NON-COMPETITION/NON-SOLICITATION AGREEMENT
This
Non-Competition
Agreement
(this
“Agreement”),
dated
November 14, 2007, is made by and between Xxxxx X. Xxxxx (the “Employee”)
and
All Ad Acquisition, Inc. a Delaware corporation (“Acquiror”).
For
purposes of this Agreement, “Acquiror” shall be deemed to include Acquiror and
its wholly and majority-owned direct and indirect subsidiaries that operate
the
Business (as defined below) of the Company.
Background
Acquiror
and Ad Authority, Inc., a Delaware corporation (the “Company”)
are
parties to an Stock Purchase Agreement dated on or about November 14, 2007
(the
“Purchase
Agreement”),
pursuant to which Acquiror will acquire the Company (the “Purchase”).
Employee understands and agrees that he is a key and significant member of
either the management and/or the technical workforce of the Company and that
he
will receive substantial consideration as a result of Acquiror’s purchase of the
Company. Employee is willing to enter into this Agreement as a condition of
the
closing of the Purchase and to protect Acquiror’s legitimate interests as a key
employee of the Company. Employee understands and acknowledges that the
execution and delivery of this Agreement by Employee is a material inducement
to
the willingness of Acquiror to enter into the Purchase Agreement, and a material
condition to Acquiror consummating the transactions contemplated by the Purchase
Agreement. Capitalized terms used herein and not defined herein shall have
the
meanings assigned to such terms in the Purchase Agreement.
Acquiror
and Employee both agree that the Company’s business includes the design,
development, manufacture, production, marketing and sales of products and
services related to the Business (as defined below) throughout each county
or
state of the United States or country in which the Company conducted or as
of
the Closing Date (as defined in the Purchase Agreement) had developed or had
been actively developing (the “Restrictive
Territory”).
Acquiror represents and Employee understands that, following the Purchase,
Acquiror will continue conducting the Company’s business in the Restrictive
Territory.
NOW,
THEREFORE, in consideration of the foregoing premises and for good and valuable
consideration, receipt of which is hereby acknowledged, Employee, intending
to
be legally bound, agrees as follows:
1. Agreement
Not to Compete/Solicit.
During
the Restrictive Period (as defined below), Employee agrees that he will not,
as
an employee, agent, consultant, advisor, independent contractor, general
partner, officer, director, Employee, investor, lender or guarantor of any
corporation, partnership or other entity, or in any other capacity directly
or
indirectly:
(a) engage
in, have an interest in or provide advice or assistance to any internet
advertising business if at the time of the proposed activity the Company is
engaged in or as of the Closing Date of the Purchase had developed or had been
actively developing such business (hereafter referred to as the “Business”)
in the
Restrictive Territory; or
(b) permit
Employee’s name to be used in connection with a business, which is competitive
or substantially similar to the Business; or
(c) do
anything to cause or encourage any officer, director, employee, consultant,
agent or broker of the Company to terminate or sever his or her employment
or
other relationship with the Company for the purpose of competing with or
proposing to compete with the Company, or for the purpose of damaging the
Company in any way; or
(d) do
anything to cause or encourage any customer to terminate, modify or fail to
review any contract or other relationship with the Company; or
(e) (iii)
contact or otherwise act in concert with, for purposes of competing, directly
or
indirectly, or aiding another to compete, directly or indirectly, with the
Business or of damaging the Company in any way, any person that became known
to
Employee by or through the Business or whose name or business was obtained
by or
from the Company; or
(f) without
the prior written consent of Buyer, directly or indirectly, solicit for
employment or hire any current employee, agent or broker of the
Company.
Notwithstanding
the foregoing, Employee may (i) own, directly or indirectly, solely as an
investment, up to one percent (1%) of any class of “publicly traded securities”
of any business that is competitive or substantially similar to the Business
or
(ii) work for a division, entity or subgroup of any of such companies that
engages in the Business so long as such division, entity or subgroup does not
engage in the Business. The term “publicly traded securities” shall mean
securities that are traded on a national securities exchange or listed on the
National Association of Securities Dealers Automated Quotation
System.
