EXHIBIT 10(i)(4)
NONCOMPETITION AND CONFIDENTIALITY AGREEMENT
This Noncompetition and Confidentiality Agreement is made as of this 14th
day of May, 1997 by and between CB Commercial Real Estate Services Group, Inc.,
A Delaware Corporation ("CBC"), CBC Acquisition Corporation, a Delaware
corporation ("CBC Acquisition"), Xxxx Real Estate Services, a Delaware
corporation ("KRES"), Xxxxxx X. Xxxx ("DMK") and Xxxx Holding Company, a
California corporation ("KHC").
RECITALS
A. Pursuant to that certain Agreement and Plan of Reorganization dated
May, 1997 (the "Merger Agreement") CBC Acquisition has agreed to be
merged with KRES and CBC, the parent corporation of CBC Acquisition
has agreed to issue to the stockholders of KRES a total of up to
6,214,261 shares of CBC Common Stock.
B. KHC is the legal holder of 946,037 shares of KRES Common Stock and DMK
is the sole trustee and with his spouse the co-beneficiary of the Xxxx
Company Stock Trust which owns 100% of the issued and outstanding
shares of The Xxxx Company ("TKC") which owns 100% of the issued and
outstanding stock of KHC with the result that DMK with his spouse, has
the sole beneficial interest in the 946,037 shares of KRES Common
Stock legally held by KHC subject only to certain options on such
shares held by Xxxxxxx Xxxxx (672,000 shares) and Xxxxxxx Xxxxx
(100,800 shares) (collectively the "Options") and to a lien held by
Safeco Insurance Company of America (the "Safeco Lien").
C. As part of the merger of CBC Acquisition and KRES KHC as a shareholder
of KRES will receive 747,369 shares of CBC Common Stock thereby making
DMK, with his spouse the sole beneficiary owner of such shares subject
only to the claims of the Options and the Safeco Lien.
X. XXXX, directly and through one or more direct or indirect subsidiaries
and affiliates (singularly and collectively the "KRES" Group) is a
nationwide and international provider of property (including sales and
lease brokerage), facility, asset and investment management and
strategic human resources services (collectively, the "Business").
The definition of "Business" does not include the real estate business
presently being conducted by Xxxx Real Estate Group, The Xxxx Company,
The Xxxx Construction Company, Xxxx International and any investment
entity in which the KRES Group has an interest which is not in the
property, facility, asset or investment management services business.
E. DMK possesses significant knowledge and information about and
expertise in the business which is extremely valuable to competitors
of KRES Group and CBC is unwilling to proceed with the Merger unless
DMK enters into this
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Agreement, which is a material inducement to CBC to enter into the
Merger.
F. Each of the DMK, CBC, KRES, KHC and CBC Acquisition are sophisticated
parties experienced in business transactions of this type, and fully
understand
1. the ramifications of the noncompetition, nonsolicitation and
confidentiality provisions of this Agreement and
2. that the laws of each state with respect to the enforceability of
such provisions vary.
G. To provide CBC with the full value of the goodwill of KRES and the
KRES Group, and as a material inducement to CBC to enter into the
Merger Agreement DMK is executing and delivering this noncompetition,
nonsolicitation and confidentiality agreement.
AGREEMENT
THEREFORE, in consideration of CBC agreeing to the Merger and to the
issuance of shares of its Common Stock in connection therewith, the mutual
covenants herein contained and other consideration (the receipt and adequacy of
which are hereby acknowledged by DMK), the parties hereby agree as follows:
1. AGREEMENT NOT TO COMPETE
a. During the Covenant Period (defined below) DMK shall not directly or
indirectly carry on or participate in any business similar to or in
competition with the Business as currently conducted or planned to be
conducted by the KRES Group (or by any person, corporation,
partnership, trust or other organization or entity including CBC
deriving title from KRES or the KRES Group to the goodwill of the
Business all of whom together are sometimes collectively called the
"Protected Entities".) The "Business" as used in this Section 1.
means the nationwide and international provision of real estate
services including property management (including any related lease
brokerage) and, facility, asset and investment management services.
