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NONCOMPETITION, NONSOLICITATION
AND NONDISCLOSURE AGREEMENT
This Agreement made as of this 8th day of January, 1996, by and among
MASADA SECURITY, INC., a Delaware corporation ("Masada"), and XXXX XXXXXXXXX
and XXXX XXXXXXXXX, husband and wife residing in Austin, Texas, (collectively
the "Sellers").
STATEMENT OF FACTS
A. Masada is purchasing all of the stock in Kristynik Security
Systems, Inc., a Texas corporation (the "Company") pursuant to the Stock
Purchase Agreement dated January 8, 1996 between Masada and Sellers ("Stock
Purchase Agreement") which is incorporated herein by this reference. The
Company owns certain security monitoring accounts as listed on Schedule 3.18(a)
of the Stock Purchase Agreement (the "Accounts"). This Agreement applies to
the customer who is related to the Account, as well as the Account's location.
X. Xxxxxxx are also the owners of Austin Central Monitoring,
Inc., a Texas corporation ("Austin Central"). Austin Central provides
monitoring services to the Accounts and also monitors other security monitoring
accounts.
C. In consideration of the payment of $50,000.00 to Sellers, the
Sellers are willing to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and for good and
valuable consideration, receipt of which is acknowledged, the parties,
intending to be legally bound, covenant and agree as follows:
1. Nonsolicitation and Nonacceptance. The Sellers agree that
following the Closing Date as defined in the Stock Purchase Agreement, they
will not, directly or indirectly through affiliates, solicit nor accept (if the
Accounts contact them) any business from any of the Accounts, including
business for the purpose of providing electronic security, intercom, central
vacuum, home automation, audio systems or related services (collectively, the
"Services"); provided, however that Sellers will be allowed to (i) provide
guard services to the Accounts, (ii) monitor the Accounts through Austin
Central pursuant to the terms of a monitoring agreement entered into between
Masada and Austin Central, (iii) monitor the Accounts which have been rejected
in writing by Masada, and (iv) monitor the Accounts which terminate their
relationship with the Company and enter into security monitoring agreements
with business entities which have third party monitoring agreements with Austin
Central; provided, however, that beginning with the expiration of the Holdback
Period II (as defined in the Stock Purchase Agreement) and
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continuing as long as Sellers own a controlling interest in Austin Central,
Sellers will cause Austin Central to provide Masada with a monthly report which
lists the Accounts who were customers of the Company at the Closing (as defined
in the Stock Purchase Agreement) and who are then monitored by Austin Central.
If contacted by the Accounts, the Sellers will inform them that the Seller can
no longer provide the Services to the Accounts and that the Company is now
owned by Masada who operates a U.L. certified monitoring station in Birmingham,
Alabama.
2. Noncompetition. The Sellers also agree that, for a period of
three (3) years following the date of this Agreement, they will not, directly
or indirectly through affiliates, take any action in competition with Masada in
connection with the Accounts. Without limiting the generality of the
foregoing, the Sellers will not, directly or indirectly through affiliates:
(a) manage, operate, join, control, participate or become
interested in or be connected with, as an employee, partner, officer, director,
stockholder, investor or otherwise, any business providing any of the Services
to the Accounts except as provided in Section 1 of this Agreement;
(b) lend their credit or money for the purpose of
establishing or operating any business providing any of the Services to the
Accounts;
(c) furnish consultation or advice to any business
providing any of the Services to the Accounts except for Services provided by
Austin Central;
(d) permit their names to be used in connection with any
business providing any of the Services to the Accounts; or
(e) sell or rent any equipment ancillary or necessary to
any business providing any of the Services to the Accounts except for Services
provided by Austin Central.
3. Nondisclosure.
(a) The Sellers acknowledge that they possess certain
confidential, proprietary and trade secret information, materials and business
concepts with respect to the Accounts, including information regarding sales,
maintenance, service and marketing, customer lists and files, accounting data
and methods, operating procedures, pricing policies, strategic plans,
intellectual property, contracts and manufacturer's warranties (collectively,
the "Proprietary Information"). In fact, the Sellers acknowledge that the
Accounts' information included on Schedule 3.18(a) of the Stock Purchase
Agreement constitutes proprietary information.
