Exhibit 10.9
CONFIDENTIALITY, CONSULTING AND NONCOMPETE AGREEMENT
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THIS AGREEMENT is made as of April 25, 1996, between Datamax International
Corporation, a Delaware corporation ("Datamax" and together with Datamax
Corporation, and all of their respective affiliates, divisions and subsidiaries,
the "Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ("Executive").
Executive's employment with the Company has been terminated effective April
24, 1996 and Datamax and Executive desire to enter into this agreement to, among
other things (i) provide obligations of Executive with respect to Confidential
Information (as defined below), (ii) provide obligations of Executive to refrain
from competing with the Company and (iii) provide for Executive's agreement to
serve as a consultant to the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Datamax and Executive hereby agree as follows:
1. Resignations. Executive has resigned from his employment with the
Company effective April 25, 1996 and as of such date has resigned from the Board
of Directors of Datamax (the "Board and from any and all other positions he
holds with respect to the Company, including without limitation his position as
Chairman of the Board, Chief Executive Officer, President, and member of the
Compensation Committee, Banking Resolution Committee, Executive Committee and
IPO Pricing Committee of Datamax, his position as Chairman of the Board, Chief
Executive Officer, President and Trustee of 401(k) Plan of Datamax Corporation,
his position as Chairman of the Board and Chief Executive Officer of Datamax Bar
Code Products Corporation, his position as Director, President and Treasurer of
DMX Integration, Inc., his position as Director of Datamax London Ltd., his
position as Managing Director of Datamax B.V., his position as Director and
President of Pioneer Labels, Inc., his position as Director and President of
U.K. Bar Coding Corporation and his position as Director and President of
Datamax Foreign Sales Corporation. Executive hereby relinquishes any rights (but
not obligations) he has under Section 2 (entitled 'Board of Directors") of that
certain Stockholders Agreement dated as of February 26, 1993 among Datamax and
certain of its stockholders (the "Stockholders Agreement") on behalf of himself
and any of his Permitted Transferees (as defined in the Stockholders Agreement).
2. Nondisclosure and Nonuse of Confidential Information. Executive
acknowledges that his work as an employee of the Company has exposed him to
Confidential Information of the Company and that his work as a consultant to the
Company may expose him to additional Confidential Information. "Confidential
Information" includes but is not limited to customer lists, employee lists,
methods of pricing, special customer requirements for service, information on
methods of servicing customer, operational information, confidential research
projects, plans for future development, matters of a technical nature and other
information of a similar nature. Executive shall not, directly or indirectly, at
any time during or after the termination of his employment with the Company,
except to the extent required by law, (1) reveal, divulge, make
known, sell, exchange, give away or otherwise dispose of, to any person, firm,
or corporation, any Confidential Information of the Company or its business,
whether the same shall or may have been designed, developed or originated by the
Executive or otherwise, or (2) reveal, divulge or make known to any person,
firm, or corporation, the name of any of Company's customers. This obligation
shall not apply to information which (a) is acquired from a third party who, to
the best of Executive's knowledge, is not in default of any obligation to the
Company in disclosing such information or (b) is already in the public domain or
known to the Company's competitors or the public generally or that becomes
available to the public generally or the Company's competitors other than as a
result of Executive's breach of this Agreement. All records and books relating
in any manner whatsoever to the Company, shall be the exclusive property of the
Company regardless of who actually prepared the original record or book.
Executive shall not copy or cause to have copied any such records and books
except in the ordinary course of business. All such records and books shall be
immediately returned to the Company by Executive on the date hereof. If the
Company shall breach its obligations to pay Executive monies due him under this
Agreement or otherwise fail to comply with its material obligations hereunder,
then if Executive shall have given the Company written notice of its breach of
this Agreement and if the Company shall not have remedied such breach within
sixty days of the date of receipt by it of such notice, Executive shall be
discharged of all obligations under this Section 2; provided, however, that if
the Company's breach occurs at a time when Executive is in breach of any of his
obligations under this Agreement, then Executive shall remain bound by this
Section 2 and all other provisions of this Agreement notwithstanding the
Company's breach.
