NONDISCLOSURE, NONCOMPETITION AND NONSOLICITATION AGREEMENT
EXHIBIT 99.2
NONDISCLOSURE, NONCOMPETITION AND NONSOLICITATION AGREEMENT
PARTIES:
|
Xxxxx Xxxxxxx (“Stakeholder”) | |
| GSI Commerce, Inc. | ||
| a Delaware corporation (“GSI”) | ||
| 000 Xxxxx Xxxxxx | ||
| Xxxx xx Xxxxxxx, XX 00000 | ||
DATE:
|
October 5, 2008 |
BACKGROUND
A. GSI and Innotrac Corporation, a Georgia corporation (the “Company”), intend to enter into
an Agreement and Plan of Merger, dated as of the date hereof (the “Merger Agreement”), which
provides for Bulldog Acquisition Corp., a wholly-owned subsidiary of GSI, to be merged with and
into the Company (the “Merger”). Following the Merger, GSI will own all of the outstanding stock
of the Company.
B. Stakeholder owns approximately forty six percent (46%) of the issued and outstanding
capital stock of the Company and desires that the Merger be completed.
C. As contemplated by the Merger Agreement, the Company will become a wholly owned subsidiary
of GSI and will carry on the business being conducted by the Company before the Merger.
Now, Therefore, in consideration of the recitals stated above and the promises,
agreements and covenants hereinafter contained, and intending to be legally bound hereby, the
parties agree as follows:
1. Definitions.
(a) “Closing Date” means the date of the consummation of the Merger.
(b) “GSI Group” means GSI and all existing and future subsidiaries of GSI including the
Company.
(c) “Business” means the provision of order processing, fulfillment and/or customer care
services as a third-party service provider to e-commerce and other direct-to-consumer businesses.
(d) “including” means including without limitation.
2. Acknowledgment. The Stakeholder acknowledges that:
(a) The GSI Group expends substantial time and money, on an ongoing basis, to train its
employees, maintain and expand its customer base, and improve and develop its products, services,
software, technology and databases;
(b) During Stakeholder’s tenure as a creditor, shareholder, employee and/or director of the
Company before the Merger, and during such Stakeholder’s tenure as an employee of the GSI Group
after the Merger, Stakeholder has had and may continue to have access to, receive, learn, develop
and/or conceive Proprietary Information of the Company and its affiliates and/or the GSI Group;
such Proprietary Information is for the benefit of the Company’s and its affiliates’ and/or GSI
Group’s competitive position in the marketplace; and such Proprietary Information could be useful
to competitors of the Company and its affiliates and/or the GSI Group;
(c) The execution and delivery of this Nondisclosure, Noncompetition and Nonsolicitation
Agreement (the “Agreement”) is a condition to GSI’s execution and delivery of the Merger Agreement
and its obligation to consummate the Merger and grant Stakeholder restricted stock award with a
value of $2.5 million at the time of grant and that he will benefit from the Merger and the grant
of the restricted stock award.
(d) The covenants of this Agreement (the “Covenants”) are supported by good and
adequate consideration; and the Covenants are reasonable and necessary to protect the legitimate
business interests of the Company and the GSI Group in acquiring the Company; and
(e) In connection with the consummation of the Merger, the Stakeholder will receive
consideration having a significant economic value.
