Non-Competition Agreement
THIS AGREEMENT is made as of the 6th day of July, 1999, between
XXXXXXXX.XXX, INC., a Florida corporation (the "Company"), and X. XXXXXXXX
XXXXX, an individual resident of the State of Georgia ("Young" or "Executive").
W I T N E S S E T H
WHEREAS, the Company originates, processes, underwrites, funds, closes
and sells mortgage loans throughout the United States, using loan
correspondents, network members, retail loan officers and strategic business
partners, each of whom employs the Company's proprietary CLOser software system
and its associated Internet capabilities; and
WHEREAS, Young is to be employed by the Company as its Chief
Information Officer where he will be charged with the overall development and
maintenance of all of the Company's computer technology; and
WHEREAS, in his position with the Company, Young will have access to
valuable confidential business and professional information possessed by the
Company, have substantial relationships with prospective and existing technology
customers and clients of the Company, have specialized training in the methods
by which the Company employs its technology and conducts its business and have
access to trade secrets related to the CLOser software system and its associated
Internet capabilities; and
WHEREAS, because of the intimate knowledge of the Company's
confidential information, trade secrets, customer and client relationships,
technology and methods of operation to be obtained by Young, there would be a
detrimental effect on the Company's business if Young were to enter into
competition with the Company after the date hereof; and
NOW THEREFORE, in consideration of the above premises and of the
promises herein contained, the parties covenant and agree as follows:
1. Certain Definitions. For purposes of this Agreement, the
following words and phrases have the following meanings:
"Affiliate" has the same meaning as "affiliate" in Rule 144(a)
promulgated under the Securities Act of 1933, as amended.
"Beneficial Owner" has the same meaning as "beneficial owner"
in Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended.
"Cause" for termination means (i) Executive's conviction of a
felony, (ii) acts of Executive which, in the judgment of the
Board, constitute fraud on the part of Executive, including
but not limited to misappropriation or embezzlement in the
performance of duties as an employee of the Company, or
willful engagement in conduct materially injurious to the
Company, or (iii) gross misconduct, including but not limited
to the willful failure of Executive either to (a) obey lawful
written instructions of the Board after thirty (30) days
notice in writing of Executive's failure to do so and the
Board's intention to terminate Executive if such failure is
not corrected, or (b) correct any conduct of Executive which
constitutes a breach of this Agreement after thirty (30) days
notice in writing of Executive's failure to do so and of the
Board's intention to terminate Executive if such failure is
not corrected.
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"Change of Control" shall be deemed to have occurred if, after
the effective date of this Agreement,
(a) any one Person (or group of Affiliated Persons or
entities) other than an Excluded Person or an underwriter
temporarily holding securities pursuant to an offer of
such securities, becomes a Beneficial Owner, directly or
indirectly, of securities representing 50% or more of the
total number of votes that may be cast for the election of
directors of the Company; or
(b) the shareholders of the Company approve, and the Company
consummates, a merger, consolidation or share exchange of
the Company with any other corporation or approve the
issuance of voting securities of the Company in connection
with a merger, consolidation or share exchange of the
Company, other than (i) a merger, consolidation or share
exchange which would result in the voting securities of
the Company outstanding immediately prior to such merger,
consolidation or share exchange continuing to represent
(either by remaining outstanding or by being converted
into voting securities of the surviving entity or any
parent thereof) at least 50% of the combined voting power
of the voting securities of the Company or such surviving
entity or any parent thereof outstanding immediately after
such merger, consolidation or share exchange, or (ii) a
merger, consolidation or share exchange effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person other than an Excluded
Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 50%
or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the
Company's then outstanding voting securities; or
(c) the shareholders of the Company approve, and the Company
consummates, an agreement for the sale or disposition by
the Company of all or substantially all of the Company's
assets (in one transaction or a series of related
transactions within any period of 24 consecutive months),
other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity at
least 50% of the combined voting power of the voting
securities of which are owned by Persons in substantially
the same proportions as their ownership of the Company
immediately prior to such sale.
(d) Notwithstanding the foregoing, no "Change of Control"
shall be deemed to have occurred if there is consummated
any transaction or series of integrated transactions
immediately following which the record holders of the
common stock of the Company immediately prior to such
transaction or series of transactions continue to own,
directly or indirectly, in the same proportions as their
ownership in the Company, an entity that owns all or
substantially all of the assets or voting securities of
the Company immediately following such transaction or
series of transactions.
"Excluded Person" means Xxxx Xxxxxx, Canaan Equity, L.P.,
Dominion Fund III, or Affiliates of any of the foregoing.
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"Person" means any individual, firm, partnership, corporation
or other entity, including any successor (by merger or
otherwise) of such entity, or a group of any of the foregoing
acting in concert.
"Retirement" shall be deemed to have occurred if the
Executive's employment terminates at age 62 or older, and if
the Executive has accrued 15 years of continuous service with
the Company or any Affiliate company.
2. Confidentiality. Young will not reveal to others or use any of
the Company's trade secrets, proprietary information, or other
confidential information pertaining to the financial affairs,
condition, business, technology, customers and clients,
products, manner of operation, training systems, plans or
prospects of the Company or its Affiliates, or aid others in
doing so, except in the proper exercise of his duties for the
Company.