3. Noncompetition. Executive acknowledges and agrees with the Company
that Executive's services to the Company are unique in nature and that the
Company would be irreparably damaged if Executive were to provide similar
services to competitors of the Company. Executive accordingly covenants and
agrees with the Company that during the period from the date hereof through and
including April 24, 1998 (the "Noncompetition Period"), Executive shall not,
directly or indirectly, either for himself or for any other individual,
corporation, partnership, joint venture or other entity, participate in any
business (including, without limitation, any division, group or franchise of a
larger organization) engaged in the manufacturing, design, engineering,
distributing, marketing, selling or reselling of (i) thermal or thermal transfer
bar code printers, (ii) bar code verifiers or (iii) labeling media and ribbons
used in connection with thermal bar code printers (the "Prohibited Business")
anywhere in the World. For purposes of this Agreement, the term "participate in"
shall include, without limitation, having any direct or indirect interest in any
corporation, partnership, joint venture or other entity, whether as a sole
proprietor, owner, stockholders partner, joint venturer, creditor or otherwise,
or rendering any direct or indirect service or assistance to any individuals
corporation, partnership, joint venture and other business entity (whether as a
director, officer, manager, supervisor, employee, agent, consultant or
otherwise), provided, however, that Executive shall not be deemed to be
participating' in the Prohibited Business if and to the extent that he merely
owns as a Passive investor less than 1% of the outstanding stock of any company
whose securities are publicly traded and has no other material relationship with
such company. If the Company shall breach its obligations to pay Executive
monies due him under this Agreement or otherwise fail to comply with its
material obligations hereunder, then if Executive shall have given the Company
written notice of its breach of this Agreement and if the Company shall not have
remedied such breach within sixty days of the date of receipt by it of such
notice,
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Executive shall be discharged of all obligations under this Section 3; provided,
however, that if the Company's breach occurs at a time when Executive is in
breach of any of his obligations under this Agreement, then Executive shall
remain bound by this Section 3 and all other provisions of this Agreement
notwithstanding the Company's breach.
4. Employee, Customer, Dealer, Supplier, Licensee Nonsolicitation. During
the Consulting Period, Executive shall not, directly or indirectly (i) induce or
attempt to induce any officer or employee of the Company to leave the employ of
the Company, or in any way interfere with the relationship between the Company
and any officer, employee, director or stockholder thereof, (ii) hire directly
or through another entity any person who was an employee of the Company at any
time during the Consulting Period, (iii) induce or attempt to induce any,
customer, dealer, supplier or licensee to cease doing business with the Company,
or in any way interfere with the relationship between any such customer, dealer,
supplier or licensee and the Company, (iv) make any negative statements or
communications, oral or written, regarding the Company or its directors,
officers, employees, consultants or stockholders (or their directors, officers,
employees or affiliates) or otherwise take actions which have the effect of
diminishing their respective reputations in any way (it being understood,
however, the Executive shall be free when seeking employment to defend his
performance as an executive of the Company and to state that he did not agree
with the decision of the board of directors of the Company to effect a change in
the Company's management so long as he does so in a manner which is not intended
to, and which does not in fact, have the effect of diminishing the reputation of
any member of the Company's board of directors or any affiliate of any of them)
or (v) compete with the Company or participate in any entity competing with the
Company in acquiring or attempting to acquire (whether by purchase of stock,
purchase of assets, merger or otherwise) any Acquisition Target. The term
"Acquisition Target" shall mean Graftek, Datametrics, Eltron, ▇▇▇▇▇▇▇▇
International, Printronix, Inc. and PSC, Inc. (and any affiliate of any of the
foregoing). If the Company shall breach its obligations to pay Executive monies
due him under this Agreement or otherwise fall to comply with its material
obligations hereunder, then if Executive shall have given the Company written
notice of its breach of this Agreement and if the Company shall not have
remedied such breach within sixty days of the date of receipt by it of such
notice, Executive shall be discharged of all obligations under this Section 4;
provided, however, that if the Company's breach occurs at a time when Executive
is in breach of any of his obligations under this Agreement, then Executive
shall remain bound by this Section 4 and all other provisions of this Agreement
notwithstanding the Company's breach.
