NONDISCLOSURE, NONCOMPETITION AND
NONSOLICITATION AGREEMENT
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Scott Dorfman (
“Stakeholder” )
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GSI
Commerce, Inc.
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a Delaware