Exhibit 10.4

 

SECURE COMPUTING CORPORATION

 

MICHAEL J. GALLAGHER

EMPLOYMENT, CONFIDENTIAL INFORMATION,

INVENTION ASSIGNMENT, AND ARBITRATION AGREEMENT

 

As a condition of my employment with SECURE COMPUTING CORPORATION, its
subsidiaries, affiliates, successors or assigns (together the “Company”), and in
consideration of my employment with the Company and my receipt of the
compensation now and hereafter paid to me by Company, I agree to the following:

 

1.        At-Will Employment. I UNDERSTAND AND ACKNOWLEDGE THAT MY EMPLOYMENT
WITH THE COMPANY IS FOR AN UNSPECIFIED DURATION AND CONSTITUTES “AT-WILL”
EMPLOYMENT. I ALSO UNDERSTAND THAT ANY REPRESENTATION TO THE CONTRARY IS
UNAUTHORIZED AND NOT VALID UNLESS OBTAINED IN WRITING AND SIGNED BY THE CHIEF
EXECUTIVE OFFICER OF THE COMPANY. I ACKNOWLEDGE THAT THIS EMPLOYMENT
RELATIONSHIP MAY BE TERMINATED AT ANY TIME, WITH OR WITHOUT GOOD CAUSE OR FOR
ANY OR NO CAUSE, AT THE OPTION EITHER OF THE COMPANY OR MYSELF, WITH OR WITHOUT
NOTICE.

 

2.        Confidential Information.

 

(a)        Company Information. I agree at all times during the term of my
employment and thereafter, to hold in strictest confidence, and not to use or
disclose, except for the benefit of the Company, to any person, firm or
corporation without written authorization of the Chief Executive Officer of the
Company, any Confidential Information of the Company. I understand that
“Confidential Information” means any Company proprietary information, technical
data, trade secrets or know-how, including, but not limited to, research,
product plans, products, services, customer lists and customers (including, but
not limited to, customers of the Company on whom I called or with whom I became
acquainted during the term of my employment), markets, software, developments,
inventions, processes, formulas, technology, designs, drawings, engineering
data, hardware configuration information, marketing, financial or other business
information disclosed to me by the Company either directly or indirectly in
writing, orally or by drawings or observation of parts or equipment. I further
understand that Confidential Information does not include any of the foregoing
items which has become publicly known and made generally available through no
wrongful act of mine or of others who were under confidentiality obligations as
to the item or items involved or improvements or new versions thereof.

 

(b)        Former Employer Information. I agree that I will not, during my
employment with the Company, improperly use or disclose any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity and that I will not bring onto the premises of the Company any
unpublished document or proprietary information belonging to any such employer,
person or entity unless consented to in writing by such employer, person or
entity.

 

(c)        Third Party Information. I recognize that the Company has received
and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company’s part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company’s agreement with such third party.

 

3.        Inventions.

 

(a)        Inventions Retained and Licensed. I have attached hereto, as Exhibit
A, a list describing all inventions, original works of authorship, developments,
improvements, and trade secrets which were made by me prior to my employment
with the Company (collectively referred to as “Prior Inventions”), which belong
to me, which relate to the Company’s proposed business, products or research and
development, and which are not assigned to the Company hereunder; or, if no such
list is attached, I represent that there are no such Prior Inventions. If in the
course of my employment with the Company, I incorporate into a Company product,
process or machine a Prior Invention owned by me or in which I have an interest,
the Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license to make, have made, modify, use and
sell such Prior Invention as part of or in connection with such product, process
or machine.

 

(b)        Assignment of Inventions. I agree that I will promptly make full
written disclosure to the Company, will hold in trust for the sole right and
benefit of the Company, and hereby assign to the Company, or its designee, all
my right, title, and itnerest in

 

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and to any and all inventions, original works of authorship, developments,
concepts, improvements, designs, discoveries, ideas, trademarks or trade
secrets, whether or not patentable or registrable under copyright or similar
laws, which I may solely or jointly conceive or develop or reduce to practice,
or cause to be conceived or developed or reduced to practice, during the period
of time I am in the employ of the Company (collectively referred to as
“Inventions”), except as provided in Section 3(f) below. I further acknowledge
that all original works of authorship which are made by me (solely or jointly
with others) within the scope of and during the period of my employment with the
Company and which are protectible by copyright are “works made for hire,” as
that term is defined in the United States Copyright Act. I understand and agree
that the decision whether or not to commercialize or market any invention
developed by me solely or jointly with others is within the Company’s sole
discretion and for the Company’s sole benefit and that no royalty will be due to
me as a result of the Company’s efforts to commercialize or market any such
invention.

