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EXHIBIT 10.72
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into and
effective as of July 6, 1998 ("Effective Date") by and between CP CLARE
CORPORATION, a Massachusetts Corporation ("Clare") and XXXXXX XXXXX ("Xxxxx")
with reference to the following facts.
RECITALS
A. Immediately prior to the Effective Date, Xxxxx was an approximately
83% shareholder and president of Micronix Integrated Systems, Inc. ("Micronix"),
a California corporation.
B. On the Effective Date, Clare Micronix became a wholly owned
subsidiary of Clare by merger with a subsidiary of Clare (the "Transaction").
C. In order to protect the value of the business operations of Clare
and the goodwill of Micronix acquired by Clare in the Transaction, Clare
desires, and Xxxxx agrees to, the terms and conditions of this Agreement.
NOW THEREFORE, the parties agree as follows:
SECTION 1. DEFINED TERMS.
1.1 ENGAGE IN COMPETITIVE ACTIVITIES. For purposes of this Agreement
"Engage in Competitive Activities" shall mean:
(i) to engage in any aspect, directly or indirectly, of any
Competitive Activities;
(ii) to render any activities to any individual or entity engaged
in Competitive Activities, including without limitation, as an employee,
consultant, adviser or independent contractor; or
(iii) to become involved, interested in or affiliated with any
individual or entity engaged in Competitive Activities, in any capacity,
including, without limitation, as a partner, shareholder, joint venturer,
lender, guarantor, surety or principal.
1.2 COMPETITIVE ACTIVITIES. For purposes of this Agreement, "Competitive
Activities" shall mean activities substantially the same as any business or
activity conducted by Clare during the time the obligations of Xxxxx under this
Agreement are applicable, including, without limitation, activities actively
contemplated by Clare, demonstrated by discussions by Clare in Board of Director
meetings or Executive Management Team meetings; provided, however, if the
obligations of Xxxxx are applicable after the termination of Xxxxx'x
relationship with Clare, Competitive Activities shall be limited to activities,
including contemplated activities, during the 12 month period prior to the date
of termination.
1.3 SERVICE AREA. For purposes of this Agreement, "Service Area" shall
mean the United States of America.
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SECTION 2. CONSIDERATION.
2.1 AMOUNT. Xxxxx acknowledges and agrees that this Agreement is a
condition of Clare's payment of the purchase price for the acquisition of
Micronix in the Transaction. In addition, Clare shall pay to Xxxxx the sum of
$1,250,000 in consideration of this Agreement, in five equal annual allotments
of $250,000. Each annual allotment shall be paid to Xxxxx in substantially equal
installments in accordance with the Company's payroll practices for its
executives, and commencing on the first payroll payment date after the Effective
Date (collectively, the "Periodic Payments"). Payment shall be made, if, during
the period commencing on the Effective Date until the date of payment, Xxxxx
remains in compliance with the terms of this Agreement.
2.2 PAYMENT TERMINATION.
(a) No Periodic Payments to Xxxxx shall be made after the date of
Xxxxx'x termination of employment with Clare, in the event that termination
occurs as a result of any one of the following:
(i) resignation of Xxxxx (except as provided in Section 2.2(c)); or
(ii) termination of Xxxxx'x employment by Clare for Good Cause (as
defined in Xxxxx'x employment agreement with Clare in effect from time to time).
(b) Periodic Payments to Xxxxx shall be made for a period of 18 months
after the date of Xxxxx'x termination of employment with Clare, in the event
that termination occurs as a result of Performance Cause (as defined in Xxxxx'x
employment agreement with Clare in effect from time to time).
(c) Periodic Payments to Xxxxx shall be made for the same period he is
to receive base salary payments following the date of Xxxxx'x termination of
employment with Clare for Good Reason following a Change in Control (pursuant to
Xxxxx'x employment agreement with the Clare in effect from time to time).
(d) In the event that Xxxxx'x termination of employment with Clare
occurs for reasons other than referenced in Section 2.2(a), (b) and (c),
Periodic Payments shall be made to Xxxxx if Xxxxx remains in compliance with the
terms of this Agreement.
SECTION 3. NONCOMPETITION AFTER EFFECTIVE DATE.
During the five-year period after the Effective Date, Xxxxx shall not
Engage in Competitive Activities within the Service Area, except as an employee
of or contractor to Clare.
SECTION 4. NONCOMPETITION AFTER TERMINATION.
If Xxxxx'x employment is terminated by Clare or if Xxxxx resigns from
employment with Clare, in either case for any reason, Xxxxx shall not Engage in
Competitive Activities within the Service Area during the period ending on the
later of (a) the five year period following the Effective Date as set forth in
Section 3 or (b) one year after the date of termination.
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SECTION 5. OWNERSHIP OF SECURITIES.
Notwithstanding anything to the contrary in this Agreement,(Error!
