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EXHIBIT 10.26
COVENANT NOT TO COMPETE
This Covenant Not To Compete (the "Agreement"), dated as of May 12, 1998,
by and between ZAI*NET SOFTWARE, L.P., a Delaware limited partnership (the
"Company"), and XXXXX XXXXX (the "Covenantor"), is to evidence the following
agreements and understandings. Capitalized terms used herein have the respective
meanings in the Purchase Agreement (as hereinafter defined) unless otherwise
specified herein.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated
as of the date hereof (the "Assignment Agreement"), and that certain Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), among the
Company, GFI Caminus LLC, a Delaware limited liability company ("GFI Caminus"),
ZAI*NET Software, Inc., a Delaware corporation ("ZAI*NET"), and Xxxxx X.
Xxxxxxx, and the transactions related thereto and contemplated thereby
(collectively the "Purchase"), (a) ZAI*NET transferred substantially all of its
assets (including goodwill) to the Company, and (b) GFI Caminus has purchased a
seventy-one percent (71%) ownership interest (the "Ownership Interest") in the
Company;
WHEREAS, by agreeing to enter into the Purchase Agreement and consummate
the transactions contemplated therein, GFI Caminus desires and is seeking to
acquire an equity ownership interest in the intellectual property, goodwill and
going concern value of the Company and if Covenantor were able to compete with
Company in any manner or engage in any other activities that are hereinafter
proscribed, then GFI Caminus would be deprived of a substantial portion of the
value sought to be obtained through the Purchase;
WHEREAS, the Company is in the business of developing, licensing,
installing and maintaining commodities trading and risk management software and
providing consulting and support services substantially related to such software
activities to the foreign exchange, natural gas, crude oil, refined products and
electric power industries (collectively, the "Company Business");
WHEREAS, the Covenantor has been the Executive Vice President of the
ZAI*NET prior to the consummation of the Assignment Agreement and has
substantial knowledge of, and access and exposure to the Company Business,
including but not limited to intellectual property, confidential and proprietary
information of the Company;
WHEREAS, Covenantor must enter into this Agreement and the Employment
Agreement, dated as of even date herewith (the "Employment Agreement"), as a
condition precedent to GFI Caminus's execution of the Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual promises, covenants,
agreements, representations and warranties hereinafter set forth and for other
good and valuable consideration, the receipt, adequacy and sufficiency of which
is hereby acknowledged, all subject to the completion of the closing of the
Purchase, the parties hereto agree as follows:
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1. Agreement Not to Compete.
1.1 Noncompetition. As a condition to the transactions being completed
pursuant to the Purchase Agreement, and as a means reasonably designed to
protect the intellectual property, confidential and proprietary information of
the Company, for a period consisting of the greater of (i) three and one-half
(3-1/2) years from the date hereof or (ii) two (2) years from the conclusion of
Covenantor's employment with the Company as a result of the termination of the
Employment Agreement or otherwise (such greater period the "Term"), Covenantor
will not, without the prior written consent of the Company based upon approval
from the Management Committee of the Company (or any similar successor
management body of the Company or any successor entity of the Company), in the
Geographical Area, directly or indirectly, engage in, assist (financially or
otherwise), associate with, or perform services (other than on behalf of the
Company or any of its Affiliates) in the Company Business, including, without
limitation, whether such engagement, assistance, association or performance is
as an individual, principal, officer, director, proprietor, employee, partner,
stockholder or other investor (other than as a holder of less than five percent
(5%) of the outstanding capital stock of a publicly traded corporation),
creditor, guarantor, consultant, advisor, agent, sales representative or other
participant, or otherwise permit his name to be used or employed with any such
Company Business. For purposes of this Agreement, (i) "Affiliate" shall mean any
person, partnership, limited liability company, joint venture, trust,
corporation or other entity, directly or indirectly, controlling, controlled by
or under common control with such person, partnership, limited liability
company, joint venture, trust, corporation or other entity; and (ii)
"Geographical Area" shall mean the world.
1.2 Reasonable Restrictions. Covenantor hereby represents and
acknowledges that: the restrictions stated herein on the activities in which
Covenantor may engage upon termination of his employment with the Company are
reasonable and that, despite such restrictions, Covenantor will be able to earn
his livelihood and engage in his profession following said termination; the
worldwide restriction is reasonable because the Company presently does business
or did business, or has a bona fide plan of doing business during the Term,
throughout the world; and the period of time designated above is reasonable in
relation to the nature of the Company's business.