 

(c)        Inventions Assigned to the United States. I agree to assign to the
United States government all my right, title, and interest in and to any and all
Inventions whenever such full title is required to be in the United States by a
contract between the Company and the United States or any of its agencies.

 

(d)        Maintenance of Records. I agree to keep and maintain adequate and
current written records of all Inventions made by me (solely or jointly with
others) during the term of my employment with the Company. The records will be
in the form of notes, sketches, drawings, and any other format that may be
specified by the Company. The records will be available to and remain the sole
property of the Company at all times.

 

(e)        Patent and Copyright Registrations. I agree to assist the Company, or
its designee, at the Company’s expense, in every proper way to secure the
Company’s rights in the Inventions and any copyrights, patents, mask work rights
or other intellectual property rights relating thereto in any and all countries,
including the disclosure to the Company of all pertinent information and data
with respect thereto, the execution of all applications, specifications, oaths,
assignments and all other instruments which the Company shall deem necessary in
order to apply for and obtain such rights and in order to assign and convey to
the Company, its successors, assigns, and nominees the sole and exclusive
rights, title and interest in and to such Inventions, and any copyrights,
patents, mask work rights or other intellectual property rights relating
thereto. I further agree that my obligation to execute or cause to be executed,
when it is in my power to do so, any such instrument or papers shall continue
after the termination of this Agreement. If the Company is unable because of my
mental or physical incapacity or for any other reason to secure my signature to
apply for or to pursue any application for any United States or foreign patents
or copyright registrations covering Inventions or original works of authorship
assigned to the Company as above, then 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 and in my behalf and stead to execute and file any
such applications and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright registrations thereon
with the same legal force and effect as if executed by me.

 

(f)        Exception to Assignments. I understand that the provisions of this
Agreement requiring assignment of Inventions to the Company do not apply to any
invention which qualifies fully under the provisions of Minnesota Statute §
181.78 (attached hereto as Exhibit B). I will advise the Company promptly in
writing of any inventions that I believe meet the criteria in Minnesota Statute
§ 181.78 and not otherwise disclosed on Exhibit A.

 

4.        Conflicting Employment. I agree that, during the term of my employment
with the Company, I will not engage in any other employment, occupation,
consulting or other business activity directly related to the business in which
the Company is now involved or becomes involved during the term of my
employment, nor will I engage in any other activities that conflict with my
obligations to the Company.

 

5.        Returning Company Documents. I agree that, at the time of leaving the
employ of the Company, I will deliver to the Company (and will not keep in my
possession, recreate or deliver to anyone else) any and all devices, records,
data, notes, reports, proposals, lists, correspondence, specifications, drawings
blueprints, sketches, materials, equipment, other documents or property, or
reproductions of any aforementioned items developed by me pursuant to my
employment with the Company or otherwise belonging to the Company, its
successors or assigns, including, without limitation, those records maintained
pursuant to paragraph 3(d). In the event of the termination of my employment, I
agree to sign and deliver the “Termination Certification” attached hereto as
Exhibit C.

 

6.        Notification of New Employer. In the event that I leave the employ of
the Company, I hereby grant consent to notification by the Company to my new
employer about my rights and obligations under this Agreement.

 

7.        Covenant Not to Compete. To the full extent permitted by law, I agree
that during the course of my employment with Secure Computing and for a period
of twelve (12) months after the termination of my employment (whether voluntary
or involuntary),

 

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I will not directly or indirectly solicit, offer to provide, or provide any
services similar to those Secure Computing offers to any individual or entity
with whom I worked during the last twelve (12) months of my employment with
Secure Computing or for any individual or entity which is directly or indirectly
competitive with Secure Computing’s business, unless I have written consent of
Secure Computing.

 

8.        Non-solicitation.

 

(a)        Non-solicitation of Employees. To the full extent permitted by law,
for a period of twelve (12) months immediately following the termination of my
relationship with the Company for any reason, whether voluntary or involuntary,
I shall not, by myself or in collaboration with others, either directly or
indirectly solicit, induce, recruit or encourage any of the Company’s employees
to leave their employment, or take away such employees, or attempt to solicit,
induce, recruit, encourage or take away employees of the Company, either for
myself or any other person or entity.