The definition of "Business"does not include the real estate business
presently being conducted by Xxxx Real Estate Group, The Xxxx Company,
The Xxxx Construction Company, Xxxx International and any investment
entity in which KRES directly or indirectly has an interest which is
not in the brokerage, property, facility, asset or investment
management services business.
b. COVENANT AREA. The parties agree that due to the nature of KMS'
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Business operations as a real estate service provider throughout all
of North America, due to the fact that such services can be performed
throughout the world and due to CBC's intention to continue to extend
the Business of KRES throughout the world, in order for this Agreement
to be meaningful it must restrict DMK from competing with the Business
throughout all of North America and the world. Therefore, the parties
agree that for the purposes of this Agreement, "Covenant Area" means
the following:
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i. Each and every county with a population on the date hereof of
more than 50,000 in the 00 xxxxxxxxxxx xxxxxx, Xxxxxx, Xxxxxx and
the District of Columbia;
ii. Each and every county of each and every state, commonwealth and
territory of the United States;
iii The countries of the United States of America, Canada and Mexico;
and
iv. Each and every country and territory throughout the world.
c. PROHIBITED ACTIVITIES. The term "directly or indirectly carry on or
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participate in a business similar to or in competition with the
Business as currently conducted or planned to be conducted by the KRES
Group" shall include the DMK, directly or indirectly, doing any of the
following listed acts:
i. Whether or not for compensation, directly or indirectly engaging
in any such business, or any part thereof, in the Covenant Area
or assist any other Person (defined below) in such Person's
conduct of the Business, or any part thereof, in the Covenant
Area, whether as a director, officer, employee, consultant,
adviser, independent contractor or otherwise; or
ii. Holding legal or beneficial interest in any Person that is
engaged in any such business, or any part thereof, in the
Covenant Area, whether such interest is as an owner, investor,
partner, creditor, joint venturer or otherwise; provided,
however, that DMK may acquire and own up to two percent (2%) of
the outstanding securities of any corporation which is a publicly
traded reporting corporation under the Securities Exchange Act of
1934, as amended (together with the rules and regulations
promulgated thereunder, the "Exchange Act"); or
iii. As agent or principal carrying on or engaging in any activities
or negotiations with respect to the acquisition or the
disposition of any such business; or
iv. Giving advice to any other Person, firm or association engaging
in any such business; or
v. Lending or allowing his name or reputation to be used in any such
business; or
vi. Soliciting, diverting or attempting to divert from the Protected
Entities any business constituting, or any customer of, any part
of the Business then conducted by the KRES Group; or
vii. Allowing his or her skill, knowledge or experience to be used in
any such business; provided, however, DMK will not be liable for
immaterial violations of Sections 1.c.iii. - viii. if he can
sustain the burden of proof that such violation was immaterial,
inadvertent and was not intentional.
d. NONSOLICITATION. In addition to the foregoing, DMK shall not during
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the Covenant Period, induce or attempt to induce any Person
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i. engaged or employed currently or within the prior 12 months
(whether part-time or full-time) by the KRES Group (an
"Employee"), whether as an officer, employee, consultant, agent,
adviser or independent contractor, to leave the employ of or
engagement with the KRES Group or to cease providing the services
to or on behalf of the KRES Group then provided by such Person,
or in any other manner seek to engage or employ any such Person
(whether or not for compensation) as an officer, employee,
consultant, agent, adviser or independent contractor such that
such Person would thereafter be unable to devote his or her full
attention to the Business then conducted by the KRES Group, or
ii. that is then or has been within the prior 12 months a customer
with respect to the Business to do business with any other Person
or to interfere, in any way, directly or indirectly, with the
business relationship between the KRES Group or any such
customer. This Section 1.d. will not be violated if Xxxx Real
Estate Group hires an Employee in the ordinary course of its
business provided DMK did not encourage or participate in the
decision to solicit the Employee for employment by Xxxx Real
Estate Group.
e. COVENANT PERIOD. The term of the covenants contained in Section 1.
