Non-Competition Agreement
THIS AGREEMENT is made as of the 24th day of May, 1999, between
XXXXXXXX.XXX, INC., a Florida corporation (the "Company"), and XXXX XXXXXXX, an
individual resident of the State of New Jersey ("Buscema" 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, Buscema is employed by the Company and is currently the
President of the Company's Advanced Technology Group where he is charged with
the overall development and maintenance of all of the Company's computer
technology; and
WHEREAS, in his position with the Company, Buscema has access to
valuable confidential business and professional information possessed by the
Company, has substantial relationships with prospective and existing technology
customers and clients of the Company, has specialized training in the methods by
which the Company employs its technology and conducts its business and has
access to trade secrets related to the CLOser software system and its associated
Internet capabilities; and
WHEREAS, because of Buscema's intimate knowledge of the Company's
confidential information, trade secrets, customer and client relationships,
technology and methods of operation, there would be a detrimental effect on the
Company's business if Buscema were to enter into competition with the Company
after the date hereof; and
WHEREAS, the Company is contemplating an initial public offering of its
common stock and the underwriters managing the offering are unwilling to proceed
with the offering in the absence of reasonable non-competition restrictions
being placed on the Company's senior executive officers, including Buscema; and
WHEREAS, Buscema holds options to purchase shares of the Company's
common stock, and has a financial interest in the Company's common stock being
publicly traded following an initial public offering; 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
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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.
"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.
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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"Good Reason" shall be deemed to have occurred if (i) the Company
reduces the Executive's base salary, (ii) the Company requires the Executive to
relocate more than 50 miles from Montvale, New Jersey, (iii) the Company fails
to meet its obligations hereunder or engages in any other material breach of the
terms of this Agreement, (iv) there is a material adverse change by the Board of
the Executive's functions, duties, authority or responsibilities without the
Executive's written consent, and, as a result of such change, the Executive's
position with the Company shall be or becomes one of less dignity,
responsibility, authority or scope.
"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. Buscema 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 Buscema's employment with the Company, and
for a period of twelve (12) months following the termination of Buscema's
employment for any reason whatsoever, Buscema 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 Buscema'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 Buscema's employment.
(c) nothing in this section shall prohibit Buscema 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 Buscema's employment with the Company, and
for a period of twelve (12) months following the termination of Buscema's
employment for any reason whatsoever, Buscema 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
Buscema'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 Buscema's employment, to leave their
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employment or terminate their consulting arrangements with the Company
or its Affiliates, or to become employed by or to engage in business
with Buscema, 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 Buscema's employment.
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, (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
pursuant Without Cause or for Good Reason, 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, 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. In addition, the Company
shall maintain in full force and effect, for the continued benefit of
the Executive for twelve (12) months following the date of termination,
all employee benefit plans and programs in which the Executive was
entitled to participate immediately prior to the date of termination,
so long as the Executive's continued participation is possible under
the general terms and provisions of such plans and programs.
6. Injunctions. In the event of a breach or threatened breach by
Buscema of his obligations under this Agreement, Buscema 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 Buscema from the
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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
Buscema.
7. Modification of Restriction. Buscema acknowledges that the
enforcement of the provisions in this Agreement shall not result in unreasonable
deprivation of Buscema's right to earn a 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 Buscema, or to the principal office in Plantation, Florida, in the case
of the Company.
9. Governing Law. Buscema 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 X. Xxxxxx
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Xxxx X. Xxxxxx, President and Chief
Executive Officer
/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx, individually
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