3. Nondisclosure. At all times after the Closing Date, except with the express prior written
consent of an executive officer of GSI or in connection with the proper performance of services
under his Employment Agreement, Stakeholder will not, directly or indirectly, communicate, disclose
or divulge to any Person, or use for the benefit of any Person, any Proprietary Information or any
Third Party Information. “Proprietary Information” means any and all confidential and/or
proprietary knowledge, data or information of the Company or GSI or any of their affiliates, no
matter when or how acquired. By way of illustration, but not limitation, Proprietary Information
includes (i) Inventions; (ii) the terms and details of contracts and arrangements with and
proposals to any customers of the Company or its affiliates (“Customers”) and any prospective
Customers or any entities for which GSI or its affiliates operate e-commerce businesses or provide
marketing services (“Partners”) and any prospective Partners; (iii) personal, financial and other
information obtained from customers of Customers or Partners (“Consumers”); (iv) non-public pricing
information, vendor prices, buying and pricing strategies and merchandise plans, including the
terms of contracts and arrangements with vendors; (v) promotional, marketing and advertising
strategies and plans, including the terms of contracts and arrangements relating to promotions,
marketing and advertising; (vi) non-public financial and statistical information relating
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to the Company or GSI or any of their affiliates, or the Business operated by the Company and
its affiliates or the business and the e-commerce businesses operated by GSI and its affiliates,
including budgets, financial and business forecasts, expansion plans and business strategies; and
(vii) information regarding the skills and compensation of other employees of the Company and GSI
and their affiliates. For purposes of this Section 3, Proprietary Information will not include
any information which is now known by or available to the general public or generally in the
industry, which becomes known by or available to the general public or generally in the industry
other than as a result of a breach of this Agreement by Stakeholder or which is independently
acquired by Stakeholder. “Person” means any individual, sole proprietorship, joint venture,
partnership, corporation, association, cooperative, trust, estate, government body, administrative
agency, regulatory authority or other entity of any nature. “Third Party Information” means any
and all confidential or proprietary data, knowledge and information received from third parties,
including Customers and Partners, prospective Customers and Partners and Consumers, subject to a
duty on the part of the Company or GSI or any of their affiliates to maintain the confidentiality
of such data, knowledge or information and to use it only for certain purposes. “Inventions” means
all trade secrets, inventions, mask works, ideas, processes, formulas, source and object codes,
data, programs, other works of authorship, know-how, improvements, discoveries, developments,
designs and techniques, whether or not patentable or registrable under copyright or similar
statutes.
4. Non-Competition. Stakeholder acknowledges that the Business of the Company and its
affiliates and the business of GSI and its affiliates are highly competitive, that he has
Proprietary Information of the Company and its affiliates and Third Party Information of their
Customers and Consumers and that as a result of the Company being acquired by GSI, Stakeholder will
receive and be privy to Proprietary Information of GSI and its affiliates and Third Party
Information of their Partners and Consumers. Stakeholder further acknowledges that the Company and
GSI and their affiliates are engaged in the provision of services to support the e-commerce and
direct-to-consumer businesses of their Customers and Partners and that due to the nature of such
businesses, the work performed by Stakeholder for the Company may not be bound by any geographical
or territorial limitations. Accordingly, for four (4) years after the Closing Date (the
“Restricted Period”), except with GSI’s express prior written consent, Stakeholder will not,
directly or indirectly, in any capacity, for the benefit of any Person:
(a) Communicate with or solicit any Person who, as of or during the one (1) year prior to the
Closing Date, was an employee, consultant, agent or representative of the Company or GSI or any of
their affiliates, or who, during the Restricted Period, becomes an employee, consultant, agent or
representative of the Company or GSI or any of their affiliates, (i) in any manner which interferes
or is likely to interfere with such Person’s relationship with the Company or GSI or any such
affiliate, or (ii) in an effort to obtain any such employee as an employee of any other Person or
(iii) in an effort to obtain any such consultant, agent or representative as a consultant, agent or
representative of any Person which conducts a business competitive with all or any material part of
the Business of the Company or its affiliates in the United States or the business of GSI and its
affiliates in the United States;
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(b) Communicate with or solicit any Person who, as of or during the one (1) year prior to the
Closing Date, was a Partner, Customer, client or prospect of the Company or GSI or any of their
affiliates, or who, during the Restricted Period, becomes a Partner, Customer, client or prospect
of the Company or GSI or any of their affiliates, (i) in any manner which interferes or is likely
to interfere with such Person’s relationship with the Company or GSI or any such affiliate, or (ii)
in an effort to obtain any such a Partner, Customer, client or prospect as a partner, customer,
client or prospect of any other Person which conducts a business competitive with all or any
material part of the Business of the Company or its affiliates in the United States or the business
of GSI and its affiliates in the United States; or
(c) Establish, own, manage, operate or control, or participate in the establishment,
ownership, management, operation or control of, or be a director, officer, employee, agent or
representative of, or be a consultant to, any Person which conducts a business competitive with all
or any material part of the (i) Business of the Company or its affiliates in the United States, or
(ii) the business of GSI or its affiliates in the United States which is substantially similar to
the Business of the Company or its affiliates in the United States, or which is not substantially
similar to the Business of the Company but in which Stakeholder was involved during his employment
with the Company after the Closing Date.
