EXECUTIVE AGREEMENT

 

FOR

 

CIPHERLOC CORPORATION

 

This Agreement (the “Agreement”) is entered into November 25, 2019, by and
between CIPHERLOC CORPORATION (“the Company”) and Andrew Borene (“Executive”).
Executive is an at-will employee of the Company. The provisions of the Offer
Letter are incorporated by reference into this document. Additionally, the
Company wishes to provide Executive with severance benefits if Executive’s
employment is terminated in connection with a change in control.

 

NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and
conditions contained herein, the parties hereby agree as follows:

 

1. Severance.

 

(a) If the Company terminates Executive’s employment (other than for Cause) or
Executive resigns for Good Reason, the Company shall pay to Executive the
Severance Payment immediately from an escrow account held by the Company’s
counsel, Sheppard & Mullin. For purposes of this Agreement, termination from
employment shall mean a “separation from service” as defined under the default
rules under the final Section 409A regulations.

 

(b) The Severance Payment shall be equal to one year of salary at the then
current annual rate, or $350,000, whichever is greater.

 

(c) For the first three years of service, not less than $350,000 shall be set
aside and held in escrow by the Company’s external counsel, Sheppard & Mullin.

 

(d) Each of the following shall constitute “Good Reason”, and provided further
that Executive must provide notice to the Company within sixty (60) days of the
existence of such condition and the Company will have thirty (30) days from
receipt of such notice to remedy the condition. If the condition is not remedied
within such 30 day period, the following conditions will constitute “Good
Reason”:

 

(1) the material diminution of Executive’s position, duties, responsibilities or
status with the Company or its successor, as compared with the position, duties,
responsibilities or status of Executive with the Company immediately prior to
the Event Date, except in connection with the termination of Executive for
Cause;

 

(2) the Company’s assignment of Executive on a substantially full-time basis to
work at a location where the distance between the new location and Executive’s
principal residence is at least 35 miles greater than the distance between the
former location and such residence; provided, however, that this paragraph shall
not apply to travel in the furtherance of the Company’s business to an extent
substantially consistent with Executive’s business travel obligations as of the
date hereof;

 

(3) the Company’s failure to obtain an assumption of the obligations of the
Company to perform this Agreement by any successor to the Company;

 

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(4) any material reduction in Executive’s base salary, or a material reduction
in benefits payable to Executive or failure of the Company to pay Executive any
earned salary, bonus or benefits except with the prior written consent of
Executive;

 

(5) the exclusion or limitation of Executive from participating in some form of
variable compensation plan which provides the Executive the opportunity to
achieve a level of total compensation (base salary plus variable compensation)
consistent with what the Executive had the opportunity to earn at the Event
Date; or

 

(6) any demand by any director or officer of the Company that Executive take any
action or refrain from taking any action where such action or inaction, as the
case may be, would violate any law, rule, regulation or other governmental
pronouncement, court order, decree or judgment, or breach any agreement or
fiduciary duty.

 

(e) Each of the following shall constitute “Cause”:

 

(1) any violation by Executive of any material obligation under this Agreement
or the attached Confidentiality and Non-Disclosure Agreement;

 

(2) any action or failure to act by Executive which causes the Company to incur
significant monetary damages;

 

(3) conviction for commission of a felony;

 

(4) any violation of law by the Executive, which has a material, adverse effect
on the Company;

 

(5) habitual abuse of alcohol or a controlled substance;

 

(6) theft or embezzlement from the Company;

 

(7) repeated unexcused absence from work for reasons unrelated to short-term
illnesses;

 

(8) the failure by Executive substantially to achieve personal performance goals
reasonably established by the board of directors other than where such failure
is substantially attributable to factors beyond control of Executive;

 

(9) Disability of Executive (as defined below); and

 

(10) repeated failure or refusal by Executive to carry out the reasonable
directives, orders or resolutions of the Company’s Board of Directors or any
officer to whom he/she reports.

 

(f) “Disability” shall mean any physical, mental or other health condition which
substantially impairs Executive’s ability to perform his/her assigned duties for
90 days or more in any 180 day period or that can be expected to result in
death. Any disagreement as to whether Executive is disabled shall be resolved by
a physician selected by the Company after an examination of Executive. Executive
hereby consents to such physical examination and to the examination of all
medical records of Executive necessary, in the judgment of the examining
physician, to make the determination of disability.

 

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2. Company Sale or Liquidation Bonus. If, during the term of service, the
Company or substantially all the assets of the Company are sold in a transaction
approved by a majority of the shareholders, the Executive will receive a bonus
of not less than 2.5% of the Net Proceeds. Net Proceeds shall be defined as the
stated purchase price, less costs incurred to complete the sale, to include but
not limited to accounting, legal, due diligence, commissions, investment banking
fees or similar costs that are necessitated by the sale. The date for
determination of such amount shall be as of the effective date of the sale,
merger, consolidation or change in control and the bonus shall be paid by within
thirty (30) days after that effective date.

