EXHIBIT 2.1.2
FORM OF
COBALT NETWORKS, INC.
NON-COMPETITION AGREEMENT
This Non-Competition Agreement is entered into by and between Cobalt
Networks, Inc. ("Parent"), Chili!Soft, Inc., a California corporation (the
"Company") and the undersigned shareholder ("Shareholder") of the Company as of
_________, 2000.
RECITALS
A. WHEREAS, pursuant to that certain Agreement and Plan of Reorganization
(the "Reorganization Agreement") dated as of March 22, 2000, by and between
Parent, Blue Tortilla Acquisition Corp. ("Merger Sub") and the Company, Merger
Sub will merge with and into the Company (the "Merger") and any shares of
Company capital stock owned by Shareholder will be exchanged for Parent Common
Stock and any options to acquire Company Common Stock will be assumed by Parent
and become options to acquire Parent Common Stock;
B. WHEREAS, Shareholder owns an equity interest in the Company (whether
through outstanding capital stock or options to purchase capital stock), has
served as ____________ and has gained substantial knowledge and expertise in
connection with the Company's trade secrets, confidential and proprietary
information, products and customers;
C. WHEREAS, Parent and Shareholder acknowledge that it would be
detrimental to Parent if Shareholder would compete with Parent following the
Merger;
D. WHEREAS, the Company is engaged in the business of designing, producing
and delivering active server page software (the "Business");
E. WHEREAS, it is a condition to Parent's obligation to consummate the
Merger that certain key Shareholders of the Company, including Shareholder,
enter into this Agreement;
F. WHEREAS, as an inducement to Parent to consummate the Merger, and in
consideration of the amounts paid to shareholders of the Company under the
Merger Agreement, Shareholder desires to agree with Parent as further provided
herein.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree as
follows:
1. Acknowledgments by Shareholder. Shareholder acknowledges that the promises
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and restrictive covenants that Shareholder is providing in this Agreement are
reasonable and necessary to the protection of Parent's business and Parent's
legitimate interests in its acquisition of the Company (including the Company's
goodwill) pursuant to the Reorganization Agreement.
2. Non-Competition.
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(a) The parties understand and agree that this Agreement is entered
into in connection with the Merger. The parties further understand and agree
that Shareholder is a key and significant member of the Company, owns a
significant number of shares (or rights to acquire a significant number of
shares) of the Company and that the consummation of the Merger is contingent
upon Shareholder entering into this Agreement. In addition, the parties
understand that prior to the Merger, the Company was engaged in or intended to
engage in the Business worldwide (the "Geographic Scope of Business").
Shareholder further acknowledges that the Company and Parent following the
Merger will continue conducting or intends to conduct such Business in all parts
of the Geographic Scope of the Business.
(b) During the period commencing on the closing date of the Merger
and ending twenty-four months thereafter (the "Restriction Period"), without the
prior written consent of Parent, Shareholder shall not either as an individual
or as an Shareholder, agent, consultant, advisor, independent contractor,
general partner, officer, director, shareholder or investor of any person, firm,
corporation, partnership or other entity participate or engage in an Enterprise
whose business is the design, production and delivery of the software
development, marketing and sales activities as more fully set forth in the
Company's business plan dated ______ and slide presentation dated ____ attached
hereto as Appendix A and B, respectively ("Competitive Activity"). "Enterprise"
shall refer to the subsidiary, division, company or other entity, other than the
Company, at which Shareholder is employed.
Notwithstanding the foregoing, Shareholder may purchase, directly or
indirectly, up to 5% of any class of publicly traded securities of any person or
entity which owns a business engaged in a Competitive Activity or be employed by
or act as a consultant to a subsidiary or division of a corporation engaged in a
Competitive Activity so long as such subsidiary or division is not engaged in a
Competitive Activity and such employment or consulting is not with respect to a
Competitive Activity. For the purposes of this Section 2, the term "publicly
traded securities" shall mean securities that are traded on a national
securities exchange in the United States or listed on the Nasdaq National
Market.
If any restriction set forth in this Section 2 above is held to be
unreasonable or unenforceable, then Shareholder agrees, and hereby submits, to
the reduction and limitation of such prohibition to such area or period as shall
be deemed reasonable.
3. Nonsolicitation. Shareholder further agrees that, during the
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Restriction Period, Shareholder will not, without the prior consent of Parent:
(a) personally or through others, encourage, induce, attempt to
induce, solicit or attempt to solicit (on Shareholder's own behalf or on behalf
of any other person or entity) any employee of the Company, Parent or any of
Parent's subsidiaries to leave his or her employment with the Company, Parent or
any of Parent's subsidiaries;
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(b) personally or through others, employ, or permit any entity for
which Shareholder is employed or over which Shareholder exercises voting control
that conducts or proposes to conduct a Competitive Activity or any software
development activity to employ, any person who shall have terminated his or her
employment with the Company, Parent or any of Parent's subsidiaries at any time
within the previous twelve month period; or
(c) personally or through others, interfere or attempt to interfere
with the commercial relationship or prospective commercial relationship of the
Company, Parent or any of Parent's subsidiaries with any person or entity that
is, was or is expected to become a customer or client of the Company, Parent or
any of Parent's subsidiaries.
4. Independence of Obligations. The covenants and obligations of
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Shareholder set forth in this Agreement shall be construed as independent of any
other agreement or arrangement between Shareholder, on the one hand, and the
Company or Parent, on the other.
5. Specific Performance. Shareholder agrees that in the event of any
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breach by Shareholder of any covenant, obligation or other provision contained
in this Agreement, Parent and the Company shall be entitled (in addition to any
other remedy that may be available to them) to the extent permitted by
applicable law (a) a decree or order of specific performance to enforce the
observance and performance of such covenant, obligation or other provision, and
(b) an injunction restraining such breach or threatened breach.
6. Non-Exclusivity. The rights and remedies of Parent and the Company
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hereunder are not exclusive of or limited by any other rights or remedies which
Parent or the Company may have, whether at law, in equity, by contract or
otherwise, all of which shall be cumulative (and not alternative). Without
limiting the generality of the foregoing, the rights and remedies of Parent and
the Company hereunder, and the obligations and liabilities of Shareholder
hereunder, are in addition to their respective rights, remedies, obligations and
liabilities under the law of unfair competition, misappropriation of trade
secrets and the like.
7. Successors, Assigns, Merger. This Agreement shall be binding upon and
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shall inure to the benefit of Parent, the Company and their respective
successors and assigns. This Agreement shall be binding upon Shareholder and
shall inure to his benefit and to the benefit of his heirs, executors,
administrators and legal representatives, but shall not be assignable by
Shareholder.
8. Entire Agreement. This Agreement constitutes the entire agreement
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between Parent and Shareholder relating to the matters herein provided for. This
Agreement supersedes and replaces any prior verbal or written agreements between
the parties. This Agreement may be amended or altered only in a writing signed
by the Parent and Shareholder.
9. Applicable Law; Severability. This Agreement shall be construed and
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interpreted in accordance with the laws of the State of California without
regard to conflicts of laws and principles. Each provision of this Agreement is
severable from the others, and if any provision hereof shall be to any extent
unenforceable it and the other provisions hereof shall continue to be
enforceable to the full extent allowable, as if such offending provision had not
been a part of this Agreement. Without
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limitation, the parties intend that the covenants contained in this Agreement
shall be severable insofar as the geographic and time restrictions set forth
herein are concerned. If, in any judicial proceedings, a court shall refuse to
enforce the geographic and/or time restrictions imposed herein to their fullest
extent, then the geographic and/or time restrictions set forth herein shall be
reduced to the extent necessary to permit enforcement of the foregoing covenant
to the fullest extent possible.
10. Counterparts. For the convenience of the parties hereto, this
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Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
document.
[Remainder of Page Left Blank Intentionally]
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first written above.
CHILI!SOFT, INC. COBALT NETWORKS, INC.
By:__________________________ By:________________________________________
Stephen W. DeWitt
Print Name:__________________ Chief Executive Officer and President
Title:_______________________
SHAREHOLDER
Shareholder Name:_________________________
By:_______________________________________
Print Name:_______________________________
Title:____________________________________
[Signature Page to Cobalt Networks, Inc. Non-Competition Agreement]