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Exhibit 2.4
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NON-COMPETITION AGREEMENT dated July 31,
1997 by and between XXXX DIGITAL
TECHNOLOGIES, INC. a Delaware corporation
("KDTI"), ADVANCED DIGITAL SERVICES, INC., a
New York corporation, formerly known as Xxxx
Digital Acquisition Inc. (the "Company") and
XXXXX XXXX ("Obligor").
R E C I T A L :
Concurrently with the execution and delivery of this Agreement, Advanced Digital
Services, Inc., a New York corporation ("ADSI-NY"), of which the Obligor was a
shareholder, merged with and into the Company, a wholly-owned subsidiary of
KDTI, pursuant to a Plan and Agreement of Merger dated July 31, 1997 (the
"Merger Agreement"). Obligor is also entering into an Employment Agreement with
the Company concurrently herewith.
NOW THEREFORE, in consideration for the agreements herein set forth, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by Obligor, the parties hereby agree to be bound by the
terms and conditions of this Agreement.
1. DEFINITIONS
Capitalized terms used in this Agreement shall, unless the context otherwise
requires, have the meanings specified in this Section 1.
a. The term "ADSI Customers" means customers of any of the Advanced
Digital Companies on the date hereof or at any time within the two
(2) year period prior to the date hereof.
b. The term "Advanced Digital Companies" means ADSI-NY, Advanced
Digital Solutions, Inc., a New York, corporation and Xxxxx Xxxx
Studio, Inc., a New York corporation.
c. The term "Affiliate" means any corporation, partnership, company,
firm, entity or proprietorship which, directly or indirectly,
controls or is controlled by or under common control with KDTI, and
includes the Company.
d. The term "Confidential Information" means confidential matters
relating to the business of the KDTI Companies, including, but not
limited to, "know-how," trade secrets, customer lists, subscription
lists, pricing policies, operational methods, marketing plans or
strategies, product development techniques or plans,
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information pertaining to the Customers and their requirements,
business acquisition plans, new personnel acquisition plans,
formulae, methods of manufacture, technical processes, designs and
design projects, inventions and research projects and other business
affairs relating to the business of the KDTI Companies;
e. The term "Customer" means (i) anyone who is a customer of any of the
KDTI Companies at the time of the alleged prohibited conduct or at
any time during the two (2) year period immediately preceding the
alleged prohibited conduct; (ii) any ADSI Customer; or (iii) any
prospective customers to whom any of the KDTI Companies makes a
presentation (or similar offering of services) within a period of
360 days immediately preceding the alleged prohibited conduct.
f. The term "KDTI Companies" means KDTI, the Company and any other
Affiliate.
g. The term "Local Customer" means a Customer that has an office or
facility or operates its business primarily within the Restricted
Area.
h. The term "Restricted Period" means the period commencing on the date
hereof and ending on July 31, 2007.
i. The term "Restricted Area" means the geographic area lying within a
fifty (50) mile radius of 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx.
2. COVENANTS AGAINST COMPETITION.
Obligor hereby covenants and agrees that during the Restricted Period he
will not, directly or indirectly, by himself, or through any other person, firm,
company, entity or enterprise:
(i) render any services of the type rendered by any of the KDTI Companies
to or for a Local Customer unless such services are rendered as an
employee of or consultant to one of the KDTI Companies;
(ii) attempt in any manner to solicit, directly or indirectly, from any
Customer (except on behalf of the KDTI Companies) business of the type
performed by any of the KDTI Companies, or persuade any Customer to cease
doing business or to reduce the amount of business which any such Customer
has done or contemplates doing with any of the KDTI Companies;
(iii) engage within or from the Restricted Area in any business activity
competitive with (i) the business of ADSI-NY immediately prior to its
merger with and into the Company or (ii) any other business conducted by
any of the KDTI Companies during the Restricted Period;
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(iv) employ or attempt to employ or assist anyone else to employ any
person (except on behalf of the KDTI Companies) who is then, or at any
time during the preceding twelve months was, in the employ of any of the
KDTI Companies; or
(v) solicit, directly or indirectly, or affect to the detriment of any of
the KDTI Companies, any relationship of any of the KDTI Companies with any
Customer or any supplier, service bureau, vendor or employee of any of the
KDTI Companies, or cause any Customer, supplier, or vendor of any of the
KDTI Companies to refrain from entrusting additional business to any of
the KDTI Companies.
3. CONFIDENTIAL INFORMATION
The Obligor shall keep secret and retain in strictest confidence, and
shall not use for the benefit of himself or others, except in connection with
the business and affairs of the KDTI Companies, all Confidential Information
learned by the Obligor heretofore and hereafter, and shall never disclose such
matters to anyone outside of the KDTI Companies, except (i) as required in the
course of performing duties for the KDTI Companies, (ii) with KDTI's express
written consent; or (iii) with respect to such information which is generally
known to the public or becomes known to the public though no fault of the
Obligor.