2. Non-Interference. During the Term, Covenantor will not, without the
prior written consent of the Company, directly, indirectly or as an agent on
behalf of or in conjunction with any person, firm, partnership, corporation or
other entity, (a) hire, solicit, encourage the resignation of, or in any other
manner seek to engage or employ any person who is then, or within the prior
twelve (12) months had been, an employee of the Company or its Affiliates,
whether or not for compensation and whether as an officer, covenantor,
consultant, adviser, independent sales representative, independent contractor or
participant, or (b) except as may be appropriate to perform Covenantor's duties
under the Employment Agreement, contact, solicit, service or otherwise have any
dealings related to Company Business with any person or entity with whom the
Company or its Affiliates has a former, current or prospective business
relationship or who is or was at
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any time during his employment with the Company (including any predecessor or
successor entity) a customer or client of the Company or its Affiliates, or a
prospective customer or client to which the Company or its Affiliates has made a
written or oral business proposal.
3. Future Employment. Nothing contained herein shall prevent Covenantor
from, during the Term seeking employment with or, after the termination of
Covenantor's employment with the Company becoming employed by a utility,
financial services company or other firm, provided that Covenantor's
responsibilities in connection with such employment do not involve, directly or
indirectly, activities related to any aspect of the Company Business.
4. Confidentiality. Covenantor agrees not to disclose, use, transfer or
sell any intellectual property, confidential or proprietary information of the
Company, whether Covenantor has such information in his memory or embodied in
writing or other physical form, unless such activities are on behalf of and
expressly authorized by the Company. For purposes of this Agreement, the phrase
"intellectual property, confidential or proprietary information of the Company"
means all information which is known or intended to be known only to employees
of the Company or others in a confidential relationship with any of them,
including, without limitation, that which relates to marketing or brand
recognition matters, such as logos, tradenames, service names, and trademarks,
or to technical matters, such as patents, programs, components, devices,
formulae, testing procedures, processes, computer software and graphics products
of the Company or any Affiliate, or to business matters such as the identity of
clients, customers or business partners or terms of business relationships with
clients, customers or business partners. Notwithstanding the foregoing, the term
"intellectual property, confidential or proprietary information" of the Company
shall not include information which (i) is, at the time of the disclosure, a
part of the public domain through no act or omission by Covenantor, (ii) known
to the Covenantor prior to the time of disclosure by the Covenantor, provided
that the information was not obtained by the Covenantor in the course of
rendering services to the Company or any predecessor entity or (iii) is
hereafter disclosed to Covenantor by a third party who or which did not acquire
the information under an obligation of confidentiality to or through the Company
or any predecessor entity. Covenantor agrees not to remove from the premises of
the Company, any intellectual property, confidential or proprietary information
of the Company, except as permitted by the Company and except for Covenantor's
personal rolodex and other personal belongings and files that do not contain
intellectual property, confidential or proprietary information related to the
Company Business. Covenantor recognizes that all such intellectual property,
confidential or proprietary information of the Company, are the exclusive
property of the Company. Covenantor agrees to return to the Company all written
materials in his possession containing or reflecting intellectual property,
confidential or proprietary information of the Company promptly following the
cessation of any service relationship with the Company, except for Covenantor's
personal rolodex and other personal belongings and files that do not contain
intellectual property, confidential or proprietary information related to the
Company Business. Covenantor agrees that the restrictions contained in this
Section 4 shall continue to apply without time
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or geographic restrictions, so long as any information remains intellectual
property, confidential or proprietary information of the Company.
5. Consideration. Covenantor agrees and acknowledges that the value to be
derived by him from the transactions contemplated by the Purchase Agreement and
the consideration payable to him pursuant to the Employment Agreement constitute
substantial value and shall serve as exclusive consideration for his agreements
set forth in this Agreement, and that no additional consideration is payable or
necessary in connection therewith.
6. Miscellaneous.
6.1 Entire Agreement; Amendments. This Agreement and any document
referred to herein sets forth the entire understanding of the parties relating
to the subject matter hereof and supersedes all agreements, representations,
warranties, statements, promises and understandings, with respect to the subject
matter hereof. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by the Company and Employee. No
waiver by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior os subsequent such occurrence.
6.2 Arbitration. Subject to Section 6.4 hereof, and except as
otherwise required by law, any claim or controversy arising out of or relating
to the performance of this Agreement shall be settled by arbitration in New York
City, New York in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. Such claim or controversy shall
be resolved by a three (3) arbitrator panel selected as follows: one arbitrator
selected by the Company, one arbitrator selected by the Covenantor and one
arbitrator selected by each of the arbitrators selected by each of the Company
and the Covenantor. Judgment upon the arbitration award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. All
discovery shall be governed by the Federal Rules of Civil Procedure. Either
party may apply to any court having jurisdiction hereof and seek injunctive
relief so as to maintain the status quo of the parties until such time as the
arbitration award is rendered or the claim or controversy otherwise resolved.
The prevailing party in any such matter shall recover all of its costs and
expenses, including reasonable attorneys' fees.
