NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "Agreement") is dated as of
September 1, 1999, by and among GRC International, Inc., a Delaware corporation
("Parent"), Management Consulting & Research, Inc., a Virginia corporation (the
"Company"), and Xxxxxx X. XxXxxxxxx, Ph.D. ("XxXxxxxxx").
WHEREAS, the Company is currently engaged through its subsidiaries in
the business of supplying cost analysis, financial analysis and program
management services for government and commercial clients throughout the United
States and elsewhere in the world (the "Current Business");
WHEREAS, XxXxxxxxx, in his prior and continuing course of association
with the Company, has obtained knowledge of the Company's trade secrets and
other confidential information and has had dealings with the customers and
suppliers of the Company;
WHEREAS, XxXxxxxxx has extensive knowledge of the Company's business
and market, is well respected in the industry by the Company's customers and
competitors and the loss of his continued efforts to a competitor would be
detrimental to the Company's ongoing success and future prospects;
WHEREAS, pursuant to that certain Agreement and Plan of Merger ("Merger
Agreement") dated as of August 5, 1999, by and among Parent, the Company, MAC
Merger Corporation, a Virginia corporation and a subsidiary of Parent ("Merger
Sub"), and XxXxxxxxx, the Company will be merged into Merger Sub; and
WHEREAS, XxXxxxxxx will receive substantial direct and indirect
benefit, from the transactions contemplated by the Merger Agreement, and Parent
has required that XxXxxxxxx enter into this Agreement as a condition to Parent's
consummation of the transactions contemplated by the Merger Agreement.
WHEREAS, in connection with the transactions contemplated by the Merger
Agreement, XxXxxxxxx has agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
hereby agree as follows:
1. Definitions. For the purposes of this Agreement, the following terms
have the following meanings. Capitalized terms not otherwise defined have the
meaning given such terms in the Merger Agreement.
(a) "Affiliate" shall mean with respect to any Person, any other
Person that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, through
the exercise of voting securities or otherwise, such Person.
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(b) "Person" shall mean any individual, corporation, partnership,
trust, organization, or other entity.
(c) "Proprietary Information" shall mean confidential, proprietary
or trade secret information of any kind, nature or description.
(d) "Restricted Area" shall mean (i) each metropolitan area or place
within the United States in which Parent, the Company or any of their
Affiliates has an office conducting the Restricted Business and (ii) a
radius of 100 miles from each such metropolitan area or place and (iii)
a further radius of 500 miles from such metropolitan area or place and
(iv) elsewhere in the United States and (v) elsewhere in the world.
(e) "Restricted Business" includes any business competitive with the
Current Business as well as any business or businesses in which Parent
or any of its Affiliates is involved while XxXxxxxxx is engaged by
Parent, the Company or any of their Affiliates as an employee, officer
or consultant.
(f) "Restricted Period" means a period commencing on the date hereof
and continuing through the third (3rd) anniversary date of this
Agreement.
2. Compensation. In consideration of XxXxxxxxx' obligations hereunder,
Parent shall pay to XxXxxxxxx, and XxXxxxxxx shall accept from Parent in full
payment therefor, the sum of six hundred thousand dollars ($600,000) payable in
two equal annual installments of three hundred thousand dollars ($300,000), on
the second and third anniversary of the date hereof.
3. Nondisclosure of Information. XxXxxxxxx agrees that during and after
the Restricted Period he shall not, without the prior written consent of an
officer of Parent or except within the scope of his duties for Parent, the
Company or any of their Affiliates, directly or indirectly, in any individual,
corporate or representative capacity whatsoever, (i) use or (ii) reveal,
divulge, disclose or otherwise communicate to any person, firm, association,
corporation or other entity in any manner whatsoever, Proprietary Information
concerning any matters affecting or relating to Restricted Business. XxXxxxxxx
shall not be liable pursuant to this Section 3 or disclosures as to (a)
information that is or becomes generally available to the public other than as a
result of a disclosure by XxXxxxxxx, (b) information which is received from a
third party provided that such source is not known by XxXxxxxxx to be bound by a
confidentiality agreement, or other obligation of secrecy, to Parent, the
Company or any of their Affiliates, or (c) information compelled to be disclosed
by legal process. The following are some examples of Proprietary Information,
even if not marked or identified as such:
(a) Computer software of all kinds, source and object codes,
algorithms, coding sheets, compilers, assemblers, design concepts,
routines and subroutines, and all related documents and materials;
(b) Business practices, marketing techniques, mailing lists,
purchasing information, price lists, pricing policies, quoting
procedures, customer and prospective customer lists and information,
and all materials or information relating to the manner in which the
Company does business;
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(c) Discoveries, concepts and ideas, whether or not patentable,
protectable by copyright, or otherwise protectable, trade secrets,
"know-how," production processes, research and development activities,
and information on products or programs;
(d) Financial information, cost structure, bidding strategy, salary
structure, and such other information not in the public domain as may
be helpful to competitors or harmful to the Company, its customers or
employees;
(e) Any other information, materials or documents related to the
business or activities of the Company which are not generally known to
others engaged in similar businesses or activities; and
(f) All ideas which are derived from access to or knowledge of any
of the above.
