NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (the "Agreement") is made and entered into
as of this 15th day of December, 1999, by and among XXXXX X. XXXXXX (the
"Seller"), QAD INC., a Delaware corporation (the "Purchaser") and ENTERPRISE
ENGINES, INC. (the "Company").
RECITALS
A. The Seller is the legal and beneficial owner of Two Million One Hundred
Thousand (2,000,100) shares of common stock, without par value, of the Company,
constituting One Hundred Percent (100%) of the issued and outstanding shares of
common stock of the Company (the "Shares");
B. The Purchaser has agreed to purchase the Shares pursuant to the terms of
the Stock Purchase Agreement dated December 15, 1999 (the "Purchase Agreement")
by and between the Seller, the Purchaser and the Company;
C. The Company has, is and plans to continue carrying on in the business of
the Company. The Company and its business, trademarks and trade names have
established a favorable reputation and/or recognition throughout the world; and
D. In order to protect the name, goodwill and business of the Company and
as a condition to and in consideration of the execution, delivery and
performance of the Purchase Agreement by the Purchaser, the Seller has agreed to
(i) refrain from competing with the Company or the Purchaser, as set forth in
this Agreement and (ii) refrain from making disparaging comments about the
Purchaser or the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. COMPETITION
1.1 Agreement Not To Compete.
(a) The Seller will refrain, for a period of two (2) years from the date
hereof, either alone or in conjunction with any other Person, or directly or
indirectly through his present or future Affiliates, from:
(i) employing, engaging or seeking to employ or engage any Person
who within the prior twelve (12) months had been an officer or
employee of the Company or the Purchaser;
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(ii) causing or attempting to cause (A) any client, customer or
supplier of the Company or the Purchaser to terminate or materially
reduce its business with the Company or the Purchaser, or (B) any
officer, employee or consultant of the Company or the Purchaser to
resign or sever a relationship with the Company or the Purchaser;
(iii) disclosing (unless compelled by judicial or administrative
process) or using any confidential or secret information relating to
the Company or the Purchaser, or any of their respective clients,
customers or suppliers; or
(iv) competing with, participating or engaging in, or otherwise
lending assistance (financial or otherwise) to any Person
participating or engaged in selling, creating or developing Enterprise
Applications Software for businesses engaged in manufacturing,
distribution or supply chain management functions which involves any
of the functionality of the E-Xxxx System as further described below.
EEI has designed and is currently building a set of technologies for integrating
and executing business models known as the E-Xxxx System. These technologies
include the following:
Application Interface: This interface surrounds all the other functionality
listed below. It is the interface to which all applications are written and
hides the details of transactions, collections, naming, events, etc. from the
application programmer.
Transactions: These are all the transactional semantics and mechanics that
control the concurrency and integrity of every unit of work in a running
application. This advanced transaction model will allow multiple transactional
views to be open for each client, allowing end users to manage multiple work
orders concurrently.
Dynamic UI: This is the infrastructure to support dynamic Java user interfaces.
The UI, which can be either a Java applet or a Java application, can respond
dynamically to changes in the model. This infrastructure also provides all the
smart caching necessary to make these UIs perform in mission critical
applications that require fast response times.
Query and Indexing: This is the subsystem necessary for the application to do
the searching and reporting on all of the data within the application.
Event Notification: this functionality allows the application programmer to send
events at a predetermined time and rate to any other object(s) within the system
Systems Interface: This is the infrastructure to support the interfaces that
will be used to communicate with external entities like other ERP or
Object Import/Export: This subsystem allows us to migrate object data from one
version of an application to another.
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Business Backplane: A new architecture for business components to be developed
by EEI and integrated into the Engine. It includes components interface
definitions and supports independent component upgrades.
Electronic Exchange: A market-based message broker for identifying and selecting
among candidate providers for business requests. Exchanges may be used at levels
ranging from low-level data requests to Internet-based buying and selling.