4. PAYMENTS TO OBLIGOR
a. In consideration for Obligor's performance of his obligations under
this Agreement, the Company agrees to pay Obligor, and KDTI
guarantees the payment of, the sum of Fifty Nine Thousand One
Hundred Eighty Seven and 50/100 Dollars ($59,187.50) per annum
during the first five (5) years of the Restricted Period, payable in
equal monthly installments.
b. In the event of a breach by Obligor of its obligations under this
Agreement, which is not cured within ten (10) business days after
receipt of notice of default from KDTI, the Company shall have the
right to suspend any further payments to Obligor under this
Agreement without limiting any other damages or remedies, including
specific performance or injunctive or other equitable relief to
which any of the KDTI Companies may be entitled.
c. This Agreement shall terminate and be of no further force and effect
in the event that KDTI causes the shares of the Company to be
transferred to the Obligor and the other former shareholder of
ADSI-NY pursuant to Section 3.2.2 (iii) of the Merger Agreement. The
provisions of Section 3 of this Agreement shall survive, however,
with respect to Confidential Information regarding the Customers
(other than the ADSI Customers and the customers of the Company as
of the date the shares of the Company are so transferred) and their
requirements, business acquisition plans, new personnel acquisition
plans, formulae, methods of manufacture, technical processes,
designs and design projects, inventions and
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research projects and other business affairs relating to the
business of the KDTI Companies (other than the business of ADSI-NY
transferred to the Company as a result of the merger of ADSI-NY with
and into the Company) learned by the Obligor heretofore and
hereafter.
5. ENFORCEMENT THROUGH INJUNCTION
Obligor acknowledges that the type and periods of restriction imposed in
Sections 2 and 3 are fair and reasonable and are reasonably required for the
protection of the KDTI Companies and the goodwill, business and assets of the
KDTI Companies, including the goodwill, business and assets of the ADSI-NY
transferred to the Company as a result of the merger of ADSI-NY with and into
the Company. The Obligor acknowledges that a breach of the provisions of this
Agreement would irreparably damage the KDTI Companies, and that once such a
breach has occurred, there may be no accurate way of determining the amount of
damage or loss suffered by the KDTI Companies. The Obligor therefore agrees that
the terms of this Agreement may be enforced through preliminary or final
injunctive relief or other equitable remedy, without any of the KDTI Companies
having to (i) prove irreparable injury or likelihood of success, (ii) prevail on
the balancing of the equities test or other legal criteria, or (iii) post a
bond, and without limiting any other damages or remedies to which any of the
KDTI Companies may be entitled, including termination of the payments required
under Section 4 of this Agreement.
6. BLUE LINING
a. If any of the provisions of this Agreement relating to time,
geographical area, services, products, devices and/or information
are deemed by a court of competent jurisdiction to be overly broad
or for any other reason unenforceable, the parties agree that such
restrictions herein as to time, geographical area, services
products, devices and/or information shall be reduced to such time,
geographical area, services, products, devices and/or information as
such court shall hold to be reasonable and legally enforceable. In
addition, if any court determines that any of the restrictive
covenants contained in this Agreement or any part thereof, is
invalid or unenforceable, the remainder of the restrictive covenants
shall not thereby be affected and shall be given full effect without
regard to the invalid portions.
b. The Obligor acknowledges that KDTI, the Company and the Obligor
intend to and hereby confer jurisdiction to enforce the covenants
contained in this Agreement upon the courts of any state within the
geographical scope of such covenants. In the event that the courts
of one or more of such states shall hold such covenants wholly
unenforceable by reason of the breadth of such scope or otherwise,
it is the intention of the parties hereto that such determination
not bar or in any way affect the right of any of the KDTI Companies
to the relief provided above in the courts of any other states
within the geographical scope of such covenants, as to breaches of
such covenants in such other respective states, the above covenants
as they
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relate to each state being, for this purpose, severable into diverse
and independent covenants. Notwithstanding the foregoing, no action
will be commenced in more than one jurisdiction at a time unless one
or more of the provisions of this Agreement can only be enforced if
an action is brought in another jurisdiction or jurisdictions.
c. The Obligor acknowledges that the business of the KDTI Companies
extends beyond the geographic area of the State of New York and
accordingly, it is reasonable that the restrictive covenants set
forth above are not limited by specific geographic area but by the
location of the Customers.
7. MISCELLANEOUS
a. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors,
administrators, successors and assigns.
b. Any notice or other communications required or permitted hereunder
shall be in writing and shall be deemed effective (a) upon personal
delivery, if delivered by hand and followed by notice by mail,
overnight courier or delivery service or facsimile transmission; (b)
one day after the date of delivery by Federal Express or other
nationally recognized courier service that provides a delivery
receipt, if delivered by priority overnight delivery between any two
points within the United States; or (c) three (3) days after deposit
in the mails, if mailed by certified or registered mail (return
receipt requested) between any two points within the United States,
and in each case of mailing, postage prepaid, addressed as follows:
(i) if to Obligor, at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000, and
(ii) if to KDTI or the Company, at Twenty-One Penn Plaza, 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, XX 00000, or at such other address as any
such party shall designate by written notice to the other party.
c. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to agreements made and
to be performed entirely within New York.
d. This Agreement may not be changed orally, but only by an agreement
in writing signed by any of the KDTI Companies and the Obligor.
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IN WITNESS WHEREOF, the individual parties have executed and the corporate
parties have each caused its corporate name to be hereunto subscribed by its
duly authorized officer on the date first written above.
XXXX DIGITAL TECHNOLOGIES, INC., a Delaware corporation
By: /s/ XXXXXX X. XXXXX
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XXXXXX X. XXXXX
VICE PRESIDENT & CHIEF FINANCIAL OFFICER
ADVANCED DIGITAL SERVICES, INC., a New York corporation, formerly known as XXXX
DIGITAL ACQUISITION INC.
By: /s/ XXXXXX X. XXXXX
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XXXXXX X. XXXXX
VICE PRESIDENT
OBLIGOR:
/s/ XXXXX XXXX
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XXXXX XXXX
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