Independent Contractor Agreement - the Business Law Section

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Independent Contractor Agreement - the Business Law Section Powered By Docstoc
					                                          DISCLAIMER
This form is a sample form intended to serve only as a general resource for the attorney using it.
It has not been approved, sanctioned or officially promulgated by the North Carolina Bar
Association or the Business Law Section, nor is it necessarily intended to represent the standard
of practice in North Carolina. In making this form available, neither the North Carolina Bar
Association, the Business Law Section, nor the attorneys providing the form are engaged in
rendering legal, tax, accounting or other professional services to the user or the user’s clients or
make any representation regarding the content of the form. In addition, please note that the
forms are not routinely updated (or may not be updated at all) to address changes in applicable
law. Each attorney using this form as an aid in preparing a document for a client is solely
responsible for the contents of such document and assumes all risks in connection with such use.


                             DESCRIPTION OF SAMPLE FORM
 This is a general form that, with some variation, can be used for different types of independent
contractor engagements, regardless of whether the independent contractor is an individual or an
entity. The form is generally drafted from the perspective of the party retaining the independent
contractor, with appropriate loyalty, confidentiality, and work-for-hire provisions. The nature of
the services to be provided and the fee structure are set forth in Exhibits to the Agreement.
Especially when the independent contractor is an individual, the attorney and his/her client
should take care to confirm that the service provider is truly an independent contractor (and not
an employee) under the common law and the IRS 20 factor test, since it is the substance of the
transaction and not the form of the document that controls.


                      INDEPENDENT CONTRACTOR AGREEMENT

      THIS AGREEMENT (the "Agreement"), is made this ______ day of
__________________, 20__, (the "Effective Date") by and between [COMPANY NAME], a
North Carolina company having its principal office at _____________________________ (the
"Company"), and [CONTRACTOR], an individual [OPTIONAL PROVISION: and citizen of
______________ with appropriate United States documentation which allows him/her to render
his/her services in the United States,][ALTERNATIVE PROVISION: a North Carolina
company] with a principal address located at __________________________                  (the
"Contractor"). The Company and Contractor may be referred to herein individually as a "Party"
or collectively as the "Parties".

     WHEREAS, the Company is in the business of [describe business and where the
Company conducts its business]; and

      WHEREAS, Contractor is in the business of [describe services to be performed by
Contractor] and is fully qualified to offer the services set forth in this Agreement; and

       WHEREAS, the Company wishes to ensure, to the extent possible, that certain
knowledge gained by Contractor while conducting this engagement with the Company is not
used by Contractor, or anyone associated in any way with Contractor, to the detriment of the
Company; and
        WHEREAS, the Company desires to retain the services of Contractor and Contractor
desires to provide such services to [OPTIONAL PROVISION: clients of] the Company under
the terms set forth in this Agreement.

      NOW THEREFORE, in consideration of the respective rights and obligations hereinafter
set forth, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereto agree as follows:

[ALTERNATE PROVISION: The following Paragraph, modified appropriately to the
circumstances, may be used in place of or in addition to the recitals listed above - if this
Paragraph is not used, it will be necessary to re-number the others and change the internal
paragraph cross-references:

    1. Purpose.        The Company is in the business of [describe the business and where the
Company conducts its business], requiring the skills of individuals like Contractor to be a non-
exclusive representative of the Company to provide ____________ services to the Company to
assist the Company to _____________. The Company wishes to retain Contractor to provide the
services set forth on Exhibit 1 which is attached hereto and incorporated herein by reference,
(the “Services”) and to ensure, to the extent possible, that certain knowledge gained by
Contractor in association with his engagement with the Company is not used by Contractor, or
anyone associated in any way with Contractor, to the detriment of the Company. Contractor
wishes to provide the Services to the Company upon the terms and conditions set forth in this
Agreement. The Company and Contractor wish to formally set forth their relationship in this
Agreement.]

    2. Description of Services. Contractor agrees to provide the services to the Company as
described in Exhibit 1,which is attached hereto and incorporated herein by reference, or as
periodically amended by the mutual written agreement of the Parties (the "Services"). If there is
any conflict between the provisions of this Agreement and Exhibit 1 with respect to the Services
to be performed by Contractor, the provisions of Exhibit 1 shall control. Contractor shall be
solely responsible for providing all equipment, supplies and personnel required to undertake the
Services, unless otherwise specified in Exhibit 1.

