EXHIBIT 10.18
NON-COMPETITION AGREEMENT
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This Agreement is made and entered into as of March 14, 1996 by and
between R&D Systems Company, a Delaware corporation (the "Company"), and Xxx X.
Xxxxxx ("Founder").
WHEREAS, certain investors have agreed to provide financing (the
"Financing") to the Company subject to the terms of that certain Stock Purchase
Agreement (the "Stock Purchase Agreement"), dated as of the date hereof, by and
among the Company, the Founder, the other stockholders of the Company identified
therein, and the investors identified therein;
WHEREAS, a portion of the proceeds from the Financing will be used by
the Company to repurchase outstanding capital stock held by the Founder;
WHEREAS, the Founder is an executive of the Company; and
WHEREAS, the execution of this Agreement by the Company and the Founder
is a condition precedent to the transactions contemplated by the Stock Purchase
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company and the Founder agree as follows:
1. Confidential Information, Non-Competition and Non-Solicitation.
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(a) Definitions.
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(i) Proprietary Information. As used in this Agreement,
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"Proprietary Information" means information which the Company
possesses or to which the Company has rights which has commercial
value. Proprietary Information includes, by way of example and
without limitation, trade secrets, product ideas, designs,
configurations, processes, techniques, formulas, software,
improvements, inventions, data, know-how, copyrightable
materials, marketing plans and strategies, sales and financial
reports and forecasts, and customer lists. Proprietary
Information includes information developed by the Founder in the
course of the Founder's employment by the Company or otherwise
relating to Inventions which belong to the Company under Section
1(d) below, as well as other information to which the Founder may
have access in connection with the Founder's employment.
(ii) Inventions and Developments. As used in this
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Agreement, "Inventions and Developments" means any and all
inventions, developments, creative works and useful ideas of any
description whatsoever, whether or not
patentable or copyrightable. Inventions and Developments include,
by way of example and without limitation, discoveries or
improvements which consist of or relate to any form of
Proprietary Information.
(iii) Company-Related Inventions and Developments.
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For purposes of this Agreement, "Company-Related Inventions and
Developments" means all Inventions and Developments which either
(A) relate at the time of conception or development to the actual
or demonstrably anticipated business of the Company or to its
actual or demonstrably anticipated research and development; (B)
result from or relate to any work performed for the Company,
whether or not during normal business hours; (C) are developed on
Company time; or (D) are developed through the use of the
Company's Proprietary Information, equipment and software, or
other facilities or resources.
(b) Confidentiality. The Founder understands and agrees that
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the Founder's employment has created a relationship of confidence and
trust between the Founder and the Company with respect to (i) all
Proprietary Information, (ii) the confidential information of others
with which the Company has a business relationship with reasonable
expectations (whether as a result of a contract or otherwise) that such
information will not be disclosed and (iii) any information about the
financing and transactions related to the financing, including but not
limited to amounts paid, parties involved, ownership interests sold and
restrictions on the Company and its stockholders. The information
referred to in clauses (i), (ii) and (iii) of the preceding sentence is
referred to in this Agreement, collectively, as "Confidential
Information." At all times, both during the Founder's employment with
the Company and after its termination, the Founder will keep in
confidence and trust all such Confidential Information, and will not
use or disclose any such Confidential Information without the written
consent of the Company, except as may be necessary in the ordinary
course of performing the Founder's duties to the Company except to the
extent required by applicable law or court order (in each case
following notice to the Company) and except for disclosure to the
Founder's attorneys and assessments for tax, estate planning on legal
purposes. The restrictions set forth in this Section 1(b) will not
apply to information which is or becomes known to the public or in the
trade, unless such knowledge results from an unauthorized disclosure by
the Founder, but this exception will not affect the application of any
other provision of this Agreement to such information in accordance
with the terms of such provision.
(c) Documents, Records, etc. All documents, records, apparatus,
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equipment and other physical property, whether or not pertaining to
Confidential Information, furnished to the Founder by the Company or
produced by the Founder in connection with the Founder's employment
will be and remain the sole property of the Company. The Founder will
return to the Company all such materials and property as and when
requested by the Company. In any event, the Founder will return all
such materials and property immediately upon termination of the
Founder's employment for any reason. The
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Founder will not retain with the Founder any such material or property
or any copies thereof after such termination, except that one copy of
any such materials may be delivered to independent counsel for the
Company to the extent the Founder deems it reasonably necessary to
preserve any of its rights hereunder, provided that such independent
counsel is reasonably acceptable to the Company, and the Founder
provides prior notice to the Company describing any such materials and
such independent counsel agrees to keep such material confidential.
