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EXHIBIT 10.7
NON-COMPETITION AGREEMENT
By signing below, I, Xxxxxxx X. Xxxxxx (sometimes referred to
hereinafter as the "Executive"), agree to the terms and conditions set forth in
this agreement (the "Agreement") between me and New RES, Inc. (the "Company").
I am entering into this Agreement (a) in connection with, and as additional
consideration for, the Company's acquisition, on the date hereof (the
"Acquisition"), of all of the outstanding capital stock of Telco Communications
Group, Inc. ("Telco") pursuant to an Agreement and Plan of Merger, dated as of
June 5, 1997 (the "Merger Agreement") and (b) in accordance with the terms and
conditions of Section 8.2(h) of the Merger Agreement. Immediately prior to the
Acquisition, I was President - Commercial Sales Division of Telco and
beneficially owned __________ shares of common stock, no par value, of Telco
(including, for this purpose, shares subject to options held by me).
1. Confidentiality. The Executive agrees that he will
not disclose, divulge, discuss, copy or otherwise use or suffer to be used in
any manner, other than in accordance with the Executive's duties as an employee
of and on behalf of the Company, any confidential or proprietary information
relating to the Company's (which shall include all affiliates of the Company)
businesses, prospects, finances, operations, customers, properties or otherwise
relating to its business or other trade secrets of the Company, it being
acknowledged by the Executive that all such information regarding the business
of the Company compiled or obtained by or furnished to the Executive while the
Executive shall have been employed by or associated with the Company is
confidential and/or proprietary information and the Company's exclusive
property; provided, however, that the foregoing restrictions shall not apply to
the extent that such information:
(A) is clearly obtainable in the public domain;
(B) becomes obtainable in the public domain,
except by reason of the breach by the Executive of
the terms hereof or the breach of any third party of
any obligation owed to the Company by such third
party; or
(C) is required to be disclosed by rule of law or
by order of a court or governmental body or agency.
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2. Restricted Activities
(a) For the period (the "Restricted Period")
commencing on the date hereof and ending on the later of (i) the date which is
one year following the date on which the Executive shall cease to be an
employee or director of any of Telco, the Company or any of their affiliates
(the "Employment Termination Date") in the event that the Executive's
employment with the Company is terminated by the Company without "Cause" or
terminated by the Executive for "Good Reason" (as such terms are defined in the
Employment Agreement, dated the date hereof, between the Executive and the
Company), and (ii) in all other cases, the date which is two years following
the Employment Termination Date, the Executive, without prior express written
approval by the Board of Directors of the Company (the "Board of Directors"),
agrees that he will not own, manage, control or participate in the ownership,
management or control of, or be employed or engaged by or otherwise affiliated
or associated as a consultant, independent contractor or otherwise with, or
receive compensation from, any other corporation, partnership, proprietorship,
firm, association or other business entity engaged in the business of, or
otherwise engage in the business of, (i) marketing or providing
telecommunication services within the United States of a type that were, or
were planned to be, provided by the Company or its affiliates at any time
during the Restricted Period or (ii) marketing products or services by means of
"network" or "multi-level" marketing; provided, however, that the beneficial
and/or record ownership of not more than four and nine-tenths percent (4.9%) of
any class of publicly traded securities of any entity shall not be deemed a
violation of this covenant.
(b) During the Restricted Period, the Executive,
without express prior written approval from the Board of Directors of the
Company, will not solicit any clients of the Company or any of its affiliates
for any business of the Company or any of its affiliates, or engage the
business of any clients of the Company or any of its affiliates or discuss with
any employee of the Company or any of its affiliates the formation or operation
of any business intended to compete with the Company or any of its affiliates.
