NONCOMPETITION AGREEMENT
Exhibit 10.5
THIS NONCOMPETITION AGREEMENT (this “Agreement”) made as of this 12th day of October, 2006, by
and between Internap Network Services Corporation, a Delaware corporation (“Internap”) and
(“Principal”), an officer of VitalStream Holdings, Inc., a Nevada corporation (the
“Company”). Internap and Principal are referred to collectively herein as the “Parties.”
RECITALS:
WHEREAS, Internap, Ivy Acquisition Corp., a wholly owned subsidiary of Internap, and the
Company desire to enter into that certain Agreement and Plan of Merger dated on or about October
12, 2006 (the “Merger Agreement”), pursuant to which Internap Acquisition Corp. shall be merged
with and into the Company, with the Company becoming a wholly owned subsidiary of Internap (the
“Merger”);
WHEREAS, Principal is an equity holder and/or option holder of the Company, has served as an
officer of the Company and has gained substantial knowledge and expertise in connection with the
Company’s products, services, organization, customers, partners and other proprietary matters
related to the Company’s business;
WHEREAS, Principal will receive securities of Internap pursuant to the terms of the Merger;
WHEREAS, this Agreement shall become effective only upon the consummation of the Merger; and
WHEREAS, it is a material condition to Internap’s execution and delivery of the Merger
Agreement and its willingness to complete the Merger and issue the Merger Consideration that
Principal shall enter into this Agreement, which shall become effective upon the closing of the
Merger.
AGREEMENTS:
In consideration of the Merger, which will inure to the benefit of the Principal, and other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties hereto do hereby agree as follows:
1. Covenant Not to Compete.
1.1 Restriction. During the Restricted Period, Principal covenants and agrees that he
shall not, directly or indirectly, engage within the Territory in any activity, business or venture
or division of any entity, whose primary business is the development, distribution, sale or
provision of products that compete with the Business.
1.2 Definitions.
(a) For purposes of Section 1.1, the term “compete” means: (i) calling on, soliciting, taking
away, accepting as a client or customer or attempting to call on, solicit, take away
or accept as a
client or customer any individual, partnership, corporation or association that was a client or
customer of the Company during the twelve (12)-calendar month period immediately preceding any such
act with respect to business that is substantially similar to the Business; or (ii) entering into
or attempting to enter into any business substantially similar to or competing in any way with the
Business, either alone or with any individual partnership, corporation or association.
(b) For purposes of Section 1.1, “Territory” means the United States of America.
(c) For purposes of Section 1.1, “Restricted Period” means the period beginning on the Closing
Date (as defined in the Merger Agreement) and ending on the third anniversary of the Closing Date.
(d) For purposes of Section 1.1, “Business” means the business of providing content delivery
services for the streaming of digital media over the Internet.
(e) For purposes of Section 1.1, “Proprietary Information” means information related to any of
Company’s past, present or identified prospective clients or customers (i) which derives economic
value, actual or potential, from not being generally known to or readily ascertainable by other
persons who can obtain economic value from its disclosure or use; and (ii) which is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy. Proprietary
Information also included information that has been disclosed to the Company or its affiliates by
any of the Company’s past, present or identified prospective clients or customers that the Company
or its affiliates have agreed to treat as confidential and that Principal knows or should
reasonably know is considered confidential by such client or customer. “Proprietary Information”
shall not include any information that (i) was lawfully in Principal’s possession or was lawfully
known to Principal before receipt from any person or entity during the course and scope of his
employment, (ii) is or becomes public knowledge without fault of Principal, (iii) is or becomes
lawfully available to Principal from a third party unrelated to Internap or the Company, outside
the course and scope of Principal’s employment, provided that such third party is entitled to
disclose such information without breaching any confidentiality obligations under a written
agreement or otherwise or (iv) is disclosed pursuant to and as legally required by law; provided,
however, that only the Proprietary Information that is specifically required to be disclosed may be
produced; and provided further, that Principal gives Internap reasonable prior notice of
disclosure.
(f) For purposes of Section 1.1, the words “directly or indirectly” shall mean: (i) Principal
acting as an agent, representative, consultant, officer, director, independent contractor, or
employee of any entity or enterprise or division of any entity (including, without limitation, the
Company), whose primary business is the development, distribution, sale or provision of products or
services that compete with the Business, except as approved by the Company; (ii) Principal
participating as an owner, partner, limited partner, joint venturer, creditor (other than as a
trade creditor in the ordinary course of business) or shareholder (except as a shareholder holding
less than a one-percent (1%) interest in a corporation whose shares are
actively traded on a regional or national securities exchange or in the over-the-counter
market) in any entity or enterprise (including, without limitation, the Company) that is engaged in
any activity, business or venture that develops, distributes, sells or provides products or
services that competes with the Business; or (iii) Principal communicating Proprietary Information
concerning any past, present, or identified prospective client
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or customer of the Business to any
entity or enterprise (including, without limitation, the Company) that is engaged in any activity,
business or venture that develops, distributes, sells or provides products or services that
competes with the Business.
