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CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
AGREEMENT, dated as of January 14, 2004, by and among DISTINCTIVE DEVICES
INC., a Delaware corporation ("DDI"), galaxis technology ag, a German
corporation (the "Company"), MEDIA HILL COMMUNICATION BERATUNGS-UND VERTRIEBS
GMBH, a German limited liability company ("Media Hill"), XXXXXXXX X. XXXXXX ("X.
Xxxxxx") and XXXX-XXXXXX XXXXXX ("X. Xxxxxx", together with Media Hill and X.
Xxxxxx sometimes each individually a "Covenantor" and collectively, the
"Covenantors").
WHEREAS, concurrently with the execution and delivery of this
Agreement, DDI is purchasing the outstanding capital stock of the Company from
Media Hill pursuant to a Share Purchase Agreement between DDI and Media Hill;
WHEREAS, the business of the Company involves the development of
certain technology relating to digital television software and set-top box
technology which it markets in the European Union, and which technology is
proprietary to the Company, and a primary reason for DDI's interest in the
Company;
WHEREAS, X. Xxxxxx is the principal shareholder and CEO of Media Hill
and X. Xxxxxx is CEO of the Company, and in such positions each of them has
knowledge of and access to confidential and proprietary information of the
Company;
WHEREAS, to induce DDI to enter into and close the Share Purchase
Agreement, each of the Covenanters agrees to the restrictions set forth herein;
NOW, THEREFORE, in consideration for the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Covenantors agree as
follows:
1. Definitions. As used herein, the following words have the meanings
specified:
1.1 "Confidential Information" means:
1.1.1 trade secrets concerning the business and affairs of the
Companies, product specifications, data, know-how, formulae, compositions,
processes, software programs and applications, samples, inventions and ideas,
past, current, and planned research and development, customer lists, current and
anticipated customer requirements, price lists, market studies, and any other
information, however documented, that is a trade secret within the meaning of
German law;
1.1.2 information concerning the business and affairs of the Companies
(which includes historical financial statements, financial projections and
budgets, historical and projected sales, spending budgets and plans, the names
and backgrounds of key personnel, personnel training and techniques and
materials, however documented); and
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1.1.3 notes, analysis, compilations, studies, summaries, and other
material prepared by or for the Company or for the Companies or based, in whole
or in part, on any information included in the foregoing.
However, Confidential Information does not include any information that may be
in the public domain or come into the public domain not as a result of a breach
by the Covenantors of any of the terms or provisions of this Agreement.
1.2 "Companies" means the Company and its subsidiaries, whether presently
owned or hereafter created or acquired.
1.3 "Creations" means any and all manuscripts, writings, pictorial
materials and other creations.
1.4 "Inventions" means
1.4.1 any idea, invention, technique, modification, process or
improvement (whether patentable or not);
1.4.2 any industrial design (whether registerable or not); and
1.4.3 any work of authorship created, conceived, or developed by any
of the Companies, either solely or in conjunction with others,
that relates in any way to the business then being conducted or proposed to be
conducted by the Companies and any such item created by the Companies, either
solely or in conjunction with others, that is based upon or uses Confidential
Information.
1.5 "Non-Compete Period" means the period of time commencing on, and
ending three (3) years from, the date hereof.
1.6 "Territory" means the economic area of the European Union.
2. Confidential Information.
2.1 Non-Disclosure. Each Covenantor agrees that he or it will hold in
confidence the Confidential Information and will not disclose (in writing or
orally) such Confidential Information to any unauthorized persons except with
the specific prior written consent of the Company or DDI, or except as otherwise
expressly permitted by the terms of this Agreement or except as to X. Xxxxxx in
connection with his employment with the Company.
