1
EXHIBIT 7
EXECUTIVE NONCOMPETITION
AGREEMENT
This Executive Noncompetition Agreement ("Agreement") is entered into
this 30th day of June, 1997, by and among Xxxxx Corporation, an Ohio
corporation, having its principal place of business at Xxxxx Xxxxxx, Xxxxxxxxx,
Xxxx 00000-0000 ("Parent"), Xxxx X. Xxxxxxxx ("Executive") and Fusion Systems
Corporation, a Delaware corporation having its principal place of business at
0000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (the "Company").
WHEREAS, pursuant to an Agreement and Plan of Merger ("Merger
Agreement") of even date herewith by and among Parent, a subsidiary of Parent
("Subsidiary"), and the Company, the Company and Parent have agreed to commence
a tender offer to purchase all of the outstanding shares of the Company's common
stock, par value $.01 per share, and the associated preferred share purchase
rights, and the parties thereto have agreed, subject to the terms and provisions
thereof, that Subsidiary shall be merged with and into the Company (the
"Merger");
WHEREAS, Parent and the Company desire by this Agreement to provide for
certain items and conditions relating to the continued employment of the
Executive by the Company after consummation of the Merger and for the protection
of the goodwill and proprietary rights of Parent and the Company;
WHEREAS, the Executive desires to continue to be employed by the
Company upon the terms and conditions stated herein; and
WHEREAS, the Executive and the Company have entered into an employment
agreement dated March 6, 1993 (the "Existing Agreement"), providing for payments
to the Executive following a change of control of the Company.
NOW, THEREFORE IN CONSIDERATION OF THE MUTUAL COVENANTS CONTAINED
HEREIN, INTENDING TO BE LEGALLY BOUND, PARENT, THE COMPANY AND THE EXECUTIVE
HEREBY AGREE AS FOLLOWS:
Section 1. Definitions.
-----------------------------
Unless otherwise specifically defined herein, terms used herein which
are initially capitalized herein shall have the same meaning as in the Existing
Agreement.
Section 2. Stock Option.
------------------------------
(A) GRANT OF OPTION. The Parent shall grant to the Executive, effective
upon the consummation of the Merger, an option to purchase 12,000 shares of the
common stock of Parent
2
-2-
("Parent Option"). The per-share option price of the Parent Option shall be the
fair market value of a share of the common stock of Parent on the date of grant.
The Parent Option shall have a ten-year term. Subject to the terms and
conditions set forth in this Agreement, the Parent Option shall become
exercisable only after five years have elapsed since the date of grant, and only
if the Executive remains continuously employed by the Company or Parent during
that five-year period. The other terms of the Parent Option shall be in
accordance which the terms of the option plan of Parent under which it is
granted.
(B) OTHER BENEFIT UPON TERMINATION. If the Executive's employment
terminates under the conditions set forth in Paragraph 10 or 11 of the Existing
Agreement (except that the reference in each such Paragraph to "three years
following the Change in Control Date" shall, for purposes of this Section 2(B)
only, be deemed to refer to the period of five years beginning on the date on
which the Merger is consummated), the Parent Option shall remain in effect,
shall become fully exercisable on the fifth anniversary of the date of grant,
and shall be exercisable throughout the remainder of its ten-year term in
accordance with its terms. If the Executive's employment terminates other than
as described in the preceding sentence (including without limitation as a result
of the Executive's death or disability) or if the Executive breaches any of the
covenants set forth in Section 17 or 18 of the Existing Agreement or of Section
3 of this Agreement (all such covenants being referred to collectively as the
"Covenants"), the Parent Option shall terminate.
Section 3. Covenants.
