Personal Services Agreement between Quentra Networks, Inc. and Jerry Conrad

 THIS PERSONAL SERVICES AGREEMENT ("Agreement"), made as of this 19th day of October, 2000, is by and between QUENTRA NETWORKS, INC., a Delaware corporation (the "Company"), and JERRY CONRAD (the "Employee"). RECITALS WHEREAS, the Employee is willing to be employed by the Company upon the terms and conditions set forth in this Agreement; and WHEREAS, the provisions of this Agreement are a condition of Employee's being employed by the Company, of Employee's having access to certain of the Company's confidential business and technological information, and Employee's being eligible to receive certain salary, bonuses, perquisites and supplementary benefits at the Company. This Agreement is entered into, and is reasonably necessary to protect confidential information and customer relationships to which the Employee may have access, and to protect the goodwill and other business interests of the Company. NOW, THEREFORE, in order to set forth the terms and conditions of the Employee's employment with the Company and in consideration of the covenants and agreements of the parties herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. EMPLOYMENT SERVICES (a) Subject to the terms and conditions hereinafter set forth, the Company hereby employees the Employee as President of the Company's newly formed e-commerce division commencing on October __, 2000 and ending on the last day of the Term (as defined below). The Employee accepts such employment and agrees to perform all duties in a conscientious, reasonable and competent manner and to devote his reasonable best efforts to perform his duties pursuant to this Agreement and to further the business of the Company, as directed by the Board of Directors. Without further action of the Company, the Employee may engage in other business, consulting, financial and other activities during his employment hereunder subject to fulfilling his duties hereunder and provided that any such activities are insubstantial and do not include any active involvement in the management of any entity, other than Primary Knowledge, Inc., Predictive Data, Inc., HomeAccess MicroWeb, Inc. and HA Technology, Inc. ("HA"), and provided further that except for HA, no such activities involve entities that constitute a Competitive Business (as defined in Section 7). The Employee has disclosed in Schedule 1 attached hereto the names of his other business affiliations as of the date hereof and agrees to promptly notify the Company of any additional affiliations. (b) Employee agrees to comply with the terms and conditions of the standard Company Employee Proprietary Information and Inventions Agreement, which is annexed to this Agreement and referred to as ("Exhibit A") to this Agreement. -1-  2. TERM AND TERMINATION 2.1 TERM Subject to Section 2.2 hereof, the employment of the Employee under this Agreement will commence on October 19, 2000 (the "Effective Date") and continue until the occurrence of the first of the following: (a) October 19, 2005 (i.e., a term of five years); (b) The Employee's death; or (c) The Employee's illness, physical or mental disability or other incapacity resulting in the Employee's inability to effectively perform his duties under this Agreement for an aggregate of thirty (30) days during any period of six (6) consecutive months. The period beginning on the Effective Date and ending on the Termination Date is referred to herein as the "Term." 2.2 TERMINATION The Employee may be terminated prior to the expiration of the Term with or without "Cause" at the sole discretion of the Board of Directors. "Cause" shall include any of the following occurrences: (a) The Employee's conduct involving fraud or moral turpitude or dishonesty involving the Company's business; (b) The Employee's chronic absence from work other than by reason of illness, injury, vacation or business related travel, which continues after the Employee has received a written notice from the Company to halt such chronic absence; (c) Employee is indicted for, or convicted of, or pleads guilty or nolo contendere with respect to, theft, fraud, a crime involving moral turpitude, or a felony under federal or state law; (d) The Employee's conviction of any misdemeanor which is substantially related to the Employee's services hereunder; (e) The Employee's abuse of alcohol (whether or not on the job) after receiving a written notice from the Company to halt such usage or the Employee's conviction of a crime involving alcohol; (f) The Employee's use of illegal drugs or other illegal substance (whether or not on the job) after receiving a written notice from the Company to halt such usage or the Employee's conviction of a crime involving illegal drugs or other illegal substance, which -2-  impairs the Employee's ability to perform his duties under this Agreement or has an adverse effect (other than an insignificant effect) on the Company, its business or its relationship with any customer or supplier of the Company; (g) Conduct either within or outside the scope of the Employee's employment which has an adverse effect (other than an insignificant effect) on the Company, its business or its relationship with any customer or supplier of the Company; (h) A breach by the Employee of his obligations under Sections 8, 9 or 10 hereof; and (i) A material breach of any other provision of this Agreement by the Employee, following written notice and failure to cure within a reasonable time (which cure period shall be no less than five days after Employee's receipt of such notice). The Employee may resign and terminate this Agreement on five days prior written notice to the Company for no reason or any reason ("Voluntary Termination"). In addition, the Employee may terminate this Agreement if the Company has materially breached any provision of this Agreement or the Agreement and Plan of Merger and the Company has not cured such breach within a reasonable time (but no less than five days) after receipt of written notice of such breach ("Termination for Good Cause"). 