COVENANT NOT TO COMPETE AGREEMENT
THIS
COVENANT NOT TO COMPETE AGREEMENT
(“Agreement”) is made and entered into as of 12:01 a.m. on the 30th day of June
2006 by and between SITESTAR
CORPORATION
(the
“Company”), and FIRST
USA, INC.
(“Seller”).
R
E C I T
A L S
A. Pursuant
to the Definitive Asset Purchase Agreement of even date herewith (the
“Asset
Purchase Agreement”),
by
and among the Company and Seller, Seller has agreed to sell to the Company
certain Assets (as defined in the Asset Purchase Agreement) in exchange for
cash
and other consideration, all as more fully set forth in the Asset Purchase
Agreement.
B. The
execution and delivery of this Agreement is a condition precedent to the
obligation of the Company to consummate the transactions contemplated by the
Asset Purchase Agreement, and Seller acknowledges that the Company is relying
on
the obligations of Seller under this Agreement in completing the acquisition
of
the Assets.
C. Seller
recognizes that the consummation of the transactions contemplated by the Asset
Purchase Agreement will inure to its benefit and, therefore, is willing to
enter
into this Agreement to induce the Company to consummate the transactions
contemplated by the Asset Purchase Agreement.
A
G R E E
M E N T
In
consideration of the mutual covenants and agreements herein contained, and
for
such other good and valuable consideration the receipt and sufficiency of which
is hereby acknowledged, the parties, intending to be legally bound, hereby
agree
as follows:
ARTICLE
I
DEFINITIONS
As
used
in this Agreement, the following terms shall have the meanings set
forth:
1.1. “Business”
shall
mean the provision of dial-up Internet access.
1.2. “Compete
with the Company”
shall
mean the i) direct or indirect solicitation of any Dial Up Customers that were
sold or transferred to Buyer pursuant to the Asset Purchase Agreement for the
purpose of selling said Dial Up Customers internet service; or ii) the provision
of dial up internet service to retail or wholesale customers.
1.3. “Confidential
Information”
shall
mean any and all material, data, contracts, proprietary information, trade
secrets, confidential information, customer lists, mailing lists, goodwill,
or
other intangible property used or useful in connection with the
Business.
1.4. “Restrictive
Period”
shall
mean the period of time from the date of the closing (the “Closing”)
of the
transactions contemplated under the Asset Purchase Agreement until the third
anniversary of the date of the Closing, provided, however, that in the event
of
a breach by Seller of any covenant set forth in Sections 2.1 and 2.2, the
Restrictive Period shall be extended by the period of the duration of such
breach.
1.5. “Restricted
Area”
shall
include the entire United States of America and Canada.
1.6. All
other
capitalized terms not defined herein shall have the meaning set forth in the
Asset Purchase Agreement.
ARTICLE
II
SELLER’S
COVENANTS; SEVERABILITY; REMEDIES
2.1.
Covenant Not to Compete.
Seller
agrees that during the Restrictive Period it will not compete with the Company
within the Restricted Area.
2.2. Additional
Restricted Conduct.
Seller
further agrees that during the Restrictive Period it will not:
i) directly
or indirectly, solicit, raid, entice or induce any employee of the Company
or
any of its subsidiaries or affiliates to be employed by any person, firm or
corporation that, directly or indirectly, competes with the
Company,
ii) directly
or indirectly, approach any such employee for these purposes;
iii) authorize
or knowingly approve the taking of such actions by other persons on behalf
of
any such person, firm or corporation, or assist any such person, firm or
corporation in taking such action;
iv) directly
or indirectly, solicit, raid, entice or induce any person, firm or corporation
who or which on the date hereof, is, or at any time during the Restrictive
Period, a customer of or supplier to the Business of the Company to cease doing
business with the Company, or in any way interfere with the relationship between
(a) any customer of or supplier to the Company and (b) the Company.
Notwithstanding the foregoing, Seller may solicit, deal with and otherwise
transact business with any such customer or supplier provided it is not for
the
purpose of Competing with the Company;
v) disclose
any Confidential Information to any third party or use said Confidential
Information on its own behalf.
vi) Enter
into any other wholesale agreement with another company, or individual to
provide them with retail or wholesale dial-up network access.
2.3. Consideration.
The
Company is entering into the Asset Purchase Agreement and acquiring Seller’s
interests in the Company, concurrently with execution of this Agreement, for
and
in consideration, in part, of the covenants of Seller set forth in Sections
2.1
and 2.2 above.
2.4. Acknowledgements.
Seller
acknowledges that the scope and time limits set forth in Section 2.1 above
are
reasonable and properly required to protect adequately legitimate business
interests of the Company and the Company. Seller further acknowledges that
(i)
prior to the Closing Date, Seller was engaged in the Business; (ii) the value
of
the Company would be materially diminished if Seller were to compete with the
Company; and (iii) the Company would not enter into the Asset Purchase Agreement
absent the Seller’s agreement to be bound by the terms of this Agreement. Seller
further acknowledges that enforcement of these provisions is not contrary to
the
public health, safety, policy or welfare.
2.5. Severable
Promises.
