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EXHIBIT (C)(5)
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT (the "Agreement"), dated the 11th day of
December, 1997 by and between Voith Sulzer Paper Technology North America Inc.,
a Delaware corporation ("Voith") and Xxxxxxx X. Xxxxxx (the "Executive").
BACKGROUND
Simultaneously with the execution hereof, Voith and Impact Systems, Inc.
("Impact") are entering into an Agreement and Plan of Merger of even date
herewith (the "Merger Agreement") which provides in part, that Voith and Voith
Sulzer Acquisition Corp. will offer to purchase any and all of the shares of
Common Stock of the Company pursuant to a cash tender offer (the "Tender
Offer").
Executive is an executive of Impact and has been actively involved in the
development and marketing of Impact's products together with its present or
future subsidiaries (collectively, "Impact"). Voith intends to continue the
business of Impact after the Acceptance Date (as defined below), and integrate
such business into Voith's ongoing business. To preserve and protect the assets
of Impact, including Impact's goodwill, customers and trade secrets of which
Executive has, and will, in his role as an employee of Voith, have knowledge,
and to preserve and protect Voith's goodwill and business interests going
forward, and in consideration for Voith's entering into and performing under the
Merger Agreement, Executive has agreed to enter into this Agreement.
Executive and Voith believe the limitations as to time, geographical area
and scope of activity contained in this Agreement hereof are reasonably
necessary to, and no greater than that required to, protect the goodwill and
business interests purchased by Voith.
1. Consideration. In consideration for Executive's performance pursuant to
the terms and conditions of this Agreement, Voith shall (i) purchase any of the
shares of Impact owned by Executive pursuant to the Merger Agreement and (ii)
pay Executive $700,000 on the date the Merger contemplated by the Merger
Agreement is consummated (the "Acceptance Date"); $432,000 on the first
anniversary of the Acceptance Date and $467,000 on the second anniversary of the
Acceptance Date.
2. Noncompete. Executive agrees that during the period beginning on the
Acceptance Date and continuing for five (5) years thereafter, he shall not enter
into the employ of, or render services to, any firm, corporation, or
organization in a capacity that gives him responsibility for that segment of
such entity's business which derives more than ten percent (10%) of its annual
revenues from sales of products which directly compete with products which were
offered by Impact at the Acceptance Date.
3. Geographic Area. The parties acknowledge that the business of Voith,
Impact and their subsidiaries is international in scope. Accordingly, in order
to secure Voith the benefits of the Merger, the parties agree that the
geographical areas in which the restrictions provided for in this Agreement
apply include all cities, counties and states of the United States of America.
In addition, the parties agree that the geographical areas in which the
restrictions provided for in this Agreement apply include all foreign nations
outside the United States of America in which Voith, Impact or any of their
subsidiaries has engaged in sales, or otherwise conducted business or selling
efforts, at any time during the two (2) years prior to the Acceptance Date.
4. Severability. The parties intend that the covenants contained in this
Agreement be construed as a series of separate covenants, one for each county of
each state of the United States and each nation. Except for geographic coverage,
each such separate covenant shall be deemed identical in terms of the covenants
contained in this Agreement. If, in any judicial proceeding, a court shall
refuse to enforce any of the separate covenants (or any part thereof) deemed
included in this Agreement, then such unenforceable covenant (or such part)
shall be deemed eliminated from this Agreement for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
(or portions thereof) to be enforced. In the event that the provisions of this
Agreement should ever be deemed to exceed the time or geographic limitations, or
the
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scope of these covenants, as permitted by applicable law, then such provisions
shall be reformed to the maximum time or geographic limitations, as the case may
be, permitted by applicable laws.
5. Injunctions. Executive acknowledges that any breach of the covenants of
this Agreement will result in immediate and irreparable injury to Voith and,
accordingly, consents to the application of injunctive relief and such other
equitable remedies for the benefit of Voith as may be appropriate in the event
such a breach occurs or is threatened. The foregoing remedies will be in
addition to all other legal remedies to which Voith may be entitled hereunder,
including, without limitation, monetary damages. Voith shall notify Executive of
any purported breach of the Agreement and Executive shall have a reasonable
period to cure such purported breach.
6. Miscellaneous.
(a) Notices. Any and all notices permitted or required to be given under
this Agreement must be in writing. Notices will be deemed given (i) when
personally received or when sent by facsimile transmission (to the receiving
party's facsimile number), (ii) on the first business day after having been sent
by commercial overnight courier with written verification of receipt, or (iii)
on the third business day after having been sent by registered or certified mail
from a location on the United States mainland, return receipt requested, postage
prepaid, whichever occurs first, at the address set forth below or at any new
address, notice of which will have been given in accordance with this Section
6(a):
If to Voith: Voith Sulzer Paper Technology North America, Inc.
000 X. Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx
If to Executive, at Executive's address in the personnel records of Voith.
(b) Amendments. This Agreement contains the entire agreement and supersedes
and replaces all prior agreements between Voith and Executive or Impact and
Executive concerning the subject matter hereof. This Agreement may not be
changed or modified in whole or in part except by a writing signed by the party
against whom enforcement of the change or modification is sought.
(c) Successors and Assigns. This Agreement will not be assignable by either
Executive or Voith except that the rights and obligations of Voith under this
Agreement may be assigned to a corporation which becomes the successor to Voith
as the result of a merger or other corporate reorganization and which continues
the business of Voith or any other subsidiary of Voith, provided that, in the
case of a subsidiary, Voith guarantees the performance by such assignee of
Voith's obligations hereunder.
(d) Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the law of California, as applied to agreements
entered into, and to be performed entirely in such state, by residents of such
state.
(e) No Waiver. The failure of either party to insist on strict compliance
with any of the terms of this Agreement in any instance or instances will not be
deemed to be a waiver of any term of this Agreement or of that party's right to
require strict compliance with the terms of this Agreement in any other
instance.
(f) Counterparts. This Agreement may be executed in counterparts which when
taken together will constitute one instrument. Any copy of this Agreement with
the original signatures of all parties appended will constitute an original.
(g) Legal Costs. In the event that Executive sues to enforce his rights
under this Agreement, Voith shall pay Executive all costs to Executive of such
litigation.
(h) Termination. In the event the merger contemplated by the Merger
Agreement is not consummated prior to the termination of the Merger Agreement,
this Agreement shall terminate and no payments shall be due Executive hereunder.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
VOITH SULZER PAPER TECHNOLOGY
NORTH AMERICA INC.
By: /s/ R. XXX XXXX
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Title: Executive Vice President
XXXXXXX X. XXXXXX
/s/ XXXXXXX X. XXXXXX
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(Signature)
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