2.2 Trade Secrets. Any trade secrets of the Companies shall be entitled to
all of the protections and benefits under German law and any other applicable
law. If any information that the Company deems to be a trade secret is found by
a court of competent jurisdiction not to be a trade secret for purposes of this
Agreement, such information will, nevertheless, be considered Confidential
Information for purposes of this Agreement. The Covenantors hereby waive any
requirement that the Company or DDI submit proof of the economic value of any
trade secret or post a bond or other security.
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3. Non-Competition and Non-Interference Agreement.
3.1 Restriction. As an inducement for DDI to enter into and close the
Share Purchase Agreement and as additional consideration thereunder, each
Covenantor (except as to X. Xxxxxx in the course of his employment with the
Company) agrees that he or it will not, directly or indirectly:
3.1.1 During the Non-Compete Period, engage or invest in, own, manage,
operate, finance, control or participate in the ownership, management,
operation, financing, or control of, be employed, be associated with, or in any
manner connected with, lend such Covenantor's name or any similar name to, lend
such Covenantor's credit to or render services or advice to, any business in the
Territory whose products or activities compete in whole or in part with the
products or activities of the Companies; provided, however, that any Covenantor
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 publicly traded on
any securities exchange or automated quotation system;
3.1.2 Whether for the Covenantor's own account or for the account of
any other person, at any time during the Non-Compete Period, solicit business in
the Territory of the same or similar type being carried on by the Companies from
any person known by such Covenantor to be a customer of the Companies whether or
not such Covenantor had personal contact with such person;
3.1.3 Whether for such Covenantor's own account or the account of any
other person (i) at any time during the Restricted Period, solicit, employ, or
otherwise engage as an employee or independent contractor any person who is or
was an employee of or independent contractor to the Companies at any time during
the Non-Compete Period or in any manner induce or attempt to induce any employee
of the Companies to terminate his employment with the Company, or (ii) at any
time during the Non-Compete Period, interfere with the Company's relationship
with any person, including any person who at any time during the Non-Compete
Period was an employee, contractor, supplier or customer of the Company; or
3.1.4 At any time during or after the Non-Compete Period, disparage
the Company, its shareholders, directors, officers, employees or agents.
3.2 Reformation. If any covenant in this Section 3 is held to be
unreasonable, arbitrary, or against public policy, such covenant will be
considered to be divisible with respect to scope, time, and geographic area, and
such lesser scope, time, or geographic area or all of them, as a court of
competent jurisdiction may determine to be reasonable, not arbitrary, and not
against public policy, will be effective, binding, and enforceable against the
Covenantors.
3.3 Extension. The period of time applicable to any covenant in this
Section 3 with respect to each Covenantor will be extended by the duration of
any violation by that Covenantor of such covenant.
4. Remedies. In the event of any breach or threatened breach by any Covenantor
of the covenants in this Agreement, the Covenantor specifically recognizes that
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the remedies of DDI and the Company at law may be inadequate and that DDI and
/or the Company shall be entitled to all equitable and such other relief,
including injunctions, as may be appropriate. Such relief shall not be exclusive
of any other rights that DDI or the Company may have at law or in equity. All
rights and remedies of DDI and the Company hereunder shall be cumulative and not
alternative. In the event DDI or the Company commences any action to enforce its
rights under this Agreement, the Covenantor against which any such action is
commenced shall bear the expenses (including reasonable attorneys' fees) of DDI
or the Company, except to the extent otherwise determined by the tribunal where
the action is commenced.
5. Severability. If any term or provision of this Agreement shall be
determined to be invalid or unenforceable to any extent or in any application
or in any jurisdiction, then the remainder of this Agreement, and of such terms
or provision except to such extent or in such application or such jurisdiction,
shall not be affected thereby, and each and every term and provision of this
Agreement shall be enforced to the fullest extent and in the broadest
application which a court of competent jurisdiction would deem valid and
enforceable.