(d) Ownership of Inventions and Developments. The Founder agrees
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that all Company-Related Inventions and Developments which the Founder
conceives, creates or develops, in whole or in part, either alone or
jointly with others, prior to or during the course of the Founder's
employment with the Company will be the sole property of the Company.
The Founder agrees that the Company will be the sole owner of all
patents, copyrights and other proprietary rights in and with respect to
such Company-Related Inventions and Developments. To the fullest extent
permitted by law, such Company-Related Inventions and Developments will
be deemed works made for hire. The Founder hereby transfers and assigns
to the Company any proprietary rights which the Founder may have or
acquire in any such Company-Related Inventions and Developments. The
Founder agrees to execute any documents and take any actions that may
be required to effect and confirm such transfer and assignment and
waiver. The provisions of this Section 1(d) will apply to all Company-
Related Inventions and Developments which are conceived, created or
developed during the course of the Founder's employment with the
Company, whether before or after the date of this Agreement, and
whether or not further development or reduction to practice may take
place after termination of the Founder's employment, for which purpose
it will be presumed that any Company-Related Inventions and
Developments conceived by the Founder which are reduced to practice
within one year after termination of the Founder's employment were
conceived during the course of the Founder's employment with the
Company unless the Founder is able to establish a later conception date
by clear and convincing evidence. The provisions of this Section 1(d)
will not apply, however, to any Inventions and Developments which may
be disclosed in a separate Schedule attached to this Agreement prior to
its acceptance by the Company, representing Inventions and Developments
made by the Founder prior to the Founder's employment by the Company.
(e) Disclosure of Inventions and Developments. The Founder
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agrees promptly to disclose to the Company, or any persons designated
by it, all Company-Related Inventions and Developments which are or may
be subject to the provisions of Section 1(d).
(f) Obtaining and Enforcing Proprietary Rights. The Founder
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agrees to assist the Company, at the Company's request from time to
time and at the Company's expense, to obtain and enforce patents,
copyrights or other proprietary rights with respect to Company-Related
Inventions and Developments in any and all countries. The Founder
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will execute all documents reasonably necessary or appropriate for this
purpose. This obligation will survive the termination of the Founder's
employment, provided that the Company will compensate the Founder at a
reasonable rate after such termination for time actually spent by the
Founder at the Company's request on such assistance. In the event that
the Company is unable for any reason whatsoever to secure the Founder's
signature to any document reasonably necessary or appropriate for any
of the foregoing purposes (including renewals, extensions,
continuations, divisions or continuations in part), the Founder hereby
irrevocably designates and appoints the Company and its duly authorized
officers and agents as the Founder's agents and attorneys-in-fact to
act for the Founder and on the Founder's behalf, but only for the
purpose of executing and filing any such document and doing all other
lawfully permitted acts to accomplish the foregoing purposes with the
same legal force and effect as if executed by the Founder.
(g) Third-Party Agreements and Rights. The Founder hereby
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confirms that the Founder is not bound by the terms of any agreement
with any previous company or other party which restricts in any way the
Founder's use or disclosure of information or the Founder's engagement
in any business. The Founder represents to the Company that the
Founder's execution of this Agreement, the Founder's employment with
the Company and the performance of the Founder's proposed duties for
the Company will not violate any obligations the Founder may have to
any such previous company or other party. In the Founder's work for the
Company, the Founder will not disclose or make use of any information
in violation of any agreements with or rights of any such previous
company or other party, and the Founder will not bring to the premises
of the Company any copies or other tangible embodiments of non-public
information belonging to or obtained from any such previous employment
or other party.
(h) Non-competition and Non-solicitation. For a period
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beginning on the date hereof and ending on the later of the fourth
anniversary of the date hereof and the second anniversary of the date
on which the Founder ceases to be employed by the Company for any
reason whatsoever, the Founder, directly or indirectly, whether as
owner, sole proprietor, partner, shareholder, director, consultant,
agent, Founder, co-venturer or otherwise, (i) will not engage,
participate or invest in any business activity anywhere in the world
which develops, manufactures or markets products or performs services
which are competitive with the products or services of the Company at
the time of the Founder's termination, or products or services which
the Company has under development at the time of the Founder's
termination or which are the subject of active planning at any time
during the course of the Founder's employment (and which active
planning is not thereafter abandoned); provided, however, that the
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Founder may own, as a passive investor, publicly-traded securities of
any corporation which competes with the business of the Company so long
as such securities do not, in the aggregate, constitute more than 1% of
any class of outstanding securities of such corporation, (ii) will
refrain from hiring or attempting to employ, recruiting or otherwise
soliciting, inducing or influencing any person to leave employment with
the Company or its resellers or distributors, and (iii)
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will refrain from directly or indirectly soliciting business from any
of the Company's customers, end users, resellers or distributors on
behalf of any business which competes with the Company. The Founder
understands that the restrictions set forth in this Section 1(h) are
intended to protect the Company's interest in its Proprietary
Information and established customer relationships and goodwill, and
agrees that such restrictions are reasonable and appropriate for this
purpose.