5. Consulting Services. From the date of termination of Executive's
employment with the Company through the end of the Noncompetition Period (the
"Consulting Period"), the Company shall engage Executive as an independent
contractor, and not as an employee, to render consulting services to the Company
as hereinafter provided, and Executive shall accept such engagement Executive
shall not have any authority to bind or act on behalf of the Company during the
Consulting Period. During the Consulting Period, Executive shall render such
consulting services to the Company in connection with the Company's business as
may be directed from time to time by the President of Datamax or any successor
entity. As part of such consulting services, Executive shall be obligated to
refer to the Company in writing each and every Business Opportunity that
Executive becomes aware of during the Consulting Period. The term "Business
Opportunity" means any
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acquisition, joint venture or customer opportunity in the business of the same
or similar nature as that furnished by the Company to its customers as of the
date hereof that is communicated to Executive by the prospective acquisition
target, joint venture partner or customer (or by a representative of any of the
foregoing) other than any such opportunity that is known generally within the
autoidentification or printer industries or that has, to Executive's knowledge,
already been communicated to a senior executive of the Company. Executive's
commitment to provide consulting services shall extend, to the extent requested
by the Company, to 20 hours per month from the date hereof through and including
April 24, 1997 and 10 hours per month from April 25, 1997 through and including
the termination of the Consulting Period; provided, however, that the foregoing
limitations on the number of hours Executive can be obligated to work hereunder
shall not apply (i) to any request by the Company that Executive consult with
respect to and assist (including by means of testifying as a witness in
litigation or similar proceeding) in addressing any dispute relating to any
transaction that occurred during Executive's employment with the Company or any
dispute with any party with which the Company has entered into a contract during
Executive's employment with the Company or (ii) to Executive's obligation under
Section 1(e)(i) of the Transition Services Agreement dated November 3, 1995
between Datamax Corporation and Unimark, Inc. Notwithstanding the foregoing, it
is expressly understood that (i) Executive shall be free to move his residence
to any place in the United States and his travel expenses to and from such
residence in performance of his duties hereunder shall be reimbursed by the
Company in accordance with Section 6 below and (ii) the Company shall attempt in
good faith to accommodate Executive's prior commitments when requesting him to
provide services hereunder, it being understood that the Company's commitment to
attempt to do so shall not serve to in anyway limit Executive's obligations
hereunder.
6. Compensation. In consideration of Executive's agreements set forth
herein, (i) during the Consulting Period, the Company shall pay Executive
$18,435.98 per month ($221,231,76 per year), (ii) for a period of eighteen
months after the date hereof, the Company shall provide at its cost and expense
Executive with health and dental insurance In the same manner as it is provided
generally to employees of the Company during the Consulting Period (but
Executive shall be solely responsible for any taxes incurred by him as a result
thereof, (iii) if, when and to the extent that the Company pays all executives
of the Company or all but one executive of the Company (other than Executive)
cash bonuses for the fiscal year ended February 20, 1996, the Company shall pay
Executive the bonus he would have received had he remained an employee of the
Company (which bonus shall not in any event exceed $25,538), (iv) upon execution
of this Agreement, the Company shall pay Executive $13,923.07 in full settlement
of his accrued and unused vacation, and (v) during the Consulting Period, the
Company shall indemnify Executive to the maximum extent permitted under its
bylaws and certificate of incorporation in effect on the date hereof. The
amounts payable to Executive hereunder shall remain payable notwithstanding the
death or incapacity of Executive. Except as expressly provided in this Section
6, Executive shall not be entitled to any other benefits, bonuses or perquisites
from the Company. The Company shall reimburse Executive for all reasonable
expenses incurred by him in the course of performing his duties as a consultant
to the Company under this Agreement which are consistent with the Company's
policies in effect from time to time with respect to travel, entertainment and
other business expenses, subject to the Company's requirements with respect to
reporting and documentation of such expenses. Executive shall file all tax
returns and reports required to be filed by him on the basis that he is an
independent contractor,
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rather than an employee, as defined in Treasury Regulation (S)31.3121(d)-l
(c)(2), and Executive shall indemnify the Company for the amount of any
employment taxes paid by the Company as the result of Executive not withholding
employment taxes from any amount paid to him hereunder.
