EXHIBIT 10.12
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NON-INTERFERENCE, NON-DISCLOSURE AND
NON-COMPETITION AGREEMENT
AMONG
RR INVESTORS, LLC,
RR INVESTORS II, LLC
RED XXXXX INTERNATIONAL, INC.
AND
XXXXXXX X. XXXXXX
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Dated as of May 11, 2000
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TABLE OF CONTENTS
Page
1. Confidentiality and Non-Competition.....................................1
2. Covenant Not to Compete.................................................1
3. Nondisclosure of Confidential Information...............................2
4. No Interference.........................................................2
6. Injunctive Relief.......................................................2
7. Extension of Restricted Periods.........................................3
8. Successors; Binding Agreement...........................................3
9. Waiver and Modification.................................................3
10. Severability............................................................3
11. Governing Law; Submission to Jurisdiction...............................4
12. Notices.................................................................4
13. Captions and Section Headings...........................................5
14. Entire Agreement........................................................5
15. Counterparts............................................................5
16. No Strict Construction..................................................5
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NON-INTERFERENCE, NON-DISCLOSURE AND
NON-COMPETITION AGREEMENT
THIS NON-INTERFERENCE, NON-DISCLOSURE AND NON-COMPETITION AGREEMENT is
made and entered into this 11th day of May, 2000, among RR INVESTORS, LLC, a
Virginia limited liability company ("Investors I"), RR INVESTORS II, LLC, a
Virginia limited liability company ("Investors II, and together with Investors
I, the "Buyer"), RED XXXXX INTERNATIONAL, INC., a Nevada corporation (the
"Company") and XXXXXXX X. XXXXXX (the "Executive").
Buyer has agreed to acquire (the "Acquisition") newly issued shares of
common stock of the Company pursuant to a certain Stock Subscription Agreement
dated as of February 18, 2000, among Buyer and the Company (the "Subscription
Agreement"). The execution and delivery of this Non-Interference, Non-Disclosure
and Non-Competition Agreement is a condition to the closing of the Acquisition,
and the Executive acknowledges that Buyer and its investors are relying on the
covenants of the Executive contained herein in proceeding with the Acquisition.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1. Confidentiality and Non-Competition. The Executive acknowledges that (i)
the agreements and covenants contained herein are essential to protect the
Company's business and assets and (ii) by virtue of his past association with
the Company, the Executive has obtained such knowledge, know-how, training and
experience and there is a substantial probability that such knowledge, know-how,
training and experience could be used to the substantial advantage of a
competitor of the Company and to the Company's substantial detriment. The
Executive also acknowledges that Buyer has entered into the Subscription
Agreement and will consummate the purchase contemplated thereby, and that
investors have invested in Buyer, in reliance, in part, on the covenants made by
the Executive herein.
2. Covenant Not to Compete. The Executive agrees that, for the period
commencing on the date hereof and ending on the fifth anniversary after the date
hereof (the "Restrictive Period"), the Executive shall not, in the Territory
(hereinafter defined), directly or indirectly, either for himself or for, with
or through any other Person, own, manage, operate, control, be employed by,
participate in, loan money to or be connected in any manner with, or permit his
name to be used by, any business which is engaged in the casual dining
restaurant business (a "Competitive Activity"). For purposes of this Agreement,
the term "participate" includes any direct or indirect interest, whether as an
officer, director, employee, partner, sole proprietor, trustee, beneficiary,
agent, representative, independent contractor, consultant, advisor, provider of
personal services, creditor, owner (other than by ownership of less than five
percent of the stock of a publicly-held corporation whose stock is traded on a
national securities exchange or in the NASD National Market (a "Public
Company"); provided, that this Section 7
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shall not prohibit the Executive from (i) owning a passive equity interest in an
entity (including Xxxx Xxxxx LLC, a Washington limited liability company,
subject to the non-competition covenants in the Area Development Agreements and
Franchise Agreements with the Company) so long as such entity operates only
restaurants operated as "Red Xxxxx" restaurants pursuant to franchise agreements
with the Company and (ii) so long as such activities do not adversely affect
Executive's ability to devote his entire working effort as the Chairman, Chief
Executive Officer and President of the Company so long as he is so employed,
consulting with and giving advise to entities permitted by clause (i) of this
proviso. Territory means North America and the territories of the United States
in the Caribbean, including Puerto Rico.
