Exhibit 10.18
EXHIBIT 10.18
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (the "Agreement") is made and entered into
as of this 27th day of February, 1998, by and between IP Holding Co., a Delaware
corporation (together with its subsidiaries and divisions, (the "Company") and
Xxxx X. Xxxxxx ("Employee").
WITNESSETH:
WHEREAS, in the course of Employee's employment with the Company or its
affiliates Employee has gained and will continue to gain an intimate knowledge
of the business and affairs of the Company and its affiliates, their policies,
methods of operation, personnel, customers, representatives and suppliers;
WHEREAS, Pacer Infotec, Inc. ("Pacer") and Apollo Holding, Inc. ("Apollo")
have entered into an Agreement and Plan of Merger (the "Merger Agreement"),
pursuant to which, among other things, the business of Pacer will be combined
with the business of Intermetrics, Inc., a wholly-owned subsidiary of Apollo,
and certain holders of Pacer common stock will receive Company stock;
WHEREAS, it is a condition of the Company's obligations to consummate the
transactions contemplated by the Merger Agreement that Employee enter into this
Agreement;
WHEREAS, the Employee believes it is in the best interest of Pacer and its
stockholders to induce the Company to consummate the transactions contemplated
by the Merger Agreement;
NOW, THEREFORE in consideration of the premises and mutual covenants
contained herein, and for other good and valuable consideration, the adequacy
and receipt of which are hereby acknowledged, the parties agree as follows:
1. Non-Competition
1.1 The Employee agrees that so long as he shall be employed by the Company
or any of its subsidiaries or affiliates and for a period of two (2) years
thereafter (the "Term"), without the prior written consent of the Company, the
Employee shall not directly or indirectly compete with the Company or any of its
subsidiaries or affiliates, either as principal, manager, agent, consultant,
officer, director, partner, greater than one-half of one percent (.5%) investor
or holder of any class or series of equity securities, lender, employee or in
any other capacity with respect to:
(a) any Products, contracts, projects in effect, or recompetitions of
contracts or projects in effect at the time of Employee's termination for
which Employee had a direct or indirect management responsibility or had
knowledge thereof; or
(b) any proposals made or expected to be made within six (6) months after
termination, in each case for which the Employee had a direct or indirect
management responsibility or had detailed knowledge thereof.
For purposes of this Section 1.1, a person shall be deemed to have indirect
management responsibility with respect to a contract or project if such project
or contract was the primary responsibility of the division of the Company or a
subsidiary or affiliate by which he was employed. A President or Chief Executive
Officer shall be deemed to have indirect responsibility with respect to all
projects and contracts.
1.2 Subject to Section 1.5, as additional consideration for the Employee's
agreements contained herein, in the event that the Employee is terminated for
any reason, the Company shall pay the Employee Twenty-Five Thousand Dollars
($25,000) within thirty (30) days after the date of termination.
1.3 Subject to Section 1.5, as additional consideration for the Employee's
agreements contained herein, upon the termination of the Employee's employment
by the Company without Cause (as hereinafter defined) or by the Employee for
Good Reason (as hereinafter defined), and in any such case the Employee remains
unemployed, the Company shall make payments to the Employee, beginning on the
first day of the seventh month following termination, equal to the Employee's
monthly salary, on the date of termination of Employee's employment for each
month, or pro rata for periods less than a month for the remainder of the Term.
Subject to Section 1.5, in the event Employee retires (as hereinafter defined),
and remains unemployed, the Company shall make payments to the Employee,
beginning on the first day of the seventh month following termination equal to
one-half( 1/2) of the Employee's monthly salary on the date of termination of
Employee's employment for each month, or pro rata for periods of less than a
month for the remainder of the Term.
For purposes of this Agreement:
(a) the Company shall be deemed to have terminated Employee's employment
for "Cause" if Employee: (i) fails or refuses to act in any material
respect in accordance with the reasonable directions of the Board of
Directors or Chief Executive Officer of the Company in a manner that would
constitute an act of insubordination or is in continuing, willful, material
breach of this Agreement; provided, however, that in such case the Company
--------
shall give Executive a Termination Notice specifying the directions the
Executive failed to follow or the material breach of this Agreement, and
the Executive shall have a reasonable period of time after the date of the
notice to cure such action; (ii) has been convicted of a felony; or (iii)
has committed any act of fraud, misappropriation of funds or embezzlement
in connection with his employment. During the cure period referred to in
subsection (i), the Board of Directors of the Company may cause the Company
to suspend the employment of the Executive hereunder if the Executive's
continued presence at the Company is deemed to have a potential negative
effect on the Company as determined in good faith by the Board of Directors
of the Company in its sole determination. If the Executive has not cured
such action within the specified cure period, the employment of
-2-
the Executive shall be terminated by the Company for Cause;
(b) an Employee shall be deemed to "retire" when an Employee voluntarily
terminates employment with the Company and its subsidiaries and affiliates
after reaching age 65; and
(c) "Good Reason" shall mean any of the following undertaken without
Employee's express written consent and not corrected by the Company within
ten (10) business days after receipt of written notice from the Employee:
(i) the assignment to the Executive of any material duties which are
(A) inconsistent with his status as a senior executive officer of the
Company or (B) a substantial adverse alteration in the nature or status of
his responsibilities from those in effect immediately prior to the
assignment;
(ii) a reduction by the Company in his annual base salary as in effect
at the time, or the failure to grant him salary increases and bonuses
consistent with the Company's general practices for senior executives,
except for (A) non-performance of his duties as duly documented and
substantiated or (B) general reduction in salary to senior executives.