 

3. Confidentiality and Non-Competition Agreement. In consideration of the
obligations undertaken by the Company pursuant to this Agreement,
contemporaneously with the execution of this Agreement, Executive and the
Company have entered into the form of Confidentiality and Non-Competition
Agreement attached hereto as Exhibit A and each agreement shall be effective
only if both agreements have been executed.

 

4. At Will Employment. Unless and to the extent otherwise agreed by the Company
and Executive in a separate written employment agreement, Executive’s employment
shall be “at will”, with either party permitted to terminate the employment at
any time, with or without cause. No term of any employment agreement between the
Company and Executive shall be construed to conflict with, lessen or expand the
obligations of the parties under this Agreement.

 

5. Notices. All notices and other communications called for or required by this
Agreement shall be in writing and shall be addressed to the parties at their
respective addresses stated below or to such other address as a party may
subsequently specify by written notice and shall be deemed to have been received
(i) upon delivery in person, (ii) five days after mailing it by U.S. certified
or registered mail, return receipt requested and postage prepaid, or (iii) two
days after depositing it with a commercial overnight carrier which provides
written verification of delivery:

 

To the Company:

 

Attention: Chairman of the Board of Directors

Cipherloc Corporation

825 S. Main Street, Suite 100

Buda, Texas 78610

 

  To Executive: SUPPLIED TO COMPANY

 

6.Withholding. All payments due to and all benefits to be provided to Executive
hereunder shall be subject to reduction for any applicable withholding taxes,
including excise taxes.

 

7. Assignment. Executive’s rights and duties hereunder are personal to Executive
and are not assignable to others, but Executive’s obligations hereunder will
bind his/her heirs, successors, and assigns. The Company may assign its rights
under this Agreement in connection with any merger or consolidation of the
Company or any sale of all or any portion of the Company’s assets (including,
without limitation, any division or product line), provided that any such
successor or assignee expressly assumes in writing the Company’s obligations
hereunder.

 

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8. No Duty to Mitigate. Executive shall not be required to mitigate the amount
of any payment made or benefit provided hereunder. The Company may offset any
payment due hereunder by the amount of damages to the Company resulting from any
breach of this Agreement by Executive.

 

9. Indemnification for Prior Acts and Events. It is expressly understood and
agreed by the parties hereto that the Executive shall not be liable for any act
or matters arising out of any act committed by Company officers prior to the
Executive’s tenure at the Company. Executive will also not be liable for any act
or omission that occurred at the Company prior to his employment. Executive will
therefore be indemnified and held harmless for any act or omission before his
first full day of employment with the Company.

 

9. General. This Agreement constitutes the exclusive agreement of the parties
with respect to the subject matter hereof and supersedes all prior agreements or
understandings of the parties. No waiver of or forbearance to enforce any right
or provision hereof shall be binding unless in writing and signed by the party
to be bound, and no such waiver or forbearance in any instance shall apply to
any other instance or to any other right or provision. This Agreement will be
governed by the local laws of the State of Texas without regard to its conflicts
of laws rules to the contrary. The parties hereby consent to the exclusive
jurisdiction and venue of the state and federal courts sitting in Travis County,
Texas for all matters and actions arising under this Agreement. The prevailing
party shall be entitled to reasonable attorneys’ fees and costs incurred in
connection with such litigation. No term hereof shall be construed to limit or
supersede any other right or remedy of the Company under applicable law with
respect to the protection of trade secrets or otherwise. If any provision of
this Agreement is held to be invalid or unenforceable to any extent in any
context, it shall nevertheless be enforced to the fullest extent allowed by law
in that and other contexts, and the validity and force of the remainder of this
Agreement shall not be affected thereby.

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of
the date first above written.

 

CIPHERLOC CORPORATION   EXECUTIVE:           By: /s/ Tom Wilkinson   By: /s/
Andrew Borene Name: Tom Wilkinson   Name: Andrew Borene

 

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Exhibit A

 

CONFIDENTIALITY AND NON-COMPETITION AGREEMENT

 

FOR

 

CIPHERLOC CORPORATION

 

This Agreement is entered into effective this 25th day of November, 2019, by and
between CIPHERLOC CORPORATION (“the Company”) and Andrew Borene (“Executive”).
Executive is an at-will employee of the Company. In consideration of entering
into an agreement to provide Executive with severance benefits if Executive’s
employment is terminated in connection with a change in control in the Company,
Executive promises, on the terms set forth herein, at all times to protect the
Company’s proprietary information and to not compete with the Company following
termination of Executive’s employment in connection with a change in control.

