EXECUTION COPY
NONCOMPETITION AGREEMENT dated
December 8, 1999, between COOPERSURGICAL
ACQUISITION CORP., a Delaware
corporation (the "Company"), and BEI
MEDICAL SYSTEMS COMPANY, INC., a
Delaware corporation (the "Covenantor").
Reference is made to the Asset Purchase Agreement dated as of
October 1, 1999 between the Company and the Covenantor, as amended (the "Asset
Purchase Agreement"). Pursuant to the Asset Purchase Agreement, the Company is
acquiring substantially all of the assets, including the Products, of the
Covenantor which comprise the Business. This Agreement is being entered into
pursuant to the Asset Purchase Agreement.
In consideration of the Company purchasing the Purchased Assets
under the Asset Purchase Agreement and in order to prevent the Company from
being economically harmed by a loss of the goodwill associated with the
Business, the Covenantor has agreed not to compete with the Company under the
conditions set forth in this Agreement.
ACCORDINGLY, in consideration of the good and valuable consideration
which the parties hereto acknowledge, the parties hereto hereby agree as
follows:
Section 1. Certain Defined Terms.
Capitalized terms used but not otherwise defined herein have the
meanings set forth in the Asset Purchase Agreement.
Section 2. Non-competition and Non-solicitation.
(a) Subject to the second paragraph of Section 2(a), the Covenantor
agrees that, during the Non-Compete Period (as defined below), the Covenantor
shall not, directly or indirectly, own, manage, control, participate in, consult
with, render services for, whether as an agent, employee, consultant, advisor,
representative, stockholder, partner or joint venturer, or in any manner engage
in any business within any Restricted Territory (as defined below) competing
with the Products, including any improvements and replacements for the Products,
or competing with any other products or procedures which are used to perform the
same function as, or the same treatments and procedures performed by, the
Products or a business developing any product which is used to perform the same
function as, or the same treatments and procedures performed by, the Products.
As used in this Agreement, the term "Restricted Territory" means any of the
following geographic areas (whether domestic or foreign) in which any Product,
process, good or service has been manufactured, provided, sold or offered or
promoted for sale by the Company or its Business Group or with respect to which
the Company or its Business Group have devoted substantial expense in
anticipation of launching into such geographic area a portion of the Business:
(i) any state in the continental United States; (ii) Alaska and Hawaii;
(iii) any other territory or possession of the United States; (iv) each country
in the European Union("EU"); and (v) any country other than (x) the United
States or any state, territory, possession or political subdivision thereof and
(y) a country in the EU. As used in this Agreement, the term "Non-Compete
Period" means the period beginning on the date of this Agreement and ending on
the fifth anniversary of the date of this Agreement. As used in this Agreement,
the term "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
Nothing in this Section 2 shall prohibit the Covenantor from (i)
engaging, directly or indirectly, as a partner, joint venturer or otherwise in
the development, manufacture, sales, marketing or service of the product known
as Hydro ThermAblator or HTA, or any improvement to such product (collectively,
"HTA") and, subject to the last two sentences of this paragraph, the
development, manufacture, marketing, sale or service of the products listed on
Exhibit A, or any improvement to or replacement for such products listed on
Exhibit A (the "HTA Related Products") or (ii) being a passive owner of not more
than (A) 4% of the outstanding capital stock of any class of a corporation (or
4% of the equity interest in any other Person), the securities of which are
publicly traded or (B) 1% of the outstanding capital stock of any class of a
corporation (or 1% of the equity interest in any other Person), the securities
of which are privately held, so long as the Covenantor has no active
participation in the business of such Person. The HTA Related Products may only
be marketed, sold or serviced, directly or through distribution channels, (A)
solely in connection with the sale or use of HTA by medical professionals, (B)
in a number reasonably necessary to facilitate the use by such medical
professionals of HTA and (C) to the medical professionals purchasing or using
HTA. Any marketing, sale or service of an HTA Related Product which does not
strictly comply with the immediately preceding sentence is a violation of the
Covenantor's obligations under this Agreement.