---------------------------
(A) NON-COMPETITION. The Executive hereby consents to the amendment of
Addendum E of the Existing Agreement by the Company to add products of Parent's
semiconductor equipment operations. Furthermore, in addition to the Covenants
set forth in the Existing Agreement, in consideration of the grant of the Parent
Option and other good and valuable consideration the Executive hereby agrees
that during the Restricted Period (as defined below), the Executive shall not,
as a shareholder, employee, officer, director, partner, lender, investor,
advisor, consultant or otherwise (whether or not being compensated in any way in
any such capacity), engage directly or indirectly in any business or enterprise
which is in Competition with Parent/Company (as defined below);
(B) "Competition with Parent/Company" shall mean any of the following:
(i) Competition with the semiconductor equipment business of
the Parent, of any entity controlled by Parent or of the respective
successors and assigns of Parent or any such entity;
(ii) Competition with the Company or an entity controlled by
it or the respective successors and assigns of the Company or any such
entity;
(iii) Any business activity which is the same as or comparable
to any business activity of the Company or any other entity described
in clause (ii) above or of the semiconductor equipment business of
Parent or of any other entity described in clause (i) above, in any
case from time to time during the Restricted Period in any geographic
area
3
-3-
throughout the world in which Parent or the Company or any such entity
is engaged in such business activity.
Notwithstanding the foregoing, nothing in this Section 3 shall prevent
the Executive from purchasing and holding for investment less than one percent
of the shares of any corporation.
(C) "Restricted Period" shall mean the two-year period beginning on the
date upon which the Executive's employment with the Company, with Parent or with
any entity controlled by Parent terminates for any reason.
(D) ENFORCEMENT. With respect to any Covenant finally determined by a
court of competent jurisdiction to be unenforceable in whole or in part, the
Executive, Parent and the Company hereby agree that such court shall have
jurisdiction to reform the Existing Agreement and/or this Agreement or any
provision thereof or hereof so that such Covenant is enforceable to the maximum
extent permitted by law, and the parties agree to abide by such court's
determination. If any of the Covenants is determined to be wholly or partially
unenforceable in any jurisdiction, such determination shall not be a bar to or
in any way diminish the right of the Company, Parent and their respective
affiliates and successors to enforce any such Covenant in any other
jurisdiction. The Executive acknowledges and agrees that: (i) the purpose of the
Covenants is to protect the goodwill, trade secrets and other confidential
information of the Company being acquired by Parent, that because of the nature
of the businesses in which the Company, Parent and their respective affiliates
and successors are engaged and because of the nature of the Confidential
Information to which the Executive has access, it would be impractical and
excessively difficult to determine the actual damages of the Company. Parent and
their respective affiliates and successor in the event the Executive breached
any of the Covenants, and that remedies at law (such as monetary damages) for
any breach of the Executive's obligations under the Covenants would be
inadequate. The Executive therefore agrees and consents that if he commits any
breach of any Covenant or threatens to commit any such breach, the Company,
Parent and their respective affiliates and successors shall have the right (in
addition to, and not in lieu of, any other right or remedy that may be available
to it) to temporary and permanent injunctive relief from a court of competent
jurisdiction, without posting any bond or other security and without the
necessity of proof of actual damage.
Section 4. Effect on Existing Agreement.
----------------------------------------------
The date on which the Merger is consummated will be the Change in
Control Date for purposes of the Existing Agreement, and no other transaction
contemplated by the Merger Agreement will constitute a Change in Control nor
will it be considered to give rise to any other Change in Control Date. Except
as specifically amended by this Agreement, the Existing Agreement shall remain
in full force and effect after the date hereof without amendment. This Agreement
shall be null and void ab initio if the Merger is not consummated.
Section 5. Governing Law.
-------------------------------
This Agreement shall be governed and construed in accordance with the
laws of the State of Maryland.
4
-4-
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from their Boards of Directors, the Company
and the Parent have caused this Executive Noncompetition Agreement to be
executed in their names on their behalf, all as of the day and year first above
written.
/s/ Xxxx X. Xxxxxxxx
----------------------------
Xxxx X. Xxxxxxxx
XXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------
FUSION SYSTEMS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-----------------------