(c) During the Restricted Period, the Executive
will not solicit or induce any person who is an employee of the Company or any
of its affiliates to terminate any relationship such person may have with the
Company or any of its affiliates, nor shall the Executive during such period
directly or indirectly engage, employ or compensate, or cause or permit any
person with which the Executive may be affiliated, to engage, employ or
compensate, any employee of the Company or any of its affiliates. The
Executive hereby represents and warrants that
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the Executive has not entered into any agreement, understanding or arrangement
with any employee of the Company or any of its affiliates pertaining to any
business in which the Executive has participated or plans to participate, or to
the employment, engagement or compensation of any such employee.
(d) For the purposes of this Agreement, the term
"affiliate", when used in respect of the Company, shall mean each entity which
controls, is controlled by, or is under common control with, the Company
(including, without limitation, all subsidiaries of the Company) and all
licensees of the Company.
(e) The Executive hereby acknowledges that
damages at law may be an insufficient remedy to the Company if the Executive
violates the terms of this Agreement and that the Company shall suffer
irreparable harm and shall be entitled to preliminary and/or permanent
injunctive relief to restrain the breach of or otherwise to enforce through
specific performance any of the covenants contained in this Agreement without
the necessity of showing any actual damage or that monetary damages would not
provide an adequate remedy. Such right to an injunction shall be in addition
to, and not in limitation of, any other rights or remedies the Company may
have.
(f) The period of time during which the
provisions of this Agreement shall be in effect shall be extended by the length
of time during which the Executive is in breach of the terms hereof.
(g) The Executive agrees that the restrictions
contained in this Agreement are material to the Company and, but for the
Executive's agreement to comply with such restrictions, the Company would not
have entered into the Merger Agreement.
(h) THE EXECUTIVE HAS CAREFULLY CONSIDERED THE
NATURE AND EXTENT OF THE RESTRICTIONS UPON HIM AND THE RIGHTS AND REMEDIES
CONFERRED UPON THE COMPANY HEREUNDER, AND HEREBY ACKNOWLEDGES AND AGREES THAT
THE SAME ARE REASONABLE IN TIME AND TERRITORY, ARE DESIGNED TO ELIMINATE
COMPETITION WHICH OTHERWISE WOULD BE UNFAIR TO THE COMPANY, DO NOT STIFLE THE
INHERENT SKILL AND EXPERIENCE OF THE EXECUTIVE, WOULD NOT OPERATE AS A BAR TO
THE EXECUTIVE'S SOLE MEANS OF SUPPORT, ARE FULLY REQUIRED TO PROTECT THE
LEGITIMATE INTERESTS OF THE COMPANY AND DO NOT CONFER A
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BENEFIT UPON THE COMPANY DISPROPORTIONATE TO THE DETRIMENT TO THE EXECUTIVE.
3. Governing Law; Construction. This Agreement has been
executed and delivered in the Commonwealth of Virginia and its validity,
interpretation, performance and enforcement shall be governed by the internal
laws of that state, without regard to its rules concerning conflict of laws.
The construction and interpretation of this Agreement shall not be strictly
construed against the drafter.
