished by a third party to LABLAW in confidence.

  (d) The Employee agrees that in the event of the termination of his/her employment for any reason, he/she will deliver to LABLAW and shall not take with him/her, all documents and materials of any nature pertaining to any Proprietary Information. Employee shall execute a certificate in the form of Appendix C, at the time of termination of employment confirming compliance with the requirements of this Section and other provisions of this Agreement relating to the treatment of Proprietary Information.
Assignment of Proprietary Information.
  (a) The Employee Agrees that he/she will promptly disclose to LABLAW, or its assigns, all discoveries, processes, software, formulae, data, know-how and techniques, whether or not patentable or protectable by copyright, made or conceived, first reduced to practice, or learned by him/her, either alone or jointly with others, during the period of his/her employment which (i) relate to or are useful in the business of LABLAW, or (ii) are conceived, made or worked on at the expense of, or during the Employee's normal working hours for, LABLAW or using any resources or materials of LABLAW, or (iii) arise out of tasks assigned to him/her by LABLAW, or (iv) are within the scope of his/her employment by LABLAW (collectively, "Proprietary Inventions").

  (b) All Proprietary Inventions shall be the sole property of LABLAW and its assigns, and LABLAW and its assigns shall be the sole owner of all patents, copyrights and other rights in connection therewith. In consideration of his/her employment by LABLAW and regardless of any change in the Employee's salary or the nature of the Employee's employment, the Employee hereby assigns to LABLAW, or its assigns, the Employee's entire right, title and interest in and to any and all Proprietary Inventions.

  (c) The Employee, at the expense of LABLAW, agrees to assist LABLAW and its assigns in every proper way to obtain and enforce patents, copyrights and other intellectual property rights on Proprietary Inventions in any and all countries. To that end, the employee agrees to execute all papers, and perform all acts necessary to make this Agreement effective as to any particular Proprietary Inventions, application for letters patent, and other rights and interests of LABLAW or its assigns, including the giving of testimony without expense to the Employee and without further compensation except as provided for in accordance with LABLAW's "Patent Awards Policy" as it may be amended from time to time, a copy of which is attached hereto as Appendix D and made a part of this Agreement by reference. The obligations of the Employee under this paragraph (c) shall continue beyond the termination of his/her employment with LABLAW.

  (d) As a matter of record, and in order to avoid disputes over the application of Sections 5 and 6, the Employee has attached to this Agreement, as Appendix E, a complete list of all inventions made, conceived, or first reduced to practice by Employee, alone or jointly with others, prior to his/her employment with LABLAW, that are not described in a publication or patent application in existence on the date of this Agreement, a nd that the Employee desires, and LABLAW agrees to exclude from the effect of this Agreement. If no such list is attached to this Agreement, he/she represents that he/she has no such inventions and improvements at the time of signing this Agreement.

  (e) If any application for any United States or foreign patent, copyright or other intellectual property rights related to or useful in the business of LABLAW shall be filed by or for the Employee within a period of one (1) year after the termination of his/her employment, the subject matter covered thereby shall be presumed to have been conceived during his employment with LABLAW.
Covenant Not to Compete.

(a) Non-Competition. The Employee recognizes that LABLAW is engaged in the research, development, manufacturing and marketing of proprietary products in the United States and throughout the world, and that it is of utmost importance to LABLAW to maintain the confidentiality of its Proprietary Information and preserve the good-will of its business. In order to safeguard that Proprietary Information and good-will, the Employee understands that it is a condition of his/her employment not to compete with LABLAW, in the United States or any other country, for a period of time following the termination of his/her employment, as set forth in further detail below.

(b) The Employee agrees that for a period of two years following the termination of his/her employment, he/she will not directly or indirectly, for his/her own account or for any other person, as agent, employee, officer, director, trustee, consultant, owner, partner, or shareholder, or any other capacity:
1. hire or attempt to hire or assist any other person in hiring or attempting to hire any employee of LABLAW; or
2. encourage or assist any other person in encouraging any director, officer, employee, agent, consultant or any other person affiliated with LABLAW to terminate or alter his/her or its relationship with LABLAW; or
3. encourage or assist any other person in encouraging any customer or supplier of LABLAW to terminate or alter its relationship with LABLAW; or
4. sell or market or assist any other person in selling or marketing any product or service that competes, directly or indirectly with any product or service manufactured, sold or under development by LABLAW at the time the Employee's employment with LABLAW is terminated; or
5. research, develop or manufacture or assist any other person in researching, developing or manufacturing any product or service that competes with any product or service conceived, manufactured, sold or under development by LABLAW at the time the Employee's employment with LABLAW is terminated.
(c) In order to assure that the Employee does not breach any of the foregoing provisions, the Employee agrees that for a period of two years following the termination of his/her Employment he will not accept employment with, advise, provide consulting services to or acquire any interest in (other than an investment interest of less than 5% of the total outstanding shares of a publicly traded company) any business that directly or indirectly competes with any product or service conceived, manufactured, sold or under development by LABLAW without first obtaining the written consent of LABLAW. LABLAW shall be permitted to withhold such consent in its sole discretion, unless the Employee and the prospective employer are able to provide LABLAW with assurances reasonably satisfactory to LABLAW in its sole discretion that the Employee will not be assisting the prospective employer in any of the prohibited endeavors listed in paragraph (b) above.