5. Enforcement of Covenants. Stakeholder expressly acknowledges that the covenants contained
in Sections 3 and 4 of this Agreement (“Covenants”) are a material part of the consideration
bargained for by GSI and, without the agreement of Executive to be bound by the Covenants, GSI
would not have agreed to enter into the Merger Agreement and issue to Stakeholder a restricted
stock award. Stakeholder acknowledges that any breach by Stakeholder of any of the Covenants may
result in irreparable injury to GSI for which money damages may not adequately compensate. If
there is such a breach, GSI will be entitled, in addition to all other rights and remedies which
GSI may have at law or in equity, to apply to any competent court in Georgia to have an injunction
issued enjoining and restraining Stakeholder and all other Persons involved therein from
continuing such breach. The existence of any claim or cause of action which Stakeholder or any
such other Person may have against GSI will not constitute a defense or bar to the enforcement of
any of the Covenants. If GSI must resort to litigation to enforce any of the Covenants which has a
fixed term, then such term will be extended for a period of time equal to the period during which a
breach of such Covenant was occurring, beginning on the date of a final court order (without
further right of appeal) holding that such a material breach occurred or, if later, the last day of
the original fixed term of such Covenant. If any portion of any Covenant or its application is
construed to be invalid, illegal or unenforceable, then the other portions and their application
will not be affected thereby and will be enforceable without regard thereto. If any of the
Covenants is determined to be unenforceable because of its scope, duration, geographical area or
similar factor, then the court making such determination will have the power to reduce or limit
such scope, duration, area or other factor, and such Covenant will then be enforceable in its
reduced or limited form.
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6. Termination of the Merger Agreement. In the event of the expiration or termination of the
Merger Agreement in accordance with its terms, this Agreement also shall terminate immediately,
simultaneous therewith, and be of no further force or effect.
7. Other Provisions.
(a) Notices. All notices, consents or other communications required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been duly given when delivered
personally or one (1) business day after being sent by a nationally recognized overnight delivery
service, postage or delivery charges prepaid or five (5) business days after being sent by
registered or certified mail, return receipt requested, postage charges prepaid. Notices also may
be given by prepaid facsimile or by e-mail and shall be effective on the date transmitted if
confirmed promptly thereafter by telephone and within 48 hours thereafter by a signed original sent
in one of the manners provided in the preceding sentence. Notices to GSI shall be sent to GSI
Commerce, Inc. 000 Xxxxx Xxxxxx, Xxxx xx Xxxxxxx 00000, Attention: General Counsel; and copies of
notices to GSI shall be sent simultaneously to Blank Rome LLP, Xxx Xxxxx Xxxxxx, Xxxxxxxxxxxx, XX,
00000, Attention: Xxxxxxx X. Xxxxx, Esquire; facsimile: (000) 000-0000; email:
xxxxx@xxxxxxxxx.xxx. Notices to Stakeholder shall be sent to Stakeholder’s address set forth on
the first page of this Agreement; and copies of notices to Stakeholder shall be sent simultaneously
to Xxxxx X. Xxxxxx, Kitchens Xxxxxx Xxxxxx, P.C., 00 Xxxxxxxx Xxxxxx, Xxxxx 000, 0000 Xxxxxxxx
Xxxx, XX, Xxxxxxx, Xxxxxxx 00000; facsimile: (000) 000-0000; email:xxxxxxx@xxxxx.xxx. Any party
may change its address for notice and the address to which copies must be sent by giving notice of
the new addresses to the other parties in accordance with this Section 7(a), provided that any such
change of address notice shall not be effective unless and until received.
