Exhibit 10.9
NON-COMPETITION
AGREEMENT
THIS NON-COMPETITION AGREEMENT (the
“Agreement”) is made and entered into as of
May 19, 2006, by and between U.S. Auto Parts Network, Inc., a
Delaware corporation, and Richard Pine, Lowell Mann, Brian Tinari,
and Todd Daugherty, as individuals (each a “Promisor,”
collectively, the “Promisors”).
WITNESSETH:
WHEREAS, the Buyer, PartsBin, Inc.,
a Delaware corporation and wholly-owned subsidiary of the Buyer
(“PartsBin”), on the one hand, and ThePartsBin.com,
Inc., a New Jersey corporation, All OEM Parts, Inc., a New Jersey
corporation, Auto Parts Web Solutions, Inc., a Pennsylvania
corporation, Auto Parts Online Canada, Inc., a New Jersey
corporation, Web Chat Solutions, Inc., a Pennsylvania corporation,
Power Host, Inc., a Canadian corporation and wholly-owned
subsidiary of Auto Parts Online Canada, Inc., and Everything
Internet, LLC, a New Jersey limited liability company (each a
“Target Company,” and collectively, “the
Company”), and the Promisors, on the other hand, have entered
into an Acquisition Agreement dated as of May 19, 2006 (the
“Acquisition Agreement”), whereby the Buyer and
PartsBin will acquire all of the outstanding shares of capital
stock and all membership interests of the Company from the
Promisors;
WHEREAS, the Acquisition Agreement
provides, as a condition to the closing thereunder, that Promisors
shall execute and deliver this Agreement;
WHEREAS, the agreements of Promisors
hereunder are an important aspect of the transactions under the
Acquisition Agreement, and Buyer would not consummate such
transactions absent the execution and delivery by Promisors of this
Agreement;
WHEREAS, the Company has been and is
presently engaged in the online retail of replacement and
performance automobile parts (the “Business”) in the
United States and Canada (collectively, the
“Territory”);
WHEREAS, Promisors and
Promisors’ affiliates have substantial financial resources,
experience in the Business and the ability to operate a business or
businesses that could compete with the Company in the Business
following the Closing (as defined in the Acquisition
Agreement);
WHEREAS, the agreements of Promisors
hereunder are reasonable and necessary, both in scope, geographical
extent and duration, to protect the business and goodwill of the
Company that will be acquired pursuant to the Acquisition
Agreement, and the Company and Buyer would suffer damages,
including the loss of profits, if Promisors or any of
Promisors’ affiliates engaged, directly or indirectly, in a
competing business with the Company or Buyer; and
WHEREAS, pursuant to the
transactions contemplated by the Acquisition Agreement, Promisors
will enjoy a beneficial change in status and will receive
remuneration in the form of the multiple benefits afforded to
Promisors thereunder and thereby.
NOW, THEREFORE, for and in
consideration of the premises and of the mutual representations,
warranties, covenants and agreements contained herein, and of other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and upon the terms and subject to
the conditions hereinafter set forth, the parties do hereby agree
as follows:
1. Definitions . Unless
otherwise defined herein, capitalized terms used herein shall have
the meaning ascribed to them in the Acquisition
Agreement.
2. Nondisclosure,
Nondisparagement and Noncompetition .
(a) Promisors acknowledge and agree
that this Agreement is necessary to protect the confidential and
proprietary information and goodwill associated with the
acquisition of the Company by Buyer.
(b) Promisors acknowledge and agree
that, through their longstanding relationship with the Company,
they have gained confidential and proprietary information (the
“Confidential Information”) concerning the business of
the Company. Confidential Information derives independent economic
value, actual or potential, from not being generally known to, and
not being readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use, and is
the subject of efforts that are reasonable under the circumstances
to maintain its secrecy. Confidential Information includes, but is
not limited to, proprietary technology, operating procedures,
financial statements and other financial information, trade
secrets, know-how, market studies and forecasts, competitive
analyses, pricing policies, the substance of agreements with
customers and others, marketing and similar arrangements, servicing
and training programs and arrangements, customer lists and any
other documents embodying such confidential and proprietary
information. Promisors acknowledge and agree that sharing any such
Confidential Information with third parties would be detrimental to
Buyer and the Company and could place Buyer and the Company at a
competitive disadvantage. Promisors agree that they shall not,
directly or indirectly, through any form of ownership, in any
individual or representative or affiliated capacity whatsoever,
except as may be required by law, reveal, divulge, disclose or
communicate to any person, firm, association, corporation or other
entity in any manner whatsoever information of any kind, nature or
description concerning: (i) the names of any prior or present
suppliers or customers of the Company or Buyer, (ii) the
prices for which the Company or Buyer obtains or has obtained
products or services, (iii) the names of the personnel of the
Company or Buyer, (iv) the manner of operation of the Company
or Buyer, (v) the Confidential Information, or (vi) any
other financial, statistical or other information that the Company
or Buyer designates or treats as confidential or proprietary. The
foregoing restrictions and obligations under this
Section 2(b) shall not apply to (i) any
Confidential Information that is or becomes generally available to
the public other than as a result of a disclosure, directly or
indirectly, by Promisors, (ii) any information obtained by
Promisors from a third party which Promisors have no reason to
believe is violating any obligation of confidentiality to Buyer,
(iii) any information Promisors are required by law to
disclose or (iv) information disclosed by Promisors to their
attorneys or accountants or to any agent of Promisors in connection
with their investment in Buyer. Without regard to whether any or
all of the foregoing matters would be deemed confidential, material
or important, the parties hereto stipulate that as between them,
the same are important, material and confidential and gravely
affect the effective and successful conduct of the Business and its
goodwill.
(c) Promisors acknowledge and agree
that, as a result of each Promisor’s stock ownership of,
membership interest in and participation in the operation,
management and development of the Company, he possesses
Confidential Information concerning the business of the Company, he
has significantly and uniquely contributed to the development and
maintenance of the goodwill of the Company, and he developed during
his tenure with the Company the experience and capabilities to own,
manage, operate, control or participate in the Business.
(d) For and in consideration of the
consideration paid to Promisors pursuant to the Acquisition
Agreement, the receipt and sufficiency of which are acknowledged by
Promisors, each Promisor agrees not to make any derogatory,
defamatory, disparaging or det