    3. Relationship of The Parties. Contractor shall personally perform the Services described
in this Agreement and as an independent contractor to the Company, and no joint venture,
partnership, agency, or employment relationship is created by this Agreement. Except as
expressly set forth in this Agreement or as may be limited or regulated by applicable state or
federal laws, Contractor shall have and exercise complete control and direction over the methods
by which Contractor performs his Services, duties and obligations, and the Company shall not
exercise any direction or control over such functions. Contractor shall not be considered an
employee of the Company, and shall not be entitled to participate in any plans, arrangements or
distributions of the Company pertaining to any benefits provided to regular employees of the
Company. [OPTIONAL PROVISION: Contractor shall have the right to perform work for
others during the term of this Agreement so long as Contractor fulfills his obligations hereunder,
and such employment does not give rise to a conflict of interest that would influence
Contractor’s independent decisions or performance of Services under this Agreement.] Nothing



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in this Agreement is intended to convey any rights or benefits upon any third party. Contractor
shall have no authority to negotiate or enter into contracts on behalf of the Company, incur debts
or liabilities on behalf of the Company, or conduct any other actions on behalf of the Company
without the prior written approval of an authorized representative of the Company.

    4. Standard of Performance.       In the performance of all of the Services and his other
duties and obligations under this Agreement, Contractor shall: (i) use his best efforts and all
diligence to properly and competently perform the Services and his other duties and obligations
as set forth in this Agreement; (ii) act in a professional manner; (iii) act in the best interests of
the Company; (iv) act in good faith; (v) act in a manner which is satisfactory to the Company;
and (vi) perform in such a manner as to comply with the reasonable guidelines and parameters
established by the Company. [OPTIONAL PROVISION: The Company and Contractor agree
and acknowledge that their mutual goal is for the Company to provide services of the highest
quality to the Company’s customers.]

    5. Consideration for Services. The Company shall pay Contractor for his performance of the
Services in accordance with Exhibit 2, which is attached hereto and incorporated herein by
reference, which Exhibit may be changed by the mutual written agreement of the Parties from
time to time. The Parties shall periodically review Contractor’s fees hereunder. [OPTIONAL
PROVISION: The Company, in its sole discretion, may pay additional consideration in the form
of a bonus to Contractor for better than expected performance by Contractor or for services
rendered by Contractor above and beyond the scope of the Services described herein.]

    6. Billing and Payment. Unless otherwise specified in Exhibit 2, Contractor shall submit to
the Company on a weekly [biweekly/monthly] basis detailed timesheets indicating dates and
hours worked and the type of work performed during each time period listed. Payments for
Services rendered under this Agreement shall become due fifteen (15) business days after the
Company receives payments for such Services from its clients for the applicable Service.
[ALTERNATIVE PROVISION: Payments for Services rendered by Contractor under this
Agreement shall become due ______ (___) days after Contractor submits an invoice to the
Company for his Services.] The Company may withhold from any payment, including the final
payment, any amount in dispute, including amounts returned to its clients. In addition, the
Company may withhold payment in any payment period if Contractor has failed to provide the
reports set forth herein, until such time as Contractor has submitted such reports to the Company.

    7. Expenses.       Contractor acknowledges that he is acting solely as an independent
contractor, and as such he agrees that he shall pay all expenses incurred by him in carrying out
his duties and obligations pursuant to this Agreement including, but not limited to, expenses
relating to insurance, vehicles, fuel and maintenance, supplies, and all taxes. In carrying out the
Services, Contractor agrees to use supplies standard for the industry. [OPTIONAL
PROVISION: , which may be either purchased from the Company or from a source approved by
the Company in advance of this purchase. It is understood that the Company has these items
available for purchase by Contractor. In the event Contractor chooses to purchase supplies
from a source other than the Company, a receipt documenting the quality and type of supplies
may be required.] To the extent expenses may be billed to the Company, Contractor shall
provide a weekly [biweekly/monthly] itemization of all expenses for which reimbursement is to



                                                 3
be made, accompanied by receipts for such expenses and a completed expense report form in the
format provided to Contractor by the Company.

