Exhibit 10.10
NON-COMPETITION AGREEMENT
This Agreement made as of November 27, 1996 by and between Xxxx Systems
Inc. (the "Company") and Xxxxxx Xxxxxxx ("Xx. Xxxxxxx").
WHEREAS: The Company wishes to enter into this non-competition agreement
(the "Agreement") with Xx. Xxxxxxx in exchange for and in recognition of: (a)
its promotion of Xx. Xxxxxxx to the positions of President and Chief Operating
Officer ("COO") of the Company and (b) the granting to Xx. Xxxxxxx
contemporaneously herewith of certain options to acquire shares of the Company's
common stock;
WHEREAS: The Company believes that the access to marketing, manufacturing,
sales, technical, customer related, strategic planning and other information
which Xx. Xxxxxxx will naturally and necessarily have by virtue of his new
position as President and COO of the Company makes it necessary for the Company
to have this Agreement with Xx. Xxxxxxx as a precondition for such promotion and
the benefits that flow from it, as well as a precondition to the granting of the
aforementioned options; and
WHEREAS: Xx. Xxxxxxx understands and agrees that the aforementioned
options are intended to replace and cancel Xx. Xxxxxxx'x participation in, and
any benefits or claims, accrued, contingent or otherwise, in or under the
Company's Phantom Stock Plan and any other compensation or benefit plan,
arrangement or understanding of or with the Company or any of its executives,
express or implied.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, as well as principally the severance obligation of the
Company as reflected in Section 5 hereof, Xx. Xxxxxxx and the Company agree as
follows:
1. The above recitals are hereby made part of this Agreement;
2. Xx. Xxxxxxx hereby waives and relinquishes any xxxxxx or inchoate
interest in any participation in, or any benefits or claims, accrued, contingent
or otherwise, in or under, the Company's Phantom Stock Plan and any other
compensation or benefit plan, arrangement or understanding of or with the
Company or any of its executives, express or implied.
3. Xx. Xxxxxxx represents and warrants that there has been no assignment
or other transfer of any interest in any claim which he may have against the
Company with respect to the Company's Phantom Stock Plan or any other
compensation or benefit plan, arrangement or understanding and agrees to
indemnify the Company from any liabilities, claims, damages, costs or expenses,
including attorney's fees incurred by the Company as a result of any person
asserting such assignment or transfer.
4. (a) Xx. Xxxxxxx understands and agrees that, in the course of his
employment with the Company, he has and will acquire privileged information and
trade secrets concerning,
among other things, the Company's operations, its relationship with the
printing groups of Hewlett Packard Company ("HP"), Siemens and IBM and the
Company's customers, distributors, suppliers and co-venturers, and its future
plans and its methods of doing business (collectively, "Proprietary
Information"). Xx. Xxxxxxx understands and agrees that it would be extremely
damaging to the Company, if any Proprietary Information were disclosed to a
competitor or any other person, firm or enterprise, and that all Proprietary
Information has been obtained by him in confidence. Xx. Xxxxxxx agrees to
continue to keep all Proprietary Information secret and confidential and not
to use it for his own benefit, directly or indirectly.
(b) Xx. Xxxxxxx agrees not to, directly or indirectly, either for
his own benefit or for the benefit of any other person, firm or enterprise,
(i) solicit or attempt to direct or entice away any employee of the Company
who has knowledge of any Proprietary Information or even to retain the
services of or hire any such employee, even though such employee may have
voluntarily terminated his relationship with the Company; or (ii) solicit,
call on, interfere with, accept any business from, attempt to divert or
entice away any person, firm or enterprise who is a customer, supplier,
distributor or co-venturer or other business associate of the Company,
including the printing groups of HP, Siemens or IBM pursuant to or in
connection with any Competitive Activity as defined in subsection (c) below.
(c) Xx. Xxxxxxx acknowledges that his knowledge of computers and
related products enables him to make a satisfactory living in that industry,
and thus, during his employment with the Company and for a period of three
(3) years after the date of termination of his employment with the Company
(such period to be extended to include any period of violation of this
Section 4(c) by Xx. Xxxxxxx), Xx. Xxxxxxx agrees not to engage in any
Competitive Activity (as defined below) in the United States. For purposes
of this Agreement, the term "Competitive Activity" shall mean any
participation in, engagement, assistance to, promotion or organization of,
any person, firm or enterprise by Xx. Xxxxxxx which is directly engaged in
the business of MICR check printing, MICR toners and ribbons and other MICR
related products, supplies and solutions that either Xxxx or Micross is
currently engaged in or will be engaged in during his employment with the
Company.
(d) Xx. Xxxxxxx hereby acknowledges and agrees that it would be
difficult to fully compensate the Company for damages resulting from the
breach or threatened breach of the provisions of this Section 9 and,
accordingly, that the Company, without being required to post any bond, shall
be entitled to specific performance and injunctive relief (including, without
limitation, temporary restraining orders, preliminary injunctions and
permanent injunctions) to enforce such provisions. This provision with
respect to specific performance and injunctive relief shall not, however,
diminish the Company's right to claim and recover damages. Xx. Xxxxxxx hereby
submits to the jurisdiction and venue of the Superior Court, Orange County,
California with respect to any litigation under this document.
5. In the event of the termination of the employment of Xx. Xxxxxxx,
whether actual or constructive, without cause (constructive termination
meaning a substantial reduction of his benefits or authority) Xx. Xxxxxxx will
be entitled to receive, as long as he honors the non-competition and other
obligations under this Agreement, as full recompense for any damages
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which he might sustain as a consequence of such employment and termination,
including actual, specific, consequential, personal injury or otherwise,
payment in thirty-six (36) equal monthly installments subject to withholding
(and no benefits) of the following amounts: $200,000 in the event he is
terminated during either of the fiscal years 1997 or 1998 or $300,000 in the
event he is terminated during either of the fiscal years 1999 or 2000.
6. This Agreement represents the entire agreement and understanding
between the Company and Xx. Xxxxxxx concerning Xx. Xxxxxxx'x use of Proprietary
Information and non-competition with the Company. This Agreement may only be
amended in a writing signed by Xx. Xxxxxxx and the Chief Executive Officer of
the Company.
7. If any provision of this Agreement is determined to be invalid or
unenforceable, in whole or in part, this determination will not affect any other
provision of this Agreement.
8. If any action is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees,
costs, and necessary disbursements in addition to any other relief to which that
party may be entitled.
9. This Agreement shall be construed according to the laws of the State
of California as applied to contracts entered into and to be performed entirely
within such state by residents thereof.
10. This Agreement may be executed in several counterparts each of which
so executed shall be deemed to be an original, and such counterparts shall
together constitute but one in the same release.
IN WITNESS WHEREOF, the parties execute this Agreement on this 27th day of
November, 1996.
/s/ Xxxxxx X. Xxxxxxx
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XXXXXX XXXXXXX
XXXX SYSTEMS INC.
By: /s/ Xxxxxxx X. Dirk
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Xxxxxxx X. Xxxx
Chief Executive Officer
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