EXHIBIT 10.32
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") is made effective as of
October 25, 1999 by and among XXX.XXX INC., a Delaware corporation ("Parent"),
and XxxXxxx.xxx, Inc., a Delaware corporation ("Company"), on one hand, and
Xxxxxxxx X. Xxxxx (the "Stockholder") on the other hand.
RECITALS
A. As an employee, executive and stockholder of Company, the Stockholder
has obtained extensive and valuable knowledge and information concerning the
business of Company (including, but not limited to, confidential information
relating to Company and its operations, assets, contracts, customers, personnel,
plans and prospects).
B. Concurrently with the execution and delivery of this Agreement, Parent
is acquiring the Company through a merger of Parent's wholly owned subsidiary
with and into the Company (the "Acquisition") pursuant to that certain Agreement
and Plan of Merger and Reorganization dated as of the date hereof (the "Merger
Agreement"). The Merger Agreement requires that a noncompetition agreement be
executed and delivered by the Stockholder as a condition to the completion of
the Acquisition, and the Stockholder is entering into this Agreement in order to
induce Parent to complete the Acquisition.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. Definitions. Capitalized terms used but not expressly defined in this
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Agreement shall have the meanings ascribed to them in the Merger Agreement.
2. Acknowledgments by the Stockholder. The Stockholder acknowledges that
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(a) the Stockholder has occupied a position of trust and confidence with Company
prior to the date hereof and has become familiar with the following, any and all
of which may constitute confidential information of Company (any such
information constituting confidential information of Company, the "Confidential
Information"): (i) any and all trade secrets concerning the business and affairs
of Company, data, know-how, compositions, processes, customer lists, current and
anticipated customer requirements, price lists, market studies, business plans,
internally developed programming code/software, database architecture; (ii) any
and all information concerning the business and affairs of Company (which
includes historical financial statements, financial projections and budgets,
historical and projected sales, capital spending budgets and plans, the names
and backgrounds of key personnel, personnel training and techniques and
materials), however documented; and (iii) any and all notes, analysis,
compilations, studies, summaries, and other material prepared by or for Company
containing or based, in whole or in part, on any information included in the
foregoing, (b) Parent has required that the Stockholder make the covenants set
forth in this Agreement as a condition to Parent's acquisition of the Company,
(c) the provisions of this Agreement are reasonable and necessary to protect and
preserve Company's business, and (d) Parent and Company would be
irreparably damaged if the Stockholder were to breach the covenants set forth in
Sections 3, 4, 5, 6 and 7 of this Agreement.
3. Confidential Information. The Stockholder acknowledges and agrees that
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all Confidential Information known or obtained by the Stockholder, whether
before or after the date hereof, is the property of Parent. Therefore, the
Stockholder agrees that the Stockholder will not, at any time, disclose to any
unauthorized third party or use for his own account or for the benefit of any
third party any Confidential Information, whether the Stockholder has such
information in the Stockholder's memory or embodied in writing or other physical
form, without Parent's written consent, unless and to the extent that the
Confidential Information (i) is or becomes generally known to and available for
use by the public other than as a result of the Stockholder's fault or the fault
of any other party bound by a duty of confidentiality to Parent or Company or
(ii) becomes available to Stockholder on a nonconfidential basis from a person
other than Company or Parent who is not otherwise bound by a confidentiality
agreement with Company or Parent, or is otherwise not under an obligation to
Company or Parent not to transmit the information to Stockholder. The
Stockholder agrees to deliver to Parent, at any time Parent may request, all
documents, memoranda, notes, plans, records, reports, and other documentation,
models, components, or computer software, whether embodied in a disk or in other
form (and all copies of all of the foregoing), relating to the businesses,
operations, or affairs of Company and any other Confidential Information that
the Stockholder may then possess or have under the Stockholder's control.
4. Noncompetition. As an inducement for Parent to enter into the Merger
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Agreement and as additional consideration for the consideration to be paid
hereunder, the adequacy and sufficiency of which is hereby acknowledged by the
parties hereto, the Stockholder agrees that during the Noncompetition Period (as
hereinafter defined), the Stockholder will not, for any reason, directly or
indirectly, engage or invest in, own, manage, operate, finance, control, or
participate in the ownership, management, operation, financing, or control of,
be employed by, associated with, or in any manner connected with, lend the
Stockholder's name or any similar name to, lend the Stockholder's credit to, or
render services or advice to, any business whose products, product development,
sales, services or other activities compete in any respect with the products,
product development, sales, services or other activities of or offered by
Company or the Parent, as such existed at or could be reasonably anticipated at,
or before the Closing Date (the "Restricted Business"), in any county of any
state of the United States of America, and any other states or international
jurisdictions throughout the world at any time within the Noncompetition Period
(as hereinafter defined); provided, however, that the Stockholder may purchase
or otherwise acquire up to (but not more than) one percent (1%) of any class of
securities of any enterprise (but without otherwise participating in the
activities of such enterprise) if such securities are listed on any national or
regional securities exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended. The Stockholder agrees that this
covenant is reasonable with respect to its duration, geographical area, and
scope. In the event that any court determines that the duration or the
geographic areas provided for in this Section 4, or both of them, are illegal or
unenforceable, the parties intend that such court shall limit such duration or
geographic scope to the minimum extent necessary so that such covenant shall
remain in full force and effect for the greatest duration of time and in the
greatest geographical area that would not render it unenforceable. The parties
further intend that this covenant shall be deemed to be a series of separate
covenants, one for
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each and every state or other political subdivision of the United States and for
any other country in the world where this covenant is intended to be effective.