7. Agreements Regarding Stock. Datamax and Executive acknowledge that
except as otherwise provided in Section 1 hereof, Executive remains a party to
the Stockholders Agreement, the Registration Agreement dated as of February 26,
1993 between Datamax and certain of its stockholders (the "Registration
Agreement"), the Second Amended and Restated Incentive Stock Option Agreement
dated as of July 16, 1993 between Datamax and Executive relating to options to
purchase 66,666 shares of Datamax common stock with respect to which he is now
fully vested (the "66,667 Share Option Agreement" and the Stock Option Agreement
dated as of July 16, 1993 between Datamax and Executive relating to options to
purchase 66,667 shares of Datamax common stock with respect to which he is now
fully vested (the "66,667 Share Option Agreement" and, together with the
Stockholders Agreement, the Registration Agreement and the 166,660 Share Option
Agreement, the "Equity Agreements"), and will continue to have the lights and be
subject to the obligations set forth in the Equity Agreements, provided,
however, that effective as of April 24, 1996, (a) the 66,667 Stock Option
Agreement and the 166,666 Share Option Agreement are each hereby amended to
restate paragraph 3 of each to read as follows:
"3. Exercise of Option. The Option shall be exercisable only
during the exercise period of the Option, only in accordance with the
above vesting schedule and only on or prior to the earlier of a Sale
of the Company (as defined below) or the date which is 270 days after
the Company consummates a public offering of common Stock pursuant to
a registration statement declared effective by the Securities and
Exchange Commission. The term "Sale of the Company" shall mean the
sale of the Company pursuant to which another party or parties
acquires (i) capital stock of the Company possessing the voting power
under normal circumstances to elect a majority of the Company's board
of directors (whether by merger, consolidation or sale or transfer of
the Company's capital stock) or (ii) all or substantially all of the
Company's assets determined on a consolidated basis."
and (b) the 66,667 Stock Option Agreement is hereby amended to delete paragraph
4 thereof (entitled "Company's Repurchase Option"). The Company acknowledges
that in light of the foregoing amendments, it no longer has a right to
repurchase any shares owned by Executive. The foregoing amendments, however,
will be effective unless and until Executive breaches this Agreement or the
provisions of Sections 2, 3 or 4 of this Agreement are determined by a court of
competent jurisdiction to be invalid or unenforceable as written (it being
understood that in either such event the 66,667 Stock Option Agreement and the
166,666 Share Option Agreement shall continue in full force and effect as
written without giving effect to such amendments). Executive understands and
acknowledges that the effect of the foregoing amendments will likely be to cause
any option that would otherwise qualify as an incentive stock option under
Section 422A of the Internal Revenue Code to cease to so qualify. Executive
shall sign any lock-up or similar agreement in connection with any underwritten
public offering of Datamax's (or its successors) capital stock so long as
Liberty Partners Holdings 1, L.L.C. (or its successor) ("LPH") and non-
management
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stockholders of the Company holding at least 10% of the Company's outstanding
common stock sign the substantially same agreement and so long as the duration
thereof does not exceed 180 days after the consummation of such offering. LPH
shall use it reasonable efforts to cause Executive to have the right to sell his
shares of Datamax stock in any such offering to the same extent as other non-
management stockholders (taking into account relative ownership of such stock).
8. Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:
To the Company:
Datamax International Corporation
% Liberty Capital Partners
Americas Tower, 34th Floor
1177 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
To Executive:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed five days after deposit in the U.S. mail.