 

NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and
conditions contained herein, the parties hereby agree as follows:

 

1. Intellectual Properties.

 

(a) All ownership, copyright, patent, trade secrecy, and other rights in all
works, programs, software, fixes, routines, inventions, ideas, designs, manuals,
improvements, discoveries, processes, customer lists or other properties (the
“Intellectual Properties”) made or conceived by Executive during the term of
his/her employment by the Company shall be the rights and property solely of the
Company, whether developed independently by Executive or jointly with others,
and whether or not developed or conceived during regular working hours or at the
Company’s facilities, and whether or not the Company uses, registers, or markets
the same.

 

(b) In accordance with the Company’s policy and Texas law, this Agreement (other
than Subsection 1(c)) does not apply to, and Executive has no obligation to
assign to the Company, any invention for which no Company trade secrets and no
equipment, supplies, or facilities of the Company were used and which was
developed entirely on Executive’s own time, unless: (i) the invention relates
directly to the business of the Company, (ii) the invention relates to actual or
demonstrably anticipated research or development work of the Company, or (iii)
the invention results from any work performed by Executive for the Company.

 

(c) If and to the extent that Executive makes use, in the course of his/her
employment, of any items or Intellectual Properties previously developed by
Executive or developed by Executive outside of the scope of this Agreement,
Executive hereby grants the Company a nonexclusive, royalty-free, perpetual,
irrevocable, worldwide license (with right to sublicense) to make, use, sell,
copy, distribute, modify, and otherwise to practice and exploit any and all such
items and Intellectual Properties.

 

(d) Executive will assist the Company as reasonably requested during and after
the term of his/her employment to further evidence and perfect, and to enforce,
the Company’s rights in and ownership of the Intellectual Properties covered
hereby, including without limitation, the execution of additional instruments of
conveyance and assisting the Company with applications for patents or copyright
or other registrations.

 

2. Trade Secrets and Confidential Information.

 

(a) Executive acknowledges that the Company’s business and future success
depends on the preservation of the trade secrets and other confidential
information of the Company and its suppliers and customers (the “Secrets”). The
Secrets may include, without limitation, existing and to-be-developed or
acquired product designs, new product plans or ideas, market surveys, the
identities of past, present or potential customers, business and financial
information, pricing methods or data, terms of contracts with present or past
customers, proposals or bids, marketing plans, personnel information, procedural
and technical manuals and practices, servicing routines, and parts and supplier
lists proprietary to the Company or its customers or suppliers, and any other
sorts of items or information of the Company or its customers or suppliers which
are not generally known to the public at large. Executive agrees to protect and
to preserve as confidential during and after the term of his/her employment all
of the Secrets at any time known to Executive or in his/her possession or
control (whether wholly or partially developed by Executive or provided to
Executive, and whether embodied in a tangible medium or merely remembered).

 

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(b) Executive shall mark all items containing any of the Secrets with prominent
confidentiality notices acceptable to the Company. Executive shall neither use
nor allow any other person to use any of the Secrets in any way, except for the
benefit of the Company and as directed by Executive’s supervisor. All material
containing or disclosing any portion of the Secrets shall be and remain the
property of the Company, shall not be removed from the Company’s premises
without specific consent from an officer of the Company, and shall be returned
to the Company upon the termination of Executive’s employment or the earlier
request Executive’s supervisor. At such time, Executive shall also assemble all
materials in his possession or control which contain any of the Secrets, and
promptly deliver such items to the Company.

 

3. Authority and Non-Infringement. Executive warrants that any and all items,
technology, and Intellectual Properties of any nature developed or provided by
Executive under this Agreement and in any way for or related to the Company will
be original to Executive and will not, as provided to the Company or when used
and exploited by the Company and its contractors and customers and its and their
successors and assigns, infringe in any respect on the rights or property of
Executive or any third party. Executive will not, without the prior written
approval of the Company, use any equipment, supplies, facilities, or proprietary
information of any other party. Executive warrants that Executive is fully
authorized to enter into employment with the Company and to perform under this
Agreement, without conflicting with any of Executive’s other commitments,
agreements, understandings or duties, whether to prior employers or otherwise.
Executive will indemnify the Company for all losses, claims, and expenses
(including reasonable attorneys’ fees) arising from any breach of by him/her of
this Agreement.

 

4. Non-competition and Non-solicitation.

 

(a) Executive agrees that during the term of his/her employment with the Company
and, if Executive receives the Severance Payment (as defined below), until the
first anniversary of the Termination Date (as defined below), he/she will not in
any capacity directly or indirectly engage in, assist others to engage in or own
a material interest in any business or activity that is, or is preparing to be,
in competition with the Company with respect to any product or service sold or
service provided by the Company up to the time of termination of employment in
any geographical area in which at the time of termination of employment such
product or service is sold or actively is engaged in. For the purposes of this
Agreement, the terms “Severance Payment” and “Termination Date” shall have the
meanings assigned to them in the Executive Agreement (as defined in Section 6
below).