4. Arbitration. (a) Except as provided herein, any
controversy, dispute or claim arising out of or relating to this Agreement, its
performance or the breach hereof (an "Arbitrable Dispute") which cannot be
settled by mutual agreement shall be finally settled by arbitration as follows:
Either party hereto (a "Party") who is aggrieved shall deliver a notice to the
other Party setting forth the specific points in dispute. Any points remaining
in dispute twenty (20) days after the giving of such notice shall be submitted
to arbitration before a single arbitrator ("Arbitrator") appointed in
accordance with JAMS/Endispute's Comprehensive Arbitration Rules and Procedures
(the "Rules"), modified only as herein expressly provided. The place of the
arbitration shall be the Washington, D.C. metropolitan area. The Arbitrator
may enter a default decision against any Party who fails to participate in the
arbitration proceedings. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. Section 1-16 (the "Act"). If there is any
conflict between either the Rules and the terms of this Section 4, or the Act
and this Section 4, then the terms of this Section 4 shall control. The
decision of the Arbitrator on the points in dispute will be final, unappealable
and binding and judgment on the award may be entered in any court having
jurisdiction thereof. The prevailing party in any such arbitration shall be
entitled to reimbursement for the reasonable costs and expenses incurred in
connection therewith from the other Party. The Arbitrator shall not have the
authority to award punitive damages. The Parties agree that this clause has
been included to rapidly and inexpensively resolve any disputes between them
with respect to this Agreement, and that this clause shall be grounds for
dismissal of any court action commenced by either Party with respect to this
Agreement, other than (i) actions to compel a party to comply with these
dispute resolution procedures; (ii) actions specified in this Section 4, or
(iii) post-arbitration actions seeking to enforce an arbitration award. The
Parties shall keep confidential, and shall not disclose to any person, except
as may be required by law, the existence of any controversy hereunder, the
referral of any such controversy to arbitration or the status or resolution
thereof. The procedures specified in this Section 4 shall be the sole and
exclusive procedures for the resolution of an Arbitrable Dispute; provided,
however, that prior to the appointment of an Arbitrator as provided for above,
a party, without prejudice to these procedures, may
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seek a temporary restraining order, preliminary injunction, or other
provisional judicial relief, if in its sole judgment such action is necessary
to avoid irreparable damage or to preserve the status quo. Under no
circumstances, however, shall the court be authorized to award money damages.
Any claim shall be time-barred unless the asserting party commences an
arbitration proceeding with respect to such claim within the time limit for
commencement of litigation specified by applicable law for such claim.
(b) The parties subject to this Agreement further agree that
the scope and meaning of this Section 4, including the issue of whether a
dispute is arbitrable, and the scope and meaning of any other sections or
provisions of this Agreement, shall be determined by the Arbitrator and not by
any judicial body, tribunal or forum and that the decision of the Arbitrator in
this and all other matters presented to him or her for arbitration as provided
in this Section 4 shall be final and binding.
(c) The Arbitrator is authorized to award injunctive relief,
including mandatory or prohibitory injunctions and restraining orders after
notice (including in the absence of a party), and specifically including orders
of specific performance to pay money, and all such orders shall be immediately
enforceable in any court of competent jurisdiction.
5. Separability. All provisions of this Agreement are
intended to be severable. In the event any provision or restriction contained
herein is held to be invalid or unenforceable in any respect, in whole or in
part, such finding shall in no way affect the validity or enforceability of any
other provision of this Agreement. The parties hereto further agree that any
such invalid or unenforceable provision shall be deemed modified so that it
shall be enforced to the greatest extent permissible under law, and to the
extent that any court of competent jurisdiction or the Arbitrator determines
any restriction herein to be unreasonable in any respect, such court or the
Arbitrator may limit this Agreement to render it reasonable in the light of the
circumstances in which it was entered into and specifically enforce this
Agreement as limited.
6. Notices. 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 received if so given) by hand delivery,
telegram, telex or telecopy, or by mail (registered or certified mail, postage
prepaid, return receipt requested) or by any courier service, such as Federal
Express, providing proof of delivery. All
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communications hereunder shall be delivered to the respective parties at the
following addresses:
If to the Executive: Xxxxxxx X. Xxxxxx
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Telephone:
Facsimile:
with a copy to:
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Telephone:
Facsimile:
Attention:
If to the Company: New RES, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention:
with a copy to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxxx, Esq. and
Xxxxxxxxx X. Xxxxx, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
7. No Waiver. The failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon compliance
by any other party hereto with its obligations hereunder, and any custom or
practice of the parties at
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variance with the terms hereof, shall not constitute a waiver by such party of
its right to exercise any such or other right, power or remedy or to demand
such compliance.
8. Assignability and Binding Effect. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors. The obligations of the parties hereto may not be
delegated, and any attempted delegation shall be null and void and without
effect.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the ______ day of _____________, 199 .
NEW RES, INC.
By:
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Name:
Title:
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Xxxxxxx X. Xxxxxx
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