NONCOMPETITION AGREEMENT
AGREEMENT dated January 25, 1999, between SONUS-USA, INC., a Washington
corporation ("SONUS") and XXXXXXX X. XXXXXX ("Employee").
RECITALS
A. SONUS entered into stock purchase agreements with Employee
for the following companies on various dates:
Hearing Care Associates-Northridge, Inc.;
Hearing Care Associates-Glendale, Inc.;
Hearing Care Associates-Glendora, Inc.;
Hearing Care Associates-Los Angeles, Inc.;
Hearing Care Associates-Arcadia, Inc.;
Hearing Care Associates-Xxxxxxx Oaks, Inc.;
Audio-Vestibular Center, Inc.;
Hearing Care Associates-Lancaster, Inc.;
Hearing Care Associates-Santa Xxxxxx, Inc.;
Hearing Care Associates-Inglewood, Inc.; and
Hearing Care Associates-Montclair, Inc.
(collectively, "HCA Companies");
B. In connection with the purchase of HCA Companies, Employee
and SONUS entered into certain noncompetition agreements prohibiting employee
from competing with SONUS in certain geographic areas.
C. Employee was a principal shareholder, a member of the board
of directors, and a key executive officer of HCA Companies. Because of
Employee's detailed knowledge of HCA Companies and Employee's reputation and
relationship with patients, customers, suppliers, distributors, employees, and
other parties doing business with HCA Companies. SONUS recognizes the Employee
acknowledges the detrimental effect on and the decrease in value of the HCA
Companies that would result if Employee were to enter into competition with
SONUS.
D. SONUS and Employee have determined that it is in the best
interest of each of them to expand the geographic area covered by Employee's
covenant not to compete. Employee and SONUS acknowledge that the expanded
covenant not to compete is in connection with the sale of the HCA Companies.
TERMS
In consideration of the covenants and agreements of the
parties herein contained, the parties agree as follows:
1. Covenant Not to Compete. For a period of three years after
the date Employee's employment with SONUS terminates for any reason, Employee
will not directly or indirectly engage in any Competitive Activities (as
hereinafter defined) within the Territory (as hereinafter defined). The term
"Competitive Activities" as used herein shall mean:
(i) directly or indirectly engaging in, continuing in or
carrying on any business substantially similar to that heretofore
conducted by SONUS, including owning or controlling any financial
interest in any corporation, partnership, firm or other form of
business organization which competes with SONUS or is engaged in or
carries on any aspect of such business or any business substantially
similar thereto;
(ii) consulting with, advising or assisting in any way with
respect to the operation of any hearing care business of the type
conducted by SONUS or any business substantially similar thereto,
whether or not for consideration, or any corporation, partnership, firm
or other business organization which is now, becomes or is actively
planning to become a competitor of SONUS including, but not limited to,
advertising or otherwise endorsing the products of any such competitor;
soliciting customers or otherwise serving as an intermediary for any
such competitor; loaning money or rendering any other form of financial
assistance to or engaging in any form of business transaction on other
than an arm's length basis with any such competitor; or
(iii) enticing away or otherwise persuading any employee of
SONUS to alter, modify or terminate his or her relationship with SONUS
as an employee
provided that this covenant shall not preclude the ownership by Employee of
securities of corporations which are listed on a national securities exchange or
traded in the national over-the-counter market in amounts which do not exceed 5
percent of the outstanding shares of any such corporation.
The parties agree that the geographic scope of this covenant not to
compete (the "Territory") shall cover the states of Arizona, New Mexico and the
area of California which lies north of Santa Xxxxxxx (except for a 20 mile
radius from Saratoga, California and a 10 mile radius from San Francisco,
California). In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to duration,
geographical scope or activity, it is expressly agreed that this covenant not to
compete shall be construed so that the remaining provisions shall not be
affected, but shall remain in full force and effect, and any such overbroad
provisions shall not be deemed, without further action on the part of any
person, to be modified, amended and/or limited, but only to the extent necessary
to render the same valid and enforceable in such jurisdiction.
