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EXHIBIT 99
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is made this 18th day
of September, 1998 by and between Xxxxxxxx Communications Solutions, LLC, a
Delaware limited liability company ("Xxxxxxxx"), and XETA Corporation, an
Oklahoma corporation ("XETA").
RECITALS:
WHEREAS, Xxxxxxxx and XETA have entered into an Asset Purchase
Agreement of even date herewith (the "Purchase Agreement"), which provides that
as a condition to the obligation of XETA to complete the Closing, XETA shall
have received this Agreement from Xxxxxxxx; and
WHEREAS, Xxxxxxxx desires to induce XETA to complete the Closing and to
consummate the transaction contemplated by the Purchase Agreement; and
WHEREAS, all capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing, Xxxxxxxx hereby
agrees with XETA as follows:
1. Recitals. The recitals set forth at the beginning of this Agreement
are true and correct and by this reference are incorporated into the body of
this Agreement.
2. Representations and Warranties. Xxxxxxxx does hereby represent and
warrant to XETA:
(a) that the delivery of this Agreement to XETA by Xxxxxxxx is
ancillary to the main business purpose of the Purchase Agreement, and is
executed by Xxxxxxxx to protect the legitimate interests of XETA with respect to
its purchase and utilization of the Assets, specifically the Service Contracts
and the Non-Contract Service Rights;
(b) that the Noncompetition Period (as hereinafter defined),
and the scope of the limitations imposed on Xxxxxxxx as described in Section 3
of this Agreement, are appropriate and reasonable in all respects in light of
the nature of the business of XETA and Xxxxxxxx and the legitimate need of XETA
to protect its investment in the Assets; and
(c) that the execution and delivery of this Agreement, the
performance by Xxxxxxxx of the covenants and agreements contained herein, and
the enforcement by XETA of the provisions contained herein, will cause no undue
hardship on Xxxxxxxx.
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3. Noncompetition. For a period of three (3) years after the Closing
(the "Noncompetition Period"), Xxxxxxxx specifically agrees that it shall not,
either directly or indirectly, as an owner, investor, principal or agent, or in
any other manner:
(a) solicit any Customers (as defined below) for the purpose
of (i) selling to the Customer(s) any PBX or voice mail system; (ii) selling to
the Customer(s) any maintenance, service or warranty agreement with respect to
any PBX or voice mail system; or (iii) providing service (on a time and
materials basis or otherwise) to any PBX or voice mail system which may be
owned, leased or otherwise used by the Customer(s); or
(b) effect or attempt to effect the discontinuance,
termination or breach by any Customer of any of the Service Contracts or the
Non-Contract Service Rights, or in any other way interfere with the business
relationship or the expectation of continued or future business between the
Customers and XETA.
For purposes of this Agreement, the term "Customers" shall mean the customers
under the Service Contracts and the customers covered by the Non-Contract
Service Rights and the Warranty Rights transferred to XETA at Closing, but only
to the extent of the individual hotel sites to which such Service Contracts,
Non-Contract Service Rights and Warranty Rights apply (the "Covered Sites"). A
Customer shall remain a Customer throughout the Noncompetition Period for
purposes of the limitations imposed upon Xxxxxxxx by this Agreement, regardless
of whether the Service Contracts, the Non-Contract Service Rights or the
Warranty Rights with respect to such Customer have expired or been terminated.
4. Exceptions and Exclusions.
(a) Nothing herein contained shall be deemed to prevent or
prohibit Xxxxxxxx from (i) soliciting, selling to, or performing any services
for, a parent, subsidiary, or affiliate of any Customer, provided that Xxxxxxxx'
solicitation activities or the products or services sold to or performed by
Xxxxxxxx for such entities, do not relate to PBX or voice mail systems for the
Covered Sites; or (ii) responding to and/or accepting the award of a Request for
Proposal or any similar request ("Request") issued by a Customer or any parent,
subsidiary or affiliate of such Customer, which relates to multiple hotel sites
which include the Covered Sites, provided, however, that the Covered Sites are
excluded from Xxxxxxxx' response to the Request and Xxxxxxxx does not sell any
products to or perform any services for such Covered Site in the event it is
awarded the Request.