(b) The Sellers agree without Masada's prior written
consent (i) never to publish, copy, disclose, allow to be disclosed, or use for
their own benefit or for the benefit of any other person, firm, corporation or
entity the Proprietary Information and (ii) to maintain strictly the
confidentiality of the Proprietary Information at all times. The Sellers agree
to take
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all necessary precautions to protect the Proprietary Information from
unauthorized disclosure or use.
(c) The Sellers agree not to disclose financial and/or
other terms of the Stock Purchase Agreement transaction except to their
attorneys, accountants or other professional advisors or as required by law.
4. Acknowledgment. The Sellers acknowledge and recognize that:
(a) this Agreement is necessary for the protection of the
legitimate business interests of Masada in purchasing the stock of the Company;
(b) the execution and delivery of this Agreement is a
mandatory condition precedent to Masada's closing its purchase of all of the
stock in the Company from Sellers, without which such transactions will not
close;
(c) the scope of this Agreement regarding duration and
the level of activities restricted is reasonable;
(d) none of the Sellers, individually or jointly, has any
intention of violating this Agreement during the time period set forth above;
and
(e) the breach of this Agreement will be such that Masada
will not have an adequate remedy at law because of the unique nature of the
assets of the Company and the confusion to the Accounts that a breach would
create.
5. Remedy. The Sellers and Masada agree that the amount of
damages resulting to Masada from the breach of this Agreement by the Sellers is
difficult to ascertain. In the event that Masada in its sole discretion,
elects to pursue a damage award the Sellers agree that Masada is entitled to
liquidated damages from the Sellers of 48 times the monthly recurring revenue
from the affected Accounts ("Liquidated Damages Multiple"). It is understood
that the Liquidated Damages Multiple reflects not only the Purchase Price
multiple paid for the Alarm Accounts pursuant to the Stock Purchase Agreement
but also includes other factors including, but not limited to Masada's: (i)
loss of operating cash flow; (ii) transition expenses; and (iii) costs
(including opportunity costs) associated with enforcing this Agreement. The
Sellers acknowledge and agree that the rights of Masada under this Agreement
are of a specialized and unique character and that immediate and irreparable
damage will result to Masada if the Sellers fail to or refuse to perform their
obligations under this Agreement and, notwithstanding any election by Masada to
claim damages from the Sellers as a result of any such failure or refusal,
Masada may, in addition to any other remedies and damages available, seek an
injunction in a court of competent jurisdiction,without the need to post a bond
or other security to restrain any such failure or refusal. The Sellers
represent and warrant that their expertise and capabilities are such that their
obligations under this Agreement (and the enforcement thereof by injunction or
otherwise) will not prevent them from earning a livelihood. The Sellers also
agree that
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Masada's remedy for a breach by the Sellers of this Agreement will not be
limited to the payment made from Masada to the Sellers.
6. Severability. If any provisions of this Agreement as applied
to any part or to any circumstances shall be adjudged to be invalid or
unenforceable, the same will in no way affect any other provision of this
Agreement, the application of such provision in any other circumstances, or the
validity or enforceability of this Agreement. Masada, and the Sellers intend
this Agreement to be enforced as written. If any provision or any part thereof
is held to be invalid or unenforceable because of the duration thereof or the
level of restrictions, all parties agree that the person making such
determination will have the power to reduce the duration and/or restrictions of
such provision, and/or to delete specific words or phrases and in its modified
form such provision will then be enforceable.
7. Resolution of Disputes.
(a) Any dispute arising out of or relating to this
Agreement or the breach, termination or validity hereof shall be settled by
arbitration conducted expeditiously by binding arbitration under the rules then
in effect of the American Arbitration Association, such arbitration hearing to
be held in Austin, Texas. The arbitration proceedings shall be heard by one
arbitrator selected from the proposed panel of arbitrators issued by the
American Arbitration Association. Masada and Sellers shall attempt to select a
mutually acceptable arbitrator. If the parties are unable to select a mutually
acceptable arbitrator within five business days following the issuance of the
list of potential arbitrators by the American Arbitration Association, Sellers,
on the one hand, and Masada, on the other hand, shall each select one person
from the list, and those two persons shall appoint a third person from the
list, which person shall be the arbitrator for the dispute. All arbitration
awards shall include an award of expenses, including, but not limited to, legal
and accounting fees.
(b) The arbitration provisions of Section 7(a) shall be
the sole and exclusive procedure for the resolution of disputes between the
parties arising out of or relating to this Agreement; provided, however, that a
party may seek a preliminary injunction or other provisional judicial relief if
in its judgment such action is necessary to avoid irreparable damage or to
preserve the status quo.