(iii) the knowing failure of the Company and Pacer to pay to Executive
any portion of his current compensation or to pay any portion of an
installment of deferred compensation under any deferred compensation
program the Company or Pacer, within seven (7) days of the day any such
compensation is due;
(iv) the relocation of Executive's principal office, after the Closing
Date pursuant to the Merger Agreement, to a location outside a 35 mile
radius from its location on such Closing Date, or the Company's requiring
him to be based anywhere outside such 35 mile radius except for required
travel on the Company's or Pacer's business to an extent substantially
consistent with his present business travel patterns;
(v) (A) the failure by the Company, other than because of a change in
enabling legislation prohibiting the Employee from participating in such a
plan, to continue him as a participant in all compensation, benefit and
insurance plans maintained from time to time by the Company for its senior
executives; (B) except as may be consistent with the treatment of other
senior executives of the Company, the taking of any action by the Company
which would directly or indirectly materially reduce any of such benefits
or deprive him of any material fringe benefit enjoyed by him at the time;
or (C) the failure by the Company to provide him with the number of paid
vacation days to which he is entitled at the time; or
(vi) the failure of the Company to perform, in any material manner,
its obligations to the Executive under his Employment Agreement with the
Company and Pacer of even date herewith.
-3-
1.4. The term "Products" means products sold under standard purchase orders
or license agreements by the Company or a subsidiary or affiliate.
1.5 The Company shall have the right, in its sole and absolute discretion,
to waive the non-competition provisions contained in this Section 1 and, if the
Company exercises such right, it shall have no responsibility to make the
payments described in Sections 1.2 and 1.3 hereof
2. Non-Solicitation. Employee agrees that during the Term, without the
prior written consent of the Company, the Employee shall not: (i) solicit,
employ or otherwise engage, or assist in the solicitation, employment or
engagement as an employee, independent consultant or otherwise, any person who
is an Employee of the Company or any subsidiary or affiliate of the Company or
was an employee of the Company or any subsidiary or affiliate of the Company
during the 18 months prior to Employee's termination, or in any manner induce or
attempt to induce any employee of the Company or any subsidiary or affiliate of
the Company to terminate his or her employment with the Company or its
subsidiary or affiliate; or (ii) tortiously interfere with the relationship of
the Company or any affiliate of the Company with any person, including any
person, who at any time during Employee's employment with the Company or any
subsidiary or affiliate of the Company was an employee, a customer, a vendor, a
supplier or a consultant, of, or to, the Company or any subsidiary or affiliate
of the Company.
3. Remedy For Breach. Employee hereby acknowledges that in the event of any
breach or threatened breach by Employee of any of the provisions of this
Agreement, the Company would have no adequate remedy at law and could, suffer
substantial and irreparable damage. Accordingly, Employee hereby agrees that, in
such event, the Company shall be entitled, without the necessity of proving
damages or posting bond and, in addition, notwithstanding any election by the
Company to claim damages, to obtain a temporary or permanent injunction to
restrain any such breach or threatened breach or to obtain specific performance
of any such provisions, all without prejudice to any and all other remedies
which the Company may have at law or in equity.
4. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
construed in such a way as to make such term or provision valid and enforceable
to the maximum extent possible, without affecting the remaining terms and
provisions of this Agreement or the validity or enforceability of any of the
terms and provisions of this Agreement in any other jurisdiction.
5. General Provisions. This Agreement contains the entire agreement between
the parties hereto with respect to matters contemplated herein and supersedes
all prior agreements or understandings among the parties related to such
matters. This Agreement shall be binding upon and inure to the benefit of the
Company and its successors and assigns and upon Employee. No provision of this
Agreement may be amended or waived unless executed in writing by the Company and
Employee. This Agreement shall be construed and governed in accordance with the
internal laws of the state of Delaware, without regard to its conflicts of law
rules.
-4-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first set forth above.
IP HOLDING CO.
By: /s/ XXXXXXX X. XXXXXXXXX
------------------------------------
Name:
Title:
/s/ XXXX X. XXXXXX
----------------------------------------
XXXX X. XXXXXX
-5-
