1
EXHIBIT 10.21
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT ("Agreement ") is made and entered into by
and between W. DAVID SYKES ("Shareholder") and IPL SYSTEMS, INC., a
Massachusetts corporation ("Parent") as of June 3, 1997.
RECITALS
WHEREAS, this Agreement is entered into in connection with that certain
Agreement and Plan of Merger and Reorganization dated February 28, 1997 (the
"Merger Agreement") by and among Shareholder, ANDATACO, a California corporation
("Andataco"), Parent and IPL Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of Parent ("Merger Sub"), whereby Merger Sub will be
merged with and into Andataco and Andataco will be the surviving corporation and
become a wholly owned subsidiary of Parent (the "Merger");
WHEREAS, Shareholder is a key employee and the principal shareholder of
Andataco;
WHEREAS, pursuant to the Merger Agreement, Parent will acquire from
Shareholder and certain trusts affiliated with Shareholder all of the
outstanding capital stock of Andataco;
WHEREAS, to protect the value of the business of Andataco being
purchased, including the goodwill attendant thereto, by Parent, and in
consideration of Parent completing the Merger and making payments to Shareholder
in accordance with the terms of this Agreement, Parent desires that Shareholder
enter into, and Shareholder is willing to enter into, this Agreement upon the
term and conditions set forth herein; and
WHEREAS, but for Shareholder entering into this Agreement, Parent would
not have consummated the acquisition of all of the capital stock of Andataco as
contemplated by the Merger Agreement.
AGREEMENT
NOW, THEREFORE, as a material inducement to Parent to purchase all of
the outstanding shares of capital stock of Andataco from Shareholder pursuant to
the Merger Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Parent and Shareholder,
intending to be legally bound, hereby agree as follows:
1. TERM. The term of this Agreement shall be five years from the date of
the consummation of the Merger ( the "Term").
2. CONSIDERATION. In consideration of Shareholder entering into this
Agreement and agreeing to be bound by the terms hereof, Parent shall pay
Shareholder a total consideration of one million and twenty dollars ($1,000,020)
payable in equal monthly installments of sixteen thousand six hundred
sixty-seven dollars ($16,667) per month commencing on the last business
1.
2
day of each month following the date of the consummation of the Merger and
ending on the date of expiration of the Term. No interest shall accrue or be
payable upon any amounts due under this Agreement.
3. COVENANT NOT TO COMPETE. Until the earlier of (a) the expiration of
the Term, (b) Parent ceasing to make the payments to Shareholder as provided in
Section 2 above, or (c) Parent or Andataco ceasing to make the salary or
severance payments to Shareholder as required under the terms of that certain
Employment Agreement between Shareholder and Andataco dated as of February __,
1997 (the "Employment Agreement") or an employment agreement replacing or
amending such Employment Agreement, Shareholder will not, directly or
indirectly, own, operate or control, or be a director, officer, employee,
shareholder or partner of any business, firm, entity or organization that is
similar to, or directly or indirectly competes with, the business of Andataco.
Notwithstanding the foregoing, Shareholder shall not be deemed to be engaged,
directly or indirectly, in any business solely as a passive investor holding
debt or equity securities of such business or if Shareholder is employed by a
business enterprise that is not engaged in the same business as Andataco and
Shareholder does not apply his expertise at such business or enterprise that is
or could be competitive with the business of Andataco.
4. NO SOLICITATION OF CUSTOMERS OR EMPLOYEES. During the Term of this
Agreement, Shareholder will not interfere with the business of Andataco or any
of its affiliates by soliciting or attempting to divert, take away or call on,
directly or indirectly, for himself or for any other person or entity, any
customers of Andataco or any of its affiliates, nor directly or indirectly,
induce or influence any employee, customer, supplier, reseller or distributor of
Andataco or any of its affiliates to terminate his or her relationship with
Andataco or any of its affiliates.
5. NON-DISCLOSURE OF PROPRIETARY INFORMATION. Shareholder will maintain
in confidence and will not disclose to any person, firm, corporation or other
entity any confidential or proprietary information or trade secrets of or
relating to Andataco or any of its affiliates, including, without limitation,
information with respect to its operations, inventories, products, business
practices, finances, principals, vendors, suppliers, customers or potential
customers, marketing methods, costs, prices, compensation paid to employees and
other terms of employment. The parties hereby stipulate and agree that as
between them the foregoing matters are important, material and confidential
proprietary information and trade secrets and affect the successful conduct of
the business of Andataco.