(b) Entire Understanding. Stakeholder is or will be entering into an Employment Agreement,
with a member of the Company at or after the date of this Agreement (the “Employment Agreement”).
The obligations of Stakeholder under the Employment Agreement are in addition to, and not in
limitation of, the obligations of Stakeholder under this Agreement. This Agreement and the other
agreements referred to herein state the entire understanding among the parties with respect to the
subject matter hereof and supersede all prior oral and written communications and agreements, and
all contemporaneous oral communications and agreements, with respect to the subject matter hereof.
This Agreement may not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
(c) Waivers. Except as otherwise expressly provided herein, no waiver with respect to this
Agreement shall be enforceable unless in writing and signed by the party against whom enforcement
is sought. Any waiver on behalf of the Company or any other member of the GSI Group may only be
given by an authorized officer of GSI. Except as otherwise expressly provided herein, no failure
to exercise, delay in exercising, or single or partial exercise of any right, power or remedy by
any party, and no course of dealing between or among any of the parties, shall constitute a waiver
of or shall preclude any other for further exercise of, any right, power or remedy.
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(d) Severability. If any provision of this Agreement is construed to be invalid, illegal or
unenforceable, then the remaining provisions hereof shall not be affected thereby and shall be
enforceable without regard thereto.
(e) Counterparts. This Agreement may be executed in any number of counterparts, each of which
when so executed and delivered shall be an original hereof, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one counterpart hereof.
(f) Section Headings. Section and subsection headings in this Agreement are for convenience
of reference only, do not constitute a part of this Agreement, and shall not affect its
interpretation.
(g) References and Capitalized Terms. All words used in this Agreement shall be construed to
be of such number and gender as the context requires or permits. Capitalized terms used herein and
not otherwise defined shall have the respective meanings ascribed thereto in the Merger Agreement.
(h) Controlling Law. This Agreement is made under, and shall be construed and enforced in
accordance with, the laws of the State of Georgia, without giving effect to principles of conflicts
of law.
(i) Jurisdiction and Process. In any action between or among any of the parties, whether
arising out of this Agreement or otherwise, (1) each of the parties irrevocably consents to the
exclusive jurisdiction and venue of the federal and state courts located in the State of Georgia
and agrees to resolve all disputes in such courts, (2) if any such action is commenced in a state
court, then, subject to applicable law, no party shall object to the removal of such action to any
federal court located in the State of Georgia, (3) EACH OF THE PARTIES IRREVOCABLY WAIVES THE RIGHT
TO TRIAL BY JURY, (4) each of the parties irrevocably consents to service of process by first class
certified mail, return receipt requested, postage prepaid, to the address at which such party is to
receive notice in accordance with Section _7, and (5) the prevailing parties shall be entitled to
recover their reasonable attorneys’ fees, costs and disbursements from the other parties (in
addition to any other relief to which the prevailing parties may be entitled), with the trier of
fact to determine which of the parties prevails on an issue-by-issue basis.
(j) Construction. The parties hereto agree that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be applied in the construction
or interpretation of this Agreement.
(k) Assignment. This Agreement and all obligations hereunder are personal to the Stakeholder
and may not be transferred or assigned by the Stakeholder at any time. GSI may assign its rights
under this Agreement to any entity in connection with any sale or transfer of all or substantially
all of GSI’s assets to such entity.
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(l) Binding Nature. This Agreement will be binding upon the Stakeholder and the Stakeholder’s
representatives, executors, administrators, estate, heirs and successors, and will inure to the
benefit of GSI and its successors and assigns.
(m) Advice of Counsel. Stakeholder acknowledges that he has had the benefit of legal counsel
in the negotiation of this Agreement.
[Signature page follows]
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In Witness Whereof, the parties hereto have executed this Agreement as of the date
first above written.
| GSI COMMERCE, INC. | ||||
By:
|
/s/ Xxxxxxx X. Xxxx
|
|||
| Title: Executive Vice President and Chief Financial Officer |
||||
| /s/ Xxxxx Xxxxxxx | ||||
| Xxxxx Xxxxxxx | ||||
