EXHIBIT 10.3
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "AGREEMENT") is made as of the 30th day of
April, 1997, by and between ITI TECHNOLOGIES, INC., a Delaware corporation
("BUYER"), and XXX XXXXX, an individual resident in the State of Texas
("SELLER").
RECITALS
Concurrently with the execution and delivery of this Agreement, Buyer is
purchasing from Seller, Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxxxx and Xxxxxxx Xxxx
Xxxxx (collectively, the "SELLERS"), all of the outstanding shares (the
"SHARES") of common stock, par value $1.00 per share, of CADDX-CADDI CONTROLS,
INC., a Texas corporation ("CADDX"), pursuant to the terms and conditions of
that certain Stock Purchase and Sale Agreement dated April 4, 1997, (the "STOCK
PURCHASE AGREEMENT"). ARTICLE III, SECTION 3(k) of the Stock Purchase Agreement
requires that noncompetition agreements be executed and delivered by each of the
Sellers as a condition to the purchase of the Shares by Buyer.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
Capitalized terms not expressly defined in this Agreement shall have the
meanings ascribed to them in the Stock Purchase Agreement.
2. ACKNOWLEDGMENTS BY SELLER
Seller acknowledges that: (i) Seller has occupied a position of trust and
confidence with CADDX prior to the date hereof and has become familiar with the
following, any and all of which constitute confidential information of CADDX,
(collectively the "CONFIDENTIAL INFORMATION"): (a) any and all trade secrets
concerning the business and affairs of CADDX, product specifications, data,
know-how, formulae, compositions, processes, designs, sketches, photographs,
graphs, drawings, samples, inventions and ideas, past, current and planned
research and development, current and planned manufacturing and distribution
methods and processes, customer lists, current and anticipated customer
requirements, price lists, market studies, business plans, computer software and
programs (including object code and source code), computer software and database
technologies, systems, structures and architectures (and related processes,
formulae, compositions, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information, of CADDX and any
other information, however documented, of CADDX that is a trade secret within
the meaning of Texas common law and any other applicable law), (b) any and all
information concerning the business and affairs of CADDX (which includes
historical financial statements, financial projections and budgets, historical
and projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training, techniques and materials,
however documented), and (c) any and all notes, analysis, compilations, studies,
summaries, and other material prepared by or for
CADDX containing or based, in whole or in part, on any information included in
the foregoing; (ii) the business of CADDX is international in scope; (iii) its
products and services are marketed throughout the world; (iv) CADDX competes
with other businesses that are or could be located in any part of the world; (v)
Buyer has required that Seller make the covenants set forth in SECTIONS 3 and 4
of this Agreement as a condition to Buyer's purchase of the Shares owned by
Seller; (vi) the provisions of SECTIONS 3 and 4 of this Agreement are reasonable
and necessary to protect and preserve the business of CADDX; and (vii) CADDX
would be irreparably damaged if Seller were to breach the covenants set forth in
SECTIONS 3 and 4 of this Agreement.
3. CONFIDENTIAL INFORMATION
Seller acknowledges and agrees that all Confidential Information known or
obtained by Seller, whether before or after the date hereof, is the property of
CADDX. Therefore, Seller agrees that Seller will not, at any time, disclose to
any unauthorized person or entity or use for his own account or for the benefit
of any third party any Confidential Information, whether Seller has such
information in Seller's memory or embodied in writing or other physical form,
without Buyer's written consent, unless and to the extent that the Confidential
Information is or becomes generally known to and available for use by the public
other than as a result of Seller's fault or the fault of any other person or
entity bound by a duty of confidentiality to Buyer or CADDX. Seller agrees to
deliver to Buyer at the time of execution of this Agreement, and at any other
time Buyer may request, all documents, memoranda, notes, plans, records,
reports, and other documentation, models, components, devices, or computer
software, whether embodied in a disk or in other form (and all copies of all of
the foregoing), relating to the business, operations, or affairs of CADDX and
any other Confidential Information that Seller may then possess or have under
Seller's control.
4. NONCOMPETITION
As an inducement for Buyer to enter into the Stock Purchase Agreement and as
additional consideration for the consideration to be paid to Seller under the
Stock Purchase Agreement, Seller agrees that:
(a) For a period of five (5) years after the Closing:
i) Seller will not, directly or indirectly, engage or invest in, own,
manage, operate, finance, control, or participate in the ownership,
management, operation, financing, or control of, be employed by,
associated with, or in any manner connected with, lend Seller's name or
any similar name to, lend Seller's credit to, or render services or
advice to, any business whose products or activities compete in whole
or in part with the products or activities of CADDX; provided, however,
that Seller may purchase or otherwise acquire up to (but not more than)
one percent (1%) of any class of securities of any enterprise (but
without otherwise participating in the activities of such enterprise)
if such securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the Securities
Exchange Act of 1934. Seller agrees that this covenant is reasonable
with respect to its duration, geographical area, and scope.
ii) Seller will not, directly or indirectly, either for himself or any
other person or entity: (i) induce or attempt to induce any employee of
CADDX to leave the employ of CADDX; (ii) in any way interfere with the
relationship between CADDX and any employee of CADDX; (iii) employ, or
otherwise engage as an employee, independent contractor, or otherwise,
any employee of CADDX; or (iv) induce or attempt to induce any
customer, supplier, licensee, or business relation of CADDX to cease
doing business with CADDX, or in any way interfere with the
relationship between any customer, supplier, licensee, or business
relation of CADDX.
iii) Seller will not, directly or indirectly, either for himself or any
other person or entity, solicit the business of any person or entity
known to Seller to be a customer of CADDX, whether or not Seller had
personal contact with such person or entity, with respect to products
or activities which compete in whole or in part with the products or
activities of CADDX.
In the event of a breach by Seller of any covenant set forth in SUBSECTION 4(a)
of this Agreement, the term of such covenant will be extended by the period of
the duration of such breach.
(b) Seller will not, at any time during or after the five- (5) year period,
disparage Buyer or CADDX, or any of their shareholders, directors, officers,
employees, or agents.
(c) Seller will, for a period of five (5) years after the Closing, within ten
(10) days after accepting any employment, advise Buyer of the identity of any
employer of Seller. Buyer or CADDX may serve notice upon each such employer that
Seller is bound by this Agreement and furnish each such employer with a copy of
this Agreement or relevant portions thereof.
(d) Notwithstanding anything contained herein to the contrary, the covenants set
forth in this SECTION 4 shall terminate, and be of no further force or effect,
twelve (12) months following termination by CADDX of Seller's employment with
CADDX unless such termination of employment by CADDX is "for cause" within the
meaning of the Employment Agreement between CADDX and Seller of even date
herewith.
5. REMEDIES
If Seller breaches the covenants set forth in SECTIONS 3 or 4 of this Agreement,
Buyer and CADDX will be entitled to the following remedies:
(a) Damages from Seller.
(b) In addition to its right to damages and any other rights it may
have, to obtain injunctive or other equitable relief to restrain any
breach or threatened breach or otherwise to specifically enforce the
provisions of SECTIONS 3 and 4 of this Agreement, it
being agreed that money damages alone would be inadequate to compensate
Buyer and CADDX and would be an inadequate remedy for such breach.
(c) The rights and remedies of the parties to this Agreement are
cumulative and not alternative.
6. SUCCESSORS AND ASSIGNS
This Agreement will be binding upon Buyer, CADDX and Seller and will inure to
the benefit of Buyer and CADDX and their affiliates, successors and assigns and
Seller and Seller's assigns, heirs and legal representatives.
7. WAIVER
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law: (i) no claim or right arising
out of this Agreement can be discharged by one party, in whole or in part, by a
waiver or renunciation of the claim or right unless in writing signed by the
other party; (ii) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given; and (iii) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take further
action without notice or demand as provided in this Agreement.
8. GOVERNING LAW
This Agreement will be governed by the laws of the State of Texas without regard
to conflicts of laws principles.
9. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any of the parties
in the courts of the State of Texas, County of Xxxxx, or, if it has or can
acquire jurisdiction, in the United States District Court for the Eastern
District of Texas, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
10. SEVERABILITY
Whenever possible each provision and term of this Agreement will be interpreted
in a manner to be effective and valid but if any provision or term of this
Agreement is held to be prohibited by
or invalid, then such provision or term will be ineffective only to the extent
of such prohibition or invalidity, without invalidating or affecting in any
manner whatsoever the remainder of such provision or term or the remaining
provisions or terms of this Agreement. If any of the covenants set forth in
SECTION 4 of this Agreement are held to be unreasonable, arbitrary, or against
public policy, such covenants will be considered divisible with respect to
scope, time, and geographic area, and in such lesser scope, time and geographic
area, will be effective, binding and enforceable against Seller.
11. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
12. SECTION HEADINGS, CONSTRUCTION
The headings of sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding section or sections of this Agreement
unless otherwise specified. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
13. NOTICES
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when: (i)
delivered by hand (with written confirmation of receipt); (ii) sent by facsimile
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested; or (iii) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
SELLER:
Xxx Xxxxx
c/o T. Xxxx Xxxx
Xxxxx XxXxxxxxx & Oaks Xxxxxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxxx 00000-0000
Facsimile No.: (000) 000-0000
BUYER:
ITI Technologies, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxx Xx. Xxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
With a copy to:
CADDX-CADDI Controls, Inc.
0000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
14. ENTIRE AGREEMENT
This Agreement, the Employment Agreement and the Stock Purchase Agreement
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersede all prior written and oral agreements and
understandings between Buyer and Seller with respect to the subject matter of
this Agreement. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first above written.
BUYER: SELLER:
ITI TECHNOLOGIES, INC. /s/ Xxx Xxxxx
--------------------------------
Xxx Xxxxx, Individually
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx, President and CEO
