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EXHIBIT 10.8
NONCOMPETE AGREEMENT
THIS NONCOMPETE AGREEMENT (the "Agreement") is dated as of
February 12, 1998, by and among Xxxxxxx Capital II L.P., a Delaware limited
partnership, and Strategic Entrepreneur Fund II, L.P., a Delaware limited
partnership (collectively, "Parent"), The Management Network Group, Inc., a
Kansas corporation (the "Company"), Xxxxxxx Xxxxxxx, Xxxxx Xxx, Xxxx Xxxxxxx,
and Xxxxx Xxxx, each an individual (collectively, the "Non-Competing Parties").
WHEREAS, pursuant to the transactions contemplated that in
certain Agreement and Plan of Merger, as amended, (the "Merger Agreement") among
the Company, Parent, Xxxxxxx Capital TMNG, Inc., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub") and the Non-Competing Parties
dated January 7, 1998, Merger Sub is merging with and into the Company, and
immediately following the merger, in which the Company will be the surviving
entity, Parent will own 60% of the fully diluted and outstanding shares of
common stock of the Company and the Non-Competing Parties will own 40% of the
fully diluted and outstanding shares of common stock of the Company;
WHEREAS, immediately prior to the closing of the transactions
contemplated by the Merger Agreement, the Non-Competing Parties were the sole
stockholders of the Company;
WHEREAS, each of the Non-Competing Parties acknowledges and
agrees that he has expertise in the data communications and/or
telecommunications services consulting business. Furthermore, each of the
Non-Competing Parties' reputation is an integral part of the Company's business
success throughout the areas where the Company's business is conducted. If any
Non-Competing Party in any manner uses his reputation in competition with the
data communications and/or telecommunications services consulting business of
the Company, the Company (and the Parent as the principal stockholder of the
Company) will be deprived of the benefits bargained for pursuant to this
Agreement and the Merger Agreement. Since each Non-Competing Party has the
ability to compete with the Company in the operation of the Company's business
and operations, the Company desires that the Non-Competing Parties enter into
this Agreement. But for the Non-Competing Parties' entry into this Agreement,
neither the Company nor the Parent would have entered into the Merger Agreement.
Each Non-Competing Party, in exchange for the merger consideration to be paid
pursuant to the Merger Agreement and related agreements, is willing to enter
this Agreement;
WHEREAS, each Non-Competing Party has obtained the advice of
counsel in connection with executing this document; and
WHEREAS, Parent requires that each Non-Competing Party and the
Company enter into this Agreement as a condition to Parent consummating the
transactions contemplated by the Merger Agreement.
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NOW, THEREFORE, in order to induce Parent to consummate the
transactions contemplated by the Merger Agreement, each Non-Competing Party
hereby agrees with Parent and the Company as follows:
1. Defined Terms. Capitalized terms used herein without
definition shall have the meanings ascribed to them in the Merger Agreement.
2. Term. Subject to the provisions herein, the term (the
"Term") of this Agreement shall commence on the date hereof and shall expire on
the seventh anniversary of the date of this Agreement. Notwithstanding the
foregoing, (a) in the event that the Company terminates Xxxxx Xxx'x employment
pursuant to Section 8 of that certain Employment Agreement entered into between
the Company and Xxxxx Xxx as of the date hereof, the Term applicable to Xxxxx
Xxx and his obligations hereunder shall expire on the earlier of the seventh
anniversary of the date of this Agreement or the third anniversary of such
employment termination, (b) in the event that the Company terminates Xxxx
Xxxxxxx' employment pursuant to Section 8 of that certain Employment Agreement
entered into between the Company and Xxxx Xxxxxxx as of the date hereof, the
Term applicable to Xxxx Xxxxxxx and his obligations hereunder shall expire on
the earlier of the seventh anniversary of the date of this Agreement or the
third anniversary of such employment termination and (c) in the event that the
Company terminates Xxxxx Xxxx'x employment pursuant to Section 8 of that certain
Employment Agreement entered into between the Company and Xxxxx Xxxx as of the
date hereof, the Term applicable to Xxxxx Xxxx and his obligations hereunder
shall expire on the earlier of the seventh anniversary of this date of this
Agreement or the second anniversary of such employment termination.
3. Non-Competition. During the Term, each Non-Competing
Party shall not, unless acting in accordance with the prior written consent of
Parent and the Company (which consent may be withheld in the Company's and
Parent's sole and absolute discretion), directly or indirectly, own, manage,
join, operate or control, or participate in the ownership, management, operation
or control of, or be connected as a director, officer, employer, employee,
partner, consultant, independent contractor or otherwise with, or permit his
name to be used by or in connection with, any Person which provides, sells,
distributes or markets any products or services that compete with the Company in
the data communications and/or telecommunications services consulting business
in the United States of America and the dependent territories in the United
States of America, and each and every country in the world; it being understood
that the foregoing shall not limit a Non-Competing Party from making passive
investments in less than 5% of the outstanding equity securities in any entity
listed for trading on a national stock exchange or quoted on any recognized
automatic quotation system. As used in this Agreement, "Person" means an
individual, a corporation, a partnership, a limited liability company, an
association, a trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
4. Non-Solicitation. During the Term, each Non-Competing
Party shall not nor shall he permit any of his respective Affiliates, officers,
directors, employees, agents or representatives to, directly or indirectly, (a)
solicit, encourage, or take any other intentional action which is reasonably
intended to induce any Person employed by, or providing consulting services
(directly or indirectly) on behalf of, the Company or any of its Affiliates (A)
to terminate his or
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her employment with, or stop providing consulting services (directly or
indirectly) on behalf of, the Company or such Affiliates or (B) provide his or
her employment or consulting services, directly or indirectly, to or on behalf
of any Non-Competing Party; or (b) interfere in any manner with the contractual
relationship (whether direct or through a third party) or employment
relationship between the Company or any of its Affiliates and any such Person.
