EXHIBIT 10.16
NON-COMPETITION AGREEMENT (the "Agreement") made as of this 30th day of
September, 1997, by and between MIL 3, INCORPORATED (the "Company"), a Delaware
corporation, and XXXXX X. XXXXX ("Xxxxx"), an individual residing in Washington,
D.C. (The Company and Xxxxx are each sometimes referred to herein as a "Party"
and collectively as the "Parties.")
WITNESSETH:
WHEREAS, in accordance with a Series A Preferred Stock Purchase Agreement
(the "Purchase Agreement") dated as of September 30, 1997 among Summit Investors
III, L.P. and Summit Ventures IV, L.P. (together, the "Investors") and the
Company, the Investors have purchased from the Company a total of 144,640 shares
of the Company's Series A Convertible Preferred Stock, par value $.001 per share
(the "Series A Preferred Stock"); and
WHEREAS, Xxxxx is currently the President of the Company; and
WHEREAS, it is a condition to the obligations of the Investors under the
Purchase Agreement that this Agreement be executed and delivered by Xxxxx and
the Parties are willing to execute and deliver this Agreement and to be bound by
the provisions hereof.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Parties intending legally to be bound hereby, agree with each
other as follows:
1. Covenant Not to Compete.
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(a) While Xxxxx is employed by the Company and, in the event that
Xxxxx'x employment with the Company has terminated either at his voluntary
election or for "good cause" (as hereafter defined), for a period of twelve
months thereafter, Xxxxx agrees that he will not, directly or indirectly, for
himself or on behalf of or in conjunction with any other person, partnership,
corporation or other entity, own, maintain, engage in, render any services for,
manage, have any financial interest in, permit his name to be used in or hire or
solicit any employees or customers of the Company for any enterprise in
competition with any of the Company's products or services in any market served
by the Company or any market in which the Company has, as of the date of such
termination, firm documented plans to enter within six months after such date.
Notwithstanding the foregoing, Xxxxx may during his employment and thereafter
own up to one percent (1%) of the outstanding voting securities of any publicly-
held company.
(b) If, at the time of enforcement of any provision of Section
1(a) above, a court holds that the restrictions stated therein are unreasonable
under circumstances then existing, the Parties agree that the maximum period,
scope or geographical area reasonable under such circumstances will be
substituted for the stated period, scope or area.
(c) As used herein, "good cause" means a written determination
in good faith by a disinterested majority of the board of directors of the
Company after compliance with the procedures set forth in Section 1(d), which
determination specifies:
(i) Xxxxx'x habitually willful or negligent failure to
perform the duties that he is required to perform as
directed by the board of directors of the Company;
(ii) Xxxxx'x commission of any act or acts of demonstrable
dishonesty resulting in a material detriment to the
Company;
(iii) Xxxxx'x conviction of a felony or other crime
involving dishonesty or moral turpitude; or
(iv) Xxxxx'x inability to perform his normal duties for
the Company by reason of illness, injury or
incapacity for a period of one hundred twenty (120)
substantially consecutive days.
(d) If the Company asserts that any of the events or
circumstances specified in Section 1(c) above as constituting good cause for
Xxxxx'x termination has occurred, the Company will serve a written notice upon
Xxxxx (with a copy to the Investors) specifying such events or circumstances in
detail. Thereafter, Xxxxx shall have a period of not less than thirty (30) days
in which to cure any such alleged deficiencies which are specified in such
written notice. If, after such written notice and opportunity to cure and upon
consideration of all information supplied by Xxxxx in response to the Company's
assertion, a disinterested majority of the Company's board of directors, in good
faith, makes a written determination that good cause for Xxxxx'x termination
existed, then the provisions of Section 1(a) shall be applicable to Xxxxx'x
activities.
2. Confidential Information. All information, data and documents
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concerning the Company's business and affairs provided by the Company to Xxxxx
in whatever form (the "Confidential Information") is confidential and
proprietary to the Company, and Xxxxx agrees that, except as appropriate in the
performance of his duties as President of the Company, and after the termination
of his employment with the Company, to protect the Confidential Information from
further disclosure to any third party.
