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Exhibit 4(d)
NON-COMPETITION AGREEMENT
AGREEMENT ("Agreement"), dated June 25, 1997, between
Xxxxxx-Field Health Products, Inc., a Delaware corporation (the "Company"), and
Xxxxxxx X. Xxxx (the "Shareholder").
RECITALS
WHEREAS, the Company has entered into an Agreement and Plan of
Merger, dated as of June 25, 1997 (the "Merger Agreement"), by and among the
Company, LaBac Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company, LaBac Systems, Inc. ("LaBac"), the Shareholder and
Xxxxxxx X. Xxxx, pursuant to which LaBac will become a wholly-owned subsidiary
of the Company;
WHEREAS, the Shareholder is a shareholder and an employee of
LaBac, and will derive substantial economic benefits from the performance by the
Company of the Merger Agreement;
WHEREAS, the Company and Peek Brothers Enterprises, Inc., a
Colorado corporation (the "Consulting Entity"), are parties to a certain
Consulting Agreement dated as of June 25, 1997 (the "Consulting Agreement");
WHEREAS, all of the capital stock of the Consulting Entity is
owned by the Shareholder and Xxxxxxx X. Xxxx;
WHEREAS, the Merger Agreement provides that, as a condition to
closing thereunder, the parties hereto enter into this Agreement;
WHEREAS, unless otherwise defined herein, all capitalized
terms shall have the meaning ascribed to such terms in the Merger Agreement; and
NOW, THEREFORE, in order to induce the Company to perform its
obligations under the Merger Agreement, and in consideration of the promises and
mutual covenants set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as
follows:
1. COVENANTS OF SHAREHOLDER.
(a) In consideration of the Non-Competition Payments (as
hereinafter defined), the Shareholder expressly covenants and agrees that during
the period (the "Initial Non-Competition Period") commencing on the date hereof
and ending on the earlier to occur of (i) the date of termination of the
Consulting Agreement as provided in Section 4 of the Consulting Agreement or
(ii) the third (3rd) anniversary date of the Closing (such earlier date, the
"Initial Non-Competition Date"), he will not (x) directly or indirectly,
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own, manage, operate, join, control or participate in or be connected with as an
officer, employee, consultant, partner, stockholder, lender, or otherwise, any
Competitor, as defined below, or any subsidiary or affiliate thereof and (y)
interfere with, solicit or cause or attempt to cause any material change in, any
of the business or accounts of the Company or any of its subsidiaries or
affiliates, including, but not limited to, the relationship of any client,
customer or supplier with the Company or any of its subsidiaries or affiliates,
which existed as of the Closing or at any time during the Initial
Non-Competition Period, which relate to the manufacture, distribution or
marketing of durable medical products in any domestic or foreign jurisdiction in
which the Company or a subsidiary or affiliate of the Company engages in such
activities. During the Initial Non-Competition Period, a "Competitor" shall be
deemed to mean any business, individual, partnership, firm, corporation or
organization (other than the Company or a subsidiary or affiliate of the
Company) which manufactures, distributes, or markets durable medical products in
any domestic or foreign jurisdiction in which the Company or a subsidiary or
affiliate of the Company engages in such activities.
(b) In further consideration of the Non-Competition
Payments (as hereinafter defined), the Shareholder expressly covenants and
agrees that for the period commencing on the Initial Non-Competition Date and
ending on the seventh (7th) anniversary date of the Closing (the "Second
Non-Competition Period"), he will not (x) directly or indirectly, own, manage,
operate, join, control or participate in or be connected with as an officer,
employee, consultant, partner, stockholder, lender, or otherwise, any
Competitor, as defined below, or any subsidiary or affiliate thereof (during the
Second Non-Competition Period, a "Competitor" shall be deemed to mean any
business, individual, partnership, firm, corporation or organization (other than
the Company or a subsidiary or affiliate of the Company) which manufactures,
distributes, or markets wheelchairs or wheelchair seating systems in any
domestic or foreign jurisdiction in which the Company or a subsidiary or
affiliate of the Company engages in such activities, or which is engaged in any
such jurisdiction in any other project areas in the durable medical products
industry which were assigned by the Company to the Consulting Entity during the
term of the Consulting Agreement and accepted by the Consulting Entity) and (y)
interfere with, solicit or cause or attempt to cause any material change in, any
of the business or accounts of the Company or any of its subsidiaries or
affiliates, including, but not limited to, the relationship of any client,
customer or supplier with the Company or any of its subsidiaries or affiliates,
which existed as of the Closing or at any time during the Second Non-Competition
Period, which relate to the manufacture, distribution, or marketing of
wheelchairs or wheelchair seating systems in any domestic or foreign
jurisdiction in which the Company or a subsidiary or affiliate of the Company
engages in such activities or which relate to any project areas in the durable
medical products industry which were assigned by the Company to the Consulting
Entity during the term of the Consulting Agreement and accepted by the
Consulting Entity.