As used herein, the "Noncompetition Period" shall commence upon the Closing Date
and end two and one-half years after the Closing Date.
5. Nonsolicitation. The Stockholder further agrees that during the
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Noncompetition Period, he will not (i) directly or indirectly, personally or
through others, encourage, induce, attempt to induce, solicit or attempt to
solicit (on the Stockholder's own behalf or on behalf of any other person or
entity) any employee of, or representative, agent, consultant, or advisor to,
Parent or Company to leave his or her employment with such Parent or Company;
(ii) divert, or attempt to divert, any person or entity which has furnished
services to the Parent or the Company or furnishes services for or to the Parent
or Company (including any person or entity known by Stockholder to be a
prospective customer, supplier or material service provider of the Parent or
Company) or (iii) induce or attempt to induce any customer, supplier or material
service provider of the Parent or the Company to cease being (or to not become)
a customer, supplier or material service provider of the Parent or Company
(including any person or entity known by Stockholder to be a prospective
customer, supplier or material service provider of the Parent or Company).
6. Independence of Obligations. The covenants of the Stockholder set
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forth in this Agreement shall be construed as independent of any other agreement
or arrangement between the Stockholder, on the one hand, and Parent or Company,
on the other. The existence of any claim or cause of action by the Stockholder
against Parent or Company shall not constitute a defense to the enforcement of
such covenants against the Stockholder.
7. Remedies. If the Stockholder breaches the covenants set forth in this
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Agreement, each of Parent and Company will be entitled to the following
remedies:
a. damages from the Stockholder; and
b. in addition to its right to damages and any other rights it may
have, to obtain injunctive or other equitable relief to restrain any breach or
threatened breach or otherwise to specifically enforce any provision of this
Agreement, it being agreed that money damages alone would be inadequate to
compensate the Parent or Company and would be an inadequate remedy for such
breach.
8. Non-Exclusivity. The rights and remedies of Parent and Company
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hereunder are not exclusive of or limited by any other rights or remedies which
Parent or Company may have, whether at law, in equity, by contract or otherwise,
all of which shall be cumulative (and not alternative). Without limiting the
generality of the foregoing, the rights and remedies of Parent and Company
hereunder, and the obligations and liabilities of the Stockholder hereunder, are
in addition to their respective rights, remedies, obligations and liabilities
under the law of unfair competition, misappropriation of trade secrets and the
like.
9. Waiver. The rights and remedies of the parties to this Agreement are
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cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or
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privilege under this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement.
10. Governing Law. This Agreement will be governed by the laws of the
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State of California without regard to conflicts of laws principles.
11. Severability. If any provision of this Agreement or any part of any
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such provision is held under any circumstances to be invalid or unenforceable in
any jurisdiction, then (a) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) such invalidity or
enforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Agreement. Each provision of this
Agreement is separable from every other provision of this Agreement, and each
part of each provision of this Agreement is separable from every other part of
such provision.
12. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement. Execution and delivery of this Agreement by exchange
of facsimile copies bearing the facsimile signature of a party hereto shall
constitute a valid and binding execution and delivery of this Agreement by such
party.
13. Section Headings; Construction. The section headings in this Agreement
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are provided for convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement unless otherwise specified.
All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.
14. Notices. All notices, consents, waivers, and other communications
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under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand, (b) sent by facsimile, provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service or
registered mail (receipt requested), in each case to the appropriate addresses
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and facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):
Stockholder: At Stockholder's address set forth on the signature page
hereof.
Parent: XXX.XXX INC.
00 Xxxxxxxxx
Xxxxx Xxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
Facsimile number: (000) 000-0000
With a copy to: Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
00 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Facsimile number: (000) 000-0000
15. Further Assurances. The Stockholder shall execute and/or cause to be
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delivered to Parent or Company such instruments and other documents and shall
take such other actions as Parent or Company may reasonably request to
effectuate the intent and purposes of this Agreement.
16. Assignment. This Agreement and all obligations hereunder are personal
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to the Stockholder and may not be transferred or assigned by the Stockholder at
any time. Each of Parent and Company may assign its respective rights under this
Agreement to any entity in connection with any sale or transfer of all or a
substantial portion of its respective assets to such entity.
17. Binding Nature. Subject to Section 11 hereof, this Agreement will be
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binding upon the Stockholder and the Stockholder's representatives, executors,
administrators, estate, heirs, successors and assigns, and will inure to the
benefit of Parent and Company and their respective successors and assigns.
18. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties with respect to the subject matter of this Agreement and
supersedes all prior written and oral agreements and understandings among
Parent, Company and the Stockholder with respect to the subject matter of this
Agreement. This Agreement may not be amended except by a written agreement
executed by all parties hereto.
19. Survival. All of the provisions set forth in this Agreement are
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continuing and shall survive both the execution of this Agreement and the Merger
Agreement.
20. Not an Employment Contract. This agreement is not a contract of
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employment and does not give Stockholder any right to employment for any
specific period of time. If there is at any time a contract of employment
between the Stockholder and Parent or the Company, whether effective before or
after this Agreement, this Agreement shall be deemed to be an amendment to such
contract of employment unless such contract of employment expressly cancels this
Agreement.
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21. Attorneys' Fees. In the event that any legal proceeding is brought to
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enforce or interpret any of the provisions of this Agreement, the prevailing
party shall be entitled to recover reasonable attorneys' fees whether or not the
action or proceeding proceeds to final judgment.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
XXX.XXX INC. STOCKHOLDER:
By:_______________________________ By:_______________________________
Name:________________________
Title:_______________________
XXXXXXX.XXX INC.
By:_______________________________
Name:________________________
Title:_______________________
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