1.3 Reasonableness. Principal agrees that the terms and the time periods provided
for, and the geographical area encompassed by, the covenants contained in Section 1.1 hereof are
necessary and reasonable in order to protect Internap with respect to the use of the assets of the
Company. The Parties agree that the execution, delivery and performance of this Agreement is in
consideration of and a condition to the consummation of the transactions contemplated by the Merger
Agreement. If any court having jurisdiction at any time hereafter shall hold any provision or
clause of this Agreement to be unreasonable as to its scope, territory or term, and if such court
in its judgment or decree shall declare or determine that scope, territory or term which such court
deems to be reasonable, then such scope, territory or term, as the case may be, shall be deemed
automatically to have been reduced or modified to conform to that declared or determined by such
court to be reasonable.
2. Miscellaneous.
2.1 Remedies. It is expressly agreed that monetary damages would be inadequate to
compensate Internap for any breach by Principal of the covenants set forth in Section 1.1.
Accordingly, in the event of any breach or threatened breach by Principal of any such covenant,
Internap shall be entitled to seek temporary or permanent injunctive relief in any court of
competent jurisdiction, in addition to any other remedies at law or in equity to which Internap may
be entitled.
2.2 Severability. The covenants contained in this Agreement shall be construed as a
series of separate covenants, one for each of the counties in each of the states of the United
States and one for each jurisdiction within each country other than the United States. It is the
desire and intent of the Parties that these covenants shall be enforced to the fullest extent
permissible under applicable law and that if one such clause is found unenforceable, the remaining
clauses be enforced.
2.3 Notices. Any notice, request, information or and other document to be given
hereunder to either party by the other party must be in writing and delivered personally or sent by
certified or registered mail, postage prepaid, as follows:
If to Principal, addressed to:
With a copy to:
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If to Internap, addressed to:
And a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P.
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxxxxx, Esq.
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxxxxx, Esq.
Either party may change the address to which notices hereunder are to be sent to it by giving
written notice of such change of address in the manner herein provided for giving notice. Any
notice delivered personally shall be deemed to have been given on the date it is so delivered, and
any notice delivered by registered or certified mail shall be deemed to have been given on the date
it is received or refused, if delivery is refused.
2.4 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of California.
2.5 Successors and Assigns. The covenants, terms and provisions set forth herein
shall inure to the benefit of and be enforceable by Internap and its successors, assigns and
successors-in-interest, including, without limitation, any affiliate of Internap or any corporation
with which Internap may be merged or by which it may be acquired.
2.6 Entire Agreement. This Agreement constitutes the entire agreement between the
Parties hereto regarding the subject matter hereof, and there are no other agreements,
understandings, restrictions, warranties or representations relating to said subject matter among
the Parties.
2.7 Counterparts/Facsimiles. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together shall constitute one
instrument. Facsimile signatures of the Parties to this Agreement will have the same force and
effect as original signatures.
2.8 Amendment and Modification. The Parties hereto may amend, modify and supplement
this Agreement in such manner as may be agreed upon by them in writing.
2.9 Headings. The descriptive headings in this Agreement are inserted for convenience
only and do not constitute a part of this Agreement.
2.10 Capitalized Terms. Unless otherwise indicated, capitalized terms not defined
herein have the meanings set forth in the Merger Agreement.
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2.11 Waiver. A waiver by Internap of any breach by Principal of any of the terms,
provisions or conditions of this Agreement or the acquiescence of Internap in any act (whether
commission or omission) which but for such acquiescence would be a breach of any of the terms,
provisions or conditions of this Agreement, shall not constitute a general waiver of such term,
provision or condition of any subsequent act contrary thereto.
2.12 Effectiveness of this Agreement. This Agreement shall become effective only upon
the consummation of the Merger. This Agreement shall be null and void upon the termination of the
Merger Agreement.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date and
year first above given.
| PRINCIPAL: | ||||||
| [Name] | ||||||
| INTERNAP: | ||||||
| INTERNAP NETWORK SERVICES CORPORATION | ||||||
| By: | ||||||
| Its: | ||||||
[SIGNATURE PAGE TO PRINCIPAL NONCOMPETITION AGREEMENT]
