Exhibit 10.16
NON-COMPETITION AGREEMENT
AGREEMENT by and between Cannondale Corporation, a Delaware corporation
(the "Company"), and _____________ (the "Executive"), dated as of the ___ day of
_______, ____.
WHEREAS, the Executive has served as a member of the Board of Directors
(the "Board") and/or executive officer of the Company, and in such capacities
has acquired and possesses confidential information and unique knowledge
regarding the businesses and operations of the Company; and
WHEREAS, the Company has requested, and Executive has agreed, that the
Executive shall enter into this Non-Competition Agreement upon the terms and
conditions of this Agreement, all as more fully described herein.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below:
(a) "ANNUAL BASE SALARY" shall mean that amount equal to 12 times the
highest monthly base salary paid or payable, including any base salary which has
been earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the twelve-month period immediately preceding the month
in which the Effective Date occurs.
(b) "Change of Control" shall mean:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (i) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities");
PROVIDED, HOWEVER, that for purposes of this subsection (b)(i), the following
acquisitions shall not constitute a Change of Control: (A) any acquisition
directly from the Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (D)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of subsection (b)(iii) of this Section 1; or
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board;
PROVIDED, HOWEVER, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination would
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be;
(B) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination; and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(c) "Change of Control Period" shall mean the period commencing on
February 5, 2000 and ending on the third anniversary of such date; PROVIDED,
HOWEVER, that commencing on the date one year after February 5, 2000, and on
each annual anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the "Renewal Date"), unless
previously terminated, the Change of Control Period shall be automatically
extended so as to terminate three years from such Renewal Date, unless at least
60 days prior to the Renewal
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Date the Company shall give notice to the Executive that the Change of Control
Period shall not be so extended.
(d) "Disability" shall mean the absence of the Executive from the
Executive's duties with the Company on a full-time basis for 180 consecutive
business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative.
(e) "Effective Date" shall mean the date during the Change of Control
Period on which the Executive's employment with the Company is terminated (other
than for death or Disability) after a Change of Control has occurred. Anything
in this Agreement to the contrary notwithstanding, if a Change of Control occurs
and if the Executive's employment with the Company is terminated prior to the
date on which the Change of Control occurs, and if it is reasonably demonstrated
by the Executive that such termination of employment (i) was at the request of a
third party who has taken steps reasonably calculated to effect a Change of
Control or (ii) otherwise arose in connection with or anticipation of a Change
of Control, then for all purposes of this Agreement the "Effective Date" shall
mean the date immediately prior to the date of such termination of employment.
(f) "Highest Annual Bonus" shall mean the higher of (i) the Executive's
highest profit sharing bonus under the Company's profit sharing plan for the
last three consecutive full fiscal years prior to the Effective Date (annualized
in the event that the Executive was not employed by the Company for the whole of
such fiscal year), or (ii) the annual bonus paid or payable, including any bonus
or portion thereof which has been earned but deferred, for the most recently
completed fiscal year (annualized in the event that the Executive was not
employed by the Company for the whole of such fiscal year).
2. NON-COMPETITION. (a) The Executive agrees that he shall not, for a
period of two years following the Effective Date (the "Non-Competition Period"),
without the prior written consent of the Company, directly or indirectly
(whether as a sole proprietor, partner, venturer, stockholder, director,
officer, consultant, member, employee or in any other capacity as principal or
agent or through any person, corporation, partnership, entity or employee acting
as nominee or agent) conduct or engage in or be interested in or associated with
any firm, association, syndicate, partnership, company, corporation or other
entity which conducts or engages in the bicycle or motorsports manufacturing,
marketing or distribution business, or any other business engaged in by the
Company on the Effective Date, in any geographic areas in which the Company is
then so engaged in business, nor shall Executive interfere with, disrupt or
attempt to disrupt the relationship, contractual or otherwise, between the
Company, on the one hand, and any customer, supplier, lessor or lessee of the
Company, on the other hand, nor shall the Executive directly or indirectly
solicit or induce any Company employee to leave the employ of the Company or
hire or attempt to hire any such employee to provide any services to any person
or entity that competes with the Company or is preparing to compete with the
Company, or with which the Company is preparing to compete; PROVIDED, HOWEVER,
that this Section 2 shall not prohibit the Executive from owning beneficially or
of record not more than 1% of the
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outstanding equity securities of any entity whose equity securities are
registered under the Exchange Act or are listed for trading on any United States
or foreign stock exchange or quotation system.
(b) It is the desire and intent of the parties that the provisions of
this Section 2 shall be enforced in the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which employment is
sought. Accordingly, if any particular portion of this Section 2 shall be
adjudged to be invalid or unenforceable, the court shall have the power to amend
the duration or geographic scope of this Section 2 or delete therefrom the
portion determined to be invalid or unenforceable, such amendment or deletion to
apply only with respect to the operation of this paragraph in the particular
jurisdiction in which such adjudication is made.
3. CONSIDERATION FOR COVENANT NOT TO COMPETE. In consideration of the
Executive's covenant set forth in Section 2 hereof, the Company shall pay to the
Executive in a lump sum in cash within 30 days after the commencement of the
Non-Competition Period an amount equal to the product of (i) two and (ii) the
sum of (x) the Executive's Annual Base Salary at the time of a Change of Control
and (y) the Highest Annual Bonus. In event of the death or Disability of the
Executive during the Non-Competition Period, no repayment to the Company of any
amount already paid to the Executive hereunder shall be required.
4. SUCCESSORS. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
5. MISCELLANEOUS. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
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(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
IF TO THE EXECUTIVE:
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c/o Cannondale Corporation
16 Trowbridge Drive
Bethel, Connecticut 06810
IF TO THE COMPANY:
Cannondale Corporation
16 Trowbridge Drive
Bethel, Connecticut 06810
Attention: Chief Executive Officer
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceablility of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder shall not be deemed to be
a waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will" and
may be terminated by either the Executive or the Company at any time, in which
case the Executive shall have no further rights under this Agreement.
(g) The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any setoff, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the
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Executive under any of the provisions of this Agreement and such amounts shall
not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive or others of
the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
federal rate provided for in Section 7872 (f)(2)(A) of the Internal Revenue Code
of 1986, as amended.
(h) Each party acknowledges that money damages are an inadequate remedy
for a breach of this Agreement because of the difficulty of ascertaining the
amount of damage that will be suffered by the non-breaching party in the event
that this Agreement is breached. Therefore, the parties agree that the
non-breaching party may obtain specific performance of this Agreement and
injunctive relief against any breach hereof without the posting of a bond or
other security and without proof of actual damages. Each party shall be liable
for any breach of this Agreement.
(i) This Agreement may be signed in counterparts, each of which
together shall constitute one and the same instrument. This Agreement supersedes
all prior agreements and constitutes the entire understanding of the parties
hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to authorization from its Board, the Company has caused these
presents to be executed in its name on its behalf, all as of the date first
above written.
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CANNONDALE CORPORATION
By:
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Name:
Title:
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