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Exhibit 10.19
***Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. Sections
200.80(b)(4), 200.83 and 230.406
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement"), dated as of
this 31st day of July, 1996 is being entered into by and among LUCENT
TECHNOLOGIES INC., a Delaware corporation ("Lucent"), PARADYNE PARTNERS, L.P., a
Delaware limited partnership ("the Partnership"), PARADYNE ACQUISITION CORP., a
Delaware corporation ("PAC"), AT&T PARADYNE CORPORATION, a Delaware corporation
("Paradyne"), and CAP ACQUISITION CORP., a Delaware corporation ("CAPCo") ( the
Partnership, PAC, Paradyne and CAPCo are collectively referred to herein as the
"Acquisition Persons").
RECITALS
A. Lucent is the sole stockholder of Paradyne and has in its
possession valuable knowledge and information concerning the business of
Paradyne.
B. Pursuant to a Purchase Agreement dated as of June 18, 1996
by and among Lucent, Paradyne, the Partnership, PAC, Rental Acquisition Corp.,
CAPCo and Lease Acquisition Corp. (the "Purchase Agreement"), Lucent is selling
all of the outstanding shares of capital stock of Paradyne to PAC, selling
certain assets to CAPCo and causing the sale of certain assets of Paradyne to
CAPCo. It is a condition to the obligations of the Partnership, CAPCo and PAC to
consummate the transactions contemplated by Purchase Agreement that Lucent
execute and deliver this Agreement.
C. Lucent and Paradyne have conducted and are conducting their
respective businesses on a worldwide basis.
NOW, THEREFORE, the parties to this Agreement hereby agree as
follows:
Section 1. General Definitions. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Purchase Agreement. As used herein, the following terms have the following
meanings:
"Current Paradyne Products" shall mean the Paradyne products
listed on Schedule I hereto.
"Lucent Subsidiary" means any direct or indirect Subsidiary of
Lucent.
"Paradyne Competitor" as of a specified time means a Person
then engaged in, either directly or indirectly through a Subsidiary, one or more
activities that constitute Paradyne Competition.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any governmental agency or
political subdivision.
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"Stand-Alone Product" shall mean any product that is marketed
or sold by a Person as a separate product, provided, however that a product
which a Person markets and generally sells as an integrated component or part of
a materially larger system with significantly broader functionality, which
system is being sold by such Person, will not be deemed to be a Stand-Alone
Product even if it is also sold as a spare or replacement part for a component
or part of such larger systems and has relatively incidental sales to potential
customers for such larger systems.
"Subsidiary" shall mean, with respect to a Person, a
corporation, partnership, limited liability company or other entity in which
such Person holds an equity interest constituting a majority in respect of the
voting power of all equity or ownership interests of such entity.
"Substantially Similar Product" means a product that is
substantially similar in design, functionality and operating characteristics to
and competes in the marketplace with (or, as to products not yet being marketed,
will upon introduction in the marketplace compete with) any Current Paradyne
Product.
Section 2. Basic Restrictions. Except as provided in Section 4
below, Lucent shall not, and shall not permit any Lucent Subsidiary to, at any
time during the four year period commencing on the date of this Agreement:
(i) engage in any Paradyne Competition
anywhere in the world; or
(ii) be or become a stockholder, owner
or co-owner of, or partner in, or acquire any material debt interest in, any
Paradyne Competitor anywhere in the world (the "Competitor Acquisition
Restrictions); or
(iii) provide consulting or management
services to any Paradyne Competitor, other than customer support services for
Lucent or Lucent Subsidiary products the design, development, production,
manufacture or assembly of which does not otherwise violate this Agreement.
Section 3. Definitions of Competition.
