1
NON-COMPETITION AGREEMENT
(this "Agreement") dated as of
November 21, 1997, between YOUNG
AMERICA CORPORATION, a Minnesota
corporation (the "Corporation"), XXX
X. XXXXXXX (the "Principal
Stockholder") and each of the other
parties set forth on the signature
page hereto (collectively with the
Principal Stockholder, the "Selling
Stockholders").
WHEREAS, the Selling Stockholders are parties to that certain
Recapitalization Agreement dated as of the date hereof (the "Recapitalization
Agreement"); and
WHEREAS, the execution and delivery of this Agreement is a condition
precedent for the consummation of the transactions contemplated by the
Recapitalization Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the parties hereto agree as
follows:
1. Consulting Arrangements
The Principal Stockholder hereby agrees to provide consulting services to
the Corporation on the following terms and conditions:
1.1. Term. The Principal Stockholder shall provide consulting services to
the Corporation from the date hereof until the first anniversary of
the date hereof.
1.2. Commitment. The Principal Stockholder shall provide such consulting
services for up to 20 hours per week (which may be via telephone
unless otherwise requested by the Corporation, in which case, the
Corporation shall reimburse the Principal Stockholder for any travel
expenses incurred).
1.3. Compensation. In consideration of the consulting services to be
provided hereunder, the Corporation shall pay to the Principal
Stockholder $100,000 per annum, payable in equal monthly
installments.
2. Disclosure of Information
2.1. The Selling Stockholders shall not use or disclose to any person,
firm, corporation or other business entity (other than any officer,
director, Selling Stockholders, affiliate or representative of the
Corporation), except as required in connection with the performance
of the Selling Stockholders' duties under and in compliance with the
terms of this Agreement and as required by law or judicial process,
any
2
Confidential Information (as hereinafter defined) for any reason or
purpose whatsoever, nor shall the Selling Stockholders make use of
any of the Confidential Information for the Selling Stockholders'
purposes or for the benefit of any person or entity except the
Corporation or any subsidiary thereof.
2.2. For purposes of this Agreement, "Confidential Information" shall
mean (i) the Intellectual Property Rights (as hereinafter defined)
of the Corporation and its subsidiaries and (ii) all other
information of a proprietary nature relating to the Corporation or
any subsidiary thereof, or the business or assets of the Corporation
or any such subsidiary, including, without limitation, books,
records, customer and registered user lists, vendor lists, supplier
lists, distribution channels, pricing information, cost information,
marketing plans, strategies, forecasts, financial statements,
budgets and projections, other than information which is generally
within the public domain at the time of the receipt thereof by the
Selling Stockholders or at the time of use or disclosure of such
Confidential Information by the Selling Stockholders other than as a
result of the breach by the Selling Stockholders of the Selling
Stockholders' agreement hereunder.
2.3. As used herein, the term "Intellectual Property Rights" means all
industrial and intellectual property rights, including, without
limitation, patents, patent applications, patent rights, trademarks,
trademark applications, trade names, service marks, service xxxx
applications, copyrights, copyright applications, know-how,
certificates of public convenience and necessity, franchises,
licenses, trade secrets, proprietary processes and formulae,
inventions, development tools, marketing materials, trade dress,
logos and designs and all documentation and media constituting,
describing or relating to the above, including, without limitation,
manuals, memoranda and records.
3. Restrictive Covenants
3.1 The Selling Stockholders acknowledge and recognize that they have
been privy to Confidential Information. Accordingly, in
consideration of the premises contained herein and the consideration
to be received by the Selling Stockholders pursuant to the
Recapitalization Agreement, the Selling Stockholders shall not, at
any time prior to expiration of the fifth anniversary of the date
hereof (the "Term"), (i) directly or indirectly engage in, represent
in any way, or be connected with, any Competing Business, whether
such engagement shall be as an officer, director, owner, executive,
partner, affiliate or other participant in any Competing Business,
(ii) assist others in engaging in any Competing Business in the
manner described in clause (i) above, (iii) induce employees of the
Corporation or any subsidiary or affiliate thereof to terminate
their employment with the Corporation or any such subsidiary or
affiliate or to engage in any Competing Business or (iv) induce any
entity or person with which the Corporation or any subsidiary or any
affiliate thereof has a business relationship to terminate or alter
such business relationship. As used herein, "Competing Business"
shall mean any business in any city or county in any state of the
United
2
3
States if such business is competitive, directly or indirectly, at
any time during the five year term of this Agreement with (A) the
business of the Corporation or any affiliate thereof or (B) any of
the products or business being developed or conducted by the
Corporation or any Subsidiary thereof.
3.2. The Principal Stockholder understands that the foregoing
restrictions may limit his ability to earn a livelihood in a
business similar to the business of the Corporation or any
subsidiary or affiliate thereof, but he nevertheless believes that
he has received and will receive sufficient consideration and other
benefits as a Selling Stockholder and as otherwise provided
hereunder to justify clearly such restrictions which, in any event
(given his education, skills and ability), the Principal Stockholder
does not believe would prevent him from earning a living.