2.3 EFFECT OF TERMINATION (a) If the Employee is terminated for "Cause" as defined above, or the Employee effects a Voluntary Termination, then this Agreement shall terminate and the Employee shall not be entitled to any unearned compensation or benefits under this Agreement as of the date of termination. If the Employee is terminated without "Cause" as defined above, or the Employee effects a Termination for Good Cause, then this Agreement shall terminate and the Employee shall nevertheless be entitled to six months of semi-monthly salary installments as set forth in Section 3.1 and the remaining First Year Bonus, up to a maximum of six months, as set forth in Section 3.2, provided that upon Employee's separation from employment, Company is authorized to deduct from Employee's wages or other monies due Employee any debts, other than debts forgiven in accordance with Section 6.2, or amounts owed to Company by Employee. (b) The Employee hereby acknowledges and agrees that all personal property, including, without limitation, all books, manuals, records, reports, notes, contracts, lists, files, disks and other media with Company information, blueprints, and other documents, or materials, or copies thereof, and equipment furnished to or prepared by Employee in the course of or incident to Employee's employment, belong to the Company and shall be promptly returned to the Company upon termination of Employee's employment. (c) For two (2) months after termination of Employee's employment, Employee agrees to fully cooperate with the Company in all matters relating to the winding up of pending work on behalf of -3-  the Company and the orderly transfer of work to other employees of the Company following any termination of Employee's employment. For two (2) years after termination of Employee's employment, Employee shall also cooperate in the resolution of any dispute, including litigation of any action, involving the Company that relates in any way to Employee's activities while employed by the Company. Such activities and all such activities shall be scheduled for mutually convenient times. (d) The Employee's obligations in Sections 7, 8, 9, 10, 11 and 13.5 hereof shall survive the termination of employment hereunder for any reason. 3. COMPENSATION 3.1 SALARY The Company agrees to pay the Employee for each full fiscal year of the term of this Agreement an annual salary, at a rate equal to $160,000 per year in accordance with the Company's normal payroll schedule, less all applicable tax withholdings for state and federal income taxes, FICA and other deductions as required by law and/or authorized by Employee. 3.2 BONUS Employee shall receive a cash bonus in an amount equal to $500,000, which amount shall be prorated over the first twelve months in accordance with the Company's normal payroll schedule (the "First Year Bonus"). In addition, Employee shall receive an additional bonus in an amount equal to $1,500,000, at such time as the Company has received a license fee or similar payment of at least $7,500,000 from Albertson's, Inc. (the "Albertson Bonus"). The Albertson Bonus shall be payable within fifteen business days after the month end in which the Company receives such payment from Albertsons, Inc. All bonus payments shall be less all applicable tax withholdings for state and federal income taxes, FICA and other deductions as required by law and/or authorized by Employee. 4. REIMBURSEMENT FOR EXPENSES The Company agrees to reimburse the Employee for all reasonable business expenses incurred by him in connection with the performance of his obligations under this Agreement, subject to established reimbursement policies of the Company in effect from time-to-time regarding expense reimbursement, including, without limitation, reasonable travel, entertainment, cell phone, long distance charges and other customary expenses the Employee incurs in the performance of his duties hereunder. 5. BENEFITS The Employee shall be entitled to the following benefits during the term of his employment under this Agreement, and shall be offered any additional benefits typically offered or provided any other executive officers of the Company. -4-  5.1 VACATION The Employee shall be allowed three (3) weeks of vacation per year during the term of this Agreement, with full pay and without loss of any other compensation of benefits, in accordance with established Company policies. The Employee shall coordinate the schedule of his vacations with other executives and the personnel of the Company at its affiliates so as to provide sufficient managerial and executive coverage for the Company's operations. 5.2 OTHER BENEFITS The Employee may receive such other benefits, if any, as the Board of Directors may from time-to-time make available to the Employee in the Board of Directors' sole discretion; provided, however, the Employee shall be eligible for any benefits offered to any other member of the Company's senior executive team on terms no less favorable that those offered to other members of the senior executive team. 5.3 PAYMENTS All cash payments due to the Employee hereunder shall be paid promptly (no later than two business days after the due date) in immediately available funds to the account specified by the Employee or by check made payable to the order of the Employee. 6. LOAN TO EXECUTIVE; FORGIVENESS 6.1 LOAN Concurrent with the Closing (as defined in the Agreement and Plan of Merger), Employee shall borrow from the Company, and Company shall loan to Employee the sum of $2,000,000 (Two Million Dollars) (the "Loan"). The Loan shall be made under the terms and conditions set forth in a promissory note of Employee (the "Promissory Note") and Pledge and Security Agreement of Marine Aircraft, a Nevada corporation, (the "Pledge") in the forms attached hereto as Exhibits B and C, respectively. Execution and delivery of the Promissory Note and the Pledge, and the closing of the transactions contemplated by the Agreement and Plan of Merger, shall be conditions to the Company's obligations to make the Loan to Employee. 