(b) The parties hereto recognize that the Laws and public policies of
various jurisdictions may differ as to the validity and enforceability of
covenants similar to those set forth in this Section. It is the intention of the
parties that the provisions of this Section be enforced to the fullest extent
permissible under the Laws and policies of each jurisdiction in which
enforcement may be sought, and that the unenforceability (or the modification to
conform to such Laws or policies) of any provisions of this Section shall not
render unenforceable, or impair, the remainder of the provisions of this
Section. Accordingly, if any provision of this Section shall be determined to be
invalid or unenforceable, such invalidity or unenforceability shall be deemed to
apply only with respect to the operation of such provision in the particular
jurisdiction in which such determination is made and not with respect to any
other provision or jurisdiction.
(c) The parties hereto acknowledge and agree that any remedy at Law for any
breach of the provisions of this Section would be inadequate, and Seller hereby
consents to the granting by any court of an injunction or other equitable
relief, without the necessity of actual monetary loss being proved, in order
that the breach or threatened breach of such provisions may be effectively
restrained.
1.2 Consideration For NonCompetition Agreement. The Purchaser will pay to
the Seller ONE HUNDRED THOUSAND DOLLARS ($100,000) for this covenant payable in
twelve (12) equal monthly installments commencing on December 16, 1999.
2. REMEDIES.
2.1 Injunctive Relief. The Seller acknowledges and agrees that the
covenants and obligations contained in this Agreement relate to special, unique
and extraordinary matters, that the skills, talents, experience and knowledge of
the Seller are very valuable and, if used to compete with the Company or the
Purchaser, or if the Seller is permitted to disclose confidential information or
permitted to make negative or disparaging comments about the Company, such
competition, disclosure and/or comments will greatly decrease the value of the
business transferred to the Purchaser pursuant to the Purchase Agreement, and
that a violation of any of the terms of this Agreement will cause the Purchaser
and the Company irreparable injury for which adequate remedy at law is not
available. Therefore, in addition to other remedies that the Purchaser or the
Company may have, the Seller agrees that the Purchaser shall be entitled to an
injunction, restraining order or other equitable relief from any court of
competent jurisdiction, restraining the Seller from committing any violation of
the covenants and obligations set forth in this Agreement, together with an
award of attorneys' fees to be set by the Court.
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2.2 Remedies Cumulative. The Purchaser's rights and remedies under Section
2.1 above are cumulative and are in addition to, and not in lieu of, any other
rights and remedies the Purchaser may have at law or in equity.
3. MISCELLANEOUS.
3.1 Notice. All notices, demands and requests required by this Agreement
shall be in writing and shall be deemed to have been given or made for all
purposes (i) upon personal delivery, (ii) one (1) day after being sent, when
sent by professional overnight courier service, (iii) five (5) days after
posting when sent by registered or certified mail, or (iv) on the date of
transmission when sent by telegraph, telegram, telex or other form of "hard
copy" transmission, to either party hereto at the address set forth below or at
such other address as either party may designate by notice pursuant to this
Section 3.1.
If to Purchaser: QAD Inc.
0000 Xxx Xxxx
Xxxxxxxxxxx, XX 00000
Attn: General Counsel
Facsimile: 000-000-0000
With copy to: Xxxxxx X. Xxxx, Esq.
Nida & Xxxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Facsimile No.: 000-000-0000
If to Seller: Xxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxxx
Xxx Xxxxx, xxxxxxxxxx 00000
Facsimile: none
With copy to: Heller, Ehrman, White & XxXxxxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxx X. X'Xxxx
Facsimile No.: 000-000-0000
If to Company: Enterprise Engines, Inc.
c/o QAD Inc.
10,000 Midlantic, #000 Xxxx
Xx. Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
Facsimile No.: 000-000-0000
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With copy to: Xxxxxx X. Xxxx, Esq.
Nida & Xxxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Facsimile No.: 000-000-0000
This Agreement shall be binding on, and shall inure to the benefit of, the
parties hereto and their respective heirs, legal representatives, successors,
and assigns; provided, however, that the Seller may not assign, transfer or
delegate his rights or obligations hereunder and any attempt to do so shall be
void.
