1
EXHIBIT 10.23
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT (the "Agreement") is made as of September
29, 1997, by and among DataWorks Corporation, a California corporation
("Parent"), DataWorks Acquisition Sub, Inc., a Delaware corporation ("Merger
Sub"), and Mark Hellinger ("Stockholder").
RECITALS
Stockholder is a stockholder of Interactive Group, Inc., a Delaware
corporation ("Company"). Parent, Merger Sub and Company have entered into an
Agreement and Plan of Merger and Reorganization dated as of July 31, 1997 (the
"Reorganization Agreement"), providing for the acquisition (the "Acquisition")
by Parent of Company pursuant to a merger of Merger Sub and Company (the
"Merger"). Stockholder plans to vote in favor of the Merger and receive all the
benefits of the Merger; and in connection therewith and in exchange for the
additional consideration provided herein, Stockholder has agreed pursuant to and
to the extent permitted by Section 16601 of the Business and Professions Code of
the State of California not to compete with Company in the manner and to the
extent herein set forth. Stockholder is entering into this Agreement as an
inducement to Parent and Merger Sub to consummate the Merger, with all of the
attendant financial benefits to Stockholder as a stockholder of Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein
contemplated and intending to be legally bound hereby, Merger Sub, Parent and
Stockholder agree as follows:
1. ACKNOWLEDGMENTS BY STOCKHOLDER. Stockholder acknowledges that by virtue
of his position with Company he has developed considerable expertise in the
business operations of Company and has had access to extensive confidential
information with respect to Company. Stockholder recognizes that Merger Sub and
Parent would be irreparably damaged, and their substantial investment in Company
materially impaired, if Stockholder were to enter into an activity competing
with Company's business in violation of the terms of this Agreement or if
Stockholder were to disclose or make unauthorized use of any confidential
information concerning the business of Company. Accordingly, Stockholder
expressly acknowledges that he is voluntarily entering into this Agreement and
that the terms and conditions of this Agreement are fair and reasonable to
Stockholder in all respects.
2. CONFIDENTIALITY. Stockholder hereby expressly affirms that any
confidentiality agreement previously entered into between Company and
Stockholder in effect as of the date hereof (the "Confidentiality Agreement") is
and shall remain in full force and effect and Stockholder specifically agrees
that the rights and privileges of Company under the Confidentiality Agreement
shall inure to the benefit of Parent and Merger Sub, to the same extent as if
they were original parties thereto, as well as to Company. Further, Stockholder
hereby expressly agrees that Company's rights under this Agreement are in
addition to, but not in substitution of, its rights under the Confidentiality
Agreement and the Confidentiality Agreement remains in full force and effect.
2
3. NONCOMPETITION. Until the later of (a) three (3) years after completion
of the Merger or (b) two (2) years after termination of Stockholder's employment
with Parent, Stockholder shall not, directly or indirectly, without the prior
written consent of Parent, (i) own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or financing of, or
be connected as an officer, director, employee, partner, principal, agent,
representative, consultant, licensor, licensee or otherwise with, any business
or enterprise engaged in any business which is competitive with the business of
Company, within each of the geographical units which are listed in Appendix A
hereto (the "Territory"), or (ii) engage in any other manner, within the
Territory, in any business which is competitive with the business of Company.
For the purposes of this Section 3, the "business of Company" shall be defined
as set forth in Appendix B hereto (which also includes a list of companies
deemed by the parties to be in competition with the business of Company and
therefore covered by the terms of this Noncompetition Agreement).
Notwithstanding the above, Stockholder shall not be deemed to be engaged
directly or indirectly in any business in contravention of subparagraphs (i) or
(ii) above, if (x) Stockholder participates in any such business solely as a
passive investor in up to 1% of the equity securities of a company or
partnership, the securities of which are publicly traded, or (y) Stockholder is
employed by a business or enterprise that is engaged primarily in a business
other than the business of Company and Stockholder does not apply his expertise
at such business or enterprise to that part of such business or enterprise that
is or could be competitive with the business of Company.
4. NON-INTERFERENCE. Stockholder further agrees that until the later of (a)
three (3) years following completion of the Merger or (b) two (2) years
following termination of Stockholder's employment with Parent, he will not,
without the prior written consent of Parent, (i) interfere with the business of
Company, Parent or Merger Sub, by soliciting, attempting to solicit, inducing,
or otherwise causing any employee or consultant of Company, Parent or Merger Sub
to terminate his or her employment as such in order to become an employee,
consultant or independent contractor to or for any competitor of Company, Parent
or Merger Sub or to or for any company with which Stockholder is associated in
any way; or (ii) induce or attempt to induce any customers, suppliers,
distributors, resellers, or independent contractor of Company to terminate their
relationships with, or to take any action that would be disadvantageous to the
business of, Company.
