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EXHIBIT 10.38
NONDISCLOSURE AND NONCOMPETITION AGREEMENT
THIS N0NDISCLOSURE AND NONCOMPETITION AGREEMENT (this "Agreement") is dated as
of the 10th day of April 1997, by and between GARGOYLES ACQUISITION CORPORATION,
a Washington corporation and wholly-owned subsidiary of Gargoyles, Inc., a
Washington corporation ("Gargoyles") and XXXXXX XXXXXXX ("Xxxxxxx").
RECITALS
A. Gargoyles and Xxxxxxx, among others, are parties to that certain Asset
Purchase Agreement dated April 10, 1997 (the "Asset Purchase Agreement") under
which Sungold Enterprises, Ltd., a New York corporation ("Sungold"), has agreed
to sell substantially all of its assets to Gargoyles.
X. Xxxxxxx is an employee and shareholder of Sungold, but will retire upon
the closing of the transactions contemplated by the Asset Purchase Agreement.
C. Subject to the terms and conditions of this Agreement, Gargoyles desires
Xxxxxxx to keep certain information regarding Sungold and Gargoyles confidential
and to enter into an agreement not to compete with the business of Gargoyles,
and Xxxxxxx is willing to enter into such an agreement.
D. Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to them in the Asset Purchase Agreement. For purposes of this
Agreement, Gargoyles and Sungold shall together be referred to herein as the
"Companies".
AGREEMENT
1. Confidentiality.
1.1 Definitions. For purposes of this Section 1:
"Confidential Information" wherever used shall mean all of the
Companies' proprietary information which derives independent economic value from
its secrecy from other persons, companies, or business entities who could obtain
economic value from its disclosure to them or use by them. Confidential
Information also includes, without limitation, research data, trade or business
know-how or business plans, inventions, devices, patterns, compilations,
programs, methods, techniques, or processes which are disclosed or made
available by the Companies to Xxxxxxx, or devised by Xxxxxxx during his employ
by Sungold. Examples of Confidential Information include, without limitation:
all information specifically identified as Confidential Information by the
Companies and all information regarding the Companies' existing or proposed
installations, products or product lines, information systems, or other
projects, the Companies' supplier and customer lists
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and all customer information, and the Companies' existing and proposed business
and marketing plans and policies, whether written or oral, and whether
designated individually as Confidential Information or not. Confidential
Information does not include information that:
(a) is a matter of public knowledge at the time Xxxxxxx first learns of
the information; or
(b) later becomes a matter of public knowledge after Xxxxxxx learns of
the information, other than becoming public knowledge by reason of a
breach by Xxxxxxx of the obligation of confidentiality set out in
this Agreement.
1.2 Confidentiality Agreement. Xxxxxxx agrees not to disclose to any
third party and to keep confidential all Confidential Information of the
Companies.
2. Covenant Not To Compete.
2.1 Covenant of Xxxxxxx. Xxxxxxx covenants and agrees with Gargoyles
that Xxxxxxx, or any company or entity affiliated with Xxxxxxx, will not
directly or indirectly, in any of the states of the United States, and any
foreign countries in which the Gargoyles products are now sold or are hereafter
sold (the "Territory"), during the period commencing on the Closing Date and
expiring on the third (3rd) anniversary thereof (the "Restricted Period") (i)
form, acquire, own (other than the ownership of stock in a publicly traded
company), finance, assist, support, or become associated in any capacity or to
any extent, directly or indirectly with, an enterprise which manufactures,
sells, distributes or represents, sunglasses, protective eyewear, protective
eyewear used in the medical/dental field or otherwise, goggles, sports glasses,
or other products in the optical industry (the "Competing Business"), (ii)
interfere with or attempt to interfere with any officers, employees,
representatives or agents of Gargoyles or its affiliates, or induce or attempt
to induce any of them to leave the employ of Gargoyles or its affiliates, or
violate the terms of the employees' contracts with Gargoyles, or (iii) for the
purpose of engaging in a Competing Business, call upon, solicit, advise, or
otherwise do, or attempt to do, business with any clients, suppliers, customers
or accounts of Gargoyles or any of its affiliates.
2.2 Injunctive Relief. In the event of a breach or a threatened breach
by Xxxxxxx or one of his affiliates of any of the restrictive covenants set
forth in this Section 2, Gargoyles shall be entitled to an injunction
restraining such breach, but nothing herein shall be construed to prohibit
Gargoyles from pursuing any remedy available to it for such breach or such
threatened breach.
2.3 Enforcement. Xxxxxxx agrees that as to the Territory and Restricted
Period set forth above for the purpose of the covenant not to compete, each
state, province, country or other jurisdiction within the Territory and periods
within the
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Restricted Period are divisible and separate so that if the covenant not to
compete made by Xxxxxxx hereunder is held by a court to be invalid or
unenforceable as to any geographic area or for any time period described, his
covenant not to compete shall remain valid and enforceable in all remaining
geographic areas and time periods. Xxxxxxx agrees that it is his express
intention that, if a court reforms this Agreement, Gargoyles be given the
broadest protection allowed by law as respects this Agreement and the covenant
not to compete.
3. Consideration. As consideration for Xxxxxxx'x nondisclosure and
noncompetition agreements set forth herein, Gargoyles shall provide Xxxxxxx with
comprehensive medical insurance coverage as described on the attached Exhibit A
during the term of this Agreement.
4. Miscellaneous.
4.1 Invalid Provisions. This Agreement is intended to be severable.
Should any part or provision of this Agreement be found to be unenforceable or
invalid for any reason, the remaining parts and provisions will remain in
effect.
4.2 Non Waiver. No waiver by any party hereto of any breach or default
by another party shall constitute a waiver with respect to any future breach or
default.
4.3 Attorneys Fees. If it shall be necessary for any party to this
Agreement to employ an attorney to enforce their rights pursuant to this
Agreement because of the default of another party(s), the defaulting party(s)
shall reimburse the non-defaulting party(s) for reasonable attorneys' fees and
expenses.
4.4 Governing Law. This Agreement is made in, and shall be enforced in
accordance with, the laws of the state of Washington. Xxxxxxx and Gargoyles
agree that either the King County Superior Court, or the United States District
Court for the Western District of Washington, shall be the proper venue for, and
shall have jurisdiction over, any litigation arising from or related to this
Agreement.
4.5 Counterparts. This Agreement may be signed in one or more
counterparts, each of which may be termed an original, but all of which together
shall constitute one Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above mentioned.
GARGOYLES, INC.,
a Washington corporation
/s/ XXXXXX XXXXXXX By: /s/ XXXXXX X. XXXXXX
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Xxxxxx Xxxxxxx Xxxxxx X. Xxxxxx, VP and
CFO
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