3.3 Entire Agreement. This Agreement and the Purchase Agreement contain the
entire agreement of the parties with respect to the subject matter hereof, and
all other agreements, written or verbal, are of no further force or effect.
3.4 Amendment. This Agreement may be modified or amended only by a written
agreement signed by the Purchaser and the Seller.
3.5 Waivers. No waiver of any term or provision of this Agreement will be
valid unless such waiver is in writing and signed by the party against whom
enforcement of the waiver is sought. The waiver of any term or provision of this
Agreement shall not apply to any subsequent breach of this Agreement.
3.6 Captions and Cross-references. Captions to the various sections in this
Agreement are for the convenience of the parties only and shall not affect the
meaning or interpretation of this Agreement. All cross-references in this
Agreement, unless specifically directed to another agreement or document, refer
to provisions within this Agreement.
3.7 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but together they shall constitute
one and the same instrument.
3.8 Severability. The terms and provisions of this Agreement shall be
deemed severable, and if any term, provision or part of any provision is held
illegal, void or invalid under applicable law, the same shall be deleted or
changed to the minimum extent necessary to make it, as so changed, or the
remainder of the provision in the case of a deletion of any part of a provision,
legal, valid and binding. If any term or provision of this Agreement is held
illegal, void or invalid in its entirety, the remaining terms and provisions of
this Agreement shall not in any way be affected or impaired but shall remain
binding in accordance with their terms. 3.9 ARBITRATION. Any dispute relating to
this Agreement shall be resolved in accordance with the arbitration provisions
set forth in the Purchase Agreement.
3.9 Arbitration. Any dispute relating ot this Agreement shall be resolved
in accordance with the arbitation provisions set forth in the Purchase
Agreement.
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3.10 Attorneys' Fees and Costs. In the event of any action at law or in
equity between the parties hereto to enforce any of the provisions hereof, the
unsuccessful party or parties to such litigation shall pay to the successful
party or parties all costs and expenses including reasonable attorneys' fees,
incurred therein by such successful party or parties, and if such successful
party or parties shall recover judgment in any such action or proceeding, such
costs, expenses, and attorneys fees may be included in and as part of such
judgment. The successful party shall be the party who is entitled to recover his
costs of suit, whether or not the suit proceeds to final judgment. If no costs
are awarded, the successful party shall be determined by the court.
3.11 GOVERNING LAW AND FORUM. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PURCHASER, THE COMPANY AND THE SELLER HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE. EXCEPT AS SET FORTH IN SECTION 3.9 ABOVE, ANY AND
ALL ACTIONS AND PROCEEDINGS ARISING OUT OF OR RELATED DIRECTLY OR INDIRECTLY TO
THIS AGREEMENT SHALL BE LITIGATED IN ANY STATE COURT OR FEDERAL COURT SITTING IN
SAN FRANCISCO, STATE OF CALIFORNIA, AND EACH PARTY HERETO HEREBY EXPRESSLY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND TO VENUE THEREIN
AND CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING BY
CERTIFIED OR REGISTERED MAILING OF THE SUMMONS AND COMPLAINT THEREIN DIRECTED TO
THE PARTIES IN THEIR RESPECTIVE ADDRESSES SET FORTH IN SECTION 3.1 HEREOF.
3.12 Covenant to Perform Necessary Acts. Each party hereto agrees to
perform any further acts and execute and deliver any further documents which may
be reasonably necessary or otherwise reasonably required to carry out the
provisions of this Agreement.
3.13 Number and Gender. Words in the singular shall include the plural, and
words in a particular gender shall include either or both genders when the
context in which such words are used indicate that such is the intent.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
PURCHASER:
QAD Inc.
By: /s/ X.X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
SELLER:
/s/ Xxxxx X. Xxxxxx
---------------------------------
Xxxxx X. Xxxxxx
COMPANY:
ENTERPRISE ENGINES, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
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