THIS
NONCOMPETITION AGREEMENT (this “Agreement”) made as of
this 12th day of October, 2006, by and between Internap Network
Services Corporation, a Delaware corporation
(“Internap”) and (“Principal”), an officer
of VitalStream Holdings, Inc., a Nevada corporation (the
“Company”). Internap and Principal are referred to
collectively herein as the “Parties.”
WHEREAS, Internap,
Ivy Acquisition Corp., a wholly owned subsidiary of Internap, and
the Company desire to enter into that certain Agreement and Plan of
Merger dated on or about October 12, 2006 (the “Merger
Agreement”), pursuant to which Internap Acquisition Corp.
shall be merged with and into the Company, with the Company
becoming a wholly owned subsidiary of Internap (the
“Merger”);
WHEREAS, Principal
is an equity holder and/or option holder of the Company, has served
as an officer of the Company and has gained substantial knowledge
and expertise in connection with the Company’s products,
services, organization, customers, partners and other proprietary
matters related to the Company’s business;
WHEREAS, Principal
will receive securities of Internap pursuant to the terms of the
Merger;
WHEREAS, this
Agreement shall become effective only upon the consummation of the
Merger; and
WHEREAS, it is a
material condition to Internap’s execution and delivery of
the Merger Agreement and its willingness to complete the Merger and
issue the Merger Consideration that Principal shall enter into this
Agreement, which shall become effective upon the closing of the
Merger.
In consideration
of the Merger, which will inure to the benefit of the Principal,
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereto do
hereby agree as follows:
1.
Covenant Not to Compete.
1.1
Restriction . During the Restricted Period, Principal
covenants and agrees that he shall not, directly or indirectly,
engage within the Territory in any activity, business or venture or
division of any entity, whose primary business is the development,
distribution, sale or provision of products that compete with the
Business.
(a)
For purposes of Section 1.1, the term “compete”
means: (i) calling on, soliciting, taking away, accepting as a
client or customer or attempting to call on, solicit, take
away
or accept as a
client or customer any individual, partnership, corporation or
association that was a client or customer of the Company during the
twelve (12)-calendar month period immediately preceding any such
act with respect to business that is substantially similar to the
Business; or (ii) entering into or attempting to enter into
any business substantially similar to or competing in any way with
the Business, either alone or with any individual partnership,
corporation or association.
(b) For
purposes of Section 1.1, “Territory” means the
United States of America.
(c) For
purposes of Section 1.1, “Restricted Period” means
the period beginning on the Closing Date (as defined in the Merger
Agreement) and ending on the third anniversary of the Closing
Date.
(d) For
purposes of Section 1.1, “Business” means the
business of providing content delivery services for the streaming
of digital media over the Internet.
(e) For
purposes of Section 1.1, “Proprietary Information”
means information related to any of Company’s past, present
or identified prospective clients or customers (i) which
derives economic value, actual or potential, from not being
generally known to or readily ascertainable by other persons who
can obtain economic value from its disclosure or use; and
(ii) which is the subject of efforts that are reasonable under
the circumstances to maintain its secrecy. Proprietary Information
also included information that has been disclosed to the Company or
its affiliates by any of the Company’s past, present or
identified prospective clients or customers that the Company or its
affiliates have agreed to treat as confidential and that Principal
knows or should reasonably know is considered confidential by such
client or customer. “Proprietary Information” shall not
include any information that (i) was lawfully in
Principal’s possession or was lawfully known to Principal
before receipt from any person or entity during the course and
scope of his employment, (ii) is or becomes public knowledge
without fault of Principal, (iii) is or becomes lawfully
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