5. NONCOMPETITION PAYMENT. In consideration of Stockholder's obligations
described herein, concurrent with the Effective Time (as defined in the
Reorganization Agreement) of the Merger, the Company shall pay to Stockholder
the amount of $525,000.
3
6. INDEPENDENCE OF OBLIGATIONS. The covenants of Stockholder set forth in
this Agreement shall be construed as independent of any other agreement or
arrangement between Stockholder, on the one hand, and Merger Sub, Company or
Parent or any of their subsidiaries, on the other, and the existence of any
claim or cause of action by Stockholder against Merger Sub, Company or Parent or
any of their subsidiaries shall not constitute a defense to the enforcement of
such covenants against Stockholder.
7. EQUITABLE RELIEF. Stockholder expressly acknowledges that damages alone
will not be an adequate remedy for any breach by Stockholder of the covenants
set forth in Sections 2, 3, and 4 hereof and that the other parties hereto, in
addition to any other remedies which they may have, shall be entitled, as a
matter of right, to injunctive relief, including specific performance, in any
court of competent jurisdiction with respect to any actual or threatened breach
by Stockholder of any of said covenants.
8. SEVERABILITY, ETC.
(a) If any provision of this Agreement shall be held by a court of competent
jurisdiction to be excessively broad as to duration, activity or subject, it
shall be deemed to extend only over the maximum duration, activity and/or
subject as to which such provision shall be valid and enforceable under
applicable law. If any provisions shall, for any reason, be held by a court of
competent jurisdiction to be invalid, illegal or unenforceable, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement, but this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
(b) The parties intend that the covenant contained in Section 3 above shall
be construed as a series of separate covenants, one for each geographical unit
specified. Except for geographical coverage, each such separate covenant shall
be deemed identical in terms to the covenant contained in Section 3 above. If,
in any judicial proceeding, a court shall refuse to enforce any of the separate
covenants deemed included in this Agreement, then the unenforceable covenant
shall be deemed eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced.
9. NOTICES. All notices or other communications hereunder shall be in
writing and deemed given if and when delivered to a party in person, or if and
when mailed by registered or certified mail, return receipt requested, to the
parties at the addresses set forth below or such other addresses as shall be
specified by notice to the other party hereunder:
4
To Parent or
Merger Sub at:
DataWorks Corporation
5910 Pacific Center Boulevard
San Diego, CA 92121
Attn: President
To Stockholder at:
1211 Santa Luisa Drive
Solana Beach, CA 92075
10. WAIVER OF BREACH. The failure or delay by Parent or Merger Sub in
enforcing any provision of this Agreement shall not operate as a waiver thereof,
and the waiver by Parent or Merger Sub or a breach of any provision of this
Agreement by Stockholder shall not operate or be construed as a waiver of any
subsequent breach or violation thereof. All waivers shall be in writing and
signed by the party to be bound.
11. ASSIGNMENT. This Agreement shall be assignable by Parent or Merger Sub
only to any person, firm or corporation which may become a successor in interest
by purchase, merger or otherwise to Parent, Merger Sub or Company or the
business operated by Parent, Merger Sub or Company. This Agreement is not
assignable by Stockholder.
12. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the Confidentiality
Agreement represent the entire agreement and understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings of the parties in connection therewith (other than the
Confidentiality Agreement). They may not be altered or amended except by an
agreement in writing signed by the parties to be bound.
13. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of Parent and its permitted successors and assigns and Stockholder and
Stockholder's heirs and legal representatives.
14. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California as applied to
contracts entered into between California residents and to be performed entirely
within California.
5
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
STOCKHOLDER
/s/ Mark Hellinger
---------------------------------------
DATAWORKS CORPORATION
By: /s/ Norman R. Farquhar
-----------------------------------
DATAWORKS ACQUISITION SUB, INC.
By: /s/ Norman R. Farquhar
-----------------------------------
6
APPENDIX A
TERRITORY
(1) All counties of California, (2) all other states and territories
of the United States of America and provinces and territories of Canada, and (3)
any other foreign country or territory in which the business of Company is
carried on, or in which Company intends to carry on business.
6.
7
APPENDIX B
BUSINESS
Enterprise Resource Planning (ERP)-related software applications for the
manufacturing and industrial product marketplaces.
7.