3. Non-Competition. During Young's employment with the Company,
and for a period of twelve (12) months following the
termination of Young's employment for any reason whatsoever,
Young will not, anywhere in the United States:
(a) compete, directly or indirectly, with the Company or its
Affiliates in any business that would be deemed to be
competitive with the online residential mortgage
origination business of the Company or its Affiliates as
such business was conducted by the Company or its
Affiliates during Young's employment; and
(b) become employed by or affiliated in any manner with any
other business entity or person which owns or operates or
is seeking to acquire or operate a business which would be
deemed to be competitive with the online residential
mortgage business of the Company or its Affiliates as such
business was conducted by the Company or its Affiliates
during Young's employment.
(c) nothing in this section shall prohibit Young from owning
stock or other securities of a competitor amounting to
less than five (5) percent of the outstanding capital
stock of such competitor.
4. Non-Solicitation. During Young's employment with the Company,
and for a period of twelve (12) months following the
termination of Young's employment for any reason whatsoever,
Young will not:
(a) solicit any business from customers or prospects of the
Company or its Affiliates, which solicitation would be
deemed to be competitive with the business of the Company
or its Affiliates as such business was conducted by the
Company or its Affiliates during Young's employment; and
(b) solicit persons who are or have been employees or
consultants of the Company or its Affiliates during the
one (1) year period prior to termination of Young's
employment, to leave their employment or terminate their
consulting arrangements with the Company or its
Affiliates, or to become employed by or to engage in
business with Young, which business would be deemed to be
competitive with business of the Company or its Affiliates
as such business was conducted by the Company during
Young's employment.
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5. Compensation Upon Termination or During Disability.
(a) Death or Disability. If the Executive's employment is
terminated by reason of his death or disability, the
Executive or the Executive's estate shall be entitled to
(1) his then current base salary, pro-rata bonus and all
fringe benefits accrued and vested through the date of
termination or death, (2) all accrued and vested
retirement benefits and (3) in the case of the Executive's
death, if no beneficiary is designated, the proceeds of
any Company maintained life insurance policy.
(b) Termination by Company For Cause. If the Executive's
employment is terminated for Cause or by reason of
voluntary termination, the Executive shall be entitled to
receive (1) his base salary accrued through the date of
termination at the rate in effect at the time the notice
of termination is given and (2) only such stock options as
have vested prior to the date of termination. The Company
shall have no further obligations to the Executive under
this Agreement.
(c) Termination Upon Retirement. If the Executive's employment
is terminated as a result of his Retirement the Executive
shall be entitled to receive (1) his base salary accrued
through the date of termination plus a pro-rata bonus at
the rate in effect at the time the notice of termination
is given and (2) 100% vesting of the stock options he has
been granted prior to the date of termination. The Company
shall have no further obligations to the Executive under
this Agreement, other than its obligations under the
Company's retirement plans and policies if the Executive's
employment is terminated as a result of his Retirement. If
the Executive's stock options vest under this paragraph,
the deadline for exercising such stock options under the
applicable Option Agreement shall be the date which is the
sooner of three years after the date of termination or the
deadline for exercising such stock options set forth in
the Option Agreement.
(d) Termination by Company Without Cause or by the Executive
with Good Reason. If the Company terminates the
Executive's employment Without Cause, then the Company
shall pay to the Executive his base salary accrued through
the date of termination at the rate in effect on the date
of termination. In addition, the Company shall pay to the
Executive, as liquidated damages, or severance pay, or
both, on the thirtieth (30th) day following the date of
termination, a lump-sum amount equal to one times the base
salary then in effect plus the amount of the previous
year's bonus, and in addition, in such event, one hundred
percent of the stock options granted to Executive prior to
the date of termination shall become fully vested.
6. Injunctions. In the event of a breach or threatened breach by Young
of his obligations under this Agreement, Young acknowledges that
the Company will not have an adequate remedy at law and shall be
entitled to such equitable and injunctive relief as may be
available to restrain Young from the violation of the provisions
hereof. Nothing herein shall be construed as prohibiting the
Company from pursuing any other remedies available for such breach
or threatened breach, including the recovery of monetary damages
from Young.
7. Modification of Restriction. Young acknowledges that the
enforcement of the provisions in this Agreement shall not result in
unreasonable deprivation of Young's right to earn a
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living and that if the provisions of this Agreement shall be
determined by any court to be invalid or unenforceable to any
extent, then this Agreement shall be deemed to be amended so as to
be valid and enforceable to the fullest extent permitted by law.
8. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if hand delivered,
sent by recognized overnight courier, or sent by certified mail to
his residence in the case of Young, or to the principal office in
Plantation, Florida, in the case of the Company.
9. Governing Law. Young and the Company agree that this Agreement
shall be governed by, construed and enforced in accordance with the
laws of the State of Florida, exclusive of choice of laws and
conflict of laws principles. The parties stipulate that any action
or other legal proceeding arising under or in connection with this
Agreement shall be commenced and prosecuted in its entirety in the
federal or state courts having jurisdiction over Broward County,
Florida, each party hereby submitting to the personal jurisdiction
thereof, and the parties agree not to raise the objection that such
courts are not a convenient forum.
10. Counterparts. This Agreement may be executed in counterparts each
of which shall be original and together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
XXXXXXXX.XXX, INC.
By: /s/ Xxxx Xxxxxx
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Xxxx X. Xxxxxx, President and Chief
Executive Officer
/s/ X. Xxxxxxxx Xxxxx
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X. Xxxxxxxx Young, individually
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