Noncompetition Agreement - Master Graphics Inc. and David L. McQuiddy III
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") is made as of May 8, 1998,
by and between MASTER GRAPHICS, INC., a Tennessee corporation ("Buyer"), and
DAVID L. MCQUIDDY III, an individual residing in Nashville, Tennessee
("Employee").
RECITALS
Concurrently with the execution and delivery of this Agreement, Buyer is
acquiring by merger all of the common stock, par value $10.00 per share, of
McQuiddy Printing Company (the "Acquired Company") pursuant to the terms and
conditions of a Merger Agreement made as of April 9, 1998, (the "Merger
Agreement"). It is anticipated that the Acquired Company will be merged into
Premier Graphics, Inc., a Delaware corporation (the "Company"), which is a
wholly owned subsidiary of Buyer. Section 7.4(e) of the Merger Agreement
requires that a noncompetition agreement be executed and delivered by Employee
as a condition to the closing of the Merger Agreement.
AGREEMENT
Now, therefore, in consideration of the mutual promises, agreements and
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, agree as follows:
1. DEFINITIONS
Capitalized terms not expressly defined in this Agreement shall have the
meanings ascribed to them in the Merger Agreement.
2. ACKNOWLEDGMENTS BY EMPLOYEE
Employee acknowledges that (a) Employee has occupied a position of trust
and confidence with the Acquired Company prior to the date hereof and has become
familiar with the following, any and all of which constitute confidential
information of the Company, (collectively the "Confidential Information"): (i)
any and all trade secrets concerning the business and affairs of the Company,
product specifications, data, know-how, formulae, compositions, processes,
designs, samples, current and planned manufacturing and distribution methods and
processes, customer lists, current and anticipated customer requirements, price
lists, market studies, business plans, and computer software and programs of the
Company and any other information, however documented, of the Company that is a
trade secret; (ii) any and all information concerning the business and affairs
of the Company (which includes historical financial statements, financial
projections and budgets, historical and projected sales, capital spending
budgets and plans, the names and backgrounds of key personnel, and personnel
training and techniques and materials), however documented; and (iii) any and
all notes, analysis, compilations, studies, summaries, and other material
prepared by or for the Company containing or based, in whole or in part, on any
information included in the foregoing; provided, however, that Confidential
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Information shall not include any information that is or becomes generally known
to and available for use by the public other than as a result of Employee's
fault or the fault of any other Person known by Employee to be bound by a duty
of confidentiality to Buyer or the Company; (b) the customers of the Company are
located in several states; (c) the Company competes with other businesses that
are or could be located in any part of the United States; (d) Buyer has required
that Employee make the covenants set forth in Sections 3 and 4 of this Agreement
as a condition to the closing of the Merger Agreement; (e) the provisions of
Sections 3 and 4 of this Agreement are reasonable and necessary to protect and
preserve the Acquired Companies' business, and (f) the Company would be
irreparably damaged if Employee were to breach the covenants set forth in
Sections 3 and 4 of this Agreement.
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3. CONFIDENTIAL INFORMATION
Employee acknowledges and agrees that all Confidential Information known or
obtained by Employee, whether before or after the date hereof, is the property
of the Company. Therefore, Employee agrees that Employee will not, at any time,
disclose to any unauthorized Persons or use for his own account or for the
benefit of any third party any Confidential Information, whether Employee has
such information in Employee's memory or embodied in writing or other physical
form, without Buyer's written consent, unless and to the extent that the
Confidential Information is or becomes generally known to and available for use
by the public other than as a result of Employee's fault or the fault of any
other Person known by Employee to be bound by a duty of confidentiality to Buyer
or the Company. Employee agrees to deliver to Buyer at the time of execution of
this Agreement, and at any other time Buyer may request, all documents,
memoranda, notes, plans, records, reports, and other documentation, models,
components, devices, or computer software, whether embodied in a disk or in
other form (and all copies of all of the foregoing), relating to the businesses,
operations, or affairs of the Company and any other Confidential Information
that Employee may then possess or have under Employee's control.
4. NONCOMPETITION
As an inducement for Buyer to enter into the Merger Agreement and as
additional consideration for the consideration to be paid to Employee under the
his Employment Agreement, Employee agrees that:
(a) While Employee is employed by the Company and for a period of one (1)
year after termination of Employee's employment by the Company for cause or by
Employee without cause:
(i) Employee will not, directly or indirectly, engage or invest in,
own, manage, operate, finance, control, or participate in the ownership,
management, operation, financing, or control of, be employed by, associated
with, or in any manner connected with, lend Employee's name or any similar
name to, lend Employee's credit to, or render services or advice to, any
business whose products or activities compete in whole or in part with the
products or activities of the Company, within the State of Tennessee;
provided, however, that Employee may purchase or otherwise acquire up to
(but not more than) one percent of any class of securities of any
enterprise (but without otherwise participating in the activities of such
enterprise) if such securities are listed on any national or regional
securities exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934. Employee agrees that this covenant is
reasonable with respect to its duration, geographical area, and scope.