(c) Notwithstanding the provisions of Sections 1(a) and (b)
above, nothing in this Agreement is intended, or shall be construed, to prevent
the Shareholder from owning, managing, operating, joining, controlling, or
participating in or being connected with as an officer, employee, consultant,
partner or stockholder of, or a lender to, a division,
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subsidiary or affiliate of a Competitor so long as (i) such division, subsidiary
or affiliate is not involved in any way in the design, manufacture or marketing
of durable medical products covered by the non-competition provisions of Section
1(a) or (b) above (whichever is applicable), and (ii) the Shareholder
communicates in no way either with the Competitor or any of the Competitor's
other divisions, subsidiaries or affiliates concerning the design, manufacture
or marketing of such durable medical products.
(d) Nothing in this Agreement is intended, or shall be
construed, to prevent the Shareholder during the term hereof or thereafter from
investing in the stock or other securities listed on a national securities
exchange or traded in the over-the-counter market of any corporation which is at
the time a Competitor provided that the Shareholder, together with his spouse
and dependent children, shall not, directly or indirectly, hold, beneficially or
otherwise, in the aggregate, more than one percent (1%) of any issue of such
stock or other securities of any one (1) such corporation.
(e) During the period commencing on the date hereof and
ending on the seventh (7th) year anniversary of the Closing (the "Restricted
Period"), the Shareholder agrees that he will not, directly or indirectly,
solicit the employment of or hire any officer, employee or consultant of the
Company or any of its subsidiaries or affiliates who was so employed as of the
Closing or at any time during the Restricted Period unless, such officer,
employee or consultant (a) resigns voluntarily (without any solicitation from
the Shareholder or any of his affiliates) or (b) is terminated by the Company or
any of its subsidiaries or affiliates after the Closing.
(f) During the Restricted Period, the Shareholder agrees
not to disclose (unless compelled by judicial or administrative process) or use
any confidential or secret information relating to the Company or any of its
subsidiaries or affiliates or any of their respective clients, customers or
suppliers. For purposes of this Agreement, "confidential or secret information
relating to the Company" shall not include (i) any information which becomes
known to the public without breach by the Shareholder or the Consulting Entity
of any terms of the Consulting Agreement or of the common law duties of the
Shareholder or the Consulting Entity, (ii) is developed independently by the
Shareholder or the Consulting Entity without reference to any such confidential
or secret information, or (iii) is or becomes available to the Shareholder or
the Consulting Entity from a source that, to the knowledge of the Shareholder
and Consulting Entity, is not bound by a confidentiality agreement with the
Company prohibiting such disclosure.
(g) It is expressly understood and agreed that the
covenants and agreements contained herein are necessary to induce the Company to
enter into and consummate the transaction contemplated by the Merger Agreement;
and in the event of the breach by the Shareholder of any of the terms and
conditions of this Agreement on his part to be performed hereunder, or in the
event of the breach or threatened breach by the Shareholder of the terms and
provisions of subparagraphs (a), (b), (c) or (d) of this Section 1, then the
Company shall be entitled, if it so elects, to institute and prosecute any
proceedings in any
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court of competent jurisdiction, either in law or equity, for relief, including,
without limiting the generality of the foregoing, any proceedings to obtain
provable damages for any breach of this Agreement, to enforce the specific
performance thereof by the Shareholder or to obtain an injunction against the
commission, threatened commission or continuance of any such breach or
threatened breach. In any such action, the prevailing party or parties shall be
entitled to recover from the other party or parties their reasonable attorneys'
fees and expenses in prosecution or defense of such action. If the Shareholder
violates the provisions of paragraphs (a), (b) or (d) of this Section 1, the
time period set forth therein shall be extended until after the date of entry of
final judgment enforcing such provision and the time allowed for appeal has
lapsed (the "Judgment Date") by a period equal to the time elapsed between the
commencement of the breach or threatened breach and the Judgment Date.