For the purposes of this Agreement, a Person shall be deemed
to be engaged in Paradyne Competition if and only if:
(a) such Person engages in the design, development,
production, manufacture or assembly of a Substantially Similar Product and
markets or sells it as a Stand-Alone Product unless:
(i) neither Paradyne nor CAPCo then offers the
corresponding Current Paradyne Product; or
(ii) there is a similarly situated customer with
respect to a corresponding Current Paradyne Product, and neither Paradyne nor
CAPCo then offers such
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Current Paradyne Product to Lucent or a Lucent Subsidiary on terms and
conditions which are at least as favorable to Lucent or a Lucent Subsidiary as
those Paradyne or CAPCo, as the case may be, offers similarly situated
customer(s); or
(iii) Paradyne has no other similarly situated
customers for the corresponding Current Paradyne Product and does not agree to
supply such Current Paradyne Product to Lucent on terms previously agreed to by
Lucent or a Lucent Subsidiary with respect to such Current Paradyne Product in
accordance with the Supply Agreement executed pursuant to Section 1.8(a) of the
Purchase Agreement; or
(iv) CAPCo and Lucent or a Lucent Subsidiary have a
supply agreement relating to the corresponding Current Paradyne Product and
CAPCo has no other similarly situated customers for such Current Paradyne
Product and CAPCo does not agree to supply such Current Paradyne Product to
Lucent on terms previously agreed to by Lucent or a Lucent Subsidiary with
respect to such Current Paradyne Product in accordance with such supply
agreement; or
(b) such Person engages in the design, development,
production, manufacture or assembly of a Substantially Similar Product other
than as a Stand-Alone Product without offering Paradyne (and CAPCo with respect
to those Current Paradyne Products offered by CAPCo) a Right of First Refusal
(as defined in Section 4(c) below). In this regard, the performance of
installation, maintenance or repair services with respect to products shall not
be deemed to constitute "assembly" of such products, nor will the licensing of
intellectual property be deemed the sale of a product.
Section 4. Exceptions to Restrictions. The restrictions set
forth in Section 2 above shall be subject to the following exceptions:
(a) The design, development, production, manufacture or
assembly and sale of a Substantially Similar Product by a Person shall not be
deemed to constitute Paradyne Competition unless such Substantially Similar
Product falls within one of the following product categories and the gross
revenues received by such Person from the sales of Substantially Similar
Products in such Product Category in any twelve month period exceeds $[***]:
(i) [***]
(ii) [***]
(iii) [***]
(iv) [***]
(v) [***]
(vi) [***]
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*Confidential Treatment Requested
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(b) The design, development, production, manufacture or
assembly and sale of one or more Substantially Similar Products by a Person
shall not be deemed to constitute Paradyne Competition unless the aggregate
annual gross revenues received by Paradyne from the sale of products that
compete with the Substantially Similar Products designed, developed, produced,
manufactured or assembled and sold by such Person constitutes more than [***].
(c) The design, development, production, manufacture or
assembly of one or more Substantially Similar Products that are not Stand-Alone
Products by a Person shall not be deemed to constitute Paradyne Competition if
such Person has given Paradyne a reasonable opportunity to supply the
Substantially Similar Product to such Person and Paradyne is unwilling or unable
to provide such products (or satisfactory equivalents) on prices, terms,
quantities and schedules that such Person would realize if designing,
developing, producing, manufacturing or assembling the products itself (the
"Right of First Refusals").
(d) The continuation by Lucent or Lucent Subsidiaries of the
activities listed on Schedule A hereto shall not be deemed to constitute
Paradyne Competition.
(e) None of the following shall be deemed to violate the
Competitor Acquisition Restriction: (i) the acquisition or holding by Lucent or
a Lucent Subsidiary as a passive investment of not more than five percent (5%)
of the outstanding capital stock of a Paradyne Competitor provided that the
applicable class or classes of capital stock are publicly traded on an
established U.S. or foreign national securities exchange, or the NASDAQ National
Market, (ii) the extension of loans or credit facilities by any finance
subsidiary or division of Lucent to a Paradyne Competitor in the ordinary course
of business on an arm's length basis on terms substantially similar to those
generally offered customers of Lucent or the obtaining by such subsidiary or
division of warrants or other equity kickers in connection with such activities,
(iii) the extension by Lucent or any Lucent Subsidiary of loans to, or the
acquisition by any such Person of notes or any other form of debt of, any
Paradyne Competitor as seller financing in connection with a sale of any
business or non-ordinary course sale of any assets of Lucent or any Lucent
Subsidiary and (iv) the extension by Lucent or any Lucent Subsidiary of trade
credit to such Paradyne Competitor in the ordinary course of business on an
arm's length basis on terms substantially similar to those generally offered
customers of Lucent.
(f) Neither Lucent nor any Lucent Subsidiary shall be deemed
to violate the Competitor Acquisition Restriction if: (i) such Person acquires
an interest in a Paradyne Competitor (an "Acquired Person") where the activities
of such Acquired Person that cause such Acquired Person to be characterized as a
Paradyne Competitor (the "Competing Activities") are secondary to other lines of
business carried on by such Acquired Person, (ii) within two (2) years after the
acquisition of such interest, such Competing Activities are wound down or
disposed of and (iii) during the period prior to such sale or winding-down, such
Competing Activities are not integrated with the other businesses of Lucent and
the Lucent Subsidiaries in any manner that would materially strengthen, improve
or expand any such Competing Activities that are to be sold.