(d) The Employee has carefully read and considered the restrictions in this Section 7 and agrees that the restrictions are fair and reasonable and are reasonably required for the protection of the interests of LABLAW.
Conflicting Agreements. The Employee represents and warrants that he/she is free to enter into this Agreement, that the Employee has not made and will not make any agreements (oral or in writing) in conflict with this Agreement, and will not disclose to LABLAW, not use for LABLAW's benefit, any trade secrets or confidential information that is the property of any other party now or hereafter in the Employee's possession. The Employee represents that he/she has provided to LABLAW, copies of all employment, proprietary information and other similar agreements to which he/she is a party that are currently in effect.
Remedies. In order to avoid irreparable injury to LABLAW, in the event of any breach or threatened breach by the Employee of the provisions of this Agreement, LABLAW shall be entitled to an injunction restraining such breach. Nothing herein shall be construed as prohibiting LABLAW from pursuing any other remedies available to LABLAW for such breach or threatened breach, including the recovery of damages from the Employee. The Employee agrees that in the event that he/she breaches his/her duty of loyalty to Company or any of his/her covenants in Sections 5 through 7, in addition to any and all other remedies which LABLAW may have available to it, LABLAW will be entitled, at its election, to recover from the Employee (i) the value of anything belonging to LABLAW which the Employee uses in breach of such duty, or (ii) any benefit which the Employee receives as a result of his/her breach, or its proceeds, (iii) its reasonable attorney's fees incurred in enforcing this Agreement, and LABLAW shall also be entitled to recover from the Employee the amount of damages thereby caused. In the event of termination of the Employee's employment for breach of any of the covenants under this Employment Agreement, Employee agrees that he shall thereby forfeit all rights granted to him under any stock option, profit participation, bonus or deferred compensation arrangement of LABLAW then existing in which he/she participates, to the extent permitted by law.
Notices. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and hand delivered or if sent by registered mail to his/her last known residence in case of the Employee and to its principal place of business in the case of LABLAW.
Independence of Employee's Covenants. The covenants on the part of Employee to be performed under this Agreement shall be construed as agreements independent of any other provisions of this Agreement, and the existence of any claims or cause of action of Employee against LABLAW, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by LABLAW or its assigns of any of the Employee's covenants hereunder.
Waiver. The failure of LABLAW to insist upon strict compliance with any of the terms, covenants, or conditions hereof shall not be deemed a waiver of such terms, covenants, or conditions, nor shall any waiver or relinquishment of any right or power hereunder at any one or more times be deemed a waiver of relinquishment of such power or right at any other time or times.
Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited by or invalid under any such law, that provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or nullifying the remainder of that provision or any other provisions of this Agreement.
Benefit. Except as otherwise herein expressly provided, this Agreement shall inure to the benefit of and be binding upon LABLAW, its successors and assigns, and the Employee, his/her heirs, executors, administrators, and legal representatives, provided that the obligations of the Employee hereunder may not be delegated.
Construction. For purposes of this Agreement, unless the context otherwise requires, the term "person," shall include any individual, corporation, partnership, joint venture, association, joint-stock company, trust company, trust, unincorporated organization, government agency or entity or any subdivision thereof, or any other entity.
Governing Law: Consent to Jurisdiction. This Agreement shall be construed as a Massachusetts contract under seal and shall be interpreted in accordance with the internal laws of the Commonwealth of Massachusetts. The Employee hereby agrees to the jurisdiction of the courts in the Commonwealth of Massachusetts and waives any objection based upon forum non conveniens with respect to any action instituted concerning any dispute arising in connection with this Agreement or the employment of the Employee by LABLAW. LABLAW shall have the right to bring any action or proceeding against the Employee in the courts of any other jurisdiction LABLAW reasonably deems necessary to rely on its rights under this Agreement.
Entire Agreement. This instrument contains the entire Agreement of the parties. It may not be changed orally, but only by an agreement in writing signed by the parties.

IN WITNESS WHEREOF, this Agreement has been executed under seal on the date and year first above written. This Agreement has been executed under seal as of the date and year first above written.

EMPLOYEE

By:_______________________

Witness

LABLAW, INC.

By:_______________________
Corporate Officer (Title)

Witness

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