Noncompetition and Confidentiality Agreement - New Frontier Media Inc., Colorado Satellite Broadcasting Inc. and 1043133 Ontario Inc.
NONCOMPETITION AND CONFIDENTIALITY AGREEMENT
THIS NONCOMPETITION AND CONFIDENTIALITY AGREEMENT is entered into as of this
_____ day of__________ , 1997, by and among New Frontier Media, Inc., and
Colorado Satellite Broadcasting, Inc., a Colorado corporation, (collectively
"Buyers") and 1043133 Ontario Inc. ("Seller"),
Background
Buyers are acquiring certain assets from Seller for an Adult Movies
Business;
As a condition to Buyers' willingness to consummate the transactions
contemplated by the Purchase Agreement to which this Agreement is an exhibit,
Buyers have required that Seller and Seller agrees to the covenants not to
compete and the confidentiality agreements provided in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and in the Purchase Agreement and foregoing premises, the parties
hereby covenant and agree as follows.
1. DEFINITIONS. The following terms shall have the following meanings:
(a) "Adult Movies Business" means any and all present or contemplated
satellite broadcast services on television or any other medium, including cable
television and the Internet, which broadcasts, replays, and/or otherwise
exploits feature length adult programming and all related promotional content
and other programming of a non-rated or X-rated nature and whose main theme
embodies nudity and/or sexually explicit material between consenting adults and
such other related business assets as are necessary for the operation thereof.
(b) "Purchase Agreement" shall mean the Asset Purchase Agreement between
New Frontier Media, Inc. and Colorado Satellite Broadcasting, Inc. as buyers
and 1248663 Ontario Inc., as seller, dated September 5, 1997.
2. NONCOMPETITION. During the period commencing on the Closing Date of the
Purchase Agreement, and ending on the expiration of five years following that
date, Seller and its officers or directors shall not, directly or indirectly,
manage, operate, join, advise, control, or be connected as an officer, director,
employee, partner, guarantor, adviser, or consultant in or beneficially own or
control, directly or indirectly, ten (10) percent or more of the voting, profit
sharing, or equity interests in, any corporation, partnership, joint venture, or
other business venture (an "Interest in a Business") which competes in the Adult
Movies Business of Buyers in any location throughout the world.
3. CONFIDENTIALITY. Seller shall keep confidential all of and shall not
disclose to any other party or provide any other party access to, the
confidential or proprietary
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information of the assets and services being acquired by Buyers pursuant to
the purchase Agreement not in the public domain, including but not limited
to, information relating to such matters as Buyers or the Adult Movies
Business' products, services, finances, methods of operation and competition,
research data, market reports, distribution methods, marketing plans and
strategies, operational requirements, personnel, customers and suppliers and
distributors, trade secrets, technical information, processes, systems,
procedures, know-how, improvements, price lists, projections and other
financial data, invoices, financial statements, or any other compilation of
information used in the Adult Movies Business which gives Buyers an
opportunity to obtain an advantage over its competitors who do not know or
use such information. This shall include both information acquired by Seller
before and after the date of this Agreement (collectively "Confidential
Information")
4. NONSOLICITATION OF EMPLOYEES. For the period commencing on the Closing
Date of the Purchase Agreement, and ending on the expiration date of five years
follow that date, Seller shall not, either on its own account or for any person,
firm, or company, solicit, interfere with, or endeavor to cause any officer,
employee or consultant of Buyers, who is employed or otherwise engaged to
provide services to buyers, to leave his or her employment or engagement with
Buyers or induce or attempt to induce any such person to terminate or breach any
employment, noncompetition, or confidentiality agreement such person may have
with Buyers.
5. NONSOLICITATION OF CUSTOMERS. For the duration of this Agreement, Seller
shall not solicit, induce, or attempt to induce any past or current customer or
distributor of Buyers to do business with Seller or any affiliate in regard to a
matter included in the Adult Movies Business or to cease doing business in whole
or in part with Buyers.
6. STAY OF TIME. In the event Seller violates any provision of this
Agreement, the running of the term of this agreement shall be automatically
tolled starting on the day of such violation and resuming on the date such
violation ceases.
7. EQUITABLE RELIEF. The parties acknowledge and agree that in the event
of any breach of this Agreement by Seller (i) Buyers' remedies at law are and
will be inadequate; (ii) such breach will substantially diminish the value of
the assets proprietary interest that are being acquired by Buyers through the
Purchase Agreement; and (iii) will cause irreparable injury in a short period
of time. In the event of a breach or threatened breach by Seller of the
provisions of this Agreement, the parties hereto agree that Buyers shall be
entitled to equitable relief to protect its interests therein, including, but
not limited to, preliminary and permanent injunctive relief. Such relief and
all other rights and remedies of Buyers provided herein shall be cumulative
with any other rights provided to it in the Purchase agreement or otherwise
provided to it under applicable law and nothing herein shall preclude Buyers
from pursuing any other remedies available to it for a breach or threatened
breach, including without limitation the recovery of damages for Seller.
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8. NOTICES. (a) In the event a party believes that there has been a
breach of this Agreement, it shall notify in writing the other party of the
belief and provide a brief statement of the basis for such belief, provided that
any failure to give such notice shall not act as a waiver of or otherwise affect
in any way any rights or remedies the non-breaching party may have or relieve
the other party from any duty or liability hereunder. In the event Seller
acquires or comes to own, control, directly or indirectly, an interest in a
business, whether voluntarily or involuntarily, which business may reasonably be
deemed to compete with the Adult Movies Business, Seller shall promptly notify
Buyers of such fact and identify the interest in the business and the nature of
such business's activities as they may relate to the Adult Movies Business.
(b) All notices or other communications which may be or are required to be
given under this Agreement shall be in writing and shall be deemed to have been
duly given on the date of service if served personally on the party to whom
notice is to be given, or on the third day after mailing if mailed to a party to
whom notice is to be given, by first class registered or certified, postage
prepaid, and properly addressed as follows:
Buyers: New Frontier Media, Inc.
1050 Walnut St. Suite 301
Boulder, CO 80302
Attn.: Mark H. Kreloff
with a copy to:Mark L. Driver, Esq.
The Law Office of Mark L. Driver, P.C.
3300 East First Ave., Suite 600
Denver, CO 80206
Seller: Douglas Duncan
2500 Don Reid Drive
Ontario, Canada
K1H8P5
Stewart Duncan
2500 Don Reid Drive
Ontario, Canada
K1H8P5
with a copy to:Jamie Wyllie, Esq.
Yegendorf, Brazeau, Sell, Prehogan & Wyllie
55 Metcalfe Street, Suite 750
Ontario, Canada
K1H6L5
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9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and inure
to the benefit of the parties hereto and their permitted and respective heirs,
successors and assigns. No party shall have the right to assign this Agreement
without the prior written consent of the other party, except that Buyers shall
have the right to assign its rights hereunder to any successor in interest of
the Adult Movies Business whether by merger, consolidation, purchase of assets
or otherwise, or any other person or entity controlling or which at any time
controls or is under common control with either Buyer or any of their
subsidiaries or successors.
10. SEPARATE COVENANTS. This Agreement shall be deemed to consist of a
series of separate covenants. Seller expressly agrees that the character,
duration, and geographical scope of this Agreement are reasonable in light of
the circumstances as they exist on the date upon which this Agreement has been
executed. However, should a determination nonetheless be made by a court of
competent jurisdiction at a later date that the character, duration or
geographic scope of this Agreement is unreasonable in light of the circumstances
as the now or then exist, then it is the intention and agreement of the parties
that this Agreement shall be construed by the court in such a manner as to
impose only those restrictions on the conduct of Seller which is reasonable in
light of such circumstances and are necessary to assure Buyers of the intended
benefit of this Agreement. If any of the provision of this Agreement shall
otherwise contravene or be deemed invalid under the laws of any state or
jurisdiction, such contravention or invalidity shall not invalidate all of the
provisions of this Agreement but rather is shall be construed as not containing
the provisions or provisions contravening or invalid under the laws of the state
or jurisdiction, and the all other rights and obligations created hereby shall
be construed and enforced accordingly.
11. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Colorado, without
regard to principles of conflicts of laws and the parties irrevocable commit to
the jurisdiction and venue of the United States District Court for the District
of Colorado to resolve any dispute arising hereunder or related hereto.
12. AMENDMENTS AND WAIVERS. Any amendments or modifications to this
Agreement must be in writing signed by each party hereto or their successors or
assigns. No breach of any covenant, agreement, warranty, or representation shall
be deemed waived unless expressly waived in writing by the party who might
assert such breach. No waiver of any right hereunder shall operate as a waiver
of any other right or the same or similar right on another occasion.
13. ATTORNEYS' FEES. In the event that any action or proceeding is
commenced by any party hereto for the purpose of enforcing any provision of this
Agreement, the parties to such action or proceeding may receive as part of any
award, judgment, decision, or other resolution of such action or proceeding,
their costs, and reasonable attorneys' fees.
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14. ENTIRE AGREEMENT. This Agreement and the agreements referred to herein
contain the entire understanding of the parties and supersede all prior or
contemporaneous agreements and understandings.
15. COUNTERPARTS. This Agreement may be executed by the parties in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
In Witness Whereof, the parties hereto have executed this Agreement on the
date first above written.
Buyers: New Frontier Media, Inc.
By:
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Its:
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Colorado Satellite Broadcasting, Inc.
By:
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Its:
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SELLER:
1043133 Ontario Inc.
By:
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Its:
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