(b) During the Non-Compete Period, the Covenantor agrees that the
Covenantor shall not, directly or indirectly through another Person (i) solicit
any employee of the Company or its Business Group to leave the employ of the
Company or any of its Business Group, or in any way interfere with the
relationship between the Company or any of its Business Group, on the one hand,
and any employee thereof, on the other hand; provided, however, that the general
solicitation of third parties through the use of means generally available to
the public, including the placement of advertisements in the newspaper, shall
not be deemed to violate this clause (i), (ii) hire any individual who was an
employee of the Company or its Business Group until six months after such
individual's employment relationship with the Company or any of its Business
Group has been terminated or (iii) induce or attempt to induce any customer,
supplier, consultant, licensee or other business relation of the Company or any
of its Business Group to cease doing business with the Company or any of its
Business Group, or in any way interfere with the relationship between any such
customer, supplier, consultant, licensee or business relation, on the one hand,
and the Company or any of its Business Group, on the other hand; provided,
however, that the Covenantor shall not be deemed to interfere with the
relationships of the Company or its Business Group with a customer, supplier,
consultant, licensee or other business relation solely because, in compliance
with this Agreement, the Covenantor does business on a non-exclusive basis with
such a Person.
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Section 3. Option To Modify Non-Competition Covenant in Section 2 (a).
(a) The Company hereby grants to the Covenantor the right and option
(the "Option"), exercisable by the Covenantor under the terms specified in this
Section 3, to modify the non-competition covenant in Section 2 (a) of this
Agreement. The Option may be exercised by the Covenantor strictly in the manner
provided in this Section 3 solely on the occurrence of the first Change of
Control or Joint Venture Arrangement which is consummated after the date of this
Agreement.
(b) The Covenantor may exercise the Option by delivering an election
notice (the "Election Notice") to the Company concurrently with paying to the
Company the sum of $250,000 by wire transfer of immediately available funds. The
Election Notice shall certify to the Company that there has occurred the first
Change of Control or Joint Venture Arrangement which has been consummated after
the date of this Agreement, shall specify that the Covenantor is exercising the
Option upon consummation of such Change of Control or Joint Venture Arrangement
and shall be accompanied by confirmation that there has been paid to the Company
by wire transfer of immediately available funds the sum of $250,000.
(c) Upon exercise by the Covenantor of the Option in the manner
provided in this Section 3, then, notwithstanding the provisions of Section 2
(a), from and after such Change of Control or Joint Venture Arrangement is
consummated, only the following activities by the Person that acquires control
of the Covenantor as a result of such Change of Control or engages with the
Covenantor in such Joint Venture Arrangement shall be deemed to violate the
provisions of Section 2 (a) of this Agreement: developing, manufacturing,
selling, marketing or servicing products which both Mimic and compete with the
Principal Products
(d) "Change of Control" means either (x) the sale of substantially
all of the Covenantor's assets to an unaffiliated third Person (other than sale
of such assets to the Company) or (y) a merger or consolidation or sale of
capital stock of the Covenantor (each, a "Transaction"), under circumstances in
which the holders of a majority of the voting power of the outstanding capital
stock of the Covenantor, immediately prior to the Transaction, own less than a
majority of the voting power of the outstanding capital stock of the Covenantor
or the surviving corporation or resulting corporation, as the case may be (the
"Surviving Person"), immediately following such Transaction. A Person is deemed
to have acquired control of the Covenantor as a result of the Change of Control
(x) if such Person owns, directly or indirectly, substantially all of such
assets sold by the Covenantor or (y) if such Person controls, directly or
indirectly, a majority of the voting power of the outstanding capital stock of
the Surviving Person or (z) if such Person is the Surviving Person. "Joint
Venture Arrangement" means an agreement between the Covenantor and a third
Person to carry on a joint business activity in the form of a joint venture,
partnership or other contractual arrangement, including without limitation any
license, supply or distribution arrangement.