4. Right to Inventions
4.1. The Principal Stockholder hereby grants and assigns to the
Corporation for its sole use and benefit any and all inventions,
improvements, technical information and suggestions reasonably
relating to the business of the Corporation or any subsidiary or
affiliate thereof (collectively, the "Inventions") which the Selling
Stockholders may have developed or acquired, together with all
patent applications, letters patent, copyrights and reissues thereof
that may at any time be granted for or upon the Inventions. In
connection therewith:
(a) the Principal Stockholder recognizes and agrees that the
Inventions shall be the sole property of the Corporation, and
the Corporation shall be the sole owner of all patent
applications, letters patent, copyrights and reissues thereof
that may at any time be granted for or on the Inventions;
(b) the Principal Stockholder hereby assigns to the Corporation
any rights the Principal Stockholder may have in or acquire to
the Inventions;
(c) the Principal Stockholder shall, at the expense of the
Corporation, promptly execute and deliver such applications,
assignments, descriptions and other instruments as may be
necessary or proper in the opinion of the Corporation to vest
title to the Inventions and any patent applications, patents,
copyrights, reissues or other proprietary rights related
thereto in the Corporation and to enable it to obtain and
maintain the entire right and title thereto throughout the
world;
(d) the Principal Stockholder recognizes and agrees that the
Inventions to the extent copyrightable shall constitute works
for hire under the copyright laws of the United States; and
(e) the Principal Stockholder shall render to the Corporation, at
its expense, all such assistance as it may require in the
prosecution of applications for said patents, copyrights,
reissues or other proprietary rights, in the prosecution
3
4
or defense of interferences which may be declared involving
any said applications, patents, copyrights or other
proprietary rights and in any litigation in which the
Corporation may be involved relating to the Inventions.
5. Miscellaneous Provisions
5.1. Entire Agreement; Amendments. This Agreement and the other
agreements referred to herein contain the entire agreement between
the parties hereto with respect to the transactions contemplated
hereby and supersede all prior agreements or understandings between
the parties with respect thereto. This Agreement shall not be
altered or otherwise amended except pursuant to an instrument in
writing signed by each of the parties hereto.
5.2. Descriptive Headings. Descriptive headings are for convenience only
and shall not control or affect the meaning or construction of any
provisions of this Agreement.
5.3. Notices. All notices or other communications pursuant to this
Agreement shall be in writing and shall be deemed to be sufficient
if delivered personally, telecopied, sent by nationally-recognized,
overnight courier or mailed by registered or certified mail (return
receipt requested), postage prepaid, to the parties at the addresses
set forth in the Recapitalization Agreement (or at such other
address for a party as shall be specified by like notice).
All such notices and other communications shall be deemed to have
been delivered and received (A) in the case of personal delivery, on
the date of such delivery, (B) in the case of delivery by telecopy,
on the date of such delivery, (C) in the case of delivery by
nationally-recognized, overnight courier, on the Business Day
following dispatch, and (D) in the case of mailing, on the third
Business Day following such mailing. As used herein, "Business Day"
shall mean any day that is not a Saturday, Sunday or a day on which
banking institutions in New York, New York are not required to be
open.
5.4. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall
constitute but one agreement.
5.5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota applicable to
contracts made and performed wholly therein.
5.6. Benefits of Agreement; Assignment. The terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns,
representatives, heirs and estate, as applicable. Anything contained
herein to the contrary notwithstanding, this Agreement shall
4
5
not be assignable by the Selling Stockholders without the consent of
the Corporation.
5.7. Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement by the other party must be in writing
and shall not operate or be construed as a waiver of any subsequent
breach by such other party.
5.8. Severability. In the event that any provision of this Agreement is
determined to be partially or wholly invalid, illegal or
unenforceable in any jurisdiction, then such provision shall, as to
such jurisdiction, be modified or restricted to the extent necessary
to make such provision valid, binding and enforceable, or if such
provision cannot be modified or restricted, then such provision
shall, as to such jurisdiction, be deemed to be excised from this
Agreement; provided, however, that the binding effect and
enforceability of the remaining provisions of this Agreement, to the
extent the economic benefits conferred upon the parties by virtue of
this Agreement remain substantially unimpaired, shall not be
affected or impaired in any manner, and any such invalidity,
illegality or unenforceability with respect to such provisions shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
5.9. Remedies. All remedies hereunder are cumulative, are in addition to
any other remedies provided for by law and may, to the extent
permitted by law, be exercised concurrently or separately, and the
exercise of any one remedy shall not be deemed to be an election of
such remedy or to preclude the exercise of any other remedy. The
Selling Stockholders acknowledge that in the event of a breach of
any of the Selling Stockholders' covenants contained in Sections 2,
3 or 4, the Corporation shall be entitled to immediate relief
enjoining such violations in any court or before any judicial body
having jurisdiction over such a claim.
5
6
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
YOUNG AMERICA CORPORATION
By: /s/ Xxxxxxx X. Xxxx
----------------------------
Name: Xxxxxxx X. Xxxx
Title: President
/s/ Xxx X. Xxxxxxx
----------------------------
Xxx X. Xxxxxxx
XXXX X. XXXXXXX 1995
IRREVOCABLE TRUST
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx, as Trustee of
the Trust and not individually
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx, as Trustee of
the Trust and not individually
XXXXXXX XXXXXXXX XXXXXXX 1995
IRREVOCABLE TRUST
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx, as Trustee of
the Trust and not individually
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxx, as Trustee of
the Trust and not individually
XXXX X. XXXXXXX 1997
IRREVOCABLE TRUST
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx, as Trustee of
the Trust and not individually
7
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, as Trustee of
the Trust and not individually
XXXXXXX XXXXXXXX XXXXXXX
1997 IRREVOCABLE TRUST
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx, as Trustee of
the Trust and not individually
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, as Trustee of
the Trust and not individually
XXX X. XXXXXXX 1997
IRREVOCABLE ANNUITY TRUST
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx, as Trustee of
the Trust and not individually