(h) The Shareholder expressly acknowledges that the
covenants contained in this Section 1 shall not be deemed exclusive of any
common law rights of the Company in connection with any of the matters
prohibited under this Section 1 or as provided in the Merger Agreement, and that
the Company shall have any and all rights as may be provided by law or under the
Merger Agreement in connection with the matters referred to in this Section 1.
(i) As used herein "Non-Competition Payments" means the
aggregate of Four Hundred Thousand Dollars ($400,000), which shall be payable
over a period of six (6) years in equal quarterly installments of Sixteen
Thousand Six Hundred Sixty Six Dollars and Sixty Seven Cents ($16,666.67) per
quarter, payable on March 31, June 30, September 30 and December 31 of each such
year, commencing on the first (1st) anniversary date of the Closing. The Company
shall pay a pro rata portion for any partial quarter. If the Company fails for
any reason (other than as a result of the right of set-off referred to in
Section 2) to make any two Non-Competition Payments within thirty (30) days of
the due date thereof, whether consecutive or non-consecutive, the Shareholder
shall be entitled to terminate this Agreement. In the event this Agreement is so
terminated, all obligations hereunder of each party hereto shall terminate,
other than the Company's obligation to make any Non-Competition Payments accrued
through the date of such termination.
(j) Notwithstanding the foregoing, if during or subsequent
to the term of the Consulting Agreement, the Shareholder or the Consulting
Entity has a concept or idea for a product that is otherwise subject to and
proscribed by the terms and provisions contained herein and the Shareholder or
the Consulting Entity presents the concept or idea for such product (the "Peek
Product") to the Company for commercialization and (i) the Company either does
not accept such Peek Product for commercialization within ninety (90) days after
presentation of the concept or idea, or (ii) the Company and the Consulting
Entity are unable to agree upon a royalty for such Peek Product, then the
Shareholder and the Consulting Entity may, directly or indirectly through
agreements with others, manufacture, sell and/or distribute the Peek Product;
provided that the sales volume of that Peek Product does not exceed a total of
twelve (12) units in any twelve-month period, and further provided that the
Company will
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be granted a second and final opportunity to commercialize the Peek Product on
an exclusive basis following the sale of twelve (12) units of such product.
2. RIGHT OF SET-OFF.
Notwithstanding the terms and provisions contained in this
Agreement, the Company shall have an unlimited right of set-off against all
payments to be made hereunder to the Shareholder in the event the Company makes
any payment relating to the indebtedness described in Section 9.15 of the Merger
Agreement.
3. NOTICES.
Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered mail or
certified, (i) to 0000 Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000 (or to such other
address as may be designated by the Shareholder from time to time) in the case
of the Shareholder or (ii) to its principal office in the case of the Company,
and shall be deemed given when deposited in the United States mails, postage
prepaid.
4. ENTIRE AGREEMENT.
This Agreement embodies the entire agreement of the parties
with respect to the subject matter hereof. It may not be changed except by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, extension or discharge is sought.
5. WAIVERS.
The waiver by the Company of a breach of any provision of this
Agreement by the Shareholder shall not operate or be construed as a waiver of
any other or subsequent breach of the Shareholder.
6. GOVERNING LAW.
This Agreement shall be subject to, and be governed by, the
laws of the State of New York without regard to its conflict of laws provisions.
7. BINDING EFFECT.
The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon any successor to the
Company or to the business of the Company. Neither this Agreement nor any rights
or obligations of the Shareholder hereunder shall be transferable or assignable
by the Shareholder.
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8. PROVISIONS OVERLY BROAD.
If any term or provision of this Agreement, or any part or
aspect thereof, shall be deemed by a court of competent jurisdiction to be
overly broad in scope, the court considering the same shall have the power and
hereby is authorized and directed to modify such term or provision to limit such
scope so that such term or provision is no longer overly broad and to enforce
the same as so limited. Subject to the foregoing sentence, in the event any
provision of this Agreement shall be held to be invalid or unenforceable for any
reason such invalidity or unenforceability shall attach only to such provision
and shall not affect or render invalid or unenforceable any other provision of
this Agreement. Subject further to the foregoing, if a court of any one or more
jurisdictions holds any term or provision of this Agreement, or any part or
aspect thereof, unenforceable by reason of the breadth of such scope or
otherwise, then such determination will not affect or render invalid or
unenforceable such term or provision in any other jurisdiction; such terms and
provisions as they relate to each such jurisdiction being, for this purpose,
severable into diverse and independent covenants.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
XXXXXX-FIELD HEALTH PRODUCTS, INC.
By:
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Name:
Title:
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XXXXXXX X. XXXX
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