EXHIBIT 10.6(c)
COVENANT NOT TO COMPETE OR SOLICIT BUSINESS
-------------------------------------------
TN Technologies Holding Inc., a Delaware corporation ("Buyer") and Xxxxxx
X. Xxxxx, XX ("Executive") enter into this Covenant Not To Compete or Solicit
Business ("Covenant") as of December 31, 1996.
WHEREAS, Buyer and Executive are parties to the Amended and Restated
Reorganization Agreement dated as of December 31, 1996 (the "Reorganization
Agreement");
WHEREAS, pursuant to the Reorganization Agreement, Buyer is acquiring (the
"Acquisition") all of the limited partnership interests in Modem Media
Advertising Limited Partnership, a Connecticut limited partnership ("MMLP"), and
all of the issued and outstanding capital stock of Modem Media, Inc., a
Connecticut corporation ("Modem Media");
WHEREAS, Executive, as a limited partner in MMLP and a shareholder of Modem
Media, will substantially and materially benefit from the Acquisition;
NOW, THEREFORE, in further consideration of the promises and mutual
covenants contained in the Employment Agreement, the Reorganization Agreement
and the Purchase Agreement and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and to protect more
effectively the value of the assets and goodwill purchased by Buyer, Executive
covenants and agrees as follows:
1. COVENANT NOT TO COMPETE. Executive covenants that during the period
commencing on the effective date of the Reorganization Agreement and ending on
the later of (i) the date which is five years after the effective date of the
Reorganization Agreement or (ii) the date which is two years after the last
payment of salary pursuant to the Employment Agreement (the "Non-
Competition/Non-Solicitation Period"), either individually or in partnership or
jointly or in conjunction with any person or persons, firm, association,
syndicate, company, contractor, corporation or organization of any kind, as
principal, agent, trustee, shareholder, employee or consultant, or in any other
manner whatsoever, whether directly or indirectly, he shall not render or assist
others in rendering services to or for any person or persons, firm, association,
syndicate, company or corporation, that is engaged in any business substantially
similar to any part of:
(a) advertising services delivered through the Internet or corporate
intranets, digital communications services dedicated to marketing purposes, or
consumer database management in conjunction with marketing or advertising
services carried on by Buyer or entities in which Buyer owns 40% or more of the
ownership interests (collectively referred to as "Buyer and its Affiliates")
during the two-year period immediately preceding the date employment is
terminated;
(b) any other advertising services delivered through the Internet or
corporate intranets, digital communications services dedicated to marketing
purposes, or consumer database management in conjunction with marketing or
advertising services for which Buyer or its Affiliates has, as of the
termination of such Employee's employment, formulated plans, of which Executive
is aware, to commence carrying on within 1 year after the date employment is
terminated; or
(c) any advertising services delivered through the Internet or corporate
intranets, digital communications services dedicated to marketing purposes, or
consumer database management in conjunction with marketing or advertising
services solicited by Buyer or its Affiliates with respect to clients or
potential clients of Buyer or its Affiliates.
Without limiting the foregoing, nothing herein shall prohibit Executive's
being a passive owner of not more than 5% of the outstanding stock of any class
of a corporation or other entity which is publicly traded, so long as Executive
has no active participation in the business of such corporation or other entity.
Notwithstanding anything herein to the contrary, Executive shall have no
obligations under this Section 1 or under Section 2 or 3 hereof if Buyer
breaches a material term of the Employment Agreement.
2. COVENANT NOT TO SOLICIT. Executive covenants and agrees that he will
not, and will not attempt to, at any time during the Non-Competition/Non-
Solicitation Period, directly or indirectly, induce or assist in the inducement
of:
(i) any employee or consultant of Buyer or its Affiliates away from Buyer
or its Affiliates or from the faithful discharge of such employee's or
consultant's contractual and fiduciary obligations to serve Buyer's or its
Affiliates' interest; or
(ii) any "Client" of Buyer or its Affiliates away from Buyer or its
Affiliates.
As used in this Covenant, "Client" shall extend to those persons, firms,
corporations or other entities (a) who were clients of Buyer or its Affiliates,
as is applicable, at any time during the Non-Competition/Non-Solicitation Period
and who continued to be clients at any time within the 18-month period
immediately preceding the inducement (including, without limitation, AT&T
Corporation); or (b) who were new business contacts of Buyer or its Affiliates,
as is applicable, during the Non-Competition/Non-Solicitation Period and who had
been active new business contacts at any time within a one-year period
immediately preceding the inducement.
3. NON INTERFERENCE. Executive covenants and agrees that he will not at
any time during the Non Competition/Non-Solicitation Period, directly or
indirectly, seek to cause the termination or any change in the terms of any
relationships between Buyer or its Affiliates and any supplier or vendor or
prospective supplier or vendor of Buyer or its Affiliates; provided, however,
-------- -------
that Executive shall not be precluded from utilizing any supplier or vendor.