     8. Taxes. Contractor shall report all income received by him under this Agreement and
pay all taxes on such payments to the appropriate city, county, state, federal and country tax
authorities. All such payments, withholdings and benefits, if any, are the sole responsibility of
Contractor, and Contractor agrees to indemnify and hold the Company free and harmless from
and against any and all claims, demands, causes of action, losses, costs, damages, and expenses,
including reasonable attorney fees and expenses of enforcing this Paragraph, incurred by the
Company, which are attributable directly or indirectly, in whole or in part, to Contractor’s failure
to timely and fully comply with such federal, state and local income tax and withholding laws.

    9. Term.      The term of this Agreement shall commence on _________, 20__,
[ALTERNATIVE PROVISION: the Effective Date] and shall continue until terminated by
either Party as set forth in Paragraph 10 below, or for any reason whatsoever upon thirty (30)
days advance written notice from the Party desiring to terminate this Agreement; provided,
however, that in the event Contractor breaches any term of this Agreement, the Company may
terminate this Agreement with three (3) days prior written notice to Contractor.
[ALTERNATIVE PROVISION: Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall begin on the ____day of __________, 20__,
[ALTERNATIVE PROVISION: the Effective Date] and shall automatically renew for a one (1)
year period upon the expiration of the prior term of this Agreement unless previously terminated
in writing by either Party. This annual renewal process will continue until either Party
terminates this Agreement with thirty (30) days prior written notice to the other Party or as set
forth in Paragraph 10 below.]

   10. Termination.    This Agreement shall terminate as follows:

           (A) Without cause upon:

                   i. Thirty (30) days written notice of the intent to terminate this Agreement
                      given by either Party hereto to the other Party by certified mail, return
                      receipt requested, or other form of delivery whereby confirmation of
                      delivery can be obtained;

                   ii. The bankruptcy, receivership, insolvency or dissolution of the Company
                       or Contractor; the failure to promptly satisfy or discharge any execution,
                       garnishment or attachment such as will impair the ability of Contractor to
                       carry out his obligations under this Agreement; the appointment of a
                       receiver by a court of competent jurisdiction of substantially all of the
                       assets of Contractor or the Company; the entry of an order for relief
                       against Contractor or the Company under the United States Bankruptcy
                       Code; or an assignment by Contractor or the Company of substantially all
                       of its assets for the benefit of creditors; or

                  iii. The written revocation of this Agreement by all Parties;



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           (B) For cause:

                   i. By the Company following notice to Contractor:

                            1. Upon the material breach by Contractor of any duty or obligation
                               in this Agreement;

                            2. If Contractor makes any material misrepresentation or commits
                               fraud or any other act or omission which is either unlawful or has a
                               material adverse affect on the operation of the Company’s business
                               or the Company’s customers;

                            3. Upon the failure of Contractor to perform his duties and
                               obligations under this Agreement in a manner that meets the
                               standard of performance required by this Agreement; or

                            4. If the Company determines that it is, at any time, insecure with the
                               ability of Contractor to carry out the Services he is to provide
                               hereunder or for any other reasons deemed sufficient by the
                               Company.

                  ii. By the Company and at any time immediately and without notice to
                      Contractor upon the happening of any of the following circumstances:

                            1. Any Contractor or employee of Contractor having illegal drugs in
                               his possession or in his equipment or vehicle, or being under the
                               influence of same while on Company assignments or Company
                               premises;

                            2. Any Contractor or employee of Contractor violating or threatening
                               to violate any provisions of any federal laws or laws of the State of
                               North Carolina or any other state or local community or
                               incorporated area where Contractor is representing the Company.

                  iii. In the event of a material breach by the Company of the terms and
                       provisions of this Agreement and where the Company fails to cure such
                       breach within ten (10) days following receipt of written notice by
                       Contractor of such breach, Contractor may immediately terminate this
                       Agreement following a second written notice to the Company of
                       Contractor’s intent to terminate this Agreement.

    11. Effect of Termination. Within three days of termination as provided above, Contractor
shall return and account for all funds, supplies, materials or products of the Company and deliver
the same to the Company at its offices or at such place as the Company shall instruct Contractor
under the Notice provisions of this Agreement. In the event the Company terminates this



                                                  5
Agreement as a result, in whole or in part, of Contractor’s breach hereof, and the Company
incurs costs, fees or expenses in completing particular Services which are greater than those
which the Company budgeted to incur had Contractor properly, timely and completely
performed such Services, then in addition to all other rights and remedies available to the
Company, either at law or in equity, Contractor agrees to remit payment in full for such
additional expenses to the Company immediately upon receiving an invoice from the Company
identifying such additional expenses. In this event, such remedy shall not be deemed the sole or
exclusive remedy available to the Company.