3. Nondisclosure of Confidential Information. The Executive shall not
disclose to any person or entity or use, any information not in the public
domain, in any form, acquired by the Executive while he was employed or
associated with the Company or, if acquired following the termination of such
association, such information which, to the Executive's knowledge, has been
acquired, directly or indirectly, from any person or entity owing a duty of
confidentiality to the Company, relating to the Company or its business. The
Executive agrees and acknowledges that all of such information, in any form, and
copies and extracts thereof are and shall remain the sole and exclusive property
of the Company, and the Executive shall on request return to the Company the
originals and all copies of any such information provided to or acquired by the
Executive in connection with his association with the Company, and shall return
to the Company all files, correspondence and/or other communications received,
maintained and/or originated by the Executive during the course of such
association.
4. No Interference. During the Restrictive Period, the Executive shall not,
without the prior written approval of Buyer, directly or indirectly through any
other Person (i) induce or attempt to induce any employee of the Company at the
level of assistant store manager or higher to leave the employ of the Company,
or in any way interfere with the relationship between the Company and any
employee thereof, (ii) hire any Person who was an employee of the Company at the
level of assistant store manager or higher within twelve months after such
Person's employment with the Company was terminated for any reason or (iii)
induce or attempt to induce any supplier or other business relation of the
Company to cease doing business with the Company, or in any way interfere with
the relationship between any such supplier or business relation and the Company.
5. Reasonableness of Restrictions. The Executive agrees that the covenants
set forth in Sections 2, 3 and 4 are reasonable with respect to their duration,
geographical area and scope. In the event that any of the provisions of Sections
2, 3 or 4 relating to the geographic or temporal scope of the covenants
contained therein or the nature of the business or activities restricted thereby
shall be declared by a court of competent jurisdiction or arbitral panel to
exceed the maximum restrictiveness such court or arbitral panel deems
enforceable, such provision shall be deemed to be replaced herein by the maximum
restriction deemed enforceable by such court or arbitral panel.
6. Injunctive Relief. The parties hereto agree that Buyer and the Company
would suffer irreparable harm from a breach by the Executive of any of the
covenants or agreements
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contained herein, for which there is no adequate remedy at law. Therefore, in
the event of the actual or threatened breach by the Executive of any of the
provisions of this Agreement, Buyer or the Company, or their respective
successors or assigns, may, in addition and supplementary to other rights and
remedies existing in their favor, apply to any court of law or equity of
competent jurisdiction for specific performance, injunctive or other relief in
order to enforce compliance with, or prevent any violation of, the provisions
hereof, and that, in the event of such a breach or threat thereof, Buyer and the
Company shall be entitled to obtain a temporary restraining order and/or a
preliminary or permanent injunction restraining the Executive from engaging in
activities prohibited hereby or such other relief as may be required to
specifically enforce any of the covenants contained herein.
7. Extension of Restricted Periods. In addition to the remedies Buyer and
the Company may seek and obtain pursuant to this Agreement, the restricted
periods set forth herein shall be extended by any and all periods during which
the Executive shall be found by a court to have been in violation of the
covenants contained herein.
8. Successors; Binding Agreement. This Agreement shall inure to the benefit
of Buyer, the Company and their Affiliates, successors and assigns, and shall be
binding upon the Executive and his legal representatives and assigns. Buyer and
the Company may assign or transfer their rights hereunder to any of their
Affiliates or to a successor entity in the event of merger, consolidation, or
transfer or sale of all or substantially all of the assets of the Company or of
the Business or a part thereof.