 

(b)        Non-solicitation of Business. To the full extent permitted by law,
for a period of twelve (12) months immediately following the termination of my
relationship with the Company for any reason, whether voluntary or involuntary,
I will not divert or attempt to divert from the Company any business the Company
had enjoyed or solicited from its customers or potential customers during the
twelve (12) months prior to my termination of employment.

 

9.        Representations. I agree to execute any proper oath or verify any
proper document required to carry out the terms of this Agreement. I represent
that my performance of all the terms of this Agreement will not breach any
agreement 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 oral or written agreement in
conflict herewith.

 

10.        Arbitration and Equitable Relief.

 

(a)        Arbitration. EXCEPT AS PROVIDED IN SECTION 11(b) BELOW, I AGREE THAT
ANY DISPUTE OR CONTROVERSY ARISING OUT OF, RELATING TO, OR CONCERNING ANY
INTERPRETATION, CONSTRUCTION, PERFORMANCE OR BREACH OF THIS AGREEMENT, SHALL BE
SETTLED BY ARBITRATION TO BE HELD IN RAMSEY COUNTY, MINNESOTA, IN ACCORDANCE
WITH THE EMPLOYMENT DISPUTE RESOLUTION RULES THEN IN EFFECT OF THE AMERICAN
ARBITRATION ASSOCIATION. THE ARBITRATOR MAY GRANT INJUNCTIONS OR OTHER RELIEF IN
SUCH DISPUTE OR CONTROVERSY. THE DECISION OF THE ARBITRATOR SHALL BE FINAL,
CONCLUSIVE AND BINDING ON THE PARTIES TO THE ARBITRATION. JUDGMENT MAY BE
ENTERED ON THE ARBITRATOR’S DECISION IN ANY COURT HAVING JURISDICTION. THE
COMPANY AND I SHALL EACH PAY ONE-HALF OF THE COSTS AND EXPENSES OF SUCH
ARBITRATION, AND EACH OF US SHALL SEPARATELY PAY OUR COUNSEL FEES AND EXPENSES.

 

THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE’S RIGHT TO A JURY TRIAL
AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EMPLOYEE RELATIONSHIP (EXCEPT AS PROVIDED IN SECTION 10(b) BELOW),
INCLUDING, BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:

 

i.    ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF
CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND
FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF
EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR
INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND
DEFAMATION;

 

ii.    ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL, STATE OR MUNICIPAL
STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF
1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF
1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT,
AND MINNESOTA STATUTE SECTION 181, et seq.;

 

iii.    ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS
RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

 

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(b)        Equitable Remedies. I AGREE THAT IT WOULD BE IMPOSSIBLE OR INADEQUATE
TO MEASURE AND CALCULATE THE COMPANY’S DAMAGES FROM ANY BREACH OF THE COVENANTS
SET FORTH IN SECTIONS 2, 3, AND 5 HEREIN. ACCORDINGLY, I AGREE THAT IF I BREACH
ANY OF SUCH SECTIONS, THE COMPANY WILL HAVE AVAILABLE, IN ADDITION TO ANY OTHER
RIGHT OR REMEDY AVAILABLE, THE RIGHT TO OBTAIN AN INJUNCTION FROM A COURT OF
COMPETENT JURISDICTION RESTRAINING SUCH BREACH OR THREATENED BREACH AND TO
SPECIFIC PERFORMANCE OF ANY SUCH PROVISION OF THIS AGREEMENT. I FURTHER AGREE
THAT NO BOND OR OTHER SECURITY SHALL BE REQUIRED IN OBTAINING SUCH EQUITABLE
RELIEF AND I HEREBY CONSENT TO THE ISSUANCE OF SUCH INJUNCTION AND TO THE
ORDERING OF SPECIFIC PERFORMANCE.

 

(c)        Consideration. I UNDERSTAND THAT EACH PARTY’S PROMISE TO RESOLVE
CLAIMS BY ARBITRATION IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT,
RATHER THAN THROUGH THE COURTS, IS CONSIDERATION FOR OTHER PARTY’S LIKE PROMISE.
I FURTHER UNDERSTAND THAT I AM OFFERED EMPLOYMENT IN CONSIDERATION OF MY PROMISE
TO ARBITRATE CLAIMS.