(a) Xxxxx'x obligation to maintain the confidentiality of the
Confidential Information as set forth in this Agreement is not applicable to any
information, data or document which:
(i) is or becomes known to the public other than through
the act or omission of Xxxxx;
(ii) is required to be disclosed under applicable law or
by a governmental order, decree, regulation or rule
(provided that Xxxxx shall give written notice to the
Company prior to
such disclosure so as to permit the Company to assert
its rights and protect the confidentiality thereof);
(iii) was acquired by Xxxxx from a third party which Xxxxx
does not know or have reason to know obtained the
same from the Company, either directly or indirectly,
under an agreement to maintain its confidentiality;
or
(iv) was developed by Xxxxx independently of any
information, data or document which he received from
the Company and as to which he owes no obligation of
confidentiality.
3. Miscellaneous
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(a) Notices. Any notice provided for in this Agreement must be
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in writing and must be delivered to the recipient, by courier or by mail,
postage pre-paid, at the address below indicated:
To the Company:
MIL 3, Incorporated
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. Xxxxx, Chairman and Chief Executive Officer
To Xxxxx:
Xxxxx X. Xxxxx
0000 Xxx Xxxxxx Xxxxxx, X.X.
Xxx. 000
Xxxxxxxxxx, X.X. 00000
To the Investors:
Summit Ventures IV, L.P.
Summit Investors III, L.P.
c/o Summit Partners L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
with copy to:
Xxxxxxxx, Xxxxxxx & Xxxxxxx
A Professional Corporation
000 Xxxxxxx Xxxxxx
0
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxx, Esquire
or such other address or to the attention of such other person as the recipient
shall have specified by prior written notice to the sending Party. Notices
given in accordance with the foregoing shall be deemed received (i) upon
receipt, if hand delivered, and (ii) five business days after deposited in the
U.S. mail, if sent by mail.
(b) Amendments and Waivers. As long as the Investors own
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shares of the Series A Preferred Stock, this Agreement may not be amended,
modified or terminated without the prior written consent of the Investors.
Except as provided in the preceding sentence, amendments or additions to this
Agreement may be made, and compliance with any term, covenant, agreement,
condition or provision set forth herein may be omitted or waived (either
generally or in a particular instance and either retroactively or prospectively)
upon the written consent of each of the Parties.
(c) Entire Agreement. This Agreement constitutes the entire
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agreement of the Parties with respect to the matters contemplated herein. This
Agreement supersedes any and all prior understandings as to the subject matter
of this Agreement.
(d) Equitable Relief. Each of the Parties recognizes that the
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Company shall not have an adequate remedy at law if Xxxxx fails to comply with
the provisions of this Agreement, and that damages will not be readily
ascertainable, and Xxxxx expressly agrees that in the event of any failure by
him to comply with this Agreement, the Company shall be entitled to seek
specific performance of such Xxxxx'x obligations hereunder and that Xxxxx will
not oppose an application seeking such specific performance.
(e) Binding Effect; Assignment. This Agreement shall be binding
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upon and inure to the benefit of the successors and assigns of the Parties
hereto.
(f) General; Definitions. The Section headings contained in
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this Agreement are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement. Reference to the term "Section"
herein is to a Section of this Agreement. In this Agreement the singular
includes the plural, the plural the singular, and the use of any gender includes
the neuter, masculine and feminine genders.
(g) Severability. If any provision of this Agreement shall be
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found by any court of competent jurisdiction to be invalid or unenforceable, the
Parties hereby waive such provision to the extent that it is found to be invalid
or unenforceable. Such provision shall, to the maximum extent allowable by law,
be modified by such court so that it becomes enforceable, and, as modified,
shall be enforced as any other provision hereof, with all the other provisions
hereof continuing in full force and effect.
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(h) Counterparts. This Agreement may be executed in two
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counterparts, each of which shall constitute an original but both of which
together shall constitute one and the same instrument.
(i) Governing Law. This Agreement shall be deemed a contract
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made under the laws of the State of New York and together with the rights and
obligations of the parties hereunder, shall be construed under and governed by
the laws of such State.
(j) Third Party Beneficiaries. This Agreement is made for the
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benefit of the Parties hereto and shall not confer any rights or benefits on any
person not a party hereto.
[Signatures on following page]
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IN WITNESS WHEREOF, the Parties have caused this Non-Competition Agreement
to be duly executed as of the date first above written.
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
MIL 3, INCORPORATED
By: /s/ Xxxx X. Xxxxx
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Its: Chairman
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