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2. Covenant of Confidentiality. Employee shall not at any time
subsequent to the date hereof, except as explicitly requested by SONUS, (i) use
for any purpose, (ii) disclose to any person, or (iii) keep or make copies of
documents, tapes, discs or program containing, any confidential information
concerning the operations of SONUS. For purposes hereof, "confidential
information" shall mean and include, without limitation, trade rights, customer
lists and information, and all other information concerning operations,
equipment, products, marketing and distribution methods not previously disclosed
to the public directly by SONUS or otherwise in the public domain.
3. Consideration. In consideration of Employee's covenants set
forth herein, SONUS will pay to Employee (so long as he is not in material
breach of the terms hereof) the sum of $6,303 per month on the first day of each
month during the period beginning with January 1, 1999 and ending with September
1, 2001. Under no circumstances shall SONUS be relieved of its obligation to
make the foregoing payments pursuant to this Agreement as a result of the
termination of Employee's employment with SONUS, regardless of whether such
termination is by SONUS or Employee and regardless of whether it is with or
without good cause.
4. Equitable Relief of Violations. Employee agrees that the
provisions and restrictions contained in this Agreement are necessary to protect
the legitimate continuing interests of SONUS and that any violation or breach of
these provisions will result in irreparable injury to SONUS for which a remedy
at law would be inadequate and that, in addition to any relief at law which may
be available to SONUS for such violation or breach and regardless of any other
provision contained in this Agreement, SONUS shall be entitled to injunctive and
other equitable relief as a court may grant after considering the intent of this
Agreement.
If Employee violates the terms of this Agreement, such
violation shall constitute a breach of all other noncompetition agreements
entered into in connection with the purchase of HCA Companies (the "Prior
Agreements"), and if Employee violates the terms of the Prior Agreements, such
violation shall constitute a breach of this Agreement.
If SONUS violates the terms of this Agreement, such violation
shall constitute a breach of the Prior Agreements, and if SONUS violates the
terms of the Prior Agreements, such violation shall constitute a breach of this
Agreement.
5. Assignment. Neither this Agreement nor any interest herein
may be assigned by Employee. SONUS may freely assign this Agreement and any and
all interests herein to any "affiliate" (as such term is currently defined under
the Securities Act of 1934, as amended), or in connection with the transfer,
directly or indirectly, of all or substantially all, of the assets and
businesses acquired from Employee.
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6. GENERAL.
6.1. Governing Law. This Agreement shall be subject to and
governed by the laws of the State of California, excluding any choice of law
rules that may direct the application of the laws of another jurisdiction.
6.2. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of Employee and SONUS and their respective heirs, legal
representatives, executors, administrators, successors, and permitted assigns.
6.3. Integration; Amendment; Waiver. This Agreement sets forth
all of the understandings of the parties with respect to its subject matter and
supersedes any and all other agreements, either oral or in writing, of the
parties with respect to the subject hereof. No change or modification of this
Agreement shall be valid unless in writing and signed by the party against which
it is to be enforced. No waiver of any provision of this Agreement shall be
valid unless written and signed by the person or party to be charged.
6.4. Severability. If any provision of this Agreement shall be
determined to be unenforceable because the terms are excessive or unreasonable
then such provision shall be reduced to the maximum reasonable limit and
enforced as reduced. In the event that any one or more of the provisions
contained in this Agreement shall be determined to be invalid, illegal, or
unenforceable in any respect, the enforceability of such provisions in every
other respect and of the remaining provisions of this Agreement shall not in any
way be impaired.
6.5. Headings. The headings of this Agreement are inserted for
convenience only and are not to be considered in the construction of the
provisions hereof.
6.6. Attorney Fees. In the event a suit or action is commenced
for the interpretation or enforcement of this Agreement, the prevailing party
shall be entitled to collect from the losing party in addition to all of the
costs and expenses, reasonable attorney fees at trial and on appeal.
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IN WITNESS WHEREOF the parties have executed and delivered this
Agreement as of the date first above written.
SONUS-USA, INC.
BY: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
Executive Vice President
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