The
parties hereto intend that the promises set forth in Sections 2.1, 2.2 and
2.3
hereof shall be construed as a series of separate promises, each promise for
each jurisdiction to which this Agreement may be enforced from time to time.
Except for the geographic coverage for each such jurisdiction, each such
separate promise shall be deemed identical in terms. It is the desire and intent
of the parties that the provisions of this Agreement shall be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any court or
arbitrator determines that any particular provision or portion of this Agreement
shall be adjudicated to be invalid or unenforceable in respect of scope,
duration or geographic area, such court or arbitrator shall be empowered and
directed by the parties pursuant to this Section 2.5 to substitute provisions
similar to those contained in this Agreement so as to provide the parties,
to
the fullest extent permitted by applicable law, the benefits intended by this
Agreement.
2.6. Remedies
for Breach.
Both
parties recognize and agree that any breach of the covenants and obligations
undertaken by Seller pursuant to this Agreement at any time would result in
irreparable damage to the Company in an amount difficult to ascertain.
Accordingly, in addition to any other relief to which the Company may be
entitled, the Company shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, either in law
or
in equity, to enforce the specific performance of the terms and conditions
of
this Agreement by Seller or to enjoin Seller from performing services for any
such other person, firm or corporation, and to obtain damages for such breach
of
this Agreement.
ARTICLE
III
EXCEPTION
TO APPLICABILITY
Notwithstanding
anything herein to the contrary, nothing in this Agreement shall restrict Seller
from soliciting customers for or supporting current customers of Digital
Subscriber Line (DSL) Internet connectivity or web hosting
services.
ARTICLE
IV
MISCELLANEOUS
4.1. Entire
Agreement; Amendment.
This
Agreement supersedes all other agreements, oral or written, previously made
with
respect to the subject hereof and contains the entire agreement of the parties
with respect to the subject matter hereof. It may not be changed orally, but
only by agreement in writing signed by the party against whom enforcement of
any
waiver, change, modification or discharge is sought.
4.2. Severability.
If any
provision hereof should be found to be prohibited by or unlawful or
unenforceable under any applicable law of any jurisdiction, other provisions
shall be substituted so as to provide the parties, to the fullest extent
permitted by applicable law, the benefits intended by this Agreement. Moreover,
such a finding shall not affect any other provision of this Agreement. To the
full extent, however, that the provisions of such applicable law may be waived,
they are hereby waived, to the end that this Agreement be deemed to be a valid
and binding agreement enforceable in accordance with its terms.
4.3. Governing
Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the Commonwealth of Virginia.
4.4. Assignment.
The
Company shall have the right to assign this Agreement and to delegate all
rights, duties and obligations hereunder, to any affiliate, successor or
subsidiary of the Company. Seller agrees that this Agreement is personal to
it
and its rights and interests hereunder may not be assigned, nor may its
obligations and duties hereunder be delegated; provided, however, that this
Agreement shall be binding on each of the Seller’s parents, subsidiaries, sister
entities, or other affiliate and shall be binding on any successor in interest
of such entities.
4.5. Cumulative
Remedies; No Waiver.
Each
and all of the several rights and remedies provided in this Agreement, or by
law
or in equity, shall be cumulative, and no one of them shall be exclusive of
any
other right or remedy, and the exercise of any one of such rights or remedies
shall not be deemed a waiver or, or an election to exercise, any other such
right or remedy. No waiver of any term or condition of this Agreement shall
be
construed as a waiver of any other term or condition, nor shall any waiver
of
any default hereunder be construed as a waiver of any other default
hereunder.
4.6. Notices.
All
notices and communications pursuant to this Agreement shall be in writing and
shall be deemed properly given and effective when received if (a) personally
delivered, (b) sent by a national delivery service providing evidence of
delivery, or (b) sent by facsimile, to the following:
If
to
Seller, to:
FIRST
USA, INC.
Attn:
Xxxxx X. Xxxxxx, President and CEO
00000
Xxxxxxx Xxxx
Xx.
Xxxxxxxxxxx, Xxxx 00000
If
to
Company, to:
SITESTAR
CORPORATION
0000
Xxxxxxxxxx Xxxx, #000
Xxxxxxxxx,
XX 00000
or
to
such other address as a party provides (in accordance herewith) to the other
parties hereto from time to time.
4.7. Representation
by Counsel; Interpretation. The Company and Seller each acknowledge that each
party to this Agreement has had the opportunity to consult with counsel in
connection with this Agreement and the transactions and relationships
contemplated by this Agreement. Accordingly, any rule of law or any legal
decision that would require interpretation of any claimed ambiguities in this
Agreement against the party that drafted it has no application and is expressly
waived. The provisions of this Agreement shall be interpreted in a reasonable
manner to effect the intent of the Company and Seller.
IN
WITNESS WHEREOF, Seller and the Company have executed this Covenant Not to
Compete Agreement as of the date first above written.
| IDACORP, INC. | SITESTAR CORPORATION | ||
|
By: Xxxxx X. Xxxxxx |
By: Xxxxx X. Xxxxxxxx, Xx. |
||
| Title: President & CEO | Title: President & CEO |