6. BOOKS AND RECORDS. All books, records, conversations, correspondence,
files, lists, data and other information or documents pertaining to or
concerning the business of Andataco or any of its affiliates are confidential
information which may not be disclosed under the provisions of Paragraph 5
hereof and shall be and remain the sole and exclusive property of Andataco or
such affiliate. Shareholder hereby acknowledges and agrees that he does not
have, and shall not assert, any interest in or property right to any such
information or documents.
7. GEOGRAPHICAL AREA OF RESTRICTIONS. The restrictions contained in this
Agreement shall apply in the United States of America which Shareholder hereby
acknowledges
2.
3
and agrees is where Andataco has carried on substantial business and in which
Andataco presently conducts or, after the consummation of the Merger as
contemplated by the Merger Agreement, will conduct, or its affiliates will
conduct, a similar business.
8. SEVERABILITY OF PROVISIONS. Parent and Shareholder agree that the
duration, scope and geographical area for which this Agreement is to be
effective have been specifically negotiated by sophisticated, commercial parties
and specifically agree that such duration, scope and geographical area are
reasonable. If any provision of this Agreement is determined by any court of
competent jurisdiction to be invalid or unenforceable by reason of such
provision extending the covenants and agreements contained herein for too great
a period of time or over too great a geographical area, or by reason of its
being too extensive in any other respect, such agreement or covenant shall be
interpreted to extend only over the maximum period of time and geographical
area, and to the maximum extent in all other respects, as to which it is valid
and enforceable, all as determined by such court in such action. In no event
shall the consideration required to be paid pursuant to Paragraph 2 hereof be
reduced on account of any reduction in the duration, scope or geographical area
of the covenant contained herein. Any determination that any provision hereof is
invalid or unenforceable, in whole or in part, shall have no effect on the
validity or enforceability of any remaining provision hereof.
9. INJUNCTIVE RELIEF. Shareholder acknowledges that any breach by him of
any of the covenants and agreements contained in Sections 3, 4 and 5 herein will
cause irreparable damage to Parent and Andataco, the exact amount of which will
be difficult or impossible to ascertain, and that the remedies at law for any
such breach will be inadequate. Accordingly, Shareholder agrees that Parent and
Andataco shall be entitled to equitable relief in the form of a temporary
restraining order and preliminary or permanent injunctive relief ordering
Shareholder's specific performance of this Agreement and of the covenants and
agreements contained in Sections 3, 4, and 5.
10. NOTICES. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Parent or Andataco:
IPL Systems, Inc.
124 Acton Street
Maynard, MA 01754
Attention: Chief Executive Officer
Facsimile: (508) 461-1321
3.
4
if to Shareholder:
W. David Sykes
2016 Ocean Front
Del Mar, CA 92014
Facsimile: (619) 755-3030
with a copy to (which shall not constitute notice):
Cooley Godward LLP
4365 Executive Drive, Suite 1100
San Diego, CA 92121
Attention: Jeremy D. Glaser, Esq.
Facsimile: (619) 453-3555
All such notices and other communications shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of a telecopy, when the party receiving such telecopy shall have confirmed
receipt of the communication, (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 fifth business day following such
mailing.
11. MODIFICATION. This Agreement may be amended, modified, superseded or
canceled and any of the terms, covenants or provisions hereof may be amended
only by a written instrument executed by both Shareholder and Parent.
12. WAIVER. No waiver of any of the provisions of this Agreement shall
be deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
13. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by Parent
(by operation of law, by merger or otherwise) without Shareholder's prior
written consent. Except for the payment provisions set forth in Section 2 above,
the obligations and rights under this Agreement may not be assigned by
Shareholder but shall inure to the benefit of his executors and heirs. This
Agreement shall be binding upon, and inure to the benefit of, Parent and its
successors and permitted assigns.
14. ATTORNEYS' FEES. In any judicial action or proceeding or arbitration
proceeding between Shareholder and Parent to enforce any of the provisions of
this Agreement, to seek damages on account of the breach hereof, to seek
injunctive relief to prevent the breach or continued breach hereof, to seek a
determination of the rights and obligations of the parties hereunder, regardless
of whether the action or proceeding is prosecuted to judgment and in addition to
any other remedy, the unsuccessful party shall pay the successful party all
costs and expenses, including reasonable attorneys' fees, incurred therein by
the by the successful party.
4.
5
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as such laws are applied to
contracts entered into and performed entirely within the State of California by
California residents.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
IPL SYSTEMS, INC.
By: /s/ IPL SYSTEMS, INC.
--------------------------------------
Name:
--------------------------------
Title:
-------------------------------
/s/ W. DAVID SYKES
-----------------------------------------
W. DAVID SYKES
5.