6. Representations and Warranties. Each of the parties hereto represents and
warrants to the other parties hereto that the statements in the recitals
concerning such party are true and correct and that this Agreement constitutes a
valid and legally binding obligation of such party enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith, and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
7. Notices. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if delivered by hand, sent by recognized
overnight courier or mailed (postage prepaid) to the parties to this Agreement,
to the addresses set forth below or such other address as any party hereto may
hereafter duly give to the other parties:
If to DDI:
Distinctive Devices Inc.
Xxx Xxxxxx Xxxxx
Xxxxx 000
Xxxx Xxx, Xxx Xxxxxx 00000
Attn: Xxxxxx Xxxx, President & CEO
If to Media Hill:
Media Hill Communication Beratungs- und Vertriebs GmbH
Xxxxxxxxxxxxx 0
00000 Xxxxxxxx
Xxxxxxx
Attn: Xxxx-Xxxxxx Xxxxxx
If to X. Xxxxxx:
Xxxx-Xxxxxx Xxxxxx
Xxxxxxxxxxxxxxxx 0
00000 Xxxxxxxx
Xxxxxxx
If to X. Xxxxxx
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Xxxxxxxx X. Xxxxxx
Xxxxxxxx Xxxxxxx 0
00000 Xxx Xxxxxxxxx
Xxxxxxx
8. Waivers. The waiver by any party hereto of any breach or requirement of any
provision of this Agreement by any other party shall not operate or be construed
as a waiver of any subsequent breach or requirement by such party, whether
similar or different.
9. Assignment. The rights and obligations of the Covenantors under this
Agreement shall be binding upon them and their respective successors, heirs,
administrators and assigns, and shall inure to the benefit of the Company and
DDI and their respective successors and assigns. The Company and DDI may assign
their rights hereunder to (i) an entity resulting or surviving any merger,
consolidation or other reorganization to which the Company or DDI is a party,
(ii) to any affiliate of DDI or (iii) any entity to which the Company may
transfer or sell all or substantially all of the assets and business of the
Company existing at such time.
10. Entire Understanding. This Agreement sets forth the entire agreement and
understanding of the parties with respect to the subject matter hereof, and all
prior and other agreements, oral or written, concerning the same subject matter,
including without limitation all businessmen's discussion, correspondence, and
other writings, are not a part of and are superseded by this Agreement. In the
event of any conflict between the terms and conditions of this Agreement and
those in any other agreement (such as the Share Purchase Agreement or an
employment agreement with X. Xxxxxx) between or among the parties hereto as to
the subject matter herein, the terms and conditions of this Agreement shall
govern.
11. Amendments. This Agreement may not be amended or modified except by a
writing executed by each of the parties hereto, which writing specifically
refers to this Agreement and expressly states that it is intended to amend or
modify this Agreement.
12. Headings. The descriptive headings of this Agreement are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Agreement.
13. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of Germany, without regard to conflict of
laws principles.
14. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be considered an original instrument (whether in original or
facsimile form), but all of which taken together shall be considered one and the
same instrument, and shall become binding when one or more counterparts shall
have been signed by each of the parties.
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IN WITNESS WHEREOF, the parties have caused this agreement to be executed on the
day first written above.
DISTINCTIVE DEVICES INC.
By: /s/ Xxxxxx Xxxx
----------------------------
Name: Xxxxxx Xxxx
Title: President & Chief Executive Officer
MEDIA HILL COMMUNICATION
BERATUNGS- UND VERTRIEBS GMBH
By: /s/ Xxxx-Xxxxxx Xxxxxx
----------------------------
Name: Xxxx-Xxxxxx Xxxxxx
Title: Chief Executive Officer
XXXXXXXX XXXXXX
By: /s/ Xxxxxxxx Xxxxxx
----------------------------
HANS XXXXXX XXXXXX
By: /s/ Hans Xxxxxx Xxxxxx
----------------------------
GALAXIS TECHNOLOGY AG
By: /s/ Xxxxxxxx Xxxxxx
----------------------------
Name: Xxxxxxxx Xxxxxx
Title: Chief Executive Officer
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