Ralph W. Emerson and Suzanne O. Emerson - Page 3

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          chemistries” to be used on food supplies.  Petitioner’s duties              
          included developing pesticides for sale and developing                      
          intellectual property patents to protect the pesticides                     
          developed.  Under the contract, ProGuard paid to petitioner                 
          $10,000 per month as compensation for these services.  The                  
          contract provided that petitioner was entitled to 15 percent of             
          the net profits of products sold by ProGuard as a result of his             
          developments for the company.  The contract provided for the                
          treatment of proprietary rights of the parties as follows:                  
                                  New Developments                                    
                    7.01   Emerson agrees that all designs, plans,                    
               reports, specifications, drawings, inventions,                         
               processes, and other information or items produced by                  
               Emerson while performing services under this agreement                 
               will be assigned to ProGuard as the sole and exclusive                 
               property of ProGuard and ProGuard’s assigns, nominees,                 
               and successors, as will any copyrights, patents, or                    
               trademarks obtained by Emerson while performing                        
               services under this agreement.  On request and at                      
               ProGuard’s expense, Emerson agrees to help ProGuard                    
               obtain patents and copyrights for any new developments.                
               This includes providing data, plans, specifications,                   
               descriptions, documentation, and other information, as                 
               well as assisting ProGuard in completing any required                  
               application or registration.  ProGuard shall become the                
               registrant of all products, shall acquire title to all                 
               patents and right to such products and shall produce,                  
               package and sell all products.                                         
                             Successful “Start-Up” Phase                              
                    7.01(a)   If and when the “start-up” phase is                     
               deemed by ProGuard to be successful and of sufficient                  
               size to warrant its own identity, a new identity may be                
               formed which would handle the sales and marketing of                   
               the “start-up” products.  The parties’ respective                      
               interests in the new entity shall be based on capital                  
               invested with Emerson owning 15% [capital interest] and                

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