 

11.        General Provisions.

 

(a)        Governing Law; Consent to Personal Jurisdiction. This Agreement will
be governed by the laws of the State of Minnesota. I hereby expressly consent to
the personal jurisdiction of the state and federal courts located in Minnesota
for any lawsuit filed there against me by the Company arising from or relating
to this Agreement.

 

(b)        Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the Company and me relating to the subject matter herein
and supersedes all prior discussions between us. No modification of or amendment
to this Agreement, nor any waiver of any rights under this agreement, will be
effective unless in writing signed by the party to be charged. Any subsequent
change or changes in my duties, salary or compensation will not affect the
validity or scope of this Agreement.

 

(c)        Severability. If one or more of the provisions in this Agreement are
deemed void by law, then the remaining provisions will continue in full force
and effect.

 

(d)        Successors and Assigns. This Agreement will be binding upon my heirs,
executors, administrators and other legal representatives and will be for the
benefit of the Company, its successors, and its assigns.

 

Date:             8/1/03

/s/ Michael J. Gallagher

Signature

 

Witness:

   

 

 

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Exhibit A

 

LIST OF PRIOR INVENTIONS

AND ORIGINAL WORKS OF AUTHORSHIP

 

Title   Date   Identifying Number or Brief Description                          
                                                                               
   

 

         No inventions or improvements

 

         Additional Sheets Attached

 

 

Signature of Employee:                                                          

 

Print Name of Employee:                                                       

 

Date:                                                           

 

 

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Exhibit B

 

Minnesota Statute §181.78

INVENTION ON OWN TIME – EXEMPTION FROM AGREEMENT

 

181.78 Agreements; terms relating to inventions.

 

Subdivision 1. Any provision in an employment agreement which provides that an
employee shall assign or offer to assign any of the employee’s rights in an
invention to the employer shall not apply to an invention for which no
equipment, supplies, facility or trade secret information of the employer was
used and which was developed entirely on the employee’s own time, and (1) which
does not relate (a) directly to the business of the employer or (b) to the
employer’s actual or demonstrably anticipated research or development, or (2)
which does not result from any work performed by the employee for the employer.
Any provision which purports to apply to such an invention is to that extent
against the public policy of this state and is to that extent void and
unenforceable.

 

Subd. 2. No employer shall require a provision made void and unenforceable by
subdivision 1 as a condition of employment or continuing employment.

 

Subd. 3. If an employment agreement entered into after August 1, 1977 contains a
provision requiring the employee to assign or offer to assign any of the
employee’s rights in any invention to an employer, the employer must also, at
the time the agreement is made, provide a written notification to the employee
that the agreement does not apply to an invention for which no equipment,
supplies, facility or trade secret information of the employer was used and
which was developed entirely on the employee’s own time, and (1) which does not
relate (a) directly to the business of the employer or (b) to the employer’s
actual or demonstrably anticipated research or development, or (2) which does
not result from any work performed by the employee for the employer.

 

 

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Exhibit C

 

SECURE COMPUTING CORPORATION

 

TERMINATION CERTIFICATION

 

In accordance with my Employment Agreement, I hereby certify to the following:

 

I do not have in my possession, nor have I failed to return, any devices,
records, data, notes, reports, proposals, lists, correspondence, specifications,
drawings, blueprints, sketches, materials, equipment, other documents or
property, or reproductions of any aforementioned items belonging to SECURE
COMPUTING CORPORATION, its subsidiaries, affiliates, successors or assigns
(together, the “Company”).

 

I have complied with all the terms of the Company’s Employment Agreement signed
by me, including the reporting of any inventions and original works of
authorship (as defined therein), conceived or made by me (solely or jointly with
others) covered by that agreement.

 

In compliance with the Employment Agreement, I will preserve as confidential all
trade secrets, confidential knowledge, data or other proprietary information
relating to products, processes, know-how, designs, formulas, developmental or
experimental work, computer programs, data bases, other original works of
authorship, customer lists, business plans, financial information or other
subject matter pertaining to any business of the Company or any of its
employees, clients, consultants or licensees.

 

I further agree that for twelve (12) months from this date, I will not directly
or indirectly through others, solicit, induce, recruit or encourage any of the
Company’s employees to leave their employment or engage in any behavior that is
in violation of my ongoing responsibilities under my Employment Agreement.

 

Date:                                         
                                  

 

(Employee’s Signature)    

(Type/Print Employee’s Name)

 

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