6.2 FORGIVENESS As of each of the second, third and fourth anniversaries of the date of the Promissory Note, the Company shall forgive the installment of principal and interest then due under the Promissory Note as and to the extent provided in the Promissory Note. In the event (a) Employee is terminated by the Company without "Cause," (b) Employee terminates his employment hereunder for "Termination for Good Cause," (c) Employee dies prior to the fourth anniversary of the date of the Promissory Note, or (d) the Closing Price is equal to or less than $2 (two dollars) for twenty consecutive trading days, all of the outstanding principal and interest due on the Promissory Note shall be forgiven as set forth in the Promissory Note. -5-  7. DEFINITIONS As used in this Agreement, the following words have the meanings specified: (a) "Affiliate" shall mean the Company and any parent of the Company and any subsidiaries, direct or indirect, and sister corporations. (b) "Agreement and Plan of Merger" shall mean that certain Amended and Restated Agreement and Plan of Merger dated October 5, 2000 among the Company, HomeAccess MicroWeb, Inc., a California corporation, DQE Enterprises, Inc., a Pennsylvania corporation, Barbara Conrad and Employee. (c) "Board" shall mean the board of director of the Company. (d) As used in Sections 8, 9, 10 and 11 only, the term "the Company" shall include the Company and Affiliates. (e) "Competitive Business" means a business that is involved in or relates to any business in which the Company or an Affiliate is currently, or had been during the twelve (12) months prior to Employee's involvement with the subject business, actively engaging in or contemplating engaging in (as evidenced by inclusion in a written business plan or proposal disclosed to Employee). (f) "Confidential Information" means Proprietary Ideas and also information related to the Company's business, whether or not in written or printed form, not generally known in the trade or industry of which the Employee has or will become informed during the period of employment by the Company, which may include but is not limited to product specifications, manufacturing procedures, methods, equipment, compositions, technology, formulas, trade secrets, know-how, research and development programs, sales methods, customer lists, mailing lists, customer usage and requirements, software and other confidential technical or business information and data; provided, however, that Confidential Information shall not include any information which is in the public domain by means other than disclosure by the Employee or which the Employee must disclose by operation of law or legal or administrative process. (g) "Innovations" shall mean all developments, improvements, designs, original works of authorship, formulas, processes, software programs, databases, and trade secrets, whether or not patentable, copyrightable or protectable as trade secrets, that Employee by himself or jointly with others, creates, modifies, develops, or implements during the period of Employee's employment which relate in any way to the Company's business. The term Innovations shall not include Innovations developed entirely on the Company's own time without using the Company's equipment, supplies, facilities or Confidential Information, and which neither relate to the Company's business, nor result from any work performed by or for the Company. (h) "Invention" means inventions, designs, discoveries, improvements and ideas, whether or not patentable, including without limitation, upon the generality of the foregoing, novel or improved -6-  products, processes, machines, software, promotional and advertising materials, business data processing programs and systems, and other manufacturing and sales techniques, which either (a) relate to (i) the business of the Company as conducted from time-to-time or (ii) the Company's actual or demonstrably anticipated research or development, or (b) result from any work performed by the Employee for the Company. (i) "Moral Rights" shall mean any rights to claim authorship, to object to or prevent the modification of any such work of authorship, or to withdraw from circulation or control the publication or distribution of any such work of authorship. (j) "Proprietary Ideas" means ideas, suggestions, inventions and work relating in any way to the business and activities of the Company which may be subjects of protection under applicable laws, including common law, respective patents, copyrights, trade secrets, trademarks, service marks or other intellectual property rights. (k) "Termination Date" means the date that Employee's employment with the Company shall cease for any reason as set forth in Section 2 of this Agreement or such other date as determined by the Board. 8. DISCLOSURE AND ASSIGNMENT OF INVENTIONS The Employee agrees to disclose to the Company, and hereby assigns to the Company all of the Employee's rights in and, if requested to do so, provide a written description of, any Inventions conceived or reduced to practice at any time during the Employee's employment by the Company, either solely or jointly with others and whether or not developed on the Employee's own time or with the Company's resources. The Employee agrees that Inventions first reduced to practice within one (1) year after termination of the Employee's employment shall be treated as if conceived during such employment unless the Employee can establish specific events giving rise to the conception which occurred after such employment. Further, the Employee disclaims and will not assert any rights in Inventions as having been made, conceived or acquired prior to employment by the Company except such as are specifically listed at the conclusion of this Agreement. The Employee shall cooperate with the Company and shall execute and deliver such documents and do such other acts and things as the Company may request, at the Company's expense, to obtain and maintain letters patent or registrations covering any Inventions and to vest in the Company all rights therein free of all encumbrances and adverse claims. 