"Principal Products" means the Products known as "Zumi", "Zui",
"Z-Clamp", "Xxxxxxx Pelvic Set" and "Xxxx Xxxx", and all variations of such
Products. A product is deemed to "Mimic" a Principal Product if a bona fide
credible argument can be made that such product infringes a patent or patents
which may at any time have been issued for such Principal Product, even if such
Principal Product is not at the time protected by a patent.
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Section 4. Confidentiality.
(a) The Covenantor will not disclose or use at any time, during the
Non-Compete Period, any Confidential Information of which the Covenantor is or
becomes aware, whether or not such information was developed by the Covenantor.
(b) As used in this Agreement, the term "Confidential Information"
means information that is not in the public domain and that was used, developed
or obtained by the Covenantor in connection with the Business, including but not
limited (i) products or services, (ii) fees, costs and pricing structures, (iii)
designs, (iv) analyses, (v) drawings, photographs and reports, (vi) computer
software, including operating systems, applications and program listings, (vii)
flow charts, manuals and documentation, (viii) data bases, (ix) accounting and
business methods, (x) inventions, devices, new developments, methods and
processes, whether patentable or unpatentable and whether or not reduced to
practice, (xi) customers and clients and customer or client lists, (xii) other
copyrightable works, (xiii) all production methods, processes, technology and
trade secrets, and (xiv) all similar and related information in whatever form.
(c) Notwithstanding the provisions of this Agreement to the
contrary, the Covenantor shall have no liability to the Company for disclosure
or use of Confidential Information if the Confidential Information:
(i) is known to the receiving party at the time of disclosure
by the Covenantor to the receiving party of such Confidential Information
other than as the result of a breach of this Section 4 by the Covenantor;
(ii) becomes publicly known or is disclosed by the Company
other than as the result of a breach of this Section 4 by the Covenantor;
(iii) is received by the Covenantor after the date of this
Agreement from a third party that is not under an obligation of
confidentiality to the Company;
(iv) is required to be disclosed by law, court order, or
similar compulsion or in connection with any legal proceeding, provided
that such disclosure shall be limited to the extent so required and,
except to the extent prohibited by law, the Covenantor shall give the
Company notice of its intent to so disclose such Confidential Information
and shall reasonably cooperate with the Company in seeking suitable
confidentiality protections; or
(v) relates to HTA.
Section 5. Representations and Warranties.
(a) The Covenantor hereby represents and warrants to the Company
that (i) the execution, delivery and performance of this Agreement by the
Covenantor does not and will not conflict with, breach, violate or cause a
default under any agreement, contract or instrument to which the Covenantor is a
party or any judgment, order or decree to which the Covenantor is subject, (ii)
the Covenantor is not a party to or bound by any employment agreement,
consulting
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agreement, non-compete agreement, confidentiality agreement or similar agreement
with any other Person that is inconsistent with the provisions of this Agreement
and (iii) upon the execution and delivery of this Agreement by the Company and
the Covenantor, this Agreement will be a valid and binding obligation of the
Covenantor.
(b) The Company hereby represents and warrants to the Covenantor
that (i) this Agreement has been duly authorized by all necessary corporate
action on the part of the Company, (ii) the execution, delivery and performance
of this Agreement by the Company does not and will not conflict with, breach,
violate or cause a default under any agreement, contract or instrument to which
the Company is a party or any judgment, order or decree to which the Company is
subject, and (iii) upon the execution and delivery of this Agreement by the
Company and the Covenantor, this Agreement will be a valid and binding
obligation of the Company.
Section 6. Enforcement.
(a) Because the relationship between the Company and the Covenantor
is unique and because the Covenantor has had access to Confidential Information,
the parties hereto agree that money damages would be an inadequate remedy for
any breach of this Agreement. Therefore, in the event of a breach or threatened
breach by the Covenantor of this Agreement, the Company may apply to any court
of competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce, or prevent any violations of, the provisions hereof
(without posting a bond or other security) in addition to other rights and
remedies existing in its favor, including requiring the Covenantor to account
for and pay over to the Company all compensation, profits, moneys, accruals,
increments or other benefits derived or received as a direct result of any
transactions constituting a breach of the covenants contained therein.