As used in this Agreement, "Affiliate" shall mean, with respect to any Person,
any other Person directly or indirectly controlling, controlled by, or under
common control with such Person.
5. Incorporation of Recitals. The recitals in this
Agreement, including the terms defined therein, are hereby incorporated as
substantive terms and provisions of this Agreement.
6. Injunctive Relief. Each Non-Competing Party hereby
acknowledges and agrees that it would be impossible to fully compensate the
Company and Parent for damages resulting from the breach or threatened breach of
Sections 3 and 4 of this Agreement and, accordingly, that the Company and/or
Parent shall be entitled to temporary and permanent injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent injunctions,
to enforce such Sections without the necessity of proving actual damages
therewith. This provision with respect to injunctive relief shall not, however,
diminish the Company's and/or Parent's right to claim and recover damages or
enforce any other of its legal and/or equitable rights or defenses. Buyer and
the Company hereby acknowledge and agree that nothing contained in this
Agreement shall give Buyer or the Company any legal or equitable right to enjoin
the payment to the Non-Competing Parties of any funds payable to the
Non-Competing Parties from the Escrow Account(s) (as defined in the Merger
Agreement) created by the Escrow Agreement executed by the parties hereto on the
date hereof.
7. Assignment. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned by any party without the prior written
consent of the other parties except that the Company and Parent may, without
such consent, assign all such rights and obligations to another Person (a) as
permitted by, and in accordance with, the Merger Agreement, or (b) incident to a
transfer of all or substantially all of the assets of the Company to such
Person, whether by merger, sale, lease, consolidation or otherwise.
8. Severable Provisions. In the event that any of the
provisions of this Agreement should ever be adjudicated by a court of competent
jurisdiction to exceed the time or geographic or other limitations permitted by
applicable law, then such provisions shall be deemed reformed to the maximum
time or geographic or other limitations permitted by applicable law, as
determined by such court in such action. The invalidity or unenforceability of
any particular provision of this Agreement shall not affect the other provisions
hereof, which shall continue in full force and effect. Without limiting the
foregoing, the covenants contained herein shall be construed as separate
covenants, covering their respective subject matters, with respect to each of
the separate cities, counties and states of the United States, and each other
country, and political subdivision thereof, in which the Company now or
subsequently transacts any business. Each of the obligations of the
Non-Competing Parties is independent and several under this Agreement. A
violation or breach of this Agreement by any Non-Competing Party shall not be
deemed to be a
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violation or breach by any other Non-Competing Party, so long as such other
Non-Competing Party did not actively participate in the activity leading to the
breach or violation.
9. Binding Agreement. Subject to the provisions of Section
7, this Agreement shall inure to the benefit of and shall be binding upon the
parties hereto, and their respective successors and assigns.
10. Descriptive 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.
11. Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the parties or any of them, with respect to the subject
matter hereof. No modification of this Agreement shall be valid unless made in
writing and signed by the parties hereto.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Kansas without giving
effect to the provisions thereof relating to conflicts of law.
13. Notices. All notices, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by telecopy or mailed by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
a. If to any Non-Competing Party, to his address as set
forth in the records of the Company.
with a copy to:
Xxxxxxxx, Thomson & Xxxxxx
00 Xxxxxxxxx Xxxxx
000 Xxxx 00xx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Xx.
Facsimile Number: (000) 000-0000
b. If to Parent, to:
c/o Behrman Capital II L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile Number: (000) 000-0000
with a copy to:
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Xxxxxx & Xxxxxxx
00 Xxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Facsimile Number: (000) 000-0000
14. Attorneys' Fees. In the event that any party shall bring
an action in connection with the performance, breach or interpretation hereof,
then the prevailing party in such action as determined by the court or other
body having jurisdiction shall be entitled to recover from the losing party in
such action, as determined by the court or either body having jurisdiction, all
reasonable costs and expense of litigation or arbitration, including reasonable
attorney's fees, court costs, costs of investigation and other costs reasonably
related to such proceeding.
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IN WITNESS WHEREOF, this Noncompete Agreement is executed as of
this day and year first above written.
NON-COMPETING PARTIES:
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Xxxxxxx X. Xxxxxxx
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Xxxxx X. Xxx
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Xxxx X. Xxxxxxx
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Xxxxx X. Xxxx
PARENT: XXXXXXX CAPITAL II L.P.,
a Delaware limited partnership
By: Xxxxxxx Brothers, LLC,
its general partner
By:
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Xxxxx X. Xxxxxxx,
Managing Member
STRATEGIC ENTREPRENEUR FUND II, L.P.,
a Delaware limited partnership
By:
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Xxxxx X. Xxxxxxx,
General Partner
THE COMPANY: THE MANAGEMENT NETWORK GROUP; INC.
a Kansas corporation
By:
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Its
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