9. CONFIDENTIAL INFORMATION (a) The Employee shall not disclose to the Company or induce the Company to use any secret or confidential information belonging to persons not affiliated with the Company, including any former employer of the Employee. In addition to all duties of loyalty imposed on the Employee by law, the Employee shall maintain Confidential Information in strict confidence and secrecy and shall not at any time, during or at any time after termination of employment with the Company, directly or indirectly, use, disclose, copy or duplicate or otherwise permit the use, disclosure or unauthorized copying or duplication of any Confidential Information of the Company, other than in connection with authorized activities conducted in the course of Employee's employment at the -7-  Company for the benefit of the Company or with the written consent of the Board. Employee agrees to take all reasonable steps and precautions to prevent any unauthorized disclosure, use, copying or duplication of Confidential Information. The Employee shall carefully preserve any documents, records, tangible data relating to Inventions or Confidential Information coming into the Employee's possession and shall deliver the same and any copies thereof to the Company upon request and, in any event, upon termination of the Employee's employment by the Company. (b) Employee agrees to promptly disclose, in writing, all Innovations to the Company. Employee further agrees to provide all assistance requested by the Company, at its expense, in the preservation of its interests in any Innovations, and hereby assigns and agrees to assign to the Company all rights, title and interest in and to all worldwide patents, patent applications, copyrights, trade secrets and other intellectual property rights or "Moral Rights" in any Innovation. 10. NON-SOLICITATION (a) The Employee agrees that he will not, during the one-year period following termination of his employment with the Company, be connected in any way with the solicitation of any then current or potential (defined as persons or companies with pending quotes to or from the Company) customers or suppliers of the Company if such solicitation is likely to result in a loss of business for the Company. (b) The Employee agrees that he will not, during the one year period following termination of his employment with the Company, solicit for employment, employ or engage as a consultant any person who had been an employee of the Company at any time in the two year period prior to the Employee's termination of employment with the Company. (c) Participate in the inducement of or otherwise encourage Company employees, customers, or vendors to breach, modify, or terminate any agreement or relationship that they have with the Company. (d) Participate voluntarily with or provide assistance or information to any person or entity that is involved in negotiations with the Company involving a contract or services to be rendered by the Company; or a potential or existing business or legal dispute with the Company, including, but not limited to, litigation, except as may be required by law. (e) In the event the covenants set forth in this Section 9 are found to be unenforceable or invalid by reason of being overly broad, the parties hereto intend that such covenants shall be limited to such scope, geographic area and duration as shall make such covenants valid and enforceable. 11. ENFORCEMENT OF SECTION 8, 9 AND 10 Recognizing that compliance with the provisions of Sections 8, 9 and 10 of this Agreement is necessary to protect the goodwill and other proprietary interests of the Company, and that breach of the Employee's agreements thereunder will result in irreparable and continuing damages to the Company for which there will be no adequate remedy at law, the Employee hereby agrees that in the event of any breach of such agreements, the -8-  Company shall be entitled to seek injunctive relief and such other and further relief, including damages, as may be proper. 12. LAWS, REGULATIONS AND CONTRACTS The Employee agrees to comply, and to do all things necessary for the Company to comply, with all federal, state, local and foreign laws and regulations which may be applicable to the business and operations of the Company, and with any contractual obligations, including, without limitation, confidentiality obligations, which may be applicable to the Company or Employee under any contracts between the Company and its customers, suppliers or third parties. 13. MISCELLANEOUS 13.1 AMENDMENT AND MODIFICATION The Company (by action of the Board) and the Employee may amend, modify and supplement this Agreement only in such manner as may be agreed upon by the Company and the Employee in writing. 13.2 ENTIRE AGREEMENT This Agreement embodies the entire agreement between the parties hereto with respect to the employment relationship created hereby and supersedes and replaces any prior agreements pertaining to employment between the Employee and the Company. There have been and are no agreements, representations or warranties between the parties other than those set forth or provided for herein relating to such employment relationship. 13.3 ASSIGNMENT This Agreement shall not be assigned by the Employee without the written consent of the Company. Any attempted assignment without such written consent shall be null and void and without legal effect; provided, however, nothing herein shall prevent the Employee from assigning his rights to payment hereunder to any third company in full compliance with all state and federal laws. This Agreement may be assigned by the Company to a successor corporation or a good-faith purchaser of the Company's stock or assets only in connection with a sale of all or substantially all of the Company's assets or as a result of a merger or other business combination involving the Company and any such assignment shall not terminate or modify this Agreement, except that the employing party to which the Employee shall have been transferred shall, for the purposes of this Agreement, be construed as standing in the same place and stead as the Company as of the date of the assignment. 