(b) The prevailing party in any legal action arising out of or
relating to this Agreement shall be entitled to its reasonable attorneys' fees
and court costs.
Section 7. General Provisions.
(a) Severability. It is the desire and intent of the parties hereto
that the provisions of this Agreement 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 particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
(b) Complete Agreement. This Agreement and the Asset Purchase
Agreement constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede and preempt any prior
understandings, agreements or representations by or
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between the parties, written or oral, which may have related to the subject
matter hereof in any way.
(c) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Covenantor and the Company and their respective
successors, permitted assigns, personal representatives, heirs and estates, as
the case may be.
(d) Governing Law. This Agreement will be governed by and construed
in accordance with the domestic laws of the State of New York, without giving
effect to any choice of law or conflicting provision or rule (whether of the
State of New York or any other jurisdiction), that would cause the laws of any
jurisdiction other than the State of New York to be applied. In furtherance of
the foregoing, the internal law of the State of New York will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
(e) Jurisdiction and Venue.
(i) THE COMPANY AND THE COVENANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMIT, FOR THEMSELVES AND THEIR PROPERTY, TO THE
EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE
UNITED STATES OF AMERICA SITTING IN NEW YORK COUNTY, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR FOR RECOGNITION
OR ENFORCEMENT OF ANY JUDGMENT, AND THE COMPANY AND THE COVENANTOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH NEW YORK
STATE COURT OR SUCH FEDERAL COURT, PROVIDED THAT, IN THE EVENT THAT ANY
SUCH FEDERAL COURT HAS JURISDICTION, THE PARTIES SHALL INSTITUTE ANY SUCH
ACTION OR PROCEEDING IN SUCH FEDERAL COURT AND NOT IN SUCH STATE COURT.
THE COMPANY AND THE COVENANTOR AGREE THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW.
(ii) THE COMPANY AND THE COVENANTOR IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT THEY MAY LEGALLY AND
EFFECTIVELY DO SO, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT IN ANY NEW YORK STATE OR FEDERAL COURT SITTING
IN NEW YORK COUNTY. THE COMPANY AND THE COVENANTOR IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM
TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
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(f) Waiver of Jury Trial.
THIS IS A COMPLEX BUSINESS TRANSACTION. THE PARTIES BELIEVE THAT IT
WOULD BE BETTER TO HAVE ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT RESOLVED BY A JUDGE WITHOUT A JURY. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(g) Amendment and Waiver. The provisions of this Agreement may be amended
and waived only with the prior written consent of the Company and the
Covenantor, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement or any provision hereof.
(h) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(i) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
(j) Business Group. For purposes of this Agreement, the term "Business
Group" means, with respect to the Company, the Company's current and future
Affiliates including those Affiliates listed on Exhibit B, and, with respect to
the Covenantor, the Covenantor's current and future Affiliates; provided,
however, that a future Affiliate of the Company shall not be considered part of
its "Business Group" unless and until the Company provides notice to the
Convenantor in writing that such Person is an Affiliate of the Company.
(k) Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the State
of New York, the time period for taking action shall be automatically extended
to the business day immediately following such Saturday, Sunday or holiday.
(l) Survival of Representations and Warranties. All representations and
warranties contained herein shall survive the consummation of the transactions
contemplated hereby and by the Asset Purchase Agreement.
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(m) Construction.
(i) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa;
the masculine gender shall include the feminine and neuter genders; the
feminine gender shall include the masculine and neuter genders; and the
neuter gender shall include the masculine and feminine genders.
(ii) Any rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not be applied in the
construction or interpretation of this Agreement.
(iii) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words
"without limitation."
