**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 COMPUTINGCORPORATION, 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 thefollowing: 

 

1.        **At-WillEmployment**. 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 NOTVALID 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 THECOMPANY OR MYSELF, WITH OR WITHOUT NOTICE. 

 

2.        **Confidential Information.**

 

(a)        **Company Information**. I agree at all times during the term of my employment andthereafter, 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 ConfidentialInformation 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 orequipment. 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 confidentialityobligations 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 ortrade 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 unlessconsented 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 aduty 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 itto 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 “PriorInventions”), 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 nosuch 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 anonexclusive, 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 ofInventions**. 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

 

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 theemploy 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 scopeof 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 ornot 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’sefforts 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 suchfull 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 recordsof 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 willbe 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 theCompany’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 withrespect 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 myobligation 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 anyother 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 herebyirrevocably 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 actsto 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 requiringassignment 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 anyinventions 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, Iwill 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 otheractivities 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 ordeliver 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 aforementioneditems 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 ofmy 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, Ihereby 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 thecourse 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 entitywith 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 SecureComputing. 

 

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 myrelationship 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 leavetheir 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 permittedby 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 Companyhad 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 outthe 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 theCompany. 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, IAGREE 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 WITHTHE 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 ANDBINDING 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 SHALLSEPARATELY PAY OUR COUNSEL FEES AND EXPENSES. 

 

THIS ARBITRATIONCLAUSE 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 LIMITEDTO, THE FOLLOWING CLAIMS: 

 

i.    ANY ANDALL 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 ORINTENTIONAL 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 THECIVIL 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 LAWSAND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION. 

 

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(b)**        Equitable Remedies**. I AGREE THAT ITWOULD 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 HAVEAVAILABLE, 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 THECOURTS, 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 thereagainst 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 priordiscussions 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 andeffect. 

 

(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, itssuccessors, 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 noequipment, 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 theemployer’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 againstthe 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’srights 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 tradesecret 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 anticipatedresearch 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 orassigns (together, the “Company”). 

 

I have compliedwith 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 thatagreement. 

 

In compliance with the Employment Agreement, I willpreserve 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 originalworks 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 notdirectly 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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