Exhibit 10.5
CONFIDENTIALITY AND NONCOMPETITION AGREEMENT
AGREEMENT made as of February 28, 1997 between The Cobalt Group, Inc.,
a Washington corporation (the "Company"), and John Holt ("Executive").
The Company and Executive desire to enter into an agreement (i)
defining the relative rights of the Company and Executive with respect to
Intellectual Property (as defined below) owned by the Company or its customers
or clients to which Executive may have access or may contribute as a result of
Executive's employment with the Company and (ii) setting forth the obligation of
Executive to refrain from competing with the Company during his employment with
the Company and for a period of time thereafter as provided herein.
The execution and delivery of this Agreement by the Company and
Executive is a condition to the purchase of shares of the Company's Series A
Preferred Stock by certain investors pursuant to a Purchase Agreement dated as
of this date (the "Purchase Agreement").
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and Executive hereby agree as
follows:
1. NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION.
(a) Executive will not disclose or use at any time, either during
his employment with the Company or thereafter, any Confidential Information (as
defined below) of which Executive is or becomes aware, whether or not such
information is developed by him, except to the extent that such disclosure or
use is directly related to and required by Executive's performance of duties
assigned to Executive by the Company. Executive will take all appropriate steps
to safeguard Confidential Information and to protect it against disclosure,
misuse, espionage, loss and theft.
(b) As used in this Agreement the term "Confidential Information"
means information that is not generally known in the industry or to the public
and that is used, developed or obtained by the Company in connection with its
business, including but not limited to (i) products or services, (ii) fees,
costs and pricing structures, (iii) designs, (iv) analysis, (v) drawings,
photographs and reports, (vi) computer software, including operating systems,
applications and program listings, (vii) flow charts, manuals and documentation,
(viii) data bases, (ix) accounting and business methods, (x) inventions,
devices, new developments, methods and processes, whether patentable or
unpatentable and whether or not reduced to practice, (xi) customers and clients
and customer or client lists, (xii) other copyrightable works, (xiii) all
technology and trade secrets, and (xiv) all similar and related information in
whatever form.
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2. THE COMPANY'S OWNERSHIP OF INTELLECTUAL PROPERTY. In the event
that Executive as part of his activities on behalf of the Company generates,
authors or contributes to any invention, design, new development, device,
product, method or process (whether or not patentable or reduced to practice or
comprising Confidential Information), any copyrightable work (whether or not
comprising Confidential Information) or any other form of Confidential
Information relating to the Company's business as now or hereinafter conducted
during the period Executive is employed by the Company (collectively,
"Intellectual Property"), Executive acknowledges that such Intellectual Property
is the exclusive property of the Company and hereby assigns all right, title and
interest in and to such Intellectual Property to the Company. Any copyrightable
work prepared in whole or in part by Executive as part of his activities on
behalf of the Company will be deemed "a work made for hire" under Section 201(b)
of the 1976 Copyright Act, as amended, and the Company will own all of the
rights comprised in the copyright therein. Executive will promptly and fully
disclose all Intellectual Property to the Company and will cooperate with the
Company to protect the Company's interests in and rights to such Intellectual
Property.
3. DELIVERY OF MATERIALS UPON TERMINATION OF EMPLOYMENT. As
requested by the Company from time to time and upon the termination of
Executive's employment with the Company for any reason, Executive will promptly
deliver to the Company all copies and embodiments, in whatever form, of all
Confidential Information or Intellectual Property in Executive's possession or
within his control (including, but not limited to, written records, notes,
photographs, manuals, notebooks, documentation, program listings, flow charts,
magnetic media, disks, diskettes, tapes and all other materials containing any
Confidential Information or Intellectual Property) irrespective of the location
or form of such material and, if requested by the Company, will provide the
Company with written confirmation that all such materials have been delivered to
the Company.
4. NONCOMPETITION. Executive acknowledges and agrees with the
Company that Executive's services to the Company are unique in nature and that
the Company would be irreparably damaged if Executive were to provide similar
services to any person or entity competing with the Company or engaged in a
similar business. Executive accordingly covenants and agrees with the Company
that during the period commencing with the date of this Agreement and ending on
the third anniversary of the date of the termination of Executive's employment
with the Company for any reason (the "Noncompetition Period"), Executive will
not, directly or indirectly, either for himself or for any other individual,
corporation, limited liability company, partnership, joint venture or other
entity, Participate in any business (including, without limitation, any
division, group or franchise of a larger organization) anywhere in the world
which sells, proposes to sell, or represents or serves as an agent to a third
party proposing to sell any product or service competing with any product or
service of the Company's to any Person or its affiliates to whom the Company has
sold such of its products or services within the three years prior to
Executive's Participation in any such business. In addition, the Executive
agrees that, while employed by the Company, he will (a) pursue any and all
future opportunities involving products, technologies or markets of the Company
exclusively for the Company and (b) devote his full and complete efforts to the
Company's business. For purposes of this Agreement, the terms "Participation"
and "Participate in" will include, without limitation, having any direct or
indirect interest in any corporation, limited liability company, partnership,
joint
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venture or other entity, whether as a sole proprietor, owner, member,
stockholder, partner, joint venturer, creditor or otherwise, or rendering any
direct or indirect service or assistance to any individual, corporation, limited
liability company, partnership, joint venture and other business entity (whether
as a director, officer, member, manager, supervisor, employee, agent, consultant
or otherwise).
5. NONSOLICITATION. During the Noncompetition Period, Executive
shall not (i) induce or attempt to induce any employee of the Company to leave
the employ of the Company, or in any way interfere with the relationship between
the Company and any employee thereof, (ii) hire directly or through another
entity any person who was an employee of the Company at any time during the
Noncompetition Period, or (iii) induce or attempt to induce any customer,
supplier, licensee or other business relation of the Company to cease doing
business with the Company, or in any way interfere with the relationship between
any such customer, supplier, licensee or business relation and the Company.
6. NOTICES. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
To the Company: The Cobalt Group, Inc.
2030 First Avenue, Suite 300
Seattle, Washington 98121
Attention: Chief Executive Officer
With a copy to: First Analysis Corporation
Sears Tower, Suite 9500
233 South Wacker Drive
Chicago, Illinois 60606
Attention: Mark Koulogeorge
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To Executive: John Holt
3001 10th Avenue West
Seattle, WA 98119
or such other address or to the attention of such other person as the recipient
party will have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
7. GENERAL PROVISIONS.
(a) COMPANY SUBSIDIARIES. For purposes of this Agreement, the term
"Company" shall include all subsidiaries of the Company, if any.
(b) NOT AN EMPLOYMENT AGREEMENT. Executive and the Company
acknowledge and agree that this Agreement is not intended and should not be
construed to grant Executive any right to continued employment with the Company
or to otherwise define the terms of Executive's employment with the Company.
(c) ABSENCE OF CONFLICTING AGREEMENT. Executive hereby warrants
and covenants that his employment by the Company and his execution, delivery and
performance of this Agreement do not and will not result in a breach of the
terms, conditions or provisions of any agreement, order, judgment or decree to
which Executive is subject.
(d) SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. The
parties agree that a court of competent jurisdiction making a determination of
the invalidity or unenforceability of any term or provision of Section 4 of this
Agreement will have the power to reduce the scope, duration or area of any such
term or provision, to delete specific words or phrases or to replace any invalid
or unenforceable term or provision in Section 4 with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement will be
enforceable as so modified.
(e) COMPLETE AGREEMENT. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
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(f) COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(g) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement will bind and inure to the benefit of and be enforceable by the
Company and Executive and their respective successors and assigns; provided that
the rights and obligations of Executive under this Agreement will not be
assignable without the prior written consent of Executive and the Company.
(h) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Illinois without
giving effect to any choice or conflict of law provision or rule (either of the
State of Illinois or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Illinois.
(i) REMEDIES. Each of the parties to this Agreement will be
entitled to enforce its rights under this Agreement specifically, to recover
damages and costs (including reasonable attorneys fees) caused by any breach of
any provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that Executive's breach of any
term or provision of this Agreement will materially and irreparably harm the
Company, that money damages will accordingly not be an adequate remedy for any
breach of the provisions of this Agreement by Executive and that the Company in
its sole discretion and in addition to any other remedies it may have at law or
in equity may apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
(j) AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and
Executive.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
THE COBALT GROUP, INC.
By
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Its
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John Holt
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Schedule to Exhibit 10.5
The Company has entered into a similar Confidentiality and Noncompetition
Agreement on the same terms set forth above with Geoffrey Barker, dated February
28, 1997.
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