UNFAIR COMPETITION AND NONSOLICITATION AGREEMENT
Exhibits 10.35
Execution Original
UNFAIR COMPETITION AND NONSOLICITATION AGREEMENT (hereafter, the “Agreement”) entered into as
of this 25th day of May, 2005 (the “Effective Date”), by and between Santa Acquisition
Corporation (the “Company”) and Xxx Xxxxxxxx, a resident of California.
W I T N E S S E T H
WHEREAS, Xx. Xxxxxxxx owns a membership interest in Automotive Lease Guide (alg), LLC, a
California limited liability corporation with its principle place of business in Santa Barbara,
California (“ALG, LLC”), and is a shareholder in Automotive Lease Guide (alg) Canada, Inc. (“ALG,
Inc.”) (ALG, LLC and ALG, Inc. hereinafter collectively referred to as “ALG”). ALG is the leading
provider of residual values, analytical data products and consultation with respect to residual
values to the automotive industry throughout the United States (including each county in the State
of California) and Canada (the “Territory’) through, inter alia, the provision of residual guides,
portfolio risk analysis, portfolio securitization valuations, consulting and special studies
regarding residual values, development and provision of automotive data analysis and reporting
products, and providing data analysis for residual value insurance (the “Business”);
WHEREAS, on even date herewith, the Company and ALG executed an Asset Purchase Agreement
(“Purchase Agreement”) pursuant to which the Company will purchase substantially all of the assets
of ALG;
WHEREAS, the Company intends to carry on the Business of ALG and to employ Xx. Xxxxxxxx as its
President after consummation of the transactions contemplated by the Purchase Agreement;
WHEREAS, it is a condition precedent to the obligation of the Company to consummate the
transactions contemplated by the Purchase Agreement that Xx. Xxxxxxxx enter into and on the
Effective Date be bound by this Agreement;
WHEREAS, the Company recognizes the importance of Xx. Xxxxxxxx to the Business and to the
ability of the Company to retain its client, employee and vendor relationships in respect of the
Business;
WHEREAS, the parties agree that Xx. Xxxxxxxx will be subject to certain restrictive covenants
necessary to protect the value of the assets and good will of ALG purchased by the Company,
including, without limitation, confidential, proprietary and trade secret information, and goodwill
among customers, employees and vendors;
NOW THEREFORE, in consideration of good valuable consideration, including, without limitation,
the Company’s agreement to consummate the transactions contemplated by the
Purchase Agreement and the consideration provided by the Company therewith, the receipt and
adequacy whereof are hereby acknowledged, Xx. Xxxxxxxx covenants and agrees as follows:
Section 1. Nonsolicitation/Non-Compete.
(a) In view of the fact that any activity of Xx. Xxxxxxxx in violation of the terms hereof
would deprive the Company of the benefits of their bargain under the Purchase Agreement and under
the other agreements relating to that transaction, and to preserve the goodwill associated with the
Business, Xx. Xxxxxxxx hereby agrees during the Restricted Period he will not, without the express
written consent of DealerTrack Holdings, Inc. (the “Parent”), directly or indirectly, anywhere in
the Territory, (i) engage in any activity which is competitive with any portion of the Business or
is like or similar to the Business, (ii) participate or invest in, or provide or facilitate the
provision of financing to, or assist (whether as owner, part-owner, shareholder, partner, director,
officer, trustee, employee, agent or consultant, or in any other capacity), any business,
organization or person other than the Company (or any affiliate of or Successor to the Company)
whose business, activities, products or services are competitive with any portion of the Business
or are like or similar to the Business (a “Competitor”), (iii) solicit for or on behalf of himself
or any Competitor any client of the Business or any of its direct or indirect subsidiaries or
affiliates or divert to any person any client or business opportunity of the Company or any of its
direct or indirect subsidiaries or affiliates in respect of the Business, (iv) solicit or attempt
to hire or engage for or on behalf of himself or any Competitor any officer or employee of the
Company or any of its direct and/or indirect subsidiaries or affiliates, or (v) encourage for or on
behalf of himself or any Competitor, any such officer or employee to terminate his or her
relationship or employment with the Company or any of its direct or indirect subsidiaries or
affiliates.
Ownership, for personal investment purposes only, of not to exceed (i) individually, two (2%)
percent of the outstanding capital stock of any privately held entity, or (ii) two (2%) percent of
the outstanding voting stock of any publicly held corporation shall not constitute a violation
hereof.
(b) “Restricted Period” means the earlier of five (5) years following the termination of Xx.
Xxxxxxxx’x employment with the Company or ten (10) years from the Effective Date, provided
that the Restricted Period will terminate earlier (i) with respect to all or a portion of the
Territory, on the date when the Company or any person deriving any right, title or interest from
the Company to the Business acquired from ALG (any such person, a “Successor”) ceases to carry on a
business like or similar to that of the Business therein, or (ii) with respect to Subsections
1(a)(i)-(iii) only, following a determination by a court or arbitrator, that is final and
unappealable (“Final Order”), that the Company has defaulted under Section 2.06 of the Purchase
Agreement, but only if and when the Company or Parent fails to make the payment with respect to
which it is found to be in default within the later of (A) the time specified in the Final Order
or, (B) 30 days following the entry of a Final Order. By way of further clarification, Xx.
Xxxxxxxx hereby acknowledges and agrees that in the event Company, or any of its affiliates or any
Successor ceases to carry on the Business or a like or similar business in a portion of the
Territory, Section 1(a) shall be deemed to expire only with respect to that portion of the
Territory and shall continue in full force and effect with respect to the remainder of the
Territory.