(i) Injunction. The Founder agrees that it would be difficult
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to measure any damages caused to the Company which might result from
any breach by the Founder of the promises set forth in this Agreement,
and that in any event money damages would be an inadequate remedy for
any such breach. Accordingly, the Founder agrees that if the Founder
breaches, or proposes to breach, any portion of this Agreement, the
Company shall be entitled, in addition to all other remedies that it
may have, to an injunction or other appropriate equitable relief to
restrain any such breach without showing or proving any actual damage
to the Company.
2. Extent of Service. So long as the Founder is employed by the
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Company, the Founder shall devote all of the Founder's business time, attention
and energies, best efforts and business judgment, skill and knowledge to the
advancement of the Company's interests and to the discharge of the Founder's
duties and responsibilities hereunder. The Founder shall not engage in any other
business activity, except as may be approved by two-thirds of the Board of
Directors; provided, however, that nothing herein shall be construed as
preventing the Founder from the following:
(a) investing the Founder's assets in any other entity in a
manner not prohibited by Section 1(h) hereof and in such form or manner
as shall not require any material services on the Founder's part in the
operations or affairs of the companies or other entities in which such
investments are made; or
(b) acting as director of other companies so long as in a manner
not prohibited by Section 1(h); or
(c) engaging in religious, charitable or other community or
non-profit activities that do not impair the Founder's ability to
fulfill the Founder's duties and responsibilities consistent with the
foregoing.
3. No Employment Obligation. The Founder understands and agrees
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that this Agreement does not create an obligation on the part of the Company to
continue the Founder's employment by the Company. The Founder acknowledges and
agrees that, except as expressly provided in any subsequent agreement to the
contrary, he is an employee "at will."
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4. Inclusion of Company's Subsidiaries. For the purposes of Sections
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1, 2, 3 and 5 hereof, all references to "Company" shall be deemed to include the
Company and each of its subsidiaries, as in existence from time to time.
5. Integration. This Agreement and the Stock Purchase Agreement
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constitute the entire agreements between the parties with respect to the subject
matter hereof and supersede all prior agreements between the parties with
respect to any related subject matter.
6. Assignment; Successors and Assigns, etc. Neither the Company nor
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the Founder may make any assignment of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party; provided, however, that the Company may assign its rights under this
Agreement without the consent of the Founder in the event that the Company shall
hereafter effect a reorganization, consolidate with or merge into any other
corporation, partnership, organization or other entity, or transfer all or
substantially all of its properties or assets to any other corporation,
partnership, organization or other entity in which even for purposes of Section
1(h) hereof as used in determining the scope of the Company's business,
references to the Company shall be deemed to refer to the Company immediately
prior to such reorganization, consolidation or merger. This Agreement shall
inure to the benefit of and be binding upon the Company and the Founder, their
respective successors, executors, administrators, heirs and permitted assigns.
7. Enforceability. If any portion or provision of this Agreement
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shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
8. Waiver. No waiver of any provision hereof shall be effective
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unless made in writing and signed by the waiving party. The failure of any party
to require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
9. Notices. Any notices, requests, demands and other communications
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provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, return
receipt requested, to the Founder at the last address the Founder has filed in
writing with the Company or, in the case of the Company, at its main offices,
attention of the Chairman of the Board of Directors.
10. Amendment. This Agreement may be amended or modified only by a
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written instrument signed by the Founder and by a duly authorized representative
of the Company.
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11. Governing Law. This is a Colorado contract and shall be
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construed under and be governed in all respects by the internal laws of the
State of Colorado, without giving effect to its conflicts of law principles.
12. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which when so executed and delivered shall be taken to be
an original; but such counterparts shall together constitute one and the same
document.
13. Payment. In consideration of the covenants set forth in this
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Agreement and provided that the Founder is not in material breach of this
Agreement, the Company agrees to pay to the Founder, by certified or bank
cashier's check or by wire transfer, the sum of $1,500,000 on the date hereof,
$500,000 on the first anniversary of the date hereof and $500,000 on the second
anniversary of the date hereof. The Founder acknowledges that such payments
shall be deemed as payment in full by the Company for the performance of such
covenants by the Founder.
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized officer, and by the Founder,
as of the date first above written.
COMPANY:
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R&D SYSTEMS COMPANY
By: /s/ XX XXXXXXXXXX
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Name:
Title:
FOUNDER:
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/s/ XXX X. XXXXXX
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Xxx X. Xxxxxx
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