13.4 BINDING Subject to Section 13.3 hereof, this Agreement shall be binding upon and insure to the benefit of the respective parties hereto and their successors, assigns, heirs, executors, administrators and personal representatives. The parties hereto shall be entitled, at their option, to the remedy of -9-  specific performance to enforce any of the provisions of this Agreement. 13.5 ARBITRATION (a) The Company and the Employee mutually agree that any controversy or claim arising out of or relating to this Agreement or the breach thereof, or any other dispute between the parties relating in any way to Employee's employment with the Company or the termination of that relationship, including disputes arising under the common law and/or any federal or state statutes, laws or regulations, shall be submitted to mediation before a mutually agreeable mediator, which cost is to be borne equally by the parties. In the event mediation is unsuccessful in resolving the claim or controversy, such claim or controversy shall be resolved exclusively by binding arbitration. The claims covered by this Agreement ("Arbitrable Claims") include, but are not limited to, claims for wages or other compensation due; claims for breach of any contract (limited to this Agreement) or covenant (express or implied); tort claims; claims for discrimination (including, but not limited to, race, sex, religion, national origin, age, marital status, medical condition, or disability); claims for benefits (except where an Employee benefit or pension plan specifies that its claims procedure shall culminate in an arbitration procedure different from this one), and claims for violation of any federal, state, or other law, statute, regulation, or ordinance, except claims excluded in the following paragraph. The parties hereby waive any rights they may have to trial by jury in regard to Arbitrable Claims. (b) Claims Employee or the Company may have regarding Workers' Compensation or unemployment compensation benefits and the noncompetition provisions of this Agreement are not covered by the arbitration and mediation provisions of this Agreement. Claims Employee or the Company may have for violation of the proprietary information provisions of this Agreement are not covered by the arbitration and mediation provisions of this Agreement. (c) Arbitration under this Agreement shall be the exclusive remedy for all Arbitrable Claims. The Company and Employee agree that arbitration shall be held in or near Los Angeles, California, and shall be in accordance with the then-current Employment Dispute Resolution Rules of the American Arbitration Association, before an arbitrator licensed to practice law in California. The arbitrator shall have authority to award or grant both legal, equitable, and declaratory relief. Such arbitration shall be final and binding on the parties. The Federal Arbitration Act shall govern the interpretation and enforcement of this Section pertaining to Alternative Dispute Resolution. 13.6 AGREEMENT SEVERABLE; WAIVER This is a severable Agreement and in the event that any part of this Agreement shall be held to be unenforceable, all other parts of this Agreement shall remain valid and fully enforceable as if the unenforceable part or parts had not been included herein. No waiver of any provision of this Agreement shall be binding unless executed in writing by the party to be bound hereby. No waiver of a breach of any of the provisions of this Agreement shall be deemed to be or shall constitute a waiver of a breach -10-  of any other provision of this Agreement, whether or not similar, nor shall such waiver constitute a continuing waiver of such breach unless otherwise expressly provided. No failure or delay in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. 13.7 USE OF LIKENESS For so long as Employee is employed by the Company or an Affiliate, Employee authorizes the Company or such affiliate to use, reuse and to reasonably grant others the right to use and reuse without additional compensation, Employee's name, photograph, likeness (including caricature), voice and biographical information and any reproduction or simulation thereof in any media now known or hereafter developed, for valid business purposes of the Company or such Affiliate. 13.8 PROPERTY OF OTHERS Employee will not bring to the Company or use in the performance of his duties any documents or materials of a former employer that are not generally available to the public or that have not been legally transferred to the Company. 13.9 NOTICES For purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows: If to EMPLOYEE, to: JERRY CONRAD 9500 Toledo Way Irvine, California ###-###-#### Telephone: (949) 588-5120 Facsimile: (949) 588-5182 If to COMPANY, to: Quentra Networks, Inc. Attn: Timothy G. Atkinson, General Counsel 1640 S. Sepulveda Blvd., Suite 222 Los Angeles, CA 90025 Telephone: Facsimile: or to such other address as either party may have furnished to the other in writing in accordance herewith except that notices of a change of address shall be effective only upon receipt. -11-  13.10 AFFILIATED PARTIES The Employee hereby represents to the Company that he has ownership interests in the companies or entities listed on Schedule 1 attached hereto which may from time to time enter into transactions or other business relationships with the Company. The Employee hereby agrees he will update Schedule 1 immediately if there are changes. No contract, transaction or other business relationship involving the Company and any such company or entity affiliated with Employee as of the date of such proposed contract, transaction or business relationship may be authorized solely by the Employee. 