Non-Competition Agreement - Palm Inc. and Be Inc.
FORM OF NON-COMPETITION AGREEMENT THIS NON-COMPETITION AGREEMENT (the "Agreement") is made as of the Effective Date (as defined below) by and between Palm, Inc., a Delaware corporation ("Parent"), and the undersigned stockholder or optionholder ("Stakeholder") in Be Incorporated, a Delaware corporation ("Seller"). WHEREAS, concurrently with the execution of this Agreement, Parent, an indirect wholly owned subsidiary of Parent ("Buyer") and Seller are entering into an Asset Purchase Agreement dated as of August 16, 2001 (the "Purchase Agreement") pursuant to which Buyer has agreed to purchase certain of the assets (the "Assets") of Seller (the "Purchase"). The Closing Date (as defined in the Purchase Agreement) shall be the "Effective Date" of this Agreement. WHEREAS, in connection with the Purchase, Seller shall receive significant consideration in exchange for the sale of Assets pursuant to the terms of the Purchase Agreement, and it is anticipated that Stakeholder will become an employee of Parent as of the Effective Date. WHEREAS, as a condition to the Purchase, and to preserve the value of the Assets being acquired by Buyer after the Purchase, the Purchase Agreement contemplates, among other things, that Stakeholder shall enter into this Agreement and that this Agreement shall become effective on the Effective Date. WHEREAS, Stakeholder's primary place of employment with Seller is in California. NOW, THEREFORE, in consideration of the mutual promises made herein, Parent and the Stakeholder hereby agree as follows: 1. Covenant Not to Compete or Solicit. (a) Non-Competition. Beginning on the Effective Date and ending on the earlier of: (i) the second anniversary of the Effective Date and (ii) the date of termination of Stakeholder's employment with Parent by Parent for other than Cause (as defined below) (the "Non-Competition Period"), Stakeholder shall not (other than on behalf of Parent), without the prior written consent of Parent, engage in a Competitive Business Activity (as defined below) anywhere in the Restricted Territory (as defined below). Upon termination of the Purchase Agreement without the prior occurrence of the Closing thereunder, this Agreement shall automatically terminate and be of no further force or effect. Solely for purposes of this Agreement, the term "Cause" shall mean: (i) Stakeholder's continued failure to perform his or her duties and responsibilities in good faith and in a commercially reasonable manner for a period of thirty days after written notice thereof from Parent to Stakeholder; (ii) Stakeholder personally engaging in fraud, (iii) Stakeholder being convicted of a felony; (iv) Stakeholder materially breaching any term of this Agreement or any other written agreement between Stakeholder and Parent or any subsidiary of Parent; (v) Stakeholder's commencement of employment or consulting arrangement with another employer while he or she is an employee of Parent or any subsidiary of Parent, without Parent's prior written consent, excluding any service by Stakeholder as an outside member of a board of directors; (vi) material noncompliance by Stakeholder with the human resources policies of Parent generally known by Parent's employees, made known or made available to Stakeholder or delivered in writing to Stakeholder, provided Stakeholder has been provided notice of such noncompliance and fails to cure such noncompliance within thirty (30) days of such notice; (vii) Stakeholder's material nonconformance with Parent's standard business practices and policies generally known by Parent's employees, made known or made available to Stakeholder or delivered in writing to Stakeholder, provided Stakeholder has been provided notice of such nonconformance and fails to cure such nonconformance within thirty (30) days of such notice; or (viii) termination or loss, through no fault or derogation of duty on the part of Parent, of Stakeholder's E-1 <PAGE> employment authorization from the U.S. Immigration and Naturalization Service or the U.S. Department of State reflecting a right to work in the United States. For all purposes hereof, the term "Competitive Business Activity" shall mean: (i) engaging in, or managing or directing persons engaged in any business in competition with Parent's operating systems platform business; (ii) acquiring or having an ownership interest in any entity that derives revenues from any business in competition with Parent's operating systems platform business (except for passive ownership of one percent (1%) or less of any entity whose securities are publicly traded on a national securities exchange or market or five percent (5%) or less of any entity whose securities are not publicly traded on a national securities exchange or market); or (iii) participating in the operation, management or control of any firm, partnership, corporation, entity or business (each, an "Entity") described in clause (ii) of this sentence; provided, however, that Stakeholder shall not be deemed to be engaging in a Competitive Business Activity solely because Stakeholder is employed by, serves as an independent contractor to or is otherwise associated with an Entity that engages in a Competitive Business Activity if (i) Stakeholder is employed in, serves as an independent contractor to or is otherwise associated with a division of such Entity other than the division engaged in a Competitive Business Activity (a "Competing Division") and (ii) the Stakeholder does not provide technical, marketing or other assistance to a Competing Division. For all purposes hereof, the term "Restricted Territory" shall mean each and every country, province, state, city or other political subdivision of North America, Central America, South America, Asia, Australia and Europe in which Parent is currently engaged in business or otherwise distributes, licenses or sells its products. (b) Non-Solicitation. During the Non-Competition Period, Stakeholder shall not (i) solicit, encourage or take any other action which is intended to induce or encourage, or could reasonably be expected to have the effect of inducing or encouraging, any employee of the Parent or any of its subsidiaries to terminate his or her employment with the Parent; provided, however, that any general solicitation of employees not specifically targeted to Parent's employees shall not be deemed a violation of this Section 1(b). (c) The covenants contained in Section 1(a) hereof shall be construed as a series of separate covenants, one for each country, province, state, city or other political subdivision of the Restricted Territory. Except for geographic coverage, each such separate covenant shall be deemed identical in terms to the covenant contained in Section 1(a) hereof. If, in any judicial proceeding, a court refuses to enforce any of such separate covenants (or any part thereof), then such unenforceable covenant (or such part) shall be eliminated from this Agreement to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced. In the event that the provisions of this Section 1 are deemed to exceed the time, geographic or scope limitations permitted by applicable law, then such provisions shall be reformed to the maximum time, geographic or scope limitations, as the case may be, permitted by applicable laws. (d) Stakeholder acknowledges that following the Effective Date, provided he becomes an employee of Parent, he will be subject to Parent's trade secret protection policies and agrees to comply with such policies. (e) Stakeholder acknowledges (without in any way representing to Parent any of the following) that (i) the goodwill associated with the Assets prior to the Purchase is an integral component of the value of Assets to Parent and is reflected in the consideration to be received by Seller, and (ii) Stakeholder's agreement as set forth herein is necessary to preserve the value of the Assets for Parent following the Purchase. Stakeholder also acknowledges that the limitations of time, geography and scope of activity agreed to in this Agreement are reasonable because, among other things, (A) Seller and Parent are engaged in a highly competitive industry, (B) Stakeholder has unique access to, and will continue to have access to, the trade secrets and know-how relating to the Assets, including, without limitation, the plans and strategy (and, in particular, the competitive strategy) relating to the Assets, (C) if Stakeholder becomes an employee of Parent following the Effective Date, Stakeholder is accepting employment with Parent on favorable terms in connection with the Purchase, (D) in the event Stakeholder's employment with Parent ended, Stakeholder E-2 <PAGE> would be able to obtain suitable and satisfactory employment without violation of this Agreement, and (E) this Agreement provides no more protection than is necessary to protect Parent's interests in its goodwill, trade secrets and confidential information. (f) Stakeholder's obligations under this Agreement shall remain in effect if Stakeholder's employment with Parent is terminated for any reason, subject to the provisions of Section 1(a) above. 2. Miscellaneous. (a) Governing Law; Consent to Personal Jurisdiction. This Agreement shall be governed by the laws of the State of California without reference to rules of conflicts of law. Stakeholder hereby consents to the personal jurisdiction of the state and federal courts located in California for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the parties are participants. (b) Specific Performance; Injunctive Relief. The parties acknowledge that Parent will be irreparably harmed and that there will be no adequate remedy at law for a violation of any of the covenants or agreements of Stakeholder set forth herein. Therefore, it is agreed that, in addition to any other remedies that may be available to Parent upon any such violation, Parent shall have the right to seek enforcement of such covenants and agreements by specific performance, injunctive relief or by any other means available to Parent at law or in equity. (c) Severability. If any portion of this Agreement is held by an arbitrator or a court of competent jurisdiction to conflict with any federal, state or local law, or to be otherwise invalid or unenforceable, such portion of this Agreement shall be of no force or effect and this Agreement shall otherwise remain in full force and effect and be construed as if such portion had not been included in this Agreement. (d) No Assignment. Because the nature of the Agreement is specific to the actions of Stakeholder, Stakeholder may not assign this Agreement. This Agreement shall inure to the benefit of Parent and its successors and assigns. (e) Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial messenger or courier service, or mailed by registered or certified mail (return receipt requested) or sent via facsimile (with acknowledgment of complete transmission) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice); provided, however, that notices sent by mail will not be deemed given until received: (i) if to Parent, to: Palm, Inc. 5470 Great America Parkway Santa Clara, CA 95052 Attn: General Counsel Telephone No.: (408) 878-9000 Facsimile No.: (408) 878-2180 with a copy to: Wilson Sonsini Goodrich & Rosati Professional Corporation 650 Page Mill Road Palo Alto, California 94304 Attn: Katharine A. Martin, Esq. Telephone No.: (650) 493-9300 Facsimile No.: (650) 493-6811 (ii) if to Stakeholder, at the address set forth on the signature page hereto. E-3 <PAGE> (f) Entire Agreement. This Agreement contains the entire agreement and understanding of the parties and supersedes all prior discussions, agreements and understandings relating to the subject matter hereof. This Agreement may not be changed or modified, except by an agreement in writing executed by Parent and Stakeholder. (g) Waiver of Breach. The waiver of a breach of any term or provision of this Agreement, which must be in writing, shall not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement. (h) Headings. All captions and section headings used in this Agreement are for convenience only and do not form a part of this Agreement. (i) Counterparts. This Agreement may be executed in counterparts, and each counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned. [Remainder of Page Intentionally Left Blank] E-4 <PAGE> IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date. PALM, INC.: By: _________________________________ Name: _______________________________ Title: ______________________________ STAKEHOLDER: By: _________________________________ Name: _______________________________ Address: ____________________________ _____________________________________ _____________________________________ [SIGNATURE PAGE TO NON-COMPETITION AGREEMENT] E-5