4. Covenant Not to Compete. XxXxxxxxx agrees that during the Restricted
Period, he shall not, without the prior written consent of an officer of Parent
or except within the scope of his duties for Parent, the Company or any of their
Affiliates, directly or indirectly, through any corporation, organization or
other entity owned or controlled by XxXxxxxxx, or either as principal, agent,
employee, employer, consultant, stockholder or holder of any equity security
(except for an equity interest in any corporation that does not exceed five
percent (5%) of any class of its stock), partner or in any other individual or
representative capacity whatsoever:
(a) engage in any business competitive in any respect to the
Restricted Business of Parent, the Company or any of their Affiliates
in the Restricted Area;
(b) participate in the ownership, management, operation or control
of any person or entity that is engaged in any business competitive
with the Restricted Business in the Restricted Area;
(c) call upon, solicit, divert, take away or attempt to call upon,
solicit, divert or take away any existing clients or past, present or
targeted potential clients, customers, suppliers, businesses or
accounts of the Restricted Business or any portion thereof, in the
Restricted Area or interfere or compete with any portion of the
Restricted Business;
(d) hire, or knowingly attempt to hire, contact or solicit with
respect to hiring, any present employee, director, manager, officer,
contractor or consultant of Parent, the Company or any of their
Affiliates in the Restricted Area (including any person who acted in
such capacity within the one year prior to any such hiring, contact or
solicitation);
(e) give any advice relating to the Restricted Business to any
person or entity engaged in any business competitive in any respect
with the Restricted Business or Parent, the Company or any of their
Affiliates in the Restricted Area; or
(f) lend credit, money or reputation for the purpose of establishing
or operating any business competitive with the Restricted Business in
the Restricted Area.
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If, at any time during the Restricted Period, XxXxxxxxx fails or has
failed to fully comply with the terms of this Section 4, Parent and the Company
shall each be entitled to, among other remedies, require compliance by XxXxxxxxx
with the terms of this Section 4 for an additional period equal to the period of
such noncompliance. XxXxxxxxx hereby acknowledges that the geographic
boundaries, scope of prohibited activities and the time duration of the
provisions of this Section 4 are reasonable and are not broader than are
necessary to maintain the goodwill associated with the Company's business and
the Restricted Business.
5. Enforcement of Covenants. XxXxxxxxx acknowledges the confidential
and secret nature of the Company's Proprietary Information and the considerable
time, expense and other resources devoted by the Company, Parent and their
Affiliates to the development or acquisition of such Proprietary Information.
XxXxxxxxx also acknowledges that a violation or attempted violation, on his part
or on the part of any of his Affiliates, of any provision of Sections 3 or 4
above will cause such damage to Parent and the Company as will be irreparable
and that the remedy at law will be inadequate, and accordingly, XxXxxxxxx agrees
that Parent and the Company shall be entitled to an injunction, without posting
bond or any other security, from any court of competent jurisdiction,
restraining any further violation or threatened or attempted violation of such
provisions by XxXxxxxxx or his Affiliates. Any exercise by Parent or the Company
of its rights pursuant to this Section 5 shall be cumulative and in addition to
any other remedies to which Parent and the Company may be entitled.
6. Reformation of Sections 3 and 4. Parent and the Company and
XxXxxxxxx agree and stipulate that the covenants contained in Sections 3 and 4
hereof are fair and reasonable in light of all of the facts and circumstances of
the relationship among Parent and the Company and XxXxxxxxx; however, Parent and
the Company and XxXxxxxxx are aware that in certain circumstances courts have
refused to enforce certain agreements not to compete. Therefore, in furtherance
of and not in derogation of the provisions of Sections 3 and 4 hereof, the
parties agree that in the event a court should decline to enforce the provisions
of Sections 3 and 4, that Sections 3 and 4 shall be deemed to be modified or
reformed to restrict XxXxxxxxx' competition with the Parent, Company or any of
their Affiliates to the maximum extent as to time, geography and business scope,
which the court shall find enforceable. For the purposes of this Agreement,
Parent and the Company and XxXxxxxxx agree that the covenants contained in
Sections 4(a) through (f) shall each be construed as a series of separate
covenants, one for each geographical subdivision which comprises the Restricted
Area and, except for geographic coverage, each separate covenant shall be deemed
identical.