    12. Indemnification. Contractor agrees to indemnify the Company and its members,
managers, shareholders, directors, officers, employees and agents and hold them harmless from
and against all claims, liabilities, damages, losses, costs and expenses, together with all costs and
expenses incurred by them in defending any suit or action which may be brought against any of
them, including reasonable attorney’s fees and expenses, incurred or suffered by any of them and
arising, in whole or in part, out of any actual or alleged act or omission of Contractor in
connection with his performance of the Services set forth in this Agreement and any breach of
any agreement or covenant of Contractor or any inaccurate or erroneous warranty or
representation of Contractor contained herein. In addition, Contractor agrees to assume all legal
fees and expenses incurred in the defense against such claims and in enforcing this Agreement
and to reimburse the Company for such fees and expenses incurred by the Company.

[ALTERNATIVE PROVISIONS:
   (a) By Company. The Company agrees to indemnify, hold harmless and defend Contractor
    and its members, managers, shareholders, directors, officers, employees and agents from
    and against any action, claim, demand, loss, damage, liability or expenses, including
    attorney’s fees and costs, arising from or relating to: (i) the Company’s breach of this
    Agreement; (ii) the negligence or willful misconduct of the Company or any of its
    representatives; or (iii) any allegation that the Company’s intellectual property infringes
    upon a third person’s copyright or trademark right, or misappropriates a third person’s
    trade secret. The Company agrees that Contractor shall have the right to participate in and
    control the defense of any such claim through counsel of its own choosing. Contractor shall
    promptly notify the Company in writing of such claim or suit.
    (b) By Contractor. Contractor agrees to indemnify, hold harmless and defend the Company
    and its members, manager, shareholders, directors, officers, employees and agents from and
    against any action, claim, demand, loss, damage, liability or expenses, including reasonable
    attorney’s fees and costs, arising from ore related to: (i) Contractor’s actual or threatened
    breach of any provision of this Agreement; (ii) any gross negligence or willful misconduct of
    Contractor; or (iii) any allegation that Contractor’s materials infringe upon a third person’s
    copyright or trademark right, or misappropriates a third person’s trade secrets. Contractor
    agrees that the Company shall have the right to participate in the defense of any such claim
    through counsel of its own choosing. The Company shall promptly notify Contractor in
    writing of such claim or suit. Contractor shall have no indemnity obligation for claims of
    infringement to the extent resulting or alleged to result in whole in part from: (i) any work or
    services performed by a party other than Contractor; (ii) the Company’s failure, within a
    reasonable time frame, to implement any work product or instruction provided by
    Contractor; or (iii) any data or other information not provided by Contractor. ]


                                                 6
    13. Remedies. Contractor covenants and agrees that, if he shall violate any of his covenants
or agreements under this Agreement, the Company shall be entitled to an accounting and
repayment of all profits, compensation, commissions, remunerations or benefits which
Contractor directly or indirectly has realized and may realize as a result of, growing out of or in
connection with any such violation. Such remedy shall be in addition to and not in limitation of
any injunctive relief or other rights or remedies to which the Company is or may be entitled at
law, in equity or under this Agreement. Contractor agrees that the Company shall not be
required to post any bond with respect to such injunctive relief and Contractor agrees that he
shall not object to the granting of injunctive relief or to the waiver of bond.

    14. Contractor Representations and Warranties. Contractor represents and warrants that: (i)
he has the experience, skills and ability necessary to timely and completely perform the Services
and to fulfill his duties and obligations under this Agreement; (ii) he has the capacity to enter
into this Agreement; (iii) he is not a party to any agreement, arrangement or other understanding
with any person or entity which might affect, restrain or conflict with any of the provisions of
this Agreement; and (iv) all materials delivered to the Company under this Agreement shall be
original work and shall not violate any patent, copyright, trade secret or other proprietary right of
any third party.

    15. Third-Party Obligations. Contractor acknowledges that the Company, from time to time,
may have agreements with its clients that impose additional obligations or restrictions on the
Company regarding the Services to be performed by Contractor during the course of this
Agreement, or regarding the confidential nature of the Services or Confidential Information of
the client disclosed during or used in performing the Services. Contractor agrees to be bound by
all such obligations and restrictions and to take all action necessary to discharge the obligations
of the Company thereunder.

