1
EXHIBIT 10.16
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT ("Agreement") is made and entered into as
of the 7th day of February, 2001, by and among FreeMarkets, Inc., a Delaware
corporation ("Parent"), Adexa, Inc., a California corporation (the "Company"),
and Dr. K. Xxxxx Xxxxxx, an individual (the "Shareholder"). Defined terms used
in this Agreement and not otherwise defined herein shall have the meanings set
forth in that certain Agreement and Plan of Reorganization, dated as of the date
hereof (the "Reorganization Agreement"), by and among Parent, Axe Acquisition
Corporation and the Company.
W I T N E S S E T H:
WHEREAS, Parent and the Company are parties to the Reorganization
Agreement, which contemplates the acquisition by Parent of all of the
outstanding equity interests in the Company; and
WHEREAS, the Shareholder is the beneficial owner of 8,700,000 Company
Common Shares and will receive shares of Parent Common Stock upon consummation
of the Merger (the "Merger Payment");
WHEREAS, in order to induce Parent to enter into the Reorganization
Agreement and to pay to the Shareholder the Merger Payment, the Shareholder has
agreed not to engage in competition under the terms and conditions set forth in
this Agreement;
WHEREAS, Parent would not have entered into the Reorganization
Agreement without the execution by the Shareholder of this Agreement;
WHEREAS, the Shareholder's covenant not to compete as set forth in this
Agreement is essential to the preservation of the goodwill and the value of the
Company to Parent and constitutes a material inducement for Parent to enter into
the Reorganization Agreement and a material portion of the consideration
bargained for by Parent thereunder;
WHEREAS, the execution and delivery of this Agreement is a condition to
the obligation of Parent to consummate the transactions contemplated by the
Reorganization Agreement;
NOW, THEREFORE, in consideration of the Reorganization Agreement, the
Merger Payment, the promises and the covenants contained herein, Parent, the
Company and the Shareholder, each intending to be legally bound hereby, agree as
follows:
2
1. Effectiveness. This Agreement shall become effective at the Closing
of the Merger of Axe Acquisition Corporation with and into the Company pursuant
to which the Company shall become a wholly owned subsidiary of Parent (the
"Effective Date"). In the event that the Merger is not consummated, then this
Agreement shall be void and of no force and effect whatsoever.
2. Noncompetition.
(a) As used in this Agreement, the following words have the
meanings defined below:
(i) "Affiliate" means (A) the Company (whether it
continues as a separate corporation or whether it becomes a division or other
unit of Parent or any of its subsidiaries) and (B) any other corporation,
association or other business entity of which more than 50% of the securities or
other ownership interests having voting power is owned or controlled, directly
or indirectly, by Parent.
(ii) "Noncompetition Period" shall mean the period
commencing on the Effective Date and ending on the date which is the later of
the third anniversary of the Effective Date or two years following the date on
which the Shareholder ceases to be employed by Parent, the Company or any other
Affiliate for any reason.
(iii) "Restricted Business" means the development,
marketing, sale or distribution of products or services which incorporate or are
based upon collaborative supply chain technology.
(b) During the Noncompetition Period, the Shareholder shall
not:
(i) engage in, directly or indirectly, whether as a
principal, partner, director, officer, agent, employee, consultant or in any
other capacity, or have any direct or indirect ownership interest in, any
business anywhere in the world which is engaged, directly or indirectly, in the
Restricted Business; provided, however, that this covenant not to compete shall
not preclude the Shareholder from owning, as a passive investor, up to three
percent (3%) of the outstanding shares in a publicly traded company for the
shares of which an active public trading market exists;
(ii) directly or indirectly induce or attempt to
influence any employee or consultant of Parent or any Affiliate to terminate his
or her employment or relationship with Parent or any Affiliate, or hire any
person who was employed as an employee or consultant of Parent or any Affiliate
during Shareholder's employment by the Company, Parent or any other Affiliate;
or
(iii) solicit or entice, or attempt to solicit or
entice, any clients or customers of Parent or any Affiliate or potential clients
or customers of Parent or any Affiliate for purposes of diverting their business
or services from Parent or any Affiliate.
2
3
(c) The covenants in this Section 2 are severable and
separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. If any provision of this Section 2 relating to
the scope of the Restricted Business, the time period or geographic area of the
restrictive covenants shall be declared by a court of competent jurisdiction to
exceed the maximum scope, time period or geographic area, as applicable, that
such court deems reasonable and enforceable, said scope, time period or
geographic area shall be deemed to be, and thereafter shall become, the maximum
scope, time period or largest geographic area that such court deems reasonable
and enforceable and this Agreement shall automatically be considered to have
been amended and revised to reflect such determination.