(n) Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received, if delivered during business
hours on a business day, when delivered (by hand, by registered mail, by courier
or express delivery service or by facsimile) to the address or facsimile
telephone number set forth beneath the name of such party below (or to such
other address or facsimile telephone number as such party shall have specified
in a written notice given to the other party hereto) or, if not delivered during
business hours on a business day, on the next succeeding business day:
(A) if to the Company, to:
CooperSurgical Acquisition Corp.
c/o CooperSurgical, Inc.
00 Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx, President
Telecopier: (203) 925-135
with a copy to:
The Xxxxxx Companies, Inc.
0000 Xxxxxxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, V.P., Legal Affairs
Telecopier: (000) 000-0000
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X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000; and
(B) if to the Covenantor, to:
BEI Medical Systems Company, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, President & CEO
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx Godward LLP
Xxx Xxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxxxxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
* * * *
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IN WITNESS WHEREOF, each of the parties hereto has duly executed
this Noncompetition Agreement as of the date first written above.
COOPERSURGICAL ACQUISITION CORP.
By: _____________________________________
Name:
Title:
BEI MEDICAL SYSTEMS COMPANY, INC.
By: _____________________________________
Name:
Title:
EXHIBIT A
HTA Related Products
1. Endoscopic Light Source (any method).
2. Hysteroscopic Video Camera System.
3. Flexible Hysteroscope System.
4. Rigid Hysteroscope System.
5. Cervical Sealing Tenaculum.
6. Disposable Cervical Dilator.
7. Those Products which are identified by asterisk on Annex A to Schedule 1.1
of the Asset Purchase Agreement as components and/or finished goods
required in the support of HTA.
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EXHIBIT B
The Company Affiliates
JURISDICTION OF
NAME INCORPORATION
--------------------------------------------------------------------------------
1. The Xxxxxx Companies, Inc. Delaware
2. The Xxxxxx Healthcare Group, Inc. Delaware
a. Unimar, Inc. California
3. CVP, Inc. Delaware
4. The Xxxxxx Real Estate Group, Inc. Delaware
5. CooperVision, Inc. New York
a. CooperVision Inc. Canada
6. Xxxxxx Surgical Acquisition (dormant) Delaware
a. CooperVision GB Finance, Inc. (dormant) Delaware
b. CooperVision GB Services, Inc. (dormant) Delaware
7. Hospital Group of America, Inc. Delaware
a. HGA Management Services, Inc. Delaware
b. Hospital Group of Delaware, Inc. Delaware
c. Hospital Group of Illinois, Inc. Illinois
d. Hospital Group of Louisiana, Inc. Louisiana
e. Residential Centers of Indiana, Inc. Delaware
f. Hospital Group of New Jersey, Inc. New Jersey
x. Xxxxxxx Learning Center, Inc. New Jersey
h. HGNJ, Inc. New Jersey
8. Arlington Center for Recovery, L.L.C. Illinois
9. MeadowWood Health Services, L.L.C. Delaware
10. CooperSurgical, Inc. Delaware
a. CooperSurgical, Inc. Canada
b. HBH Medizintechnik GmbH Germany
11. Aspect Vision Holdings, Limited England-Wales
a. Aspect Vision Care Limited England-Wales
b. Contact Lens Technologies Limited England-Wales
c. Aspect Specialty Limited England-Wales
d. New Focus HealthCare Limited England-Wales
e. Aspect Vision Italia s.r.l. Italy
f. Focus Solutions Limited England-Wales
g. Averlan Company Limited England-Wales
h. Aspect Contact Lenses Limited England-Wales
12. CooperVision Limited England-Wales
NOTE: Except for CooperSurgical and its 52% owned subsidiary, HBH Medizintechnik
GmbH, each subsidiary is wholly-owned either by The Xxxxxx Companies, Inc. or by
the wholly-owned subsidiary under which it is indented in the list above. In the
case of CooperSurgical, Inc., 99.8% of the company is owned by The Xxxxxx
Companies, Inc. and the remaining .2% is owned by members of CooperSurgical's
Medical Advisory Board.
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