    16. Confidentiality. Contractor agrees to, and shall use his best efforts to insure that all of
his agents and representatives, treat all matters and information related to the Company's and its
customers’ businesses, including without limitation, products, research, work product, drawings,
methods, processes, flow charts, other products, systems, programs, software, procedures,
manuals, guides, confidential reports, communications, and all other technical and business
information of the Company and its customers and lists of customers as confidential information
(the "Confidential Information") entrusted to him solely for use in his capacity as a Contractor of
the Company. It is understood, however, that no information shall be considered as Confidential
Information, regardless of its having been marked as such, if: (i) it is or becomes publicly
available through no fault of Contractor; or (ii) it is disclosed to Contractor by a third party
entitled to disclose it; or (iii) it is known to Contractor prior to its disclosure to Contractor.
Contractor agrees to hold such Confidential Information in strictest confidence and to not use
such Confidential Information in any way at any time anywhere other than to perform the duties
required of him hereunder or divulge, disclose, communicate or otherwise use such Confidential
Information in any way at any time to any person or entity, other than to an officer or authorized
agent of the Company for use in the Company’s business, during and for a period of two (2)
years after the termination of this Agreement. Contractor agrees that, in the event of termination
of this Agreement for any reason, he will return to the Company all Confidential Information or
any other information within his possession or control, written or otherwise recorded, in any



                                                 7
media, whether developed by Contractor or otherwise obtained by Contractor from any source
regarding the Company, its customer(s) and/or the Services, and shall not retain any copies of
such materials for any purpose. In the event of a breach or threatened breach by Contractor of
the provisions of this Agreement, the Company is entitled to a temporary injunction restraining
or prohibiting Contractor from such breach or threatened breach of this Paragraph or this
Agreement, without notice to Contractor and without need to post a bond or other security and
upon final hearing to have a permanent injunction restraining or prohibiting such breach or
threatened breach of this Agreement entered against Contractor. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies available to the
Company for such breach or threatened breach, including the recovery of damages from
Contractor and including reasonable attorney fees and costs. The provisions of this Paragraph
shall survive any termination of this Agreement.

    17. Noninterference and Noncompetition. Contractor covenants and agrees that he shall not,
at any time, without the prior written consent of the Company, which may be withheld in the
Company’s sole discretion, directly or indirectly induce or attempt to induce any employee,
agent, customer, vendor, supplier or other representative or associate of the Company to
terminate its relationship with the Company, or in any way directly or indirectly interfere with
such a relationship or any relationship between the Company and any of its past, present or
prospective employees, agents, customers, vendors, suppliers or other representatives.

         The Company acknowledges that Contractor may engage in other professional activities
during and after the term of this Agreement. The Parties agree that except as otherwise set forth
in this Agreement, nothing contained in this Agreement shall prohibit or limit such outside
activities.

        Contractor acknowledges that the restrictions on his activities under Paragraphs 16 and
17 of this Agreement were negotiated at arm’s length and are required for the fair and reasonable
protection of the Company. Contractor further acknowledges and agrees that a breach or
threatened breach of such obligations and agreements will result in immediate, irreparable and
continuing damage to the Company and its business for which there will be no adequate remedy
at law, and further agrees that in the event of any breach or threatened breach of said obligations
and agreements, the Company, and its successors and assigns, shall be entitled to temporary and
permanent injunctive relief and to such other further legal and equitable relief, including
damages, as is proper in the circumstance which may be available to it to prevent or to restrain
any such breach by Contractor, or by Contractor’s partners, agents, representatives, servants,
companies, contractors and any and all persons directly or indirectly acting for or with him.

    18. Limited Liability. With regard to the Services, the Company and its members,
managers, shareholders, directors, officers, employees, independent contractors and agents shall
not be liable to anyone for any right, claim, liability, cause of action, action, inaction, obligation
or otherwise due to or arising out of the relationship between the Company and Contractor, for
any acts or omissions in Contractor’s performance of the Services or on the part of the agents or
employees of Contractor in connection therewith and the same shall be the obligation and
liability of Contractor. With regard to the obligations of the Company pursuant to the terms of
this Agreement, Contractor shall not be liable to anyone who may claim any right arising out of



                                                  8
the relationship between the Company and Contractor, for any acts or omissions in the
Company’s performance of its obligations under this Agreement or on the part of the agents or
employees of the Company in connection therewith.