(d) The Shareholder has carefully read and considered the
provisions of this Section 2 and, having done so, agrees that the restrictive
covenants in this Section 2 impose a fair and reasonable restraint on the
Shareholder and are reasonably required to protect the interests of the Company
and Parent, and their respective officers, directors, employees, and
stockholders and to preserve the goodwill of the Company purchased by Parent
pursuant to the Merger Agreement. The Shareholder acknowledges that the
noncompetition covenant set forth in this Section 2 constituted a material
inducement for Parent to enter into the Reorganization Agreement and a material
portion of the consideration bargained for by Parent thereunder, and that Parent
would not have entered into the Reorganization Agreement without the execution
by Shareholder of this Agreement. The Shareholder acknowledges and stipulates
that this Agreement was made in conjunction with the Merger pursuant to which
Parent acquired all of the outstanding equity interests of the Company and the
goodwill thereof, and that the Shareholder was the principal shareholder in the
Company and exchanged all of his Company Common Shares pursuant to the Merger.
3. Prior Agreements. The Shareholder represents to the Company and
Parent that: (a) there are no restrictions, agreements or understandings
whatsoever to which the Shareholder is a party or by which the Shareholder is
bound which would prevent or make unlawful the Shareholder's execution of this
Agreement; (b) the Shareholder's execution of this Agreement does not constitute
a breach of any contract, agreement or understanding, oral or written, to which
the Shareholder is a party or by which the Shareholder is bound; and (c) the
Shareholder is free and able to execute this Agreement on the terms and subject
to the conditions hereof. The Shareholder acknowledges that the restrictive
covenants set forth in this Agreement are in addition to any other restrictive
covenants set forth in any other agreement between the Company and the
Shareholder.
4. Miscellaneous.
(a) Indulgences, Etc. Any failure or delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement will not operate as a waiver thereof, nor will any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor will
any waiver of any right, remedy, power or privilege with respect to any
occurrence be
3
4
construed as a waiver of that right, remedy, power or privilege with respect
to any other occurrence.
(b) Notices. All notices, requests, demands and other
communications required or permitted under this Agreement must be in writing and
will be deemed to have been duly given on the day established by the sender as
having been delivered personally; on the day delivered by a private courier as
established by the sender by evidence obtained from the courier; or on the 5th
day after the date mailed, by certified or registered mail, return receipt
requested, postage prepaid, addressed as set forth below:
(i) If to Equity Holder:
Attn: Xxxxx Xxxxxx
0000 Xxxx Xxxxxxx Xxxx.
00xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
(ii) If to the Company or Parent:
FreeMarkets, Inc.
22nd Floor, FreeMarkets Center
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
In addition, notice by mail must be by air mail if posted outside of
the continental United States. Any party may alter the address to which
communications or copies are to be sent by giving notice of any change of
address to the other party in conformity with the provisions of this paragraph
for the giving of notice.
(c) Binding Nature of Agreement; Assignment. This Agreement
shall be binding upon and inure to the benefit of the Company, Parent and their
successors and assigns and shall be binding upon the Shareholder. The Company
may assign this Agreement at any time to any Affiliate or any successor in
interest to the entire business of the Company, and any such assignee may
re-assign this Agreement to any such entity. The Shareholder may not assign this
Agreement.
(d) Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which will be deemed to be an original
and all of which will together constitute one and the same instrument.
(e) Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision will be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
4
5
(f) Amendment. This Agreement may not be modified or amended
other than by an agreement in writing signed by all the parties.
(g) Section Headings. The section headings in this Agreement
are for convenience only; they form no part of this Agreement and will not
affect its interpretation.
(h) Gender, etc. Words used herein, regardless of the number
and gender specifically used, will be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context indicates is appropriate.
(i) Governing Law. This Agreement shall be construed and
interpreted in accordance with and governed by the laws of the Commonwealth of
Pennsylvania excluding its conflicts of laws rules.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
5
6
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
FREEMARKETS, INC.
By: /s/ XXXX XXXXXX
----------------------------
Name: XXXX XXXXXX
Title: SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
ADEXA, INC.
By: /s/ J. XXXXXXX XXXXX
----------------------------
Name: J. XXXXXXX XXXXX
Title: CHIEF FINANCIAL OFFICER
SHAREHOLDER:
/s/ K. XXXXX XXXXXX
-----------------------------
