EXECUTIVE NONCOMPETITION AGREEMENT
Exhibit 10.38
THIS NONCOMPETITION AGREEMENT (the “Agreement”) is made as of December 29, 2010, by and
between Communications Infrastructure Investments, LLC (the “Company”), and Xxx Xxxxxx,
residing at 0000 Xxxxxxxxx Xxxx, Niwot Colorado (the “Executive”). Capitalized terms used
herein and not defined shall have the meanings ascribed to them in the Company’s Second Amended and
Restated Limited Liability Company Agreement dated February 9, 2009, as amended from time to time
(the “LLC Agreement”) by and among the Company, and the persons named on Schedule A
thereto.
RECITALS
WHEREAS, the Company desires to issue certain Class B Preferred Units (“Executive Preferred
Units”) to Bear Equity, LLC (“Bear Equity”) for and on behalf of the Executive pursuant to the
terms and conditions of the parties Vesting Agreement of even date herewith and the LLC Agreement;
and
WHEREAS, the Executive has substantial knowledge and experience in the Company’s and its
Subsidiaries’ businesses and intimate knowledge of their customers, processes, trade secrets and
other business information; and
WHEREAS, the Company wishes to protect it’s value from the risk of competition posed by the
Executive and it is a condition to the issuance and continued vesting of the Executive Preferred
Units that this Agreement be executed by the parties hereto, and the parties are willing to execute
this Agreement and to be bound by the provisions hereof;
NOW THEREFORE, in consideration of the foregoing, the agreements set forth below, and the
parties’ desire to preserve the value inherent in the Company for their mutual benefit, the
Executive, intending to be legally bound hereby, agrees with the Company as follows:
1. Definitions.
“Bear Equity” has the meaning specified in the Preamble to this Agreement.
“Board” means the Company’s Board of Managers.
“Cause” means the Executive’s: (i) dishonesty of a material nature with respect to the
Company (including, but not limited to, theft or embezzlement of the Company’s or any of its
Subsidiaries’ funds or assets); (ii) conviction of, or guilty plea or no contest plea, to a felony
charge or any misdemeanor involving moral turpitude, or the entry of a consent decree with any
governmental body; (iii) noncompliance in any material respect with any laws or regulations,
foreign or domestic, affecting the operation of the Company’s or any of its Subsidiaries’ business,
if such noncompliance is likely to have a material adverse effect on the Company or any of its
Subsidiaries; (iv) violation of any express direction or any rule, regulation or policy established
by the Board that is consistent with the terms of this Agreement, which violation, if reasonably
susceptible to cure, is not cured within ten (10) days of written notice thereof from the Board
(or, were such violation can not feasibly be cured within said 10 day period and Executive has not
cured such violation within a reasonable amount of time after using best efforts), and if such
violation is likely to have a material adverse effect on the Company or any of its Subsidiaries;
(v) material breach of this Agreement, which breach, if reasonably susceptible to cure, is not
cured within ten (10) days of written notice thereof from the Board (or, were such material breach
can not feasibly be cured within said 10 day period and Executive has not cured such material
breach within a reasonable amount of time after using best efforts) or a material breach of the
Executive’s fiduciary duties to the Company or any of its Subsidiaries; or (vi) gross incompetence,
gross neglect, or gross misconduct in the performance of the Executive’s duties.
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“Competing Business” means any business engaged in owning or operating fiber networks.
“Executive Preferred Units” has the meaning specified in the Preamble to this
Agreement.
“Expiration Date” has the meaning specified in Section 2 of this Agreement.
“Fair Market Value” has the meaning set forth in the LLC Agreement.
“Good Reason” means the occurrence of any of the following events: (A) a substantial
adverse change in the nature or scope of Executive’s responsibilities, authorities, powers,
functions or duties attached to Executive’s position with the Company or any of its Subsidiaries as
of the date of this Agreement, (B) the relocation of the offices at which Executive is principally
employed to any other location that is more than 75 miles from the current location of such offices
or (C) Executive’s title as of the date of this Agreement is changed in any manner, other than as a
result of a promotion. Notwithstanding the foregoing, the occurrence of any event specified in
paragraphs (A), (B) or (C) shall not be deemed to be “Good Reason” if Executive fails to
voluntarily terminate his employment under this Agreement within sixty (60) days following such
event.
“Protected Territory” shall mean, prior to the Termination Date, the world, and
commencing on and after the Termination Date, shall include the United States and any other
geographic area in which the Company or any of its Subsidiaries conducts business as of the
Termination Date, or has developed an intention to conduct business in such geographic area on or
before the Termination Date and for which the Company or any of its Subsidiaries has prepared or
commissioned the preparation of a business plan or study on or before the Termination Date.
“Termination Date” shall mean the date the Executive’s employment with the Company or
any of its Subsidiaries is terminated, whether by the Executive or the Company or any of its
Subsidiaries
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2. Term. The term of this Agreement shall be for a period commencing on October 31,
2010 and ending three (3) years thereafter, subject to the terms and conditions below.
Notwithstanding the foregoing, in the event the Executive’s employment with the Company or any of
its Subsidiaries is terminated by the Company or any of its Subsidiaries for any reason other than
for Cause, including, but not limited to, by reason of death or disability, then the term of this
Agreement (including all restrictions contained in Section 3) shall immediately expire and be of no
further force or effect. For the avoidance of doubt, in the event the Executive’s employment with
the Company or any of its Subsidiaries is terminated by the Company or any of its Subsidiaries for
Cause OR if Executive voluntarily terminates his employment with the Company or any of its
Subsidiaries for any reason other than Good Reason, then the term of this Agreement (including all
restrictions contained in Section 3) shall continue in full force and effect for the full three (3)
term referenced above. Notwithstanding the foregoing, in the event the Company elects and/or
appoints a Chairman of the Board other than Executive (without Executive’s approval), then
Executive shall have the right (but not the obligation) to elect one of the following options: (i)
if Executive elects to have full and immediate acceleration of vesting on all unvested Executive
Preferred Units under the Vesting Agreement of the same date hereof, then such accelerated vesting
shall immediately occur and Executive shall remain subject to all of the terms and conditions of
this Agreement for the remainder of the three (3) year term referenced above, or (ii) if Executive
elects to not have full and immediate acceleration of vesting under such circumstances, then
Executive shall thereafter not be subject to any of the terms and conditions of this Agreement and
such Agreement shall immediately expire and be of no further force or effect (however, if Executive
elects this option (ii) AND continues to be employed by the Company, then Executive will be subject
to the terms and conditions of this Agreement ONLY for as long as Executive’s employment with the
Company continues — after which such restrictions shall immediately expire). If Executive is
going to exercise the above referenced election, the Executive must do so within sixty (60) days of
the date the Chairman is elected and/or appointed.. For the avoidance of doubt, the above two
options are not conditioned on or subject to the termination of Executive’s employment with Company
or any of its Subsidiaries.
3. Noncompetition and Nonsolicitation.
(a) Noncompetition. During the term of this Agreement, the Executive agrees
that Executive will not, singly, jointly, or as a partner, member, Executive, agent,
officer, director, stockholder, equity holder, lender, consultant, independent contractor,
or joint venturer of any other Person, or in any other capacity, directly, indirectly or
beneficially (except (i) as a passive holder of not more than one percent (1%) of the
outstanding stock of any company listed on a national securities exchange, or actively
traded in a national over-the-counter market, (ii) as a passive participant in any venture
capital fund where his interest therein does not exceed one percent (1%) of the total
capital commitments, or (iii) as Executive Chairman of EnVysion, (iv) as an employee,
manager, director or owner of MCCC ICG Holdings LLC, or (v) as a director or owner of GTS
Group (i.e. Consortium 1 S.a.r.l. and its affiliated companies) (collectively,
“Permitted Activities”)), own, manage, operate, join, control, or participate in the
ownership, management, operation or control of, or permit the use of his name by, or work
for, or provide consulting, financial or other assistance to, or be connected in any manner
with, a Competing Business within the Protected Territory;
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(b) Nonsolicitation. During the term of this Agreement, the Executive agrees
that Executive will not, singly, jointly, or as a partner, member, employee, agent, officer,
director, stockholder, equity holder, lender, consultant, independent contractor, or joint
venturer of any other Person, or in any other capacity, directly, indirectly or beneficially
(except for Permitted Activities) induce or attempt to induce (i) any Person which is a
customer of the Company or any of its Subsidiaries, or which otherwise is a contracting
party with the Company or any of its Subsidiaries, as of the date hereof or at any time
hereafter during the term of this Agreement, to terminate, alter or amend any written or
oral agreement or understanding with the Company or any of its Subsidiaries, or (ii) any
Person which is an employee or contractor of the Company or any of its Subsidiaries as of
the date hereof or at any time hereafter during the term of this Agreement, to terminate or
otherwise separate their employment or contractor arrangement with the Company or any of its
Subsidiaries.
4. Injunctive Relief. The Executive agrees that the breach of this Agreement by such
Executive will cause irreparable damage to the Company and that in the event of such breach the
Company shall have, in addition to any and all remedies of law, the right to an injunction,
specific performance or other equitable relief to prevent the violation of the Executive’s
obligations hereunder.
5. Amendments; Waiver. Any amendment to or modification of this Agreement, and any
waiver of any provision hereof, shall be in writing and shall require the prior written approval of
the Company. Any waiver by the Company of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach hereof.
6. Enforcement. The Company and the Executive agree that the covenants set forth in
this Agreement shall be enforced to the fullest extent permitted by law. Accordingly if, in any
judicial or similar proceedings, a court or any similar judicial body shall determine that such
covenant is unenforceable because it covers too extensive a geographical area or survives too long
a period of time, or for any other reason, then the parties intend that such covenant shall be
deemed to cover only such maximum geographical area and maximum period of time, and shall otherwise
be deemed to be limited in such manner, as will permit enforceability by such court or similar
body. The Company and the Executive further agree that covenants set forth in this Agreement are
reasonable in all the circumstances for the protection of the legitimate interests of the Company
and its Members. In the event that any one or more of such covenants shall, either taken by itself
or themselves together, be adjudged to go beyond what is reasonable in all the circumstances for
the protection of the interests of the Company and its Members, but would be adjudged reasonable if
any particular covenant or covenants or parts thereof were deleted, restricted or limited in a
particular manner, then the said covenants shall apply with such deletions, restrictions or
limitations, as the case may be.
7. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and to be performed therein.
8. Consent to Jurisdiction. The Executive hereby agrees to submit to the exclusive
jurisdiction of the court in and of the State of Delaware and to the courts to which the decisions
of appeal of such courts may be taken and consents that service of process with respect to all
courts in and of the State of Delaware may be made by registered mail to Executive’s address set
forth on page 1 hereof.
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9. Successors and Assigns. The Company shall have the right to assign this Agreement
to its successors and assigns, and all covenants and agreements hereunder shall inure to the
benefit of and be enforceable by said successors or assigns; provided, however, that the parties
hereto agree that in the event of any such assignment by the Company, the phrase “Competing
Business” shall, for purposes of being applied to Executive’s obligations hereunder to the
assignee, be limited to the business of the Company as of the date of such assignment.
10. Captions; Gender and Number. The captions of the sections of this Agreement are
for convenience of reference only and in no way define, limit or affect the scope or substance of
any section of this Agreement. The gender and number used in this Agreement are used as reference
terms only and shall apply with the same effect whether the parties are of the masculine, neuter or
feminine gender, corporate or other form, and the singular shall likewise include the plural.
11. Entire Agreement. This Agreement and each related agreement to which the
undersigned are a party constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof and supersede all prior agreements and
understandings, whether oral or written, with respect thereto and hereto.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date and year first above
written.
| COMPANY: | ||||||||
| COMMUNICATIONS INFRASTRUCTURE INVESTMENTS, LLC | ||||||||
| By: | /s/ Xxxxx Beer | |||||||
| Name: | Xxxxx Beer | |||||||
| Title: | General Counsel | |||||||
| EXECUTIVE: | ||||||||
| /s/ Xxx Xxxxxx | ||||||||
| Xxx Xxxxxx | ||||||||
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