   19. Works of Authorship and Assignment of Intellectual Proprietary Rights.

       a.    Any and all writings, works, copyrights, patents, trade secrets, and other intellectual
            property rights associated with any ideas, concepts, techniques, inventions, processes,
            works of authorship, or other similar matter or thing developed or created by
            Contractor, either independently or in conjunction with others, during the term of this
            Agreement [OPTIONAL PROVISION: and for the two (2) consecutive years after
            the termination of this Agreement] and in any way related to Contractor’s provision
            of the Services hereunder (the "Work Product"), shall be the sole and exclusive
            property of the Company. Contractor shall take any and all actions requested by the
            Company, at the Company’s expense, to vest complete, good and marketable title to
            such works in the Company as the Company requests. All such works of authorship
            shall, to the extent possible, be considered a work made for hire for the Company
            within the meaning of Title 17 of the United States Code. Contractor automatically
            assigns at the time of creation the entire right, title and interest throughout the world
            in and to such works, including all patents, copyrights and other intellectual property
            rights arising out of the work performed by him under this Agreement. Contractor
            does not personally hold any interest in any of the Company’s intellectual property or
            Confidential Information.

       b. Any writing, work, copyrights, patents, trade secrets, and other intellectual property
          rights associated with any ideas, concepts, techniques, inventions, processes, works of
          authorship, or other similar matter or thing developed or created by Contractor, either
          independently or in conjunction with others, during the term of this Agreement
          [OPTIONAL PROVISION: and for the two (2) consecutive years after the
          termination of this Agreement] and in any way related to Contractor’s provision of the
          Services hereunder, which is outside what is statutorily considered to be work made
          for hire, shall be deemed to be owned by the Company, and Contractor hereby assigns
          all of Contractor’s right, title and interest thereto in and to the Company so that the
          Company will become the sole and exclusive owner thereof following such
          assignment. Contractor shall take any and all actions requested by the Company, at
          the Company’s expense, to assign such matter to the Company and vest good and
          marketable title to such work in the Company as the Company requests. Contractor
          shall sign all documents necessary to perfect the rights of the Company in such
          intellectual property or Confidential Information, including the filing and prosecution
          of any applications for copyrights or patents. Upon request, Contractor shall sign all
          documents memorializing the automatic assignment of the rights to such intellectual
          property or Confidential Information to the Company.

       c. Contractor further agrees that all inventions, designs, discoveries, improvements,
          whether or not patentable, and all works of authorship or works made for hire that he
          may make, create, contribute to or conceive, alone or jointly with others, concerning



                                                  9
          the present or prospective activities, products or services of the Company, whether
          made, created, contributed to or conceived: (i) during, before or after the time
          Contractor provides the Services; (ii) with or without the use of Company facilities,
          materials, equipment, tools, supplies or personnel; or (iii) alone, jointly or in common
          with others during the term of this Agreement [OPTIONAL PROVISION: and
          within two (2) years following the termination of this Agreement] (collectively herein
          referred to as "Innovations") shall be the sole and exclusive property of the Company.
          Contractor agrees: (i) to promptly disclose any such Innovations to the Company and
          to promptly deliver the Innovations and all information and materials regarding the
          same to the Company contemporaneously with such disclosure; (ii) to treat such
          Innovations as trade secrets and Confidential Information of the Company for
          purposes of this Agreement and otherwise; and (iii) not to disclose such Innovations
          to anyone or use such Innovations, both during and after the term of this Agreement,
          without the prior written approval of the Company, which may be withheld in its sole
          discretion.

       d. Contractor hereby assigns all of Contractor’s right, title and interest, including all
          patent rights, trademark rights and copyrights, in and to any such Innovations to the
          Company and agrees to execute, without further consideration, all documents
          requested by the Company: (i) to vest full title in the Innovations in the Company;
          and (ii) to enable the Company to seek, register, maintain or enforce patent,
          trademark, design or copyright protection thereon anywhere in the world.

       e. Contractor agrees that, upon request of the Company, each Innovation submitted to
          the Company will be attached to a written assignment in a form acceptable to the
          Company.

       f. Notwithstanding anything to the contrary herein, Contractor shall be free to use and
          employ his general skills, know-how, and expertise, and to use, disclose, and employ
          any generalized ideas, concepts, know-how, methods, techniques, or skills gained or
          learned during the course of any assignment, so long as he acquires and applies such
          information without disclosure of any Confidential Information of the Company or its
          clients, without any unauthorized use or disclosure of Work Product or Innovations,
          and without violation of the terms of this Paragraph 19.