13.11 GOVERNING LAW This Agreement shall be governed and construed under the laws of the State of California. 13.12 INDEMNIFICATION; INSURANCE The Company represents and warrants to the Employee that it has and will maintain adequate directors and officers' liability insurance coverage and that it will indemnify the Employee to the full extent permitted by the General Corporation Law of the State of Delaware, as provided in the Certificate of Incorporation of the Company. 13.13 CORPORATE AUTHORITY; ENFORCEABILITY The Company represents and warrants to the Employee that it is a corporation duly organized and validly existing under the laws of the State of Delaware and that the execution and delivery of this Agreement, and the performance by the Company of its obligations hereunder, have been duly authorized by proper corporate action on the part of the Company. This Agreement is a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. 13.14 REFORMATION If any provisions of this Agreement should be found by any court of competent jurisdiction to be unreasonable by reason of its being too broad as to the period of time, territory, aspects of business or customers covered or otherwise, then, and in that event, such provision shall nevertheless remain valid and fully effective, but shall be considered to be amended so that any term of the provision found unreasonable shall be limited to the maximum period of time, the largest territory, the most aspects of business and customers covered and/or the broadest other limitations, as the case may be, which would be found reasonable and enforceable by such court and similarly, if any remedy is found to be unenforceable in whole or in part, or to any extent, such provision shall remain in effect only to the extent the remedy or remedies would be enforceable by such court. 13.15 SEVERABILITY AND SURVIVAL Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be -12-  prohibited by or invalid under applicable law, such provisions, to the extent of such prohibition or invalidity, shall be deemed not to be part of this Agreement, and shall not invalidate the remainder of such provision or the remaining provisions of this Agreement. Employee specifically agrees that Section 7 (Disclosure and Assignment of Inventions), Section 8 (Confidential Information) and Section 9 (Non-Solicitation) and each of their sub-paragraphs and sub-parts, are independent of and severable from each other, and that these restrictions shall survive and remain in full force and effect for the periods specified after the Termination Date. 13.16 COUNTERPARTS This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and which together shall constitute but one and the same instrument. THE EMPLOYEE ACKNOWLEDGES THAT HE HAS CONSULTED WITH INDEPENDENT COUNSEL AND HAVING READ, EXECUTED AND RECEIVED A COPY OF THIS AGREEMENT, INCLUDING THE FOLLOWING NOTICE, AND AGREES THAT, WITH RESPECT TO THE SUBJECT MATTER HEREOF, IT CONSTITUTES THE EMPLOYEE'S ENTIRE AGREEMENT WITH THE COMPANY, SUPERSEDING ANY PREVIOUS ORAL OR WRITTEN COMMUNICATIONS, REPRESENTATIONS, UNDERSTANDINGS OR AGREEMENTS WITH THE COMPANY OR ANY OF ITS OFFICIALS OR REPRESENTATIVES. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written. QUENTRA NETWORKS, INC. EMPLOYEE: By /s/ James R. McCullough /s/ Jerry Conrad -------------------------- --------------------------- James R. McCullough Jerry Conrad, an Individual Chief Executive Officer -13-  SCHEDULE 1 ENTITIES WHICH EMPLOYEE HAS OWNERSHIP INTERESTS IN  EXHIBIT A PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT FOR EMPLOYEES I recognize that Quentra Networks, Inc., a Delaware corporation, together with its predecessors, successors, subsidiaries and affiliates (hereinafter collectively called the "Company"), is engaged in a continuous program of research, development and production respecting its business, present and future, relating to the telecommunications (the "Business"). I recognize that these programs represent valuable assets to the Company. In consideration of my employment, the compensation received by me from the Company from time to time, and other good and valuable consideration, the sufficiency of which is hereby acknowledged by my signature below, I hereby agree as follows: 1. As an employee of the Company, I will devote my best efforts to the interests of the Company and to making contributions and inventions of value to the Company. 2. I agree that employment creates a relationship of confidence and trust between the Company and me and, in acknowledgement of this relationship, I will not engage in any activity, investment, interest or association: (a) which is hostile, adverse to or competitive with the Company, or (b) which so occupies my attention as to interfere with the proper and efficient performance of my duties at the Company, or (c) which interferes with the independent exercise of my judgment in the Company's interests. 3. I agree that the Company possesses and will continue to possess information that has been created, discovered, developed or otherwise become known to the Company (including but without limitation, information created, discovered, developed or made known to me during the period of or arising out of my employment by the Company) and/or in which property rights have been assigned or otherwise conveyed to the Company, which information has commercial value in the Business. All the aforementioned information is hereinafter called "Proprietary Information." Proprietary Information, for purposes of this Agreement, includes all information disclosed to me or known by me as a result of my employment with the Company, not generally known to the trade or industry in which the Company is engaged, about the Company's products, processes, machines and services, including research, development, manufacturing, purchasing, finance, data processing, engineering, marketing, merchandising and selling. 