 

(b) Executive further agrees that during the period stated above, he/she will
not directly or indirectly call on, reveal the name of, or otherwise solicit,
accept business from or attempt to entice away from the Company any actual or
identified potential customer of the Company, nor will he/she assist others in
doing so. Executive further agrees that he/she will not, during the period
stated above, encourage or solicit any other employee or consultant of the
Company to leave such employment for any reason, nor will he/she assist others
to do so.

 

(c) Executive acknowledges that the covenants in this section are necessary and
reasonable to protect the Company in the conduct of its business and that
compliance with such covenants will not prevent him/her from pursuing his/her
livelihood. However, should any court find that any provision of such covenants
is unreasonable, invalid or unenforceable, whether in period of time,
geographical area, or otherwise, then in that event the parties hereby agree
that such covenants shall be interpreted and enforced to the maximum extent
which the court deems reasonable.

 

5. Remedies. The harm to the Company from any breach of Executive’s obligations
under this Agreement may be difficult to determine and may be wholly or
partially irreparable, and Executive agrees that such obligations may be
enforced by injunctive relief and other appropriate remedies, as well as by
damages. If any bond from the Company is required in connection with such
enforcement, the parties agree that a reasonable value of such bond shall be
$5,000. Any amounts received by Executive or by any other through Executive in
breach of this Agreement shall be held in constructive trust for the benefit of
the Company.

 

6. Executive Agreement. In consideration of the obligations undertaken by
Executive pursuant to this Agreement, contemporaneously with the execution of
this Agreement, Executive and the Company shall enter into the form of Executive
Agreement to which this Agreement is attached (the “Executive Agreement”), and
each agreement shall be effective only if both agreements have been executed.

 

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7. At Will Employment. Unless and to the extent otherwise agreed by the Company
and Executive in a separate written employment agreement, Executive’s employment
shall be “at will”, with either party permitted to terminate the employment at
any time, with or without cause. No term of any employment agreement between the
Company and Executive shall be construed to conflict with or lessen Executive’s
obligations under this Agreement.

 

8. Notices. All notices and other communications called for or required by this
Agreement shall be in writing and shall be addressed to the parties at their
respective addresses stated below or to such other address as a party may
subsequently specify by written notice and shall be deemed to have been received
(i) upon delivery in person, (ii) five days after mailing it by U.S. certified
or registered mail, return receipt requested and postage prepaid, or (iii) two
days after depositing it with a commercial overnight carrier which provides
written verification of delivery:

 

To the Company:

 

Attention: Chairman of the Board of Directors

Cipherloc Corporation

825 S. Main Street, Suite 100

Buda, Texas 78610

 

  To Executive: SUPPLIED TO COMPANY

 

9. Assignment. Executive’s rights and duties hereunder are personal to Executive
and are not assignable to others, but Executive’s obligations hereunder will
bind his/her heirs, successors, and assigns. The Company may assign its rights
under this Agreement in connection with any merger or consolidation of the
Company or any sale of all or any portion of the Company’s assets (including,
without limitation, any division or product line), provided that any such
successor or assignee expressly assumes in writing the Company’s obligations
under the Executive Agreement.

 

10. General. This Agreement constitutes the exclusive agreement of the parties
with respect to the subject matter hereof and supersedes all prior agreements or
understandings of the parties. No waiver of or forbearance to enforce any right
or provision hereof shall be binding unless in writing and signed by the party
to be bound, and no such waiver or forbearance in any instance shall apply to
any other instance or to any other right or provision. This Agreement will be
governed by the local laws of the State of Texas without regard to its conflicts
of laws rules to the contrary. The parties hereby consent to the exclusive
jurisdiction and venue of the state and federal courts sitting in Travis County,
Texas for all matters and actions arising under this Agreement. The prevailing
party shall be entitled to reasonable attorneys’ fees and costs incurred in
connection with such litigation. No term hereof shall be construed to limit or
supersede any other right or remedy of the Company under applicable law with
respect to the protection of trade secrets or otherwise. If any provision of
this Agreement is held to be invalid or unenforceable to any extent in any
context, it shall nevertheless be enforced to the fullest extent allowed by law
in that and other contexts, and the validity and force of the remainder of this
Agreement shall not be affected thereby.

 

 8 

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of
the date first above written.

 

CIPHERLOC CORPORATION   EXECUTIVE:           By: /s/ Tom Wilkinson   By: /s/
Andrew Borene Name: Tom Wilkinson   Name: Andrew Borene

 

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