    20. Waiver. The terms of this Agreement may be waived only in writing signed by the
Party waiving compliance. The Company may enforce any provision of this Agreement at any
time even if the Company has not previously required Contractor to perform all of Contractor’s
obligations under this Agreement. The Company’s waiver of any of its rights arising from any
breach of this Agreement by Contractor shall not be considered as a waiver of any right arising
from any subsequent breach.

[OPTIONAL PROVISION: Contractor may enforce any provision of this Agreement at any
time even if Contractor has not previously required the Company to perform all of the
Company’s obligations under this Agreement. Contractor’s waiver of any of its rights arising




                                              10
from any breach of this Agreement by the Company shall not be considered as a waiver of any
right arising from any subsequent breach.]

    21. Reformation and Severability. If any provision of this Agreement shall for any reason be
held to be invalid or unenforceable by a court of competent jurisdiction, such decision shall not
affect, impair or invalidate the remainder of this Agreement but shall be confined in its operation
to the provision of this Agreement directly involved in the controversy in which the decision was
rendered. The invalid or unenforceable provision shall be reformed so that each Party shall have
the obligation to perform reasonably in the alternative to give the other Party the benefit of its
bargain. In the event the invalid or unenforceable provision cannot be reformed, the remaining
provisions of this Agreement shall be given full effect, and the invalid or unenforceable
provision shall be deemed stricken.

    22. Assignment. This Agreement shall be binding upon and shall inure to the benefit of the
Parties to this Agreement and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be assigned by either
Party hereto without the prior written consent of all other Parties, which consent shall not be
unreasonably withheld. [ALTERNATIVE PROVISION: Contractor may not assign any of his
obligations under this Agreement.]

    23. Dispute Resolution. In the event a disagreement arises regarding any provision of this
Agreement, the Parties shall discuss the dispute within seven (7) days of delivery of written
notice of the disagreement by one Party to the other. The Parties agree to use good faith and
reasonable business judgment to resolve the disagreement within twenty-one (21) days of such
written notice. In the event that the Parties themselves do not resolve the dispute within twenty-
eight (28) days of notice of the dispute, the Parties hereto agree to submit the matter to
mediation, and the Parties shall share the mediator’s fee and any filing fees equally. Any
disagreement that is not resolved through mediation may be submitted to arbitration or to the
courts, in accordance with Paragraph __ of this Agreement.

[ALTERNATIVE PROVISION: Every dispute between the Parties that has not been
satisfactorily settled by them privately may, at the written election of either Party, be
submitted to arbitration. The Parties shall jointly select an arbitrator within thirty (30)
days of such written election. In the event that the Parties fail to agree on a single
arbitrator within such period, the dispute shall be resolved by a panel of arbitrators, with
each Party selecting one arbitrator, and the two initial arbitrators selecting a third
arbitrator. In the event that any Party fails to appoint an arbitrator within ten (10) days of
the request of the other, or the arbitrators appointed by the Parties fail to appoint a third
arbitrator within ten (10) days of the latest date of appointment of either of them, either
Party may request that the American Arbitration Association appoint the necessary
arbitrator or arbitrators. An arbitration award shall be made within thirt y (30) days of the
appointment of the last arbitrator to be appointed and shall be binding and conclusive. All
expenses of arbitrating the dispute shall be borne by the Party.]

    24. Force Majeure. Neither Party will be deemed in default of this Agreement to the extent
that performance of its obligations or attempts to cure any breach are delayed or prevented by



                                                11
reason of any act of God, fire, natural disaster, accident, act of government, terrorism, strikes or
other labor disturbances, shortages of material, supplies or utilities ("Force Majeure"), provided
that such Party gives the other Party written notice thereof promptly and, in any event, within
fifteen (15) days of discovery thereof and uses good-faith efforts to so perform or cure. In the
event of such an event of Force Majeure, the time for performance or cure will be extended for a
period equal to the duration of the event but if the Force Majeure continues for more than thirty
(30) days, the other Party shall have the right to terminate this Agreement upon written notice to
the Party relying on such an event of Force Majeure.

[ALTERNATIVE PROVISION: Neither Party shall be liable to the other for any delay or
failure to perform under this Agreement if the delay or failure to perform is without the fault or
negligence of the Party claiming excusable delay and is due to causes beyond the control of that
Party, including, but not limited to acts of God, war, terrorism, acts of the government, fire,
floods, epidemics, quarantine restrictions, strikes, labor disputes or work stoppages, and freight
embargoes.]