For
purposes of this Agreement, the restrictive period (referred to herein as the
“Restrictive Period”) shall commence on the Closing Date of the Purchase and
shall continue until the third (3rd) anniversary of the Closing Date; provided,
however, that with respect to (a) through (e) above, if Employee’s employment
with the Company is terminated without “Cause” (as such term is defined in
Employee’s employment agreement with Acquiror) or by Employee for “Good Reason”
(as such term is defined in Employee’s employment agreement with Acquiror or
Company) the Restrictive Period shall end on the earlier of (i) one (1) year
after the termination of employment date and (ii) three (3) years after the
Closing Date. In the event that no Closing occurs as contemplated by the
Purchase Agreement and the Purchase Agreement thereby terminates, this Agreement
shall terminate and be of no further force or effect.
2. Acknowledgment.
Employee hereby acknowledges and agrees that:
(a) this
Agreement is necessary for the protection of the legitimate business interests
of Acquiror in acquiring the Company;
(b) the
execution and delivery and continuation in force of this Agreement is a material
inducement to Acquiror to execute the Purchase Agreement and is a mandatory
condition precedent to the closing of the Purchase, without which Acquiror
would
not close the transactions contemplated by the Purchase Agreement;
(c) the
scope
of this Agreement in time, geography and types and limitations of activities
restricted is reasonable;
(d) Employee
has no intention of competing with the Business acquired by Acquiror within
the
area and the time limits set forth in this Agreement; and
(e) breach
of
this Agreement will be such that Acquiror will not have an adequate remedy
at
law because of the unique nature of the operations and the assets being conveyed
to Acquiror.
3. Remedy.
Employee acknowledges and agrees that (a) the rights of Acquiror under this
Agreement are of a specialized and unique character and that immediate and
irreparable damage will result to Acquiror if Employee fails to or refuses
to
perform his obligations under this Agreement and (b) Acquiror may, in addition
to any other remedies and damages available, seek an injunction in a court
of
competent jurisdiction to restrain any such failure or refusal. No single
exercise of the foregoing remedies shall be deemed to exhaust Acquiror’s right
to such remedies, but the right to such remedies shall continue undiminished
and
may be exercised from time to time as often as Acquiror may elect. Employee
represents and warrants that his expertise and capabilities are such that his
obligations under this Agreement (and the enforcement thereof by injunction
or
otherwise) will not prevent him from earning a livelihood.
4. Severability.
If any
provisions of this Agreement as applied to any part or to any circumstances
shall be adjudged by a court to be invalid or unenforceable, the same shall
in
no way affect any other provision of this Agreement, the application of such
provision in any other circumstances, or the validity or enforceability of
this
Agreement. Acquiror and Employee intend this Agreement to be enforced as
written. If any provision, or part thereof, however, is held to be unenforceable
because of the duration thereof or the area covered thereby, all parties agree
that the court making such determination shall have the power to reduce the
duration and/or area of such provision, and/or to delete specific words or
phrases and in its reduced form such provision shall then be
enforceable.
5. Amendment.
This
Agreement may not be amended except by an instrument in writing signed by
Acquiror’s Senior Vice President of Human Resources, or his or her designee, and
Employee.
6. Waiver.
No
waiver of any nature, in any one or more instances, shall be deemed to be or
construed as a further or continued waiver of any breach of any other term
or
agreement contained in this Agreement.
7. Headings.
The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement.
8. Governing
Law.
This
Agreement shall be construed and interpreted and its performance shall be
governed by the laws of the State of California without regard to conflicts
of
law principles of any jurisdiction.
9. Entire
Agreement.
This
Agreement and the documents referenced herein constitutes the entire agreement
of the parties with respect to the subject matter of this Agreement and
supersedes all prior agreements and undertakings, both written and oral, between
the parties, or any of them, with respect to the subject matter of this
Agreement (but does not in any way merge or supersede the Purchase Agreement
or
any other agreement executed in connection with the Purchase Agreement,
including the Employee’s employment agreement with Acquiror, if any). To extent
that the provisions of this Agreement are ambiguous or incomplete they shall
be
construed in a manner consistent with the Purchase Agreement or other agreement
executed in connection therewith, although in the event of a conflict between
the terms of this Agreement and such other agreements, the terms of this
Agreement shall control.
IN
WITNESS WHEREOF, Acquiror and Employee have executed this Agreement on the
day
and year first above written.
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Employee
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/s/
Xxxxx Xxxxx
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Signature
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Xxxxx
Xxxxx
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Name
(Please Print)
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All
Ad Acquisition, Inc.
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a
Delaware corporation
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By:
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/s/
Xxxxxxx Xxxx
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Name:
Xxxxxxx Xxxx
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Title:
President
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