4. DEFINITIONS. Any capitalized term used in this Covenant shall have
the meaning ascribed to it in the Reorganization Agreement, unless otherwise
defined herein.
-2-
5. REMEDIES. If Executive violates any of the terms of this Covenant,
Buyer or any of its Affiliates shall be entitled to all appropriate remedies,
including an interim, interlocutory or permanent injunction or restraining order
to be issued by any competent court enjoining and restraining Executive from
such wrongful acts. It is further agreed that Buyer or any of its Affiliates
would be irreparably damaged by Executive's breach of any provision of this
Covenant, that damages for such a breach are not easily calculated, and that any
remedy at law would be inadequate. Therefore, Buyer and any of its Affiliates
shall be entitled to seek and obtain injunctive or other equitable relief
against Executive, his agents, assigns or successors for a breach of this
Covenant and without the necessity of proving actual monetary loss. It is
expressly understood between the parties that this injunctive or equitable
relief shall not be Buyer's or any of its Affiliates' exclusive remedy for
breach of this Covenant.
Should any litigation be commenced concerning any provision of this
Covenant, the prevailing party shall be entitled, in addition to such other
relief as may be granted, to its attorneys' fees and costs incurred by reason of
such litigation.
6. LEGAL ENFORCEABILITY. Any provision of this Covenant which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7. GOVERNING LAW. This Covenant shall be governed by and construed in
accordance with the internal laws (as opposed to the conflicts of law
provisions) of the State of Connecticut.
8. ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Reorganization
Agreement and the Employment Agreement constitute the entire agreement between
Buyer and Executive with respect to the subject matter hereof. This Covenant
supersedes any prior agreement made between the parties. The parties may not
amend this Covenant except by written instrument signed by each party hereto and
approved by the Board of Directors or the compensation committee of the Board of
Directors of Buyer.
-3-
9. NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered and
received when delivered personally (which shall be deemed to include delivery
via express courier such as Federal Express) or three days after having been
sent by registered or certified mail or upon receipt when sent by facsimile (but
only if receipt is confirmed by the addressee by a return facsimile signed by
the addressee) addressed as follows:
If to Buyer, to:
TN Technologies Holding Inc.
000 Xxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
If to Executive, to: the address or facsimile number set forth below Executive's
signature on the signature page hereof.
or to such other address as such party (or if designated additional notice
recipient) may indicate by a notice delivered to the other parties hereto.
10. SUCCESSORS AND ASSIGNS. Executive acknowledges that his obligations
hereunder are unique and personal. Accordingly, Executive may not assign any of
his rights or delegate any of his duties or obligations under this Covenant.
Buyer may assign its rights, duties or obligations under this Covenant to any
person with whom it has merged or consolidated, or to whom it has transferred
all, or substantially all, of its assets.
This Covenant shall be binding upon and inure to the benefit of the
parties hereto and their permitted successors and assigns. Nothing in this
Covenant, express or implied, is intended or shall be construed to confer upon
any person other than the parties and their respective successors and assigns
permitted by this Covenant any right, remedy or claim under, or by reason of,
this Covenant.
11. WAIVER. No provisions of this Covenant shall be deemed to be waived
as a result of the failure of Buyer or its Affiliates or Executive to require
the performance of any term or condition of this Covenant or by other course of
conduct. To be effective, a waiver must be in writing, signed by all of the
parties hereto and approved by the Board of Directors or the compensation
committee of the Board of Directors of Buyer and state specifically that it is
intended to constitute a waiver of a term or breach of this Covenant. The
waiver by Buyer or its Affiliates or Executive of any term or breach of this
Covenant shall not prevent a subsequent enforcement of such term or any other
term and shall not be deemed to be a waiver of any subsequent breach.
-4-
12. EFFECTIVE DATE. This Covenant is effective as of the Closing Date of
the Reorganization Agreement. If the Reorganization Agreement is not
consummated, this Covenant shall be null and void.
EXECUTIVE ACKNOWLEDGES THAT HE HAS READ, UNDERSTOOD AND ACCEPTS THE
PROVISIONS OF THIS COVENANT. HE ALSO ACKNOWLEDGES THAT HE HAS HAD THE
OPPORTUNITY TO AND HAS REVIEWED THE TERMS AND CONDITIONS OF THIS COVENANT WITH
COUNSEL.
-5-
IN WITNESS WHEREOF, the parties hereto have executed this Covenant as of
the date written above.
TN TECHNOLOGIES HOLDING INC. XXXXXX X. XXXXX, XX
By: /s/ XXXXXXX X. XXXXXX /s/ XXXXXX X. XXXXX, XX
--------------------------- -------------------------------
Position: Address:
--------------------- ------------------------
Facsimile:
----------------------
-6-