7. Indemnification. From and after the date hereof, XxXxxxxxx shall
indemnify, defend and hold Parent, the Company and their Affiliates harmless
from and against any and all claims, losses, damages, costs and expenses that
may be incurred by, imposed upon or asserted by or against such parties arising
from any breach of the provisions of this Agreement by XxXxxxxxx.
8. Invalid Provisions. If any provision hereof (other than Sections 3
and 4) is held to be illegal, invalid or unenforceable under present or future
laws, such provisions shall be fully severable; this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal,
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invalid or unenforceable provision there shall be added automatically as a part
hereof a provision as similar in the terms, but in any event no more restrictive
than, such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
9. Waiver of Breach. The failure by any party to enforce any of its
rights hereunder shall not be deemed to be a waiver of such rights, unless such
wavier is an express written waiver which has been signed by the waiving party.
Waiver of any one breach shall not be deemed to be a waiver of any other breach
of the same or any other provisions hereof.
10. No Right to Continued Employment. The parties hereto agree that
this Agreement is not a contract of employment and is entered into solely in
connection with the desire of Parent and the Company to maintain the goodwill
associated with the Company's business and the Related Business. No provision of
this Agreement shall be construed to create any right of XxXxxxxxx to be
employed or engaged by the Company as an employee, officer, director, consultant
or otherwise for any term.
11. Amendments. No modifications or amendments of any of the terms,
conditions or provisions of this Agreement may be made other than by written
agreement signed by the parties.
12. Assignment. This Agreement, and the respective rights and
obligations of the parties hereto, may not be transferred, assigned or pledged
by any party hereto without the prior written consent of the other parties
hereto.
13. Benefit and Burden. This Agreement shall inure to be benefit of,
and shall be binding upon, the parties hereto and their respective legatees,
distributees, estates, executors, administrators, personal representatives,
heirs, successors and permitted assigns. XxXxxxxxx acknowledges and agrees that
Parent and the Company and their Affiliates are intended beneficiaries of the
covenants contained in Sections 3 and 4 of this Agreement.
14. Captions. The captions and headings used in this Agreement are for
convenience only and do not in any way limit or amplify the terms and provisions
hereof.
15. GOVERNING LAW. THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION OF
ITS TERMS AND THE DETERMINATION OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
COMMONWEALTH OF VIRGINIA WITHOUT REGARD TO THE CHOICE OF LAW RULES OF SUCH
JURISDICTION.
16. Settlement of Disputes. Any and all controversies, disputes, or
claims arising out of or relating to this Agreement, or any part hereof,
including, without limitation, the meaning, applicability, or scope of this
Section 16 and the performance, breach, interpretation, meaning, construction,
or enforceability of this Agreement, or any portion hereof, and all claims for
rescission or fraud in the inducement of this Agreement, shall, at the request
of any party, be settled or resolved by binding arbitration pursuant to the
commercial rules and regulations of the American Arbitration Association (the
"AAA") for the resolution of commercial disputes. Any party requesting
arbitration under this Agreement shall make a demand on the other parties by
registered or certified mail with a copy to the AAA. The parties consent and
agree to have any such arbitration proceedings heard in Vienna, Virginia. The
arbitration shall take place
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regardless of whether any party to the dispute or controversy fails or refuses
to participate. The arbitrators shall apply Virginia substantive law and federal
substantive law where state law is preempted. The arbitrators shall have the
power to grant all legal and equitable remedies and award compensatory damages
provided by Virginia law. The arbitrators shall prepare in writing and provide
to the parties an award including factual findings and the reasons on which the
decision is based. Judgement upon any award may be entered in any court having
jurisdiction thereof.
17. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original for all purposes and all
of which shall be deemed collectively to be one agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of September 1, 1999.
GRC INTERNATIONAL, INC.
By:
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Name:
Title:
MANAGEMENT CONSULTING & RESEARCH, INC.
By:
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Name:
Title:
/s/ Xxxxxx X. XxXxxxxxx, Ph.D.
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Xxxxxx X. XxXxxxxxx, Ph.D.
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