4. As used herein, the period of my employment includes any time in which I may be retained by the Company as a consultant or on contract before or after being an employee. 5. All Proprietary Information shall be the sole property of the Company and its assigns, and the Company and its assigns shall be the sole owner of all patents and other rights in connection therewith. I -1-  hereby assign to the Company any rights I may have or acquire in such Proprietary Information. At all times, both during my employment by the Company and after its termination, I will keep in confidence and trust all Proprietary Information, and I will not use or disclose any Proprietary Information or anything directly relating to it without the prior written consent of the Company, except as may be necessary in the ordinary course of performing my duties as an employee of the Company. Notwithstanding the foregoing, it is understood that, at all such times, I am free to use information clearly in the public domain and my own knowledge, skills and experience to whatever extent and in whatever way I wish. 6. I agree that all algorithms, flow charts, sketches, schematics, drawings, models, plans, specifications, microcodes, computer programs, source codes, documentation, circuit and logic diagrams, circuit layouts, silkscreens and similar items documenting my work for the Company fall under the category of Work for Hire under the copyright laws of the United States. In consideration of my employment, I agree that programs and other such documentation written or created by me in the general areas of research and development being pursued by or under study by the Company in the Business shall be presumed to be Works for Hire performed for the Company, unless I have notified the Company, in writing, that the particular work is being created outside my employment. Such notification must be made as soon as is practical and with sufficient detail to identify the material in question. I understand that, in the absence of such notification, at the time of creation or immediately after creation, works made in whole or in part by me during my employment by the Company, falling within the scope of the Business of the Company, will be presumed to be Works for Hire. All copyrights to such works shall be the sole and exclusive property of the Company. I also understand that all such works are protected by the copyright laws of the United States from the time of their creation, and that any copying or appropriation of such works by me, for my own use or that of others for purposes not authorized by the Company or in its interests, will be in violation of the copyright laws of the United States and of international copyright conventions. Finally, in consideration of my employment, I agree to cooperate with the Company in performing all necessary steps for securing copyright registration of works created by me in whole or in part. This last obligation shall extend beyond the period of employment, providing that the Company agrees to provide reasonable expenses and compensation for my time, such compensation not to exceed twice the highest hourly rate paid to me during the period of my employment by the Company. 7. In the event of the termination of my employment by me or by the Company for any reason, I will deliver to the Company all documents and data of any nature pertaining to my work with the Company and I will not take with me any documents or data of any description or any reproduction of any description containing or pertaining to any Proprietary Information. 8. I will promptly disclose to the Company, or any persons designated by it, all improvements, inventions, formulae, processes, techniques, skills and data, whether or not patentable, made or conceived or reduced to practice or learned by me, either alone or jointly with others, during the period of my employment which are related to or useful in the Business of the Company, or result from tasks assigned me by the Company or result from the use of premises owned, leased or contracted for the Company (all said improvements, inventions, formulae, processes, techniques, skills and data shall be collectively hereinafter called "Inventions"). -2-  9. I agree that all Inventions shall be the sole property of the Company and its assigns, and that the Company and its assigns shall be the sole owner of all patents and other rights in connection therewith. I hereby assign to the Company any rights I may have or acquire in such Inventions. I further agree as to all such Inventions to assist the Company in every proper way (but at the Company's expense) to obtain and enforce from time to time patents on said Inventions in any and all countries, and to that end I will execute all documents for use in applying for and obtaining such patents thereon and enforcing the same, as the Company may desire, together with any assignments thereof to the Company or persons designated by it. In the event the Company is unable, because of my mental or physical incapacity or for any reason whatsoever, to secure my signature to apply for, or to pursue any application for any United States ("U.S.") or for any foreign patent or copyright covering Inventions assigned to the Company as stated above, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, to act for me and on my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution, issuance and renewal of U.S. and foreign patents and copyrights thereon with the same legal force and effect as if executed by me. My obligation to assist the Company in obtaining and enforcing patents for such Inventions in any and all countries shall continue beyond the termination of my employment, but the Company shall compensate me at a reasonable rate after such termination for time actually spent by me at the Company's request with such compensation not to exceed twice the highest hourly rate paid to me during the period of my employment by the Company. 