9. Waiver and Release. Effective on the date hereof Executive hereby
waives any and all claims it or he has or may have (in any capacity) against the
Company or against any stockholder, director, officer, agent or employees of the
Company or its affiliates (in each case in their capacities as such) (the
"Released Persons") for obligations or liabilities (whether known or unknown,
accrued, absolute, contingent, unliquidated or otherwise, whether due or to be
come due and regardless of when asserted) arising out of the termination of
Executive's employment with the Company or any transaction entered into at or
prior to such date, or out of any action or inaction or any state of facts
existing or event occurring at or prior to such date, of any nature whatsoever
(including any such obligations or liabilities arising under Title VII of the
Civil Rights Act of 1964, as amended, the Americans With Disabilities Act, the
Employee Retirement Income Security Act of 1974, as amended, the Age
Discrimination in Employment Act of 1974, as amended by various congressional
enactments, including the Older Workers Benefit Protection Act of 1990, and any
state or local laws
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or regulations similar to any of the foregoing), other than any claims for a
breach of this Agreement or the Equity Agreements (the "Reserved Claims").
Executive further agrees to release and hold harmless each of the Released
Persons from the claims described in the preceding sentence (other than the
Reserved Claims).
10. General Provisions.
(a) Not an Employment Agreement. Executive and the Company
acknowledge and agree that this Agreement is not intended and should not be
construed to grant Executive any right to continued employment with the
Company or to otherwise define the terms of Executive's employment with the
Company.
(b) Absence of Conflicting Agreements. Executive hereby warrants and
covenants that (i) his employment by the Company and his execution,
delivery and performance of this Agreement do not and shall not result in a
breach of the terms, conditions or provisions of any agreement, instrument,
order, judgment or decree to which Executive is subject, (ii) Executive is
not a party to or bound by any employment agreement, severance agreement,
plan or arrangement, noncompete agreement or confidentiality agreement with
any other person or entity that will survive the execution and delivery of
this Agreement and (iii) upon the execution and delivery of this Agreement
by the Company, this Agreement shall be the valid and binding obligation of
Executive, enforceable in accordance with its terms.
(c) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other
jurisdiction, and this Agreement shall be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein. The parties agree that a court of
competent jurisdiction making a determination of the invalidity or
unenforceability of any term or provision of Sections 3 or 4 of this
Agreement shall have the power to reduce the scope, duration or area of any
such term of provision, to delete specific words or phrases or to replace
any invalid or unenforceable term or provision in Sections 3 or 4 with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision,
and this Agreement shall be enforceable as so modified.
(d) Complete Agreement. This Agreement embodies the complete
agreement and understanding among the parties and supersedes and preempts
any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter
hereof in any way.
(e) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which
taken together constitute one and the same agreement.
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(f) Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by
the Company and Executive and their respective successors and assigns;
provided that the rights and obligations of Executive under this Agreement
may not be assigned or delegated without the prior written consent of the
Company.
(g) Choice of Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits
hereto shall be governed by the internal law, and not the law of conflicts,
of the State of Delaware.
(h) Remedies. Each of the parties to this Agreement shall be
entitled to enforce its rights under this Agreement specifically, to
recover damages and costs (including reasonable attorneys fees) caused by
any breach of any provision of this Agreement and to exercise all other
rights existing in its favor. The parties hereto agree and acknowledge that
Executive's breach of any term or provision of this Agreement shall
materially and irreparably harm the Company, that money damages shall
accordingly not be an adequate remedy for any breach of the provisions of
this Agreement by Executive and that the Company in its sole discretion and
in addition to any other remedies it may have at law or in equity may apply
to any court of law or equity of competent jurisdiction (without posting
any bond or deposit) for specific performance and/or other injunctive
relief in order to enforce or prevent any violations of the provisions of
this Agreement. The Company shall have the right to set off against any and
all amounts due hereunder (including any benefits to be provided pursuant
hereto) the amount of any damages suffered as a result of Executive's
breach of this Agreement and all provisions hereof shall continue in full
force and effect regardless of any such set off.
(i) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of Datamax and
Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
DATAMAX INTERNATIONAL CORPORATION
By
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Its
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