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Exhibit 2.5
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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
XXXX XXXXXX ("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 XXXX
XXXXXX 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 000 Xxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxx Xxxxxx 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/ XXXX XXXXXX
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XXXX XXXXXX
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