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(the "Covenant Period") shall begin at the Effective Time (as defined
in the Merger Agreement) and extend to and including March 31, 2000.
2. NONCOMPETITION CONSIDERATION
The parties agree that, for the reasons set forth in the Recitals hereto,
this Agreement represents a material inducement to CBC to enter into the
Merger Agreement and to consummate the transactions contemplated thereby.
3. OTHER DEFINITIONS
For the purpose of this Agreement:
a. "AFFILIATE" shall mean an affiliate as such term is defined in Rule
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12b-2 under the Exchange Act.
b. "PERSON" means any corporation, partnership, joint venture, trust,
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sole proprietorship, limited liability company, unincorporated
business association, natural person and any other entity that may be
treated as a person under applicable law; and
c. "CONTROL" has the meaning assigned that term in Rule 12b-2 under the
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Exchange Act.
4. REPRESENTATION AND WARRANTIES
DMK represents and warrants to, and agrees with, Company and its affiliates
that:
a. DMK has carefully reviewed this Agreement and considered all of its
terms, and agrees that its scope, duration and terms are reasonable;
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b. The 946,037 shares of KRES Common Stock constitute all of the Common
Stock of KRES Controlled by DMK (subject to the Options and the Safeco
Lien).
c. This Agreement constitutes the legal, valid and binding obligation of
DMK enforceable in accordance with its terms.
5. SCOPE AND REASONABLENESS
The parties agree that it is not their intention to violate any public
policy or statutory or common law. The parties intend that the provisions
of this Agreement be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement
is sought. The parties intend that the noncompetition covenants contained
in Section 1. be construed as a series of separate covenants by DMK, one
covenant for each area, or portion thereof, included in the Covenant
Period. Accordingly, to the extent that the covenants hereunder shall be
adjudicated to be invalid or unenforceable in any one such jurisdiction,
this Agreement shall be deemed amended to delete therefrom or reform the
portion thus adjudicated to be invalid or unenforceable, such deletion or
reformation to apply only with respect to the operation of the particular
section or provision of this Agreement in the particular jurisdiction in
which such adjudication is made.
6. INJUNCTIVE RELIEF
DMK acknowledges that it would be impossible to determine the amount of
damages that would result from any breach of any of the provisions of this
Agreement and that the remedy at law for any breach, or threatened breach,
of any of the provisions of this Agreement would likely be inadequate and,
accordingly, agrees that the Protected Entities shall, in addition to any
other rights or remedies which they may have, be entitled to seek such
equitable and injunctive relief as may be available from any court of
competent jurisdiction to restrain DMK from violating injunctive relief,
DMK hereby waives the claim or defense that a remedy at law alone is
adequate and agrees, to the maximum extent permitted by law, to have each
provision of this Agreement specifically enforced against him, without the
necessity of posting bond or other security against him, and consents to
the entry of injunctive relief against him enjoining or restraining any
breach or threatened breach of this Agreement.
7. PROPRIETARY INFORMATION
DMK shall for the period beginning with the Merger date and ending March
31, 2000, keep confidential and not communicate or disclose to any Person
any proprietary, confidential or non-public information or material
concerning the business, affairs, services, customers or employees of or
relating to the Business or the business of the Protected Entities
(including, without limitation, the identities, location or other
information concerning past, present or potential customers of KRES or its
subsidiaries' or Affiliates' Business); provided, however, that the
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foregoing obligation of DMK shall not apply to the extent that
a. DMK is, in the written opinion of legal counsel, required to disclose
any of the foregoing pursuant to the provisions of applicable law or
b. any such information or material becomes generally known and available
to the
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public otherwise than by reason of a disclosure or communications of
such information or material by DMK.