(ii) Employee will not, directly or indirectly, either for himself or
any other Person, (A) induce or attempt to induce any employee of the
Company to leave the employ of the Company, (B) in any way interfere with
the relationship between the Company and any employee of the Company, (C)
employ, or otherwise engage as an employee, independent contractor, or
otherwise, any employee of the Company, or (D) induce or attempt to induce
any customer, supplier, licensee, or business relation of the Company to
cease doing business with the Company, or in any way interfere with the
relationship between any customer, supplier, licensee, or business relation
of the Company.
(iii) Employee will not, directly or indirectly, either for himself or
any other Person, solicit the business of any Person known to Employee to
be a customer of the Company at the time his employment is terminated,
whether or not Employee had personal contact with such Person, with respect
to products or activities which compete in whole or in part with the
products or activities of the Company;
(b) In the event of a breach by Employee of any covenant set forth in
Subsection 4(a) of this Agreement, the term of such covenant will be extended by
the period of the duration of such breach;
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(c) Employee will not, at any time during or after the period set forth in
Subsection 4(a) above, disparage Buyer or the Company, or any of their
shareholders, directors, officers, employees, or agents; and
(d) Employee will, during the period set forth in Subsection 4(a) above,
within ten days after accepting any employment, advise Buyer of the identity of
any employer of Employee. Buyer or the Company may serve notice upon each such
employer that Employee is bound by this Agreement and furnish each such employer
with a copy of this Agreement or relevant portions thereof.
(e) Notwithstanding anything herein to the contrary, Employee shall have
no obligations whatsoever under this Agreement in the event Premier Graphics,
Inc. ("Premier") has breached the terms of Employee's Employment Agreement with
Premier, entered into as a condition to the closing of the Merger Agreement.
5. REMEDIES
If Employee breaches the covenants set forth in Sections 3 or 4 of this
Agreement, Buyer and the Company will be entitled to the following remedies:
(a) Damages from Employee;
(b) To offset against any and all amounts owing to Employee under the
Merger Agreement any and all amounts which Buyer or the Company claim under
Subsection 5(a) of this Agreement; and
(c) In addition to its right to damages and any other rights it may have,
to obtain injunctive or other equitable relief to restrain any breach or
threatened breach or otherwise to enforce specifically the provisions of
Sections 3 and 4 of this Agreement, it being agreed that money damages alone
would be inadequate to compensate the Buyer and the Company and would be an
inadequate remedy for such breach; and
(d) The rights and remedies of the parties to this Agreement are cumulative
and not alternative.
6. SUCCESSORS AND ASSIGNS
This Agreement will be binding upon Buyer, the Company and Employee and
will inure to the benefit of Buyer and the Company and their affiliates,
successors and assigns and Employee and Employee's assigns, heirs and legal
representatives.
7. WAIVER
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither the failure nor any delay by any party in exercising
any right, power, or privilege under this Agreement will operate as a waiver of
such right, power, or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement can be discharged by one party, in whole or
in part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement.
8. GOVERNING LAW
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This Agreement will be governed by the laws of the State of Tennessee
without regard to conflicts of laws principles.
9. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Tennessee, County of Davidson, or, if it
has or can acquire jurisdiction, in the United States District Court for the
Middle District of Tennessee, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
10. SEVERABILITY
Whenever possible each provision and term of this Agreement will be
interpreted in a manner to be effective and valid but if any provision or term
of this Agreement is held to be prohibited by or invalid, then such provision or
term will be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement. If any
of the covenants set forth in Section 4 of this Agreement are held to be
unreasonable, arbitrary, or against public policy, such covenants will be
considered divisible with respect to scope, time, and geographic area, and in
such lesser scope, time and geographic area, will be effective, binding and
enforceable against Employee.
11. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
12. SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement unless otherwise specified. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
13. NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by facsimile
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
Employee: David L. McQuiddy III
220 Lake Ridge Court
Franklin, Tennessee 37069
with a copy to: Glenn B. Rose
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Harwell Howard Hyne Gabbert & Manner, P.C.
1800 First American Center
Nashville, Tennessee 37238
Facsimile No.: (615) 251 1058
Buyer: Master Graphics, Inc
2500 Lamar Avenue
Memphis, Tennessee 38114
Attention: John P. Miller
Facsimile No.: (901) 744-6012
with a copy to: John A. Good
Baker, Donelson, Bearman & Caldwell
165 Madison Avenue, Suite 2000
Memphis, Tennessee 38117
Facsimile No.: (901) 577 2303
14. ENTIRE AGREEMENT
This Agreement, the Employment Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersede all prior written and oral agreements and
understandings between Buyer and Employee with respect to the subject matter of
this Agreement. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
MASTER GRAPHICS, INC.
By: /s/ Lance T. Fair
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Title: CFO
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/s/ David L. McQuiddy, III
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David L. McQuiddy III
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