(b) Nothing herein contained shall be deemed to prevent or
limit the right of Xxxxxxxx to own capital stock or other securities of any
corporation which are publicly owned or regularly traded in the over-the-counter
market or on any securities exchange; provided, however, such investment does
not exceed, directly or indirectly, 5% of the issuer's outstanding securities of
that class.
5. Confidentiality of Information. Xxxxxxxx agrees to maintain in
confidence, and not to divulge or communicate to any third party, or use to the
detriment of XETA or for the benefit of any other business, firm, person,
partnership or corporation, or otherwise misuse,
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any confidential information, data or trade secrets, including pricing
information, technical data, business plans or methods of operation, pertaining
to the Assets or the Business.
6. Equitable Remedies and Remedies at Law. The parties recognize that,
because of the nature of the subject matter of this Agreement, it would be
impracticable and extremely difficult to determine actual damages to XETA in the
event of a breach of this Agreement by Xxxxxxxx. Accordingly, if Xxxxxxxx
commits a breach, or threatens to commit a breach of any of the provisions of
this Agreement, XETA shall be entitled to all available legal and equitable
remedies, including without limitation, injunctive relief, both preliminary and
permanent and XETA shall not be required to post a surety bond in connection
therewith. XETA shall also be entitled to money damages for any loss suffered or
to be suffered as a consequence of Xxxxxxxx' breach of this Agreement.
7. Severability. If any of the covenants contained in Section 3, or any
part thereof, is held to be unenforceable because of the duration of such
provisions or the area covered thereby, or ever be deemed to exceed the scope of
business, the undersigned agrees that the court making such determination shall
have the power to reform the provisions of this Agreement to the maximum scope,
time or geographic limitations permitted by applicable law.
8. Extension of Noncompete Period. The periods of time during which
Xxxxxxxx is prohibited from engaging in such business practices pursuant to
Section 3 shall be extended by any length of time during which Xxxxxxxx is in
breach of any of such covenants.
9. Governing Law. This Agreement shall be construed, and the legal
relations between the parties hereto determined, in accordance with the local
laws of the State of Oklahoma applicable to agreements made and to be performed
entirely within the State of Oklahoma, without giving effect to its conflicts of
law provisions.
10. Attorneys Fees. In the event that litigation is instituted to
enforce rights or remedies under this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and costs incurred in connection
with such litigation. The agreement of the parties represented by this Agreement
is in addition to, and not in lieu of, any other agreement or obligation of the
parties contained in this Agreement or in the Purchase Agreement.
11. Enforcement. The covenants of Xxxxxxxx under this Agreement shall
be independent of any other contractual relationship between XETA and Xxxxxxxx.
Consequently, the existence of any claim or cause of action against XETA shall
not constitute a defense to the enforcement by XETA of this Agreement.
12. Assignability and Parties in Interest. No party may assign any of
its rights or delegate any of its obligations hereunder without the prior
written consent of the other party; provided, however, that this Agreement may
be assigned to a wholly owned subsidiary of XETA without prior written consent
of Xxxxxxxx. This Agreement binds, inures to the benefit of and is enforceable
by the respective successors and permitted assigns of the parties and it does
not confer any rights on any other persons or entities. Each affiliate or
subsidiary of XETA following Closing shall be a third party beneficiary of this
Agreement.
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13. Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered will be deemed to be an original and all of
which counterparts taken together will constitute but one and the same
instrument. The execution of this Agreement by any party hereto will not become
effective until counterparts hereof have been executed by all the parties
hereto.
14. Waiver. The failure of any party to insist upon strict performance
of any of the terms or conditions of this Agreement will not constitute a waiver
of any of its rights hereunder.
15. Complete Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof and, except
as provided herein, supersedes all previous oral and written and all
contemporaneous oral negotiations, commitments, writings and understandings
relating to the subject matter hereof.
16. Modifications, Amendments and Waivers. All modifications or
amendments to this Agreement shall be in writing and signed by both parties
hereto.
17. Interpretation. The headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
"XETA"
XETA Corporation, an Oklahoma
corporation
By: /s/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx, President
"Xxxxxxxx"
Xxxxxxxx Communications Solutions, LLC
By: /s/ B. XXXX XXXXXXXXX
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Title: CFO
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