6.3 Notices. All notices under this Agreement will be in writing and
will be delivered by personal service or telegram, telecopy or certified mail
(if such service is not available, then by first class mail), postage prepaid,
Federal Express (or other reputable overnight courier) to such address as may be
designated from time to time by the relevant party, and which will initially be
as set forth below. Any notice sent by certified mail will be deemed to have
been given three (3) days after the date on which it is mailed. Notices sent by
personal delivery shall be deemed effective on the date delivered, notices sent
by Federal Express (or other reputable overnight courier) shall be deemed
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effective on the third business day following the sending thereof and notices
sent by telecopy shall be deemed effective on the date delivered. No objection
may be made to the manner of delivery of any notice actually received in writing
by an authorized agent of a party. Notices will be addressed as follows or to
such other address as the party to whom the same is directed will have specified
in conformity with the foregoing:
If to Company:
ZAI*NET Software, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Covenantor:
Xxxxx Xxxxx
c/o ZAI*NET Software, L.P.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxx & Brandeis, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
6.4 Equitable Relief; Accounting. Covenantor acknowledges that the
covenants contained in Sections 1, 2 and 4 hereof are reasonable and necessary
to protect the legitimate interests of the Company, that any breach or
threatened breach of such covenants will result in irreparable injury to the
Company and that the remedy at law for such breach or threatened breach would be
inadequate. Accordingly, in the event of the breach by Covenantor of any of the
provisions of this Agreement, the Company, in addition and as a supplement to
such other rights and remedies as may exist in their favor, may apply to any
court of law or equity having jurisdiction to enforce this Agreement, and/or may
apply for injunctive relief against any act that would violate any of the
provisions of this Agreement (without being required to post a bond). Covenantor
further understands that monetary damages will not be sufficient to avoid or
compensate for a breach of the covenants contained in Sections 1, 2 and 4 hereof
and that injunctive relief would be appropriate to prevent any such breach or
threatened breach. Such right to
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obtain injunctive relief may be exercised, at the option of the Company,
concurrently with, prior to, after, or in lieu of, the exercise of any other
rights or remedies that the Company may have as a result of any such breach or
threatened breach. In addition, Covenantor shall account for and pay over to the
Company all compensation, profits and other benefits inuring to Covenantor's
benefit that are derived or received by Covenantor thereof resulting from any
action or transaction constituting a breach of the covenants contained in
Sections 1, 2 and 4 hereof.
6.5 Third-Party Benefits. None of the provisions of this Agreement
will be for the benefit of, or enforceable by, any third-party beneficiary,
except that GFI Caminus LLC is intended as a third-party beneficiary of all
rights of the Company hereunder.
6.6 Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the parties, their respective successors and permitted
assigns. None of the parties hereto may assign any of their rights or
obligations under this Agreement without the prior written consent of all other
parties hereto, except that this Agreement may be assigned by the Company to any
corporation or other business entity that succeeds to all or substantially all
of the business of the Company through merger, consolidation, corporate
reorganization or by acquisition of all or substantially all of the assets or
capital stock of the Company.
6.7 Governing Law. All questions with respect to this Agreement and
the rights and liabilities of the parties shall be governed by the laws of the
State of New York, regardless of the choice of law provisions of that state or
any other jurisdiction.
6.8 Headings and Gender. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement. All words shall be construed to be
of such gender and number as the circumstances require.
6.9 Severability. The validity, legality or enforceability of the
remainder of this Agreement will not be affected even if one or more of the
provisions of this Agreement are held to be invalid, illegal or unenforceable in
any respect. Further, if the period of time, the extent of the geographic area,
or the scope of the prescribed activities covered by this Agreement should be
deemed unenforceable, then this Agreement shall be construed to cover the
maximum period of time, geographic area and scope of prescribed activities (not
to exceed the maximum time, geographic area or scope set forth herein) as may be
valid under applicable law. The parties specifically intend that any court
determining the extent of the enforceability of this Agreement shall, if it
determines that the Agreement is not fully enforceable in accordance with its
terms, modify the period of time, geographic area or scope of prescribed
activities provided for herein to the minimum extent necessary such that the
provisions hereof as so modified are enforceable.
6.10 Attorneys' Fees. Subject to Section 6.2 hereof, if any action or
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proceeding is brought to enforce or interpret any provision of this Agreement,
the prevailing party shall be entitled to recover as an element of its costs,
and not its damages, reasonable attorneys' fees and costs incurred in connection
with such action or proceeding.
6.11 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
6.12 Remedies Not Exclusive. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy will be cumulative and will be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more remedies will
not constitute a waiver of the right to pursue other available remedies.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the first date set forth above.
ZAI*NET SOFTWARE, L.P., a Delaware limited COVENANTOR
partnership
By: /s/ Xxxxx Xxxxxxx /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
Name: Xxxxx Xxxxxxx
Its: President
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