Bookmark not defined.)(Error! Bookmark not defined.)(Error! Bookmark not
defined.), this Agreement shall not prohibit Xxxxx from owning, directly or
indirectly, solely as an investment, securities of any entity Engaged in
Competitive Activities which are traded on any national securities exchange or
listed on the National Association of Securities Dealers Automated Quotation
System so long as (i) Xxxxx is not a controlling party, or a member of a group
which controls the entity Engaged in Competitive Activities, and (ii) Xxxxx does
not, directly or indirectly, own five percent or more of any class of securities
of such entity.
SECTION 6. REMEDIES AND INJUNCTIVE RELIEF.
The parties agree that any breach of this Agreement would cause
irreparable injury to Clare which cannot be adequately compensated in monetary
damages. Therefore, Clare shall have, in addition to (and not in lieu of) other
rights and remedies available, the right to have the provisions of this
Agreement specifically enforced by any court of competent jurisdiction by way of
an injunction or other legal equitable relief. Injunctive relief shall be
available pursuant to Section 526 of the California Code of Civil Procedure and
Section 3422 of the California Civil Code (as either section may from time to
time be amended or renumerated) in addition to any other rights and remedies
Clare may have.
SECTION 7. SEVERABILITY
It is understood and agreed by the parties that the provisions of this
Agreement are reasonable and valid as to time, geographic area, scope of
business and in all other respects, and that such provisions are properly
required for the adequate protection of the business of Clare. If any court of
competent jurisdiction or arbitration panel shall refuse to enforce any or all
of the restrictions because the time, commencement date, geographic area, or
scope of business is deemed unreasonable, it is expressly understood and agreed
that this Agreement shall not be void, but that for the purpose of such
proceeding and in such jurisdiction, the restrictions contained in this
Agreement shall be deemed to be reduced only to the extent necessary to permit
enforcement of this Agreement.
SECTION 8. MISCELLANEOUS PROVISIONS
8.1 GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed by, the internal laws of the State of California, without regard to
principles of conflicts of laws.
8.2 WAIVER, MODIFICATION AND AMENDMENT. No amendment of, supplement to
or waiver of any obligations under this Agreement will be enforceable or
admissible unless set forth in a writing signed by both parties. No delay or
failure to require performance of any provision of this Agreement shall
constitute a waiver of that provision as to that or any other instance. Any
waiver granted shall apply solely to the specific instance expressly stated.
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8.3 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between Clare and Xxxxx regarding the specific subject matter of this Agreement,
and supersedes any prior understandings, agreements, or representations by or
between the parties, written or oral, to the extent they relate in any way to
the subject matter of this Agreement.
8.4 NOTICES. All notices, consents, requests, demands or other
communications to or upon the respective parties shall be in writing, if to
Xxxxx shall be copied to The Xxxxx Firm, 0000 Xxxxxx Xxxxx, Xxxxxx, XX 00000,
Attn.: Xxx Xxxxx, and shall be effective for all purposes upon receipt, by (i)
personal delivery, (ii) delivery by messenger, express or air courier or similar
courier, or (iii) delivery by United States first class mail, postage prepaid.
Either party may change its address by written notice to the other in the manner
set forth above. Receipt of communications by United States mail will be
sufficiently evidenced by return receipt. Other forms of delivery and
transmittal shall be sufficiently evidenced by a written or printed record of
receipt.
8.5 ASSIGNMENT. Neither party may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
party. This Agreement shall be binding on and inure to the benefit of the
successors and permitted assigns of the parties.
8.6 THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall be
construed to give any person other than the express parties to this Agreement,
and their respective successors and permitted assigns, any benefits, rights or
remedies.
8.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.8 CONSTRUCTION OF AGREEMENT. The parties mutually acknowledge that
they and their attorneys have participated in the preparation and negotiation of
this Agreement. In cases of uncertainty this Agreement shall be construed
without regard to which of the parties caused the uncertainty to exist.
8.9 ATTORNEYS' FEES. If any legal action or other proceeding is
commenced which is related to this Agreement, the losing party shall pay the
prevailing party's actual attorneys' fees and expenses incurred in the
preparation for, conduct of or appeal or enforcement of judgment from the
proceeding. The phrase "prevailing party" shall mean the party who is determined
in the proceeding to have prevailed or who prevails by dismissal, default or
otherwise.
8.10 RIGHT TO OFFSET. Clare shall have the right to offset any amounts
that may from time to time during the effective period of this Agreement be owed
by Xxxxx or any Xxxxx Entities (as defined in the Agreement and Plan of Merger
referenced below) to Clare pursuant to the terms of Paragraph 8.6 of the
Agreement and Plan of Merger dated as of July 6, 1998 between Clare, a wholly
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owned subsidiary of Clare, Micronix, Xxxxx and the principal shareholders of
Micronix against amounts payable to Xxxxx under this Agreement.
IN WITNESS WHEREOF, this Agreement has been entered into as of the
Effective Date.
CP CLARE CORPORATION
By: ____________________________ ____________________________
Xxxxxx Xxxxx
Its: ____________________________
Address: Address:
00 Xxxxxx Xxxx Xxxxx 4 Little Pond
Beverly, MA 01915-1048 Xxxxxx Xxxxxx, XX 00000
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