EXHIBIT 10.9
INCENTIVE COMPENSATION AGREEMENT
This Agreement is entered into between UTILX CORPORATION (the
"Company") and XXXX XXXXXXX ("Employee") as of October 29, 1999.
RECITALS
1. Employee has been working on a concept for a new product line for the
Company currently called "Trynergy/FE."
2. Trynergy/FE is in the process of being patented, with Employee as inventor
or co-inventor.
3. As provided in Employee's Employment Agreement with the Company dated as of
September 1, 1993 ("Employment Contract"), Employee has assigned all his
right, title and interest in Trynergy/FE including its related patent
applications.
4. The Company believes Trynergy/FE represents a promising growth and earnings
potential for the Company and wants to provide Employee with an economic
incentive to complete development and participate in the marketing of
Trynergy/FE, including related products and services.
In consideration of the foregoing and other valuable consideration, the
parties agree as follows:
AGREEMENT
1. INCENTIVE COMPENSATION. In addition to other compensation Employee is
entitled to under his Employment Contract, Employee will earn an annual
bonus as incentive compensation for the development and marketing of
Trynergy/FE ("Incentive Compensation") for the Company fiscal years, and in
the amounts, indicated in the table below. The amount of the Incentive
Compensation for any fiscal year is expressed as a percentage of gross
revenues, as determined in accordance with GAAP, received by the Company
(either directly or through any of its subsidiaries) from two categories of
fees: (i) royalty, franchise or other type of licensing fees ("Licensing
Fees") and (ii) fees other than Licensing Fees ("Non-licensing Fees"). The
parties intend that gross revenue from fees will include revenues received
by the Company from any sale or other transfer of products or services
related to Trynergy/FE, including any disposition of the Company's
Trynergy/FE business to another party.
% of Gross Revenue % of Gross Revenue
Company Fiscal Year from Licensing Fees from Non-Licensing Fees
------------------- ------------------- -----------------------
2000 5% 2.5%
2001 4% 2.0%
2002 3% 1.5%
2003 2% 1.0%
2004 and thereafter 1% 0.5%
2. PAYMENT DATE. For each Company fiscal year, the Company will pay Employee
all earned Incentive Compensation, less required withholding amounts,
within 90 days of the end of such fiscal year.
3. TERM AND TERMINATION OF AGREEMENT. This Agreement is effective as of the
date of this Agreement and will terminate on the earlier of (i) the
expiration date for the last Trynergy/FE-related patent that bears
Employee's name as inventor or co-inventor, or (ii) upon Employee's
termination of employment with the Company either by the Company for Cause
(as defined in Section 8.8 of the Employment Contract) or by
Employee without Good Reason (as defined in Section 8.9 of the Employment
Contract), or (iii) on the date that is 36 months following Employee's
termination of employment with the Company either due to Employee's death
or Total Disability (as defined in Section 8.4 of the Employment Contract).
4. DISPUTE RESOLUTION. Should a dispute arise between the parties regarding
the application of the Incentive Compensation calculation to a Company
product or procedure, the parties will designate, by mutual agreement, a
single patent counsel to resolve the dispute. Such counsel will resolve the
dispute by determining whether or not such Company product or procedure is
within the scope of the Trynergy/FE-related patents listed in Appendix A
attached to this Agreement, as this Appendix may be supplemented by the
parties from time to time. If the parties are unable to agree on such
counsel, or for any other dispute arising under this Agreement, the parties
will submit the dispute to arbitration as follows:
At either party's request, the parties will submit any such dispute,
controversy, or claim arising out of or in connection with, or
relating to, this Agreement or any breach or alleged breach of this
Agreement, to arbitration under the American Arbitration Association's
("AAA") rules then in effect for resolution of employment disputes (or
under any other form of arbitration mutually acceptable to the
parties). A single arbitrator agreed on by the parties will conduct
the arbitration. If the parties cannot agree on a single arbitrator,
the parties shall request a list of seven (7) arbitrators from AAA,
and shall alternately strike names until one arbitrator is left. This
arbitrator will hear the dispute. The arbitrator's decision is final
(except as otherwise specifically provided by law) and binds the
parties, and either party may request any court having jurisdiction to
enter a judgment and to enforce the arbitrator's decision. The
arbitrator will provide the parties with a written decision naming the
substantially prevailing party in the action. This prevailing party is
entitled to reimbursement from the other party for its costs and
expenses, including reasonable attorneys' fees. All proceedings will
be held at a place designated by the arbitrator in King County,
Washington. The arbitrator, in rendering a decision as to any state
law claims, will apply Washington law as required under Section 6 of
this Agreement.
5. ASSIGNMENT. This Agreement is personal to the Executive and shall not be
assignable by the Executive. The Company may assign its rights hereunder to
(i) any corporation resulting from any merger, consolidation or other
reorganization to which the Company is a party or (ii) any corporation,
partnership, association or other person to which the Company may transfer
all or substantially all of the assets and business of the Company existing
at such time. All the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns.
The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all the
business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean UTILX Corporation
and any successor to its business and/or assets as aforesaid which assumes
and agrees to perform this Agreement by operation of law, or otherwise.
6. APPLICABLE LAW. This Agreement shall be governed by the laws of the State
of Washington without regard to any rule governing conflicts of law.
UTILX CORPORATION
/s/ Xxxxxxx X. Xxxxxxxxx /s/ Xxxx Xxxxxxx
----------------------------------- ---------------------------
By: Xxxxxxx X. Xxxxxxxxx XXXX XXXXXXX
Title: Chairman and CEO
APPENDIX A
LIST OF TRYNERGY/FE RELATED PATENTS
-------------------------------- ---------------------- -------------------------- --------------------------
Application or U.S. COJK File
Patent Number Application Date Description Designation
-------------------------------- ---------------------- -------------------------- --------------------------
09/390,967 07-Sep-99 Flow-through cable UTLX-1-14214
60/155,279 11-Oct-99 Connectors, Splices and UTLX-1-14213
Terminators for
Flow-through cables
Flow-through wire rope UTLX-1-14350
-------------------------------- ---------------------- -------------------------- --------------------------
Agreed and Acknowledged on
on October 29, 1999
UTILX CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx /s/ Xxxx Xxxxxxx
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Xxxxxxx Xxxxxxxxx, President XXXX XXXXXXX