8. Notices. Any notice required or permitted to be delivered
pursuant to the terms of this Agreement shall be considered to have been
sufficiently delivered within five days after posting, if mailed by U.S. Mail,
certified or registered, return receipt requested, postage prepaid or, upon
receipt by overnight courier maintaining records of receipt by addressee or if
delivered by hand or telecopied with the original notice being mailed the same
day by one of the foregoing methods and addressed as follows:
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IF TO MASADA AT:
Masada Security, Inc.
000 00xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxx
FACSIMILE: 0-000-000-0000
WITH COPY TO:
Xxxx & Xxxxxx
3100 SouthTrust Tower
000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: W. Xxx Xxxxxxx, Esq.
FACSIMILE: (000) 000-0000
IF TO SELLERS AT:
0000 Xxxxxx Xxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx and Xxxx Xxxxxxxxx
FACSIMILE: (000) 000-0000
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WITH COPY TO:
Xxxxxx, Xxxxxx & Xxxxxxxxx, P. C.
000 Xxxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: X. Xxxxx Xxxxxxxxx, Jr., Esq.
FACSIMILE: (000) 000-0000
or at such address as the party may designate by ten days advance written
notice to the other party. Notice shall be effective when delivered to a
responsible person at the address of the addressee.
9. Entire Agreement. This Agreement is an integrated document,
contains the entire agreement between the parties, and wholly cancels,
terminates and supersedes any and all previous and/or contemporaneous oral
agreements, negotiations, commitments and writings between Masada and the
Sellers with respect to such subject matter. No change, modification,
extension, termination, discharge, abandonment or waiver of this Agreement or
any of its provisions, nor any representation, promise or condition relating to
this Agreement, will be binding upon the parties unless made in writing and
signed by the parties.
10. Interpretation. The descriptive headings of the Sections are
for ease of reference only and will in no way affect or be used to construe or
interpret this Agreement. All references to Sections and subsections contained
in this Agreement are references to the Sections and subsections of this
Agreement. The terms and conditions of this Agreement will not be construed
against this drafter. The word "including" means "including without
limitation."
11. Remedies Cumulative. It is agreed that the rights and
remedies herein provided in case of any default or breach by the Sellers of
this Agreement are cumulative and will not affect in any manner any other
remedies that Masada may have by reason of such default or breach by the
Sellers. The exercise of any right or remedy will be without prejudice to the
right to exercise any other right or remedy provided herein, by law or by
equity.
12. Waiver. No waiver of any right or remedy allowed hereunder
will be implied by the failure to enforce any such right or remedy. No express
waiver will affect any such right or remedy other than that to which the waiver
is applicable and only for that occurrence.
13. Parties in Interest. This Agreement is binding upon and
inures to the benefit of Masada and its successors and assigns and the
permitted heirs, successors and assigns of the Sellers.
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14. Assignment. Masada has the right to assign this Agreement to
any third party without the consent of the Sellers. The Sellers have no right
to assign this Agreement.
15. Governing Law. This Agreement and the rights and the
obligations of the parties are governed by and construed and enforced in
accordance with the laws of the State of Texas without regard to its conflicts
of law provisions.
16. Joint and Several Obligations. The Sellers acknowledge that
all of their agreements and covenants contained in this Agreement are made on a
joint and several basis.
17. Expenses. Masada and the Sellers each agree to pay all of
their respective costs and expenses incident to the negotiation and preparation
of this Agreement and to the performance and compliance with all agreements and
conditions contained herein on their part to be performed or complied with,
including the fees and costs of their counsel and accountants; provided,
however, that the Sellers agree to pay all of Masada's reasonable legal fees
and costs in this event Masada must go to court to enforce this Agreement and
is successful in the court proceeding.
18. Counterparts; Telecopy. This Agreement may be executed in one
or more counterparts, each of which when taken together all comprise one
instrument. Delivery of executed signature pages hereof by facsimile
transmission will constitute effective and binding execution and delivery.
19. Consultation. The Sellers acknowledge that they have: (a)
carefully read and fully understand all of the provisions of this Agreement,
and (b) had an opportunity to consult with their respective attorneys prior to
executing this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.
MASADA SECURITY, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Title: VP Corp. Development
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/s/ Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx
/s/ Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx
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