8. COVENANTS INDEPENDENT
The covenants of DMK hereunder shall be construed as and shall be
independent of the covenants, representations, warranties and obligations
of CBC under the Merger Agreement or under any agreement or instrument
delivered pursuant to the transactions contemplated thereby, and
accordingly any default by CBC with respect to any such representation,
warranty, covenant or obligation shall not constitute an excuse for DMK
failing to perform hereunder.
9. GOVERNING LAW
a. The validity of this Agreement, the construction of its terms and the
determination of the rights and duties of the parties hereto shall be
governed by the laws of the State of California.
b. The parties agree that should any court find the foregoing clause
invalid, the court shall apply the law of the jurisdiction in which it
sits.
10. MISCELLANEOUS
a. NOTICES. All notices required or desired to be given hereunder shall
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be in writing and signed by the party so giving notice, and shall be
effective when personally delivered or deposited in the United States
mail, as certified or registered mail, return receipt requested, first
class postage and fees prepaid, addressed as set forth below, or when
deposited into custody of an established courier guaranteeing
overnight delivery. Any party may from time to time change such
party's address for giving notice by giving notice thereof in the
manner outlined above:
If to CBC or
CBC Subsidiary: CB Commercial Real Estate Services Group, Inc.
000 X. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
If to DMK or KHC: Xxxxxx X. Xxxx
The Xxxx Company
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
b. ENFORCEMENT. Should any party hereto retain counsel for the purpose
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of enforcing, or preventing the breach of, any provision hereof,
including, but not limited to, by instituting any action or proceeding
in court to enforce any provision hereof or to enjoin a breach of any
provision hereof, or for a declaration of such party's rights or
obligations hereunder, or for any other judicial remedy, then the
prevailing party shall be entitled to be reimbursed by the losing
party for all costs and expenses incurred thereby, including, but not
limited to, attorneys' fees
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(including costs of appeal).
c. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
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CBC, CBC Acquisition and their respective successors and assigns.
DMK's obligations hereunder are non-assignable.
d. NO WAIVER; AMENDMENT. The failure by a Protected Entity to enforce
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any of its rights hereunder shall not be deemed to be a waiver of such
rights, unless such waiver is in writing and signed by the waiving
party, and, in the case of any corporation, approved by its Board of
Directors, or in the case of a partnership, approved by the Board of
Directors of its corporate general partner. Waiver of any one breach
shall not be deemed to be a waiver of any other breach of the same or
any other provision hereof. This Agreement can be amended only by a
written agreement executed by each party hereto.
e. GENDER. All pronouns and any variations thereof shall be deemed to
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refer to the masculine, feminine, neuter, singular or plural as the
identity of the person, persons, entity or entities may require.
f. DEFINITIONS; HEADINGS. A term defined in any part of this Agreement
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shall have the defined meaning wherever such term is used herein. The
headings contained in this Agreement are for reference purposes only
and shall not affect in any manner the meaning or interpretation of
this Agreement.
g. NO CONSTRUCTION AGAINST ANY PARTY. This Agreement was reviewed by
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legal counsel for all of the parties. This Agreement is the product
of informed negotiations among the parties and if any part of this
Agreement is deemed to be unclear or ambiguous, it shall be construed
as if it were drafted jointly by all parties. Each party acknowledges
that no party was in a superior bargaining position regarding the
substantive terms of this Agreement.
h. ENTIRE AGREEMENT. This Agreement contains the sole and entire
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agreement and understanding of the parties with respect to the entire
subject matter hereof and thereof and any and all prior discussions,
negotiations commitments, letters of intent, memoranda, writings and
understandings related hereto are hereby and thereby superseded.
i. EFFECTIVENESS. This Agreement shall become effective upon the
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"Effective Time" under the Merger Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
By:
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Its:
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CBC ACQUISITION CORPORATION
By:
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Its:
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XXXX REAL ESTATE SERVICES
By:
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Its:
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XXXX HOLDING COMPANY
By:
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Its:
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XXXXXX X. XXXX
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