Exhibit 10.7
NONCOMPETITION AGREEMENT
This Noncompetition Agreement is entered into as of the 30th day of
August, 2000 between SYNC RESEARCH, INC., a Delaware corporation ("Buyer"), and
OSICOM TECHNOLOGIES, INC., a New Jersey corporation (the "Selling Stockholder").
PRELIMINARY STATEMENTS:
WHEREAS, the Selling Stockholder owns all of the issued and
outstanding shares of capital stock of Osicom Technologies, Inc., a Delaware
corporation (the "Company");
WHEREAS, in accordance with the Amended and Restated Agreement and
Plan of Merger (the "Merger Agreement"), dated as of August 2, 2000, among Buyer
and the Selling Stockholder, Sync Research Acquisition Corp., a Delaware
corporationand wholly-owned subsidiary of Buyer ("Merger Sub"), will merge with
and into the Company, with the Company surviving as a wholly-owned subsidiary of
Buyer (the "Acquisition"). As a consequence of the Acquisition, Buyer will
acquire one hundred percent (100%) of the common stock of the Company, and the
Selling Stockholder will acquire between approximately 55% and 63% of the common
stock of Buyer;
WHEREAS, Buyer wishes to protect its investment in the business of
the Company acquired pursuant to the Acquisition by restricting the activities
of the Selling Stockholder which might compete with or otherwise harm its
business; and
WHEREAS, the Selling Stockholder is entering into this
Noncompetition Agreement in order to provide Buyer with a significant inducement
to consummate the Acquisition and to satisfy a condition precedent to the
Acquisition as provided in the Merger Agreement.
NOW, THEREFORE, in consideration of the covenants contained herein
and in consideration of Sync Research, Inc. consummating the Acquisition, the
parties hereto hereby agree as follows:
AGREEMENT:
1. For a period equal to two (2) years after the date hereof (the
"Noncompetition Period"), the Selling Stockholder will not, nor will the Selling
Stockholder permit any entity under the control of such Selling Stockholder to,
directly or indirectly, own, manage, operate or control, or participate in the
ownership, management, operation or control of, or be connected with or have any
interest in, as a stockholder, director, officer, employee, agent, consultant,
partner, member, manager, creditor or otherwise, any business or activity
anywhere within the world that is either (a) competitive with the business of
Buyer or the Company as conducted or proposed to be conducted as of the
effective time or (b) involving any line of business currently in development by
Buyer or the Company; provided, however, that nothing in the foregoing shall
prevent the Selling Stockholder and/or its affiliates from owning, in the
aggregate,
not more than five percent (5%) of the outstanding voting stock or other equity
interests in any entity with shares or equity interests registered pursuant to
Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended.
2. The Selling Stockholder agrees that for the duration of the
Noncompetition Period, it will not, nor will the Selling Stockholder permit any
entity under the control of such Selling Stockholder to, without the prior
written consent of Buyer (i) solicit for employment any person then employed by
Buyer or the Company or (ii) employ any employee of Buyer or the Company who
voluntarily terminates such employment after the effective time until 12 months
have passed following termination of such employment.
3. The consideration for the agreements of the Selling Stockholder
contained herein is the agreement of Buyer to proceed with the Acquisition and
the issuance by Buyer of between approximately 55% and 63% of its common stock
to the Selling Stockholder pursuant to the Merger Agreement.
4. In the event a court shall refuse to enforce the agreements
contained in this Noncompetition Agreement, either because of the scope of the
geographical area specified in this Noncompetition Agreement or the duration of
the restrictions, the parties hereto expressly confirm their intention that the
geographical areas covered hereby and the time period of the restrictions be
deemed automatically reduced to the minimum extent necessary to permit
enforcement.
5. Each of the parties hereto acknowledges and agrees that the
extent of damages to Buyer in the event of a breach by the Selling Stockholder
of this Noncompetition Agreement would be impossible to ascertain and there is
and will be available to Buyer no adequate remedy at law to compensate it in the
event of such a breach. Consequently, the Selling Stockholder agrees that, in
the event that it breaches any of such covenants, Buyer shall be entitled, in
addition to any other relief to which it may be entitled including without
limitation money damages, to enforce any or all of such covenants by injunctive
or other equitable relief ordered by any court of competent jurisdiction.
6. This Noncompetition Agreement shall be governed by and construed
in accordance with the laws of the State of California.
7. This Noncompetition Agreement may not be assigned by the Selling
Stockholder or Buyer. This Noncompetition may not be amended or modified except
by an instrument in writing signed by the Selling Stockholder and Buyer.
8. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly, given if so given) if delivered in person, by cable, telegram or
telex, by registered or certified mail (postage prepaid, return receipt
requested) or by courier to the respective parties as follows:
If to Buyer:
SYNC RESEARCH, INC
00 Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, President
If to Selling Stockholder:
OSICOM TECHNOLOGIES, INC.
0000 00xx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attention: President
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of changes of address shall
only be effective upon receipt.
9. This Noncompetition Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties have caused this Noncompetition
Agreement to be duly executed and delivered on the day and year first above
written.
SYNC RESEARCH, INC.
By /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx
Chief Executive Officer
OSICOM TECHNOLOGIES, INC.
By /s/ Xxxxxxxxxxx X. Xxx
-------------------------------------
Name: Xxxxxxxxxxx X. Xxx
Its: VP of Finance
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