(c) Xx. Xxxxxxxx acknowledges that the time, scope, geographic area and other provisions of
this Section 1 have been specifically negotiated by sophisticated commercial parties and agrees
that (i) all such provisions are reasonable under the circumstances of the transactions
contemplated hereby, (ii) are given as an integral and essential part of the transactions
contemplated in the Purchase Agreement and (iii) but for Xx. Xxxxxxxx’x agreement to Section 1
contained herein, Parent and the Company would not have entered into or consummated the
transactions contemplated hereby. Xx. Xxxxxxxx has independently consulted with his counsel and
has been advised in all respects concerning the reasonableness and propriety of the covenants
contained herein, with specific regard to the Business to be conducted by Company and its
subsidiaries and affiliates, and represents that this Section 1 is intended to be and shall be
fully enforceable and effective in accordance with its terms.
(d) The parties recognize that original equipment manufacturers of automobiles such as Ford,
General Motors, DaimlerChrysler, Honda and Toyota (“OEMs”) may conduct business activities on their
own or through affiliates which activities are competitive with or similar to the Business;
however, the Parent and Company do not intend to prohibit or restrict Xx. Xxxxxxxx from working for
any OEM after his termination from the Company provided that Xx. Xxxxxxxx is not personally engaged
in performing services for those business units or affiliates that are directly competitive with
the Business. Therefore, notwithstanding anything else contained in this Agreement to the
contrary, upon the termination of Xx. Xxxxxxxx’x employment with the Company, Xx. Xxxxxxxx shall
not be prohibited from working for an OEM provided that Xx. Xxxxxxxx’x activities on behalf of the
OEM do not support business activities of such OEM or its affiliates the are competitive with the
Business
Section 2. Equitable Relief. Xx. Xxxxxxxx acknowledges and agrees that the Company
will suffer irreparable damage which cannot be adequately compensated by money damages in the event
of a breach, or threatened breach, of any of the terms and provisions of Section 1 of this
Agreement, and that, in the event of any such breach, or threatened breach, the Company will not
have an adequate remedy at law. It is therefore agreed that the Company, in addition to all other
such rights, powers, privileges and remedies that it may have, shall be entitled to injunctive
relief, specific performance or such other equitable relief as the Company may request to enforce
any of those terms and provisions and to enjoin or otherwise restrain any act prohibited thereby,
and Xx. Xxxxxxxx will not raise and hereby waives any objection or defense that there is an
adequate remedy available at law. Xx. Xxxxxxxx agrees that the Company shall be entitled to seek
such injunctive relief, without bond, in a court of competent jurisdiction and Xx. Xxxxxxxx hereby
consents to the jurisdiction of the state and federal courts of California for purposes of such an
action. The foregoing shall not constitute a waiver of any of the Company’s rights, powers,
privileges and remedies against or in respect of a breaching party or any other person or thing
under this Agreement, or applicable law. The Company shall have the right to enforce this
Agreement in a court of competent jurisdiction and shall not be required to arbitrate any claims
hereunder pursuant to Section 18 of the Employment Agreement of even date herewith by and between
the Company and Xx. Xxxxxxxx.
Section 3. Disclosure of Agreement. Xx. Xxxxxxxx will disclose the existence and
terms of this Agreement to any prospective employer, partner, co-venturer, investor or lender prior
to entering into an employment, partnership or other business relationship with such person or
entity.
Section 4. Miscellaneous.
(a) The parties agree that if any portion or provision of this Agreement is to any extent be
declared illegal or unenforceable by a court of competent jurisdiction, then the court may amend
such portion or provision so as to comply with the law in a manner consistent with the intention of
this Agreement, the remainder of this Agreement, or the application of such illegal or
unenforceable portion or provision in circumstances other than those as to which it is so declared
illegal or unenforceable, will not be affected thereby, and each portion and provision of the
Agreement will be valid and enforceable to the fullest extent permitted by law. In the event that
any provision of this Agreement is determined by any court of competent jurisdiction to be
unenforceable by reason of excessive scope as to geographic, temporal or functional coverage, such
provision will be deemed to extend only over the maximum geographic, temporal and functional scope
as to which it may be enforceable.
(b) Xx. Xxxxxxxx agrees that no claim that he may have against the Parent or Company shall
serve as a defense to enforcement of his obligations hereunder.
(c) This Agreement constitutes the entire agreement between the Parent, the Company and Xx.
Xxxxxxxx with respect to the subject matter hereof, and supersedes all prior representations and
agreements with respect to such subject matter. This Agreement may not be amended, modified or
waived except by a written instrument duly executed by the person against whom enforcement of such
amendment, modification or waiver is sought. The failure of any party to require the performance
of any portion or provision of this Agreement, or the waiver by any party of any breach of this
Agreement, in any particular case will not prevent any subsequent enforcement of such portion or
provision or to be deemed a waiver of any separate or subsequent breach.
(d) This Agreement shall be governed by California law. The parties consent to exclusive
personal jurisdiction of the state and federal courts situated in Los Angeles, California in
respect to enforcement of this Agreement and waive any defenses based on personal jurisdiction or
venue in such courts.
I UNDERSTAND THAT THIS AGREEMENT AFFECTS IMPORTANT RIGHTS THAT I HAVE. I HAVE READ IT
CAREFULLY AND AM SATISFIED THAT I UNDERSTAND IT COMPLETELY AND AGREE TO IT.
Remainder of Page Intentionally Left Blank
Date:
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5/25/05 | /s/ Xxx Xxxxxxxx
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| SANTA ACQUISITION CORPORATION | ||||||||
Date:
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/s/
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