9. Waiver and Modification. Any waiver, alteration or modification of any
of the terms of this Agreement shall be valid only if made in writing and signed
by the parties hereto; provided, that any such waiver, alteration or
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modification is consented to on the Company' behalf by the Board of Directors.
No waiver by any of the parties hereto of their rights hereunder shall be deemed
to constitute a waiver with respect to any subsequent occurrences or
transactions hereunder unless such waiver specifically states that it is to be
construed as a continuing waiver.
10. Severability. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or term of this Agreement shall be held to
be prohibited by or wholly invalid under such applicable law, then (i) such
provision or term shall be ineffective only to the extent of such provision or
invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of this
Agreement and (ii) the invalid or unenforceable term or provision shall be
deemed replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision.
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11. Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF COLORADO, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICT OF LAW THEREOF.
(b) EACH OF THE PARTIES HERETO CONSENTS AND AGREES TO THE JURISDICTION
OF ANY PROVINCIAL OR FEDERAL COURT SITTING IN THE CITY OR COUNTY OF DENVER,
COLORADO, AND WAIVES ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH
RESPECT TO ANY ACTION INSTITUTED THEREIN.
12. Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed effective and given upon actual delivery
if presented personally, one business day after the date sent if sent by prepaid
telegram, overnight courier service, telex, or by facsimile transmission or five
business days after the date sent if sent by certified or registered mail,
postage prepaid, return receipt requested, which shall be addressed:
In the case of the Company, to:
Red Xxxxx International, Inc.
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Facsimile No.: 000-000-0000
with a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile No.: 000-000-0000
In the case of Buyer, to:
RR Investors, LLC.
RR Investors II, LLC
c/o Quad-C, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Telecopier: (000-000-0000
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and to:
McGuire, Woods, Battle & Xxxxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopier: 000-000-0000
In the case of the Executive:
Xxxxxxx X. Xxxxxx
Red Xxxxx International, Inc.
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: 000-000-0000
with a copy to:
Powers & Xxxxxxxx, X.X.
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
and Xxxxxx Xxxxxx
Facsimile No.: 000-000-0000
or, in each case, to such other address as may be designated in writing by any
such party.
13. Captions and Section Headings. Captions and section headings herein are
for convenience only, are not a part hereof and shall not be used in construing
this Agreement.
14. Entire Agreement. This Agreement, constitutes the entire understanding
and agreement of the parties hereto regarding the subject matter hereof.
15. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
16. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
RR INVESTORS, LLC
By its manager
Quad-C Management, Inc.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Xxxxxx X. Xxxxxx, Xx.
Vice President
RR INVESTORS II, LLC
By its manager
Quad-C Management, Inc.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Xxxxxx X. Xxxxxx, Xx.
Vice President
RED XXXXX INTERNATIONAL, INC.
By:
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Xxxxx X.XxXxxxxxx
Chief Financial Officer
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Xxxxxxx X. Xxxxxx
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
RR INVESTORS, LLC
By its manager
Quad-C Management, Inc.
By:
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Xxxxxx X. Xxxxxx, Xx.
Vice President
RR INVESTORS II, LLC
By its manager
Quad-C Management, Inc.
By:
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Xxxxxx X. Xxxxxx, Xx.
Vice President
RED XXXXX INTERNATIONAL, INC.
By: /s/Xxxxx X.XxXxxxxxx
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Xxxxx X.XxXxxxxxx
Chief Financial Officer
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Xxxxxxx X. Xxxxxx
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
RR INVESTORS, LLC
By its manager
Quad-C Management, Inc.
By:
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Xxxxxx X. Xxxxxx, Xx.
Vice President
RR INVESTORS II, LLC
By its manager
Quad-C Management, Inc.
By:
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Xxxxxx X. Xxxxxx, Xx.
Vice President
RED XXXXX INTERNATIONAL, INC.
By:
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Xxxxx X.XxXxxxxxx
Chief Financial Officer
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
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