10. Any provision in this Agreement requiring me to assign my rights in any Invention 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 my own time, and (a) which does not relate (i) to the Business of the Company, or (ii) to the Company's actual or demonstrably anticipated research or development, or (b) which does not result from any work performed by me for the Company. I also agree to assign to or to assign as directed by the Company all my right, title and interest, in and to any and all Inventions full title to which is required to be in the U.S. by a contract between the Company and the U.S. or any of its agencies. 11. As a matter of record, I have identified on Exhibit A, attached hereto, all Inventions or improvements relevant to the subject matter of my employment by the Company which have been made or conceived or first reduced to practice by me alone or jointly with others prior to my engagement by the Company, which I desire to remove from the operation of this Agreement; and I covenant that such list is complete. If there is no such list on Exhibit A, I represent that there are no such inventions and/or improvements at the time of signing this Agreement. 12. I represent that my performance of all the terms of this Agreement and my employment by the Company does not and will not, to the best of my present knowledge and belief, breach any agreement or duty to keep in confidence Proprietary Information acquired by me in confidence or in trust prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict herewith. 13. (a) I understand as part of the consideration for the offer of employment extended to me by the Company and my employment or continued employment by the Company, that I have not brought and -3-  will not bring with me to the Company or use in the performance of my responsibilities at the Company any materials or documents of a former employer which are not generally available to the public, unless I have obtained written authorization from the former employer for their possession and use. (b) The Company has not induced or solicited the breach of disclosure of any confidential information, trade secrets, agreement, duty, commitment, understanding by me, or other proprietary data of any previous employer of mine. (c) The Company shall not utilize any trade secrets or confidential business or information of any other person, including any previous employer of mine, currently known by me. (d) Accordingly, I advise the Company that the only materials or documents of a former employer which are not generally available to the public that I will bring to the Company or use in my employment are identified in Exhibit A attached hereto, and as to each such item, I represent that I have obtained, prior to the effective date of my employment with the Company, written authorization for their possession and use in my employment with the Company. If there is no such list on Exhibit A, I represent that there are no such materials and/or documents at the time of signing this Agreement. (e) Neither my carrying on the Company's Business as an employee, nor the conduct of the Company's Business as proposed, will conflict with or result in a breach of the terms, conditions or provisions of or constitute a default under any contract, covenant or instrument under which I am now obligated. (f) I am not obligated under any contract, agreement or commitment, or subject to any judgment, decree or order of any court or administrative agency, that would conflict with my obligation to use my best efforts to promote the interests of the Company or that would conflict with the Company's Business now carried on or as proposed to be conducted. 14. This Agreement shall be effective as of the first day of my employment by the Company. By signing this Agreement, I acknowledge receipt of a copy of this Agreement. 15. This Agreement shall be binding upon me, my heirs, executors, assigns, and administrators and shall inure to the benefit of the Company, its successors and assigns. Dated (today's date): _______________ __, _____. CAUTION TO EMPLOYEE: This Agreement affects important rights. Do not sign it unless you have read it carefully, and are satisfied that you understand it completely. -4-  --------------------------------------- Name (Please Print) --------------------------------------- Signature --------------------------------------- Title ACCEPTED AND AGREED TO: - ------------------------ By _____________________ Name ____________________ Title____________________ -5-  EXHIBIT A 1. The following is a complete list of all inventions or improvements relevant to the subject matter of my employment by ____________________________ (the "Company") which have been made of conceived or first reduced to practice by me alone or jointly with others prior to my engagement by the Company: _____ No inventions or improvements _____ See below __________________________________________________________________________ __________________________________________________________________________ _____ Additional sheets attached 2. I propose to bring to my employment the following materials and documents of a former employer which are not generally available to the public, which materials and documents may be used in my employment: _____ No materials _____ See below __________________________________________________________________________ __________________________________________________________________________ _____ Additional sheets attached My signature on this document confirms that my continued possession and use of these materials is authorized. 3. Exceptions to copyright Works for Hire (paragraph 6.) _____ No exceptions _____ See below __________________________________________________________________________ __________________________________________________________________________ _____ Additional sheets attached __________________________________________________________________________ (Please Print Name and Title) __________________________________________________________________________ Representative (Please Print Name and Title)