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*Confidential Treatment Requested
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(g) The design, development, manufacture, fabrication, sale,
lease, licensing, and distribution by the Micro-Electronics Division of Lucent
of (i) semiconductor wafers, devices, chips, and components, (ii) energy systems
and power products, (iii) printed circuit boards and interconnection components,
(iv) opto-electronic devices, (v) software and firmware associated with any of
the foregoing whether used in conjunction therewith or used on a stand-alone
basis and (vi) the technologies associated with any of the foregoing shall not
be deemed to constitute Paradyne Competition. In addition, Lucent and the Lucent
Subsidiaries shall retain the right to engage in the licensing of any and all of
its technology associated with the above-listed products whether protected by
patent, copyright, trade secret, trademark, mask work right or any other form of
protection associated with intellectual property and to engage in contract
manufacturing operations for Persons not Affiliates of Lucent. Notwithstanding
the above provisions, with respect to Current Paradyne Products, Lucent and the
Lucent Subsidiaries will not (except as otherwise permitted herein) design,
develop, produce, manufacture or assemble either (x) Substantially Similar
Products that are System Level Products or (y) board level products (other than
reference design boards) with substantially the same functionality as System
Level Products that are Substantially Similar Products. For the purposes of this
Section 4(g), a System Level Product means any product that is functional
without requiring additional components or products.
Section 5. Acknowledgements by Lucent. Lucent acknowledges
that the promises and restrictive covenants it is providing in this Agreement
are reasonable and necessary to the Acquisition Persons' protection of their
legitimate interests in the acquisition of Paradyne and its assets and certain
assets from Lucent pursuant to the Purchase Agreement, including but not limited
to Paradyne's goodwill. Lucent acknowledges that, pursuant to the Purchase
Agreement, Lucent is selling all of Lucent's shares of stock of Paradyne to PAC,
selling certain assets to CAPCo and causing the sale of certain assets of
Paradyne to CAPCo. Lucent acknowledges that the amount allocated to this
Agreement pursuant to Section 1.5(d) of the Purchase Agreement is not intended
to limit the amount of the Damages that may be recovered for any breach by
Lucent of this Agreement.
Section 6. Independence of Obligations. The covenants of
Lucent set forth in this Agreement shall be construed as independent of any
other agreement or arrangement between Lucent, on the one hand, and the
Acquisition Persons, on the other. The existence of any claim or cause of action
by Lucent against any of the Acquisition Persons shall not constitute a defense
to the enforcement of such covenants against Lucent.
Section 7. Specific Performance. Lucent agrees that in the
event of any breach or threatened breach by Lucent of any covenant, obligation
or other provision contained in this Agreement, each of the Acquisition Persons
shall be entitled (in addition to any other remedy that may be available to
them) to (a) a decree or order of specific performance or mandamus to enforce
the observance and performance of such covenant, obligation or other provision,
and (b) an injunction restraining such breach or threatened breach.
Section 8. Nonexclusivity. The rights and remedies of the
Acquisition Persons hereunder are not exclusive of or limited by any other
rights or remedies which the Acquisition Persons may have, whether at law, in
equity, by contract or otherwise, all of which shall be
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cumulative (and not alternative). Without limiting the generality of the
foregoing, the rights and remedies of the Acquisition Persons hereunder, and the
obligations and liabilities of Lucent hereunder, are in addition to their
respective rights, remedies, obligations and liabilities under the law of unfair
competition, misappropriation of trade secrets and the like.
Section 9. Notices. Any notice or other communication required
or permitted to be delivered to Lucent or any of the Acquisition Persons under
this Agreement shall be in writing and shall be deemed properly delivered, given
and received when delivered (by hand, by registered mail, by courier or express
delivery service or by facsimile) to the address or facsimile telephone number
set forth beneath the name of such party below (or to such other address or
facsimile telephone number as such party shall have specified in a written
notice given to the other party hereto):
if to Lucent:
Lucent Technologies Inc.
Xxxx 0X00
00 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Osl, Jr.
Fax: (000) 000-0000
with a copy to:
Lucent Technologies Inc.
Room A2046
000 Xxxxxxxxxx Xxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: W. Xxxxxxx Xxxxxxxx, Esq.
Fax: (000) 0000-0000
if to Paradyne:
AT&T Paradyne Corporation
0000 000xx Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: President
Fax: (000) 000-0000
with a copy to:
Paradyne Partners, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
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if to the Partnership:
Paradyne Partners, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
if to PAC:
Paradyne Acquisition Corp.
0000 000xx Xxx. Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: President
Fax: (000) 000-0000
with a copy to:
Paradyne Partners, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
if to CAPCo:
CAP Acquisition Corp.
0000 000xx Xxx. Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: President
Fax: (000) 000-0000
with a copy to:
Paradyne Partners, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
Section 10. Severability. If any provision of this Agreement
or any part of any such provision is held under any circumstances to be invalid
or unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such
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jurisdiction, be deemed amended to conform to applicable laws so as to be valid
and enforceable to the fullest possible extent, (b) the invalidity or
unenforceability of such provision or part thereof under such circumstances and
in such jurisdiction shall not affect the validity or enforceability of such
provision or part thereof under any other circumstances or in any other
jurisdiction, and (c) such invalidity of enforceability of such provision or
part thereof shall not affect the validity or enforceability of the remainder of
such provision or the validity or enforceability of any other provision of this
Agreement. Each provision of this Agreement is separable from every other
provision of this Agreement, and each part of each provision of this Agreement
is separable from every other part of such provision.
Section 11. Governing Law. This Agreement shall be construed
in accordance with, and governed in all respect by, the laws of the State of New
York (without giving effect to principles of conflicts of laws).
Section 12. Waiver. No failure on the part of any of the
Acquisition Persons to exercise any power, right, privilege or remedy under this
Agreement, and no delay on the part of any of the Acquisition Persons in
exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercises thereof or of any other power, right, privilege
or remedy. None of the Acquisition Persons shall be deemed to have waived any
claim arising out of this Agreement, or any power, right, privilege or remedy
under this Agreement, unless the waiver of such claim, power, right, privilege
or remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such party; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
Section 13. Construction. The captions contained in this
Agreement are for convenience of reference only, shall not be deemed to be a
part of this Agreement and shall not be referred to in connection with the
construction or interpretation of this Agreement. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this Agreement
unless otherwise specified. All words used in this Agreement will be construed
to be of such number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms. The
parties hereto agree that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be applied
in the construction or interpretation of this Agreement.
Section 14. Entire Agreement. This Agreement and the Purchase
Agreement (and the other agreements referred to in the Purchase Agreement) set
forth the entire understanding of Lucent and the Acquisition Persons relating to
the subject matter hereof and thereof and supersede all prior agreements and
understandings between any of such parties relating to the subject matter hereof
and thereof.
Section 15. Amendments. This Agreement may not be amended,
modified, altered, or supplemented other than by means of a written instrument
duly executed and delivered on behalf of the Acquisition Persons and Lucent.
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Section 16. Assignment. This Agreement and all obligations
hereunder are personal to Lucent and may not be transferred or assigned by
Lucent at any time. Each of the Acquisition Persons may assign, in whole or in
part, its rights under this Agreement in connection with the acquisition of all
or a substantial portion of its assets or business.
Section 17. Binding Nature. Subject to Section 16, this
Agreement will be binding upon Lucent and Lucent's successors and assigns, and
will inure to the benefit of the Acquisition Persons and their respective
successors and assigns.
Section 18. Attorneys' Fees and Expenses. If any legal action
or other legal proceeding relating to the enforcement of any provision of this
Agreement is brought against Lucent, the prevailing party shall be entitled to
recover reasonable attorneys' fees, costs and disbursements (in addition to any
other relief to which the prevailing party may be entitled).
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized officers as of the day and year first above
written.
LUCENT TECHNOLOGIES INC.
By: /s/ W. F. Osl, Jr.
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PARADYNE PARTNERS, L.P.
by Paradyne GenPar, Inc., its General Partner
By: /s/ Xxxxx Xxxxxxx
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AT&T PARADYNE CORPORATION
By: /s/ W. F. Osl, Jr.
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CAP ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxxx
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PARADYNE ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxxx
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SCHEDULE A
The following product line [***]:
[***]
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*Confidential Treatment Requested
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SCHEDULE I
CURRENT PARADYNE PRODUCTS
- [***]
- [***]
- [***]
- [***]
- [***]
- [***]
- [***]
- [***]
- [***]
- [***]
- [***]
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*Confidential Treatment Requested
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