Exhibit 99.1
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is dated July 15, 2005,
and is between SPECTRUM PMI, INC. (the "Buyer"), A-XXXX PRECIOUS METALS, INC., a
New York corporation ("PMI") and XXXXXX X. XXXXXXX, an individual ("Xx.
Xxxxxxx").
Simultaneously with execution and delivery of this Agreement, the Buyer
and Xx. Xxxxxxx are consummating the transactions contemplated by the Stock
Purchase Agreement dated as of the date hereof, between the Buyer, on the one
hand, and Xx. Xxxxxxx and A-Xxxx Holding, Inc. on the other hand (the "Purchase
Agreement"), pursuant to which the Buyer is acquiring one hundred percent (100%)
of all of the issued and outstanding shares of PMI.
Execution and delivery of this Agreement is a condition to the Buyer's
obligation to consummate the transactions contemplated by the Purchase
Agreement, and the Buyer would not do so without Xx. Xxxxxxx entering into this
Agreement.
In order to induce the Buyer to consummate the transactions contemplated
by the Purchase Agreement, and in recognition and acknowledgement of the need to
protect the goodwill and other business interests being acquired, the parties
therefore agree as follows:
1. Payment. As consideration for this Agreement, the Buyer shall pay to
Xx. Xxxxxxx the sum of Two Million Dollars ($2,000,000.00) in cash via wire
transfer of readily available funds to such account as Xx. Xxxxxxx may designate
in writing.
2. No Competition.
(a) From the date of this Agreement until the sooner of (1) the
fourth (4th) anniversary of the date of this Agreement, and (2) the date that
none of the Buyer, PMI and their Affiliates is any longer engaged in the
business of the purchase and sale of precious metals on a wholesale basis (that
period, the "Agreement Term"), Xx. Xxxxxxx may not, and shall cause his
Affiliates not to, in the Territory, directly or indirectly own, manage,
operate, join, control, participate in, invest in or otherwise provide
assistance, in any manner, including, without limitation, as an officer,
director, employee, independent contractor, partner, manager, member, principal,
consultant, advisor, agent, proprietor, trustee or investor, any Competing
Business, except that ownership of Five percent (5%) or less of the stock or
other securities of a corporation, the stock of which is listed on a national
securities exchange or is quoted on the Nasdaq National Market will not
constitute a breach of this Section 1, so long as Xx. Xxxxxxx does not in fact
have the power to control, or direct the management of, or is not otherwise an
active, direct or indirect participant in the business of such entity,
including, without limitation, as an officer, director, employee, independent
contractor, partner, manager, member, principal, consultant, advisor, agent,
proprietor or trustee, and provides no services nor gives any business advice to
such entity.
(b) For purpose of this Agreement, the following terms have the
following meanings:
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(1) "Affiliate" means, with respect to any given Person, (1)
any other Person at the time directly or indirectly controlling, controlled by
or under common control with that Person, (2) any other Person of which that
Person at the time owns or has the right to acquire, directly or indirectly, ten
percent (10%) or more on a consolidated basis of any class of the capital stock
or other ownership interest, or (3) any other Person which at the time owns or
has the right to acquire, directly or indirectly, ten percent (10%) or more of
any class of the capital stock or other ownership interest of that Person. For
purposes of this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise;
(2) "Competing Business" means any Person engaged directly or
indirectly, in the Territory, in any business engaged in by PMI as of the date
hereof, which is the purchase and sale of precious metals on a wholesale basis
and related services;
(3) "Person" means any individual, corporation, association,
partnership (general or limited), joint venture, trust, estate, limited
liability company or other entity or organization; and
(4) "Territory" means the United States of America, Austria,
Belgium, Denmark, France, Germany, Italy, Luxembourg, Norway, Switzerland, the
Netherlands, and the United Kingdom.
3. No Solicitation of Employment. During the Agreement Term, Xx. Xxxxxxx
shall not, directly or indirectly, and shall cause his Affiliates not to
directly or indirectly (i) solicit or encourage any employee or agent of PMI or
the Buyer to terminate his or her employment with PMI or the Buyer, or to seek
or accept employment or any other affiliation with any other Person, or (ii)
divert, employ or hire away or attempt to divert, employ or hire away any
employee or agent of PMI or the Buyer, nor assist a Competing Business or any
other Person in doing any of the foregoing, provided, however, that this
restriction shall not apply to general employment solicitations made through
newspapers or periodicals of general circulation, or to the hiring of any former
employee of PMI who, after such employee's termination of employment with PMI
(without breaching any employment agreement, if any), independently seeks
employment with Xx. Xxxxxxx or any of his Affiliates without being solicited by
Xx. Xxxxxxx or any of his Affiliates.
4. No Solicitation of Customers and Suppliers. During the Agreement Term,
Xx. Xxxxxxx shall not, directly or indirectly, and shall cause his Affiliates
not to directly or indirectly, (i) solicit, divert or appropriate to or for a
Competing Business any Person that is a customer or supplier of PMI as of the
date hereof or was a customer or supplier of PMI at any time during the twelve
(12) month period prior to the date hereof (each a "PMI Customer or Supplier"),
(ii) attempt to influence, persuade or induce any PMI Customer or Supplier to
cease doing business with, or to reduce the amount of business customarily done
with, or not to commence a business relationship with, PMI, or (iii) otherwise
interfere in any manner in the relationship of PMI with any PMI Customer or
Supplier, in each case whether or not the relationship between PMI and such PMI
Customer or Supplier was originally established in whole or in party through the
efforts of Xx. Xxxxxxx.
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5. Exception for Certain Businesses. Notwithstanding any other provision
in this Agreement, this Agreement shall not limit Xx. Xxxxxxx'x right to have an
ownership or other interest (whether as principal, shareholder, member, partner,
director, officer, agent, employee, consultant or otherwise) in or provide
assistance to the legal entities and businesses involving precious metals in
which Xx. Xxxxxxx has a direct or indirect interest as of the date hereof (a
list of which is attached hereto as Schedule 1), which Xx. Xxxxxxx represents
and warrants, except as described on Schedule 1, do not presently conduct and
will not conduct in the future a Competing Business; provided, however, that in
the event that any of the entities or businesses set forth on Schedule 1 hereto
shall at any time during the Agreement Term change the scope or magnitude of any
of their existing business that constitutes a Competing Business, or in fact
begin to conduct a Competing Business, Xx. Xxxxxxx'x interest in such entity or
business (whether direct or indirect) shall be deemed a breach by Xx. Xxxxxxx of
the terms of Section 2 above. The parties to this Agreement further acknowledge
and agree that: (A) (1) Xx. Xxxxxxx is a director, creditor and shareholder of
Goldline Holdings, Inc., (2) Goldline Holdings, Inc. is the parent company of
Goldline International, Inc., (3) Xx. Xxxxxxx is a director of Goldline
International, Inc., and (4) Xx. Xxxxxxx is a minority shareholder and does not
control Goldline Holdings, Inc. or Goldline International, Inc. in Goldline
Holdings, Inc, and (B) Xx. Xxxxxxx holds a minority interest in and does not
control Aurumet Trading, LLC. Provided Xx. Xxxxxxx is not in breach of his
obligations under Section 6 below and recuses himself from any discussion or
vote concerning Goldline Holdings, Inc.'s or Goldline International Inc.'s, or
Aurumet Trading, LLC's, entry into or conduct of a Competing Business, as
applicable, this Agreement shall not limit, restrict, prohibit or otherwise
limit Xx. Xxxxxxx'x involvement as a shareholder, member, creditor or director
of Goldline Holdings, Inc. or Goldline International, Inc., or of Aurumet
Trading, LLC, as applicable, and so long as Xx. Xxxxxxx does not have a
controlling interest in those entities, any action taken by Goldline Holdings,
Inc. or Goldline International, Inc., or by Aurumet Trading, LLC, as applicable,
shall not constitute a violation of this Agreement.
6. Proprietary Information.
(a) Xx. Xxxxxxx acknowledges that in connection with his employment
with and/or control of PMI, of necessity he has regularly developed and had
access to, and use of, proprietary information and confidential records (as each
such term is defined below). Xx. Xxxxxxx covenants that during the Agreement
Term and any time thereafter he shall not, and shall cause his Affiliates not
to, directly or indirectly, use for his or its own purpose or for the benefit of
any other Person, or disclose, any proprietary information to any Person, unless
such use or disclosure has been authorized in writing by PMI. The term
"proprietary information" shall include all information that has or could have
commercial value or other utility in the business in which PMI is currently
engaged or is contemplating engaging, and all information the unauthorized
disclosure of which could be detrimental to the interests of PMI, whether or not
specifically labeled as confidential or proprietary by PMI. By way of example,
"proprietary information" includes, without limitation, the following: (i) the
name and address of any customer, vendor or Affiliate of PMI and any information
concerning the transactions or relations of any customer, vendor or Affiliate of
PMI with PMI or any of its shareholders, directors, officers, employees, agents,
consultants, representatives and/or personnel; (ii) any information concerning
any product, technology or procedure employed by PMI but not generally known to
its customers, vendors or competitors, or under development by or being
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tested by PMI but not at the time offered generally to its customers or vendors;
(iii) any information relating to computer software or systems used by PMI other
than off-the-shelf software and systems furnished by third party vendors; (iv)
any business plans, budgets, advertising or marketing plans, pricing or
marketing methods, sales margins, cost of goods, cost of material, capital
structure, operating results, or borrowing arrangements; (v) any information
belonging to customers, vendors or Affiliates of PMI or any other Person which
PMI has agreed to hold in confidence; (vi) any other information which is
generally regarded as confidential or proprietary (including, without
limitation, records of sales and profits); (vi) any intellectual property
covered by Section 6(c) below;(viii) salary, staffing and employment
information; (ix) information contained in any of PMI's written or oral policies
and procedures or manuals; and (x) all materials relating to any of the
foregoing, whether in a handwritten, printed, graphic, video, audio, electronic
or other medium. Information that is not novel or copyrighted or patented may
nonetheless be proprietary information. The term "proprietary information" shall
not include information generally available to and known by the public (other
than by reason of a breach of Xx. Xxxxxxx or other Persons who were under
confidentiality obligations as to such information).
(b) Xx. Xxxxxxx shall not at any time directly or indirectly publish,
make known or in any fashion disclose any material confidential records to, or
permit any inspection or copying of confidential records by, any Person, except
for his independent attorneys on a need to know basis, provided that such
attorneys agree to be bound by the provisions of this Section 6. For purposes
hereof, "confidential records" means the following items that relate to or are
connected with the business of PMI: all correspondence, memoranda, files,
manuals, books, lists, financial records, operating or marketing records,
magnetic tape, or electronic or other media or equipment of any kind which may
be in the possession of or accessible to Xx. Xxxxxxx or PMI or under any of
their control which contain any proprietary information. All confidential
records shall be and remain the sole property of PMI from and after the date
hereof.
(c) All intellectual property related to or used (currently or in the
past) by PMI owned, conceived or made by Xx. Xxxxxxx on or prior to the date
hereof, either alone or jointly with others, shall be, as of the date hereof,
assigned to and shall belong to PMI. Xx. Xxxxxxx hereby agrees to promptly
perform all actions reasonably requested by PMI to establish and confirm the
ownership of such intellectual property by PMI. Any intellectual property not
related to or used (currently or in the past) by the business of PMI owned,
conceived or made by Xx. Xxxxxxx shall remain the property of Xx. Xxxxxxx.
5. Acknowledgement; Remedies; Survival of this Agreement.
(a) Xx. Xxxxxxx acknowledges that the provisions of this Agreement are
reasonable and necessary for the protection of the Buyer and PMI.
(b) Xx. Xxxxxxx acknowledges that violation of any of his obligations
under this Agreement may cause the Buyer and PMI irreparable damage and agrees
that the Buyer's and PMI's remedies at law for a breach or threatened breach of
any of the provisions of this Agreement may be inadequate and, in recognition of
this fact, in the event of a breach or threatened breach by Xx. Xxxxxxx of any
of the provisions of this Agreement, in addition to the remedies at law or in
equity, the Buyer and PMI may be entitled to equitable relief in the form of
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specific performance, a temporary restraining order, temporary or permanent
injunction, or any other equitable remedy that may then be available restraining
Xx. Xxxxxxx or any of his Affiliates from any actual or threatened breach of his
obligations. The rights and remedies of the Buyer and PMI under this Agreement
are cumulative and shall not be exclusive, and each such party shall be entitled
to pursue all legal and equitable rights and remedies and to secure performance
of the obligations and duties of the other under this Agreement, and the
enforcement of one or more of such rights and remedies by a party shall in no
way preclude such party from pursuing, at the same time or subsequently, any and
all other rights and remedies available to it.
6. Notices. Every notice or other communication required or contemplated
by this Agreement must be in writing and sent by one of the following methods:
(1) personal delivery, in which case delivery is deemed to occur the day of
delivery; (2) certified or registered mail, postage prepaid, return receipt
requested, in which case delivery is deemed to occur the day it is officially
recorded by the U.S. Postal Service as delivered to the intended recipient; or
(3) next-day delivery to a U.S. address by recognized overnight delivery service
such as Federal Express, in which case delivery is deemed to occur one business
day after being sent. In each case, a notice or other communication sent to a
party must be directed to the address for that party set forth below, or to
another address designated by that party by written notice:
If to the Buyer, to:
--------------------
c/o Spectrum Numismatics International, Inc.
00000 Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
with a copy to:
---------------
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
and a copy to:
--------------
Xxxx & Xxxxx, LLP
00000 Xxxxxxx Xxxxx Xxxxxxx, Xxxxx X000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxx, Esq.
If to PMI:
----------
A-Xxxx Precious Metals, Inc.
X/0 Xxxxxxx X. Xxxxxxx
00000 Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
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with a copy to:
---------------
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
and a copy to:
--------------
Xxxx & Xxxxx, LLP
00000 Xxxxxxx Xxxxx Xxxxxxx, Xxxxx X000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxx, Esq.
If to Xx. Xxxxxxx, to:
----------------------
Xxxxxx X. Xxxxxxx
Third Floor
000 Xxxxxxxx Xxxx.
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
with a copy to:
---------------
Xxxxxx Xxxxxxx Xxxxx & Xxxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
7. Assignment. This Agreement inures to the benefit of, is enforceable by,
and may be assigned by each Buyer or PMI, any purchaser of all or substantially
all of such Buyer's or PMI's respective businesses or assets, any successor to
such Buyer or PMI or any assignee thereof (whether direct or indirect, by
purchase, merger, consolidation or otherwise). Xx. Xxxxxxx may not assign this
Agreement.
8. Complete Understanding. This Agreement constitutes the complete
understanding between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter of this
Agreement.
9. Severability. If any provision of this Agreement or its application to
any person or circumstances is determined by any court of competent jurisdiction
to be unenforceable to any extent, that unenforceable provision will be deemed
eliminated to the extent necessary to permit the remaining provisions to be
enforced, and the remainder of this Agreement, or the application of the
unenforceable provision to other persons or circumstances, will not be affected
thereby. If any provision of this Agreement, or any part thereof, is held to be
unenforceable because of the
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scope or duration of or the area covered by that provision, the court making
that determination shall reduce the scope, duration of or area covered by that
provision or otherwise amend the provision to the minimum extent necessary to
make that provision enforceable to the fullest extent permitted by law. In this
regard, Xx. Xxxxxxx agrees and acknowledges that (1) the provisions of Sections
1, 2, 3 and 4 are reasonable and necessary for the protection of the Buyer and
PMI and do not impose a greater restraint than is necessary to protect the
goodwill or other business interests of the Buyer and PMI; (2) those provisions
contain reasonable limitations as to the time and the scope of activity to be
restrained; and (3) the consideration provided under the Purchase Agreement is
sufficient to compensate Xx. Xxxxxxx for the restrictions contained in Sections
1, 2, 3 and 4.
10. Governing Law. The laws of the State of California govern this
Agreement, without giving effect to principles of conflict of laws.
11. Amendments; Waivers. This Agreement may not be amended except by an
instrument in writing signed by the parties. No waiver by any party of any
breach under this Agreement will be deemed to extend to any prior or subsequent
breach or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence. Waiver by either party of any breach by the other
party will not operate as a waiver of any other breach, whether similar to or
different from the breach waived. No delay on the part of the parties in the
exercise of any of their respective rights or remedies will operate as a waiver
of such rights and remedies.
[Remainder of page intentionally left blank.
Signatures of parties contained on the following page.]
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IN WITNESS WHEREOF, the parties hereby execute this NONCOMPETITION
AGREEMENT on the date stated in the introductory clause.
"Buyer"
SPECTRUM PMI, INC.
A Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: CEO
"PMI"
A-XXXX PRECIOUS METALS, INC.
A New York corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
XXXXXXX X. XXXXXXX, CEO
"Xx. Xxxxxxx"
/s/ Xxxxxx X. Xxxxxxx
--------------------------------------
XXXXXX X. XXXXXXX, an individual
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