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NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT (this "Agreement") is made this 26th day
of January, 1998 by and among Prism Solutions, Inc., a Delaware corporation
("Prism Solutions"), Customer Focus International, Inc., a California
corporation ("CFI"), and Xxxxx X. Xxxx, a California resident ("Employee").
RECITALS
WHEREAS, Employee has been an officer of CFI and is the owner of a
majority of the shares of capital stock of CFI; and
WHEREAS, CFI is a party to an Agreement and Plan of Reorganization
(the "Reorganization Agreement") dated January 26, 1998 by and among Prism
Solutions, C Acquisition Corp., a Delaware corporation, and CFI, pursuant to
which C Acquisition Corp., a wholly-owned subsidiary of Prism Solutions, is to
merge with and into CFI; and
WHEREAS, the parties hereto recognize that Employee has unique
knowledge and experience regarding CFI's business, and the Prism solutions
desires to be assured that confidential information pertaining to CFI's
business and the goodwill of CFI will be preserved and protected and will inure
to the benefit of Prism Solutions; and
WHEREAS, execution and delivery of this Agreement is a condition
precedent to the closing of the transactions contemplated by the Reorganization
Agreement (the "Closing");
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties contained herein, and further as an inducement to
Prism Solutions to enter into the Reorganization Agreement, the parties hereto
hereby agree as follows:
1. Covenant not to Compete.
(a) For the three-year period following the date of this
Agreement, Employee shall not, anywhere in the world, including without
limitation the counties in the State of California listed in Exhibit A hereto:
(i) (A) engage, directly or indirectly, in any
business activity as a sole proprietor, partner, beneficial shareholder,
officer, director, employee, agent, or consultant of, for, or with, (B) work
for, consult, found, or enter into any license agreement with a competitor of
Prism Solutions in, or (C) be involved in any way with any entity or person
engaged in the design, research, development, marketing, sale, or licensing of
computer software that is substantially similar to or competitive with any
customer relationship management system for the financial services industry
software product created, distributed, or known by Employee to be under
development by Prism Solutions or any of its subsidiaries or by CFI prior to
the termination of Employee's employment with Prism Solutions;
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(ii) solicit for employment any CFI employees who
continue to be employed by Prism Solutions or CFI after the Closing ("Retained
Employees"); and
(iii) hire any Retained Employees; provided, however,
that, Employee may hire any Retained Employee (A) who has been involuntarily
terminated by Prism Solutions, or (B) who, at the time of hiring, has been
employed by a third party unaffiliated with any party hereto on a bona fide
basis for at least twelve (12) months, or (C) with respect to whom Prism
Solutions has agreed may be hired by Employee.
(b) The limitation on hiring set forth in Section
1(a)(iii) above shall apply to Employee as an individual, and to any entity
that Employee controls where "control" means an ownership interest, directly or
indirectly, of ten percent (10%) or more of the outstanding capital stock (or
equivalent indicia of ownership) of an entity or executive authority (whether
or not as an officer) to participate in the direction of the business or
operations of the entity. Such limitations on hiring will not apply to
entities in which Employee retains merely a non-controlling ownership interest
or an outside director position; provided, however, that under such
circumstances Employee shall not bring to the attention of such entity the name
of any such restricted Retained Employee in any employee search or hiring
process and shall not participate in any such process that has independently
identified such a restricted Retained Employee as a candidate.
2. Consideration; Agreement Reasonable. Employee acknowledges
and agrees that (a) this Agreement is being entered into as a condition to the
consummation of the Reorganization Agreement; (b) as a majority shareholder of
CFI, he is receiving a substantial benefit for the consummation of the
Reorganization Agreement, including shares of unregistered Prism Common Stock,
and he is also receiving $525,000 (the "Cash Consideration") payable by Prism
Solutions $262,500 on the date of this Agreement and amortized pro rata on a
daily basis over the first 18 months of this Agreement, with another $262,500
being payable at the end of such 18 month period and amortized pro rata on a
daily basis over the last 18 months of this Agreement, which benefits
constitutes adequate consideration for the covenants set forth in this
Agreement, and (c) the covenants provided for in this Agreement, including
without limitation the term and scope of the covenant not to compete, are
necessary and reasonable in order to protect Prism Solutions in the conduct of
its business.
3. Enforceability of Restriction. The foregoing restriction may
be enforced throughout the world. The foregoing restriction shall be deemed to
be a series of separate covenants as to increasing degrees of scope and
duration. If any of such covenants shall be held invalid or unenforceable by
reason of being unreasonably broad as to duration, geographic scope, or
otherwise, such covenants shall be deemed eliminated to that extent and the
remaining covenants shall be enforced to the broadest extent deemed reasonable.
The parties hereto expressly agree that the restrictions as so amended shall be
valid and binding as though such invalid or unenforceable covenant had not been
included herein.
4. Reformation. In the event that the provisions of this
Agreement should ever be deemed to exceed the scope, time, geographic, or other
limitations of applicable law regarding
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covenants not to compete, then such provisions shall be reformed to the maximum
scope, time, geographic, or other limitations, as the case may be, permitted by
applicable laws.
5. Damages. In the event that Employee breaches any covenant or
agreement set forth in this Agreement, it is expressly agreed between the
parties that Prism Solutions shall be entitled to recover from Employee and
Employee agrees to promptly repay any unamortized portion of the Cash
Consideration. Additionally, in the event that Employee breaches any covenant
or agreement set forth in this Agreement, it is expressly agreed between the
parties that monetary damages would be inadequate to compensate Prism Solutions
for any such breach. Accordingly, Employee acknowledges and agrees that any
such violation or threatened violation will cause irreparable injury to Prism
Solutions and that, in addition to any other remedies which may be available,
Prism Solutions shall be entitled to obtain injunctive relief against the
threatened breach of the covenant or agreement set forth in this Agreement or
the continuation of any such breach.
6. Assignment. This Agreement and the rights and obligations
hereunder shall not be assignable by any party without the written consent of
the other party, other than an assignment from Prism Solutions to any
subsidiary, its parent, or any subsidiary of its parent. The rights and
obligations of each party under this Agreement shall inure to the benefit of
and shall be binding upon the successors and permitted assigns of such party.
7. Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the transactions contemplated hereby.
It may not be changed orally but only by an agreement in writing, signed by the
party against which or whom enforcement of any waiver, change, modification,
extension, or discharge is sought.
8. Applicable Law. This Agreement shall be interpreted in
accordance with the laws of the State of California.
9. Counterparts. This Agreement may be executed in one or more
counterparts, all of which together shall constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have entered into this
Noncompetition Agreement as of the date first written above.
PRISM SOLUTIONS, INC.
By: /s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
Secretary and
Chief Financial Officer
CUSTOMER FOCUS INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
President and
Chief Executive Officer
EMPLOYEE
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
SIGNATURE PAGE TO NONCOMPETITION AGREEMENT
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EXHIBIT A
CALIFORNIA COUNTIES
1. Alameda
2. Alpine
3. Xxxxxx
4. Butte
5. Calaveras
6. Colusa
7. Xxxxxx Xxxxx
0. Xxx Xxxxx
0. Xx Xxxxxx
00. Fresno
11. Xxxxx
12. Humboldt
13. Imperial
14. Xxxx
15. Kings
16. Lake
17. Lassen
18. Los Angeles
19. Madera
20. Marin
21. Mariposa
22. Mendocino
23. Merced
24. Modoc
25. Mono
26. Monterey
27. Napa
28. Nevada
29. Orange
30. Placer
31. Plumas
32. Riverside
33. Sacramento
34. San Xxxxxx
35. San Bernadino
36. San Diego
37. San Francisco
38. San Xxxxxxx
00. Xxx Xxxx Xxxxxx
00. San Mateo
41. Santa Xxxxxxx
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42. Santa Xxxxx
43. Santa Xxxx
44. Shasta
45. Sierra
46. Siskiyou
47. Xxxxxx
48. Sonoma
49. Stanislaus
50. Xxxxxx
51. Tehama
52. Trinity
53. Tuolomne
54. Tulare
55. Ventura
56. Yolo
57. Yuba