    25. Attorney Fees. In the event that it shall become necessary for either Party to retain the
services of an attorney to enforce any terms of this Agreement by any legal means, the prevailing
Party, in addition to all other rights and remedies under this Agreement or as provided by law,
shall be entitled to reimbursement of its reasonable attorney's fees and costs of suit by the non-
prevailing Party, payable on demand of the prevailing Party.

    26. Modification. No changes, modifications or amendments of any term shall be valid
unless agreed upon by the Parties in writing. Any agreement between the Parties purporting to
amend a term or condition of this Agreement shall, to be effective, specifically identify that term
or condition’s Paragraph number, and shall include the Parties’ specific intent to amend that term
or condition.

    27. Choice of Words. The language used in this Agreement shall be deemed to be the
language chosen by the Parties to this Agreement to express their mutual intent. All pronouns
and any variations thereof shall be deemed to refer to the masculine, feminine, or neuter,
singular or plural as the identity of the person or persons may require.

    28. No Strict Construction. Neither Party will assert that it did not draft the words used in
the Agreement so that any ambiguities are resolved against the Party that drafted the Agreement
so that the rule of strict construction will not be applied against either Party to this Agreement.

    29. Headings. The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or interpretation of this Agreement.

    30. Notice. All notices, demands and requests which may be given or which are required to
be given by either Party to the other must be in writing, unless otherwise specifically provided
for in this Agreement, and shall be sent by express, registered or certified mail, return receipt
requested or with delivery confirmation, postage prepaid, by overnight courier service such as
Federal Express, by facsimile transmission, or by personal delivery and addressed to each Party
hereto at the addresses set forth above. Notices, demands or requests which any Party is required



                                                12
or desires to give the other hereunder shall be deemed to have been properly given for all
purposes if: (a) delivered against a written receipt of delivery; (b) mailed by express, registered
or certified mail of the United States Postal Service, return receipt requested, or mail with
delivery confirmation of the United States Postal Service, postage prepaid; (c) delivered to a
nationally recognized overnight courier service for next business day delivery, to its addressee at
such Party's address as set forth above; or (id) delivered via telecopy or facsimile transmission to
a Party’s facsimile number, provided, however, that if such communication is given via telecopy
or facsimile transmission, an original counterpart of such communication shall concurrently be
sent in the manner specified in subparagraphs (b) or (c) above. Each such notice, demand or
request shall be deemed to have been received upon the earlier of: (i) actual receipt or refusal by
the addressee; or (ii) three (3) business days after deposit thereof at any main or branch United
States post office if sent in accordance with subparagraph (b) above, and the next business day
after deposit thereof with the courier if sent pursuant to subparagraph (c) above.

    31. Survival. Except as otherwise provided in this Agreement, all covenants and agreements
made in Paragraphs 7 (Expenses), 8 (Taxes), 11 (Effect of Termination), 12 (Indemnification),
13 (Remedies), 16 (Confidentiality), 17 (Noninterference and Non-competition), 18 (Limited
Liability), and 19 (Works of Authorship) shall survive the execution and subsequent termination
of this Agreement.

   32. Choice of Law and Venue. This Agreement shall be construed in accordance with the
laws of North Carolina without giving effect to the North Carolina conflict of law provisions.
The Parties further agree that the location and jurisdiction for any dispute arising under this
Agreement shall be proper only in any federal or state court located only in _________ County,
North Carolina.

    33. Voluntary Signature. The Parties represent that each has carefully read this Agreement,
that he knows and understands the contents and consequences thereof, and that he has signed this
Agreement voluntarily and with informed consent.

    34. Entire Agreement. This Agreement, together with its Exhibits, constitutes the entire
agreement between the Company and Contractor relating to the subject matter hereof. The
Parties shall not be bound by or liable for any statement, writing, representation, promise,
inducement or understanding not set forth herein or in an Exhibit hereto.

   35. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the same document.

        IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals under seal on the date set forth in the opening paragraph hereof.


                                         [SIGNATURES]




                                                13
                 EXHIBIT 1
SERVICES TO BE PERFORMED BY CONTRACTOR




                  14
            EXHIBIT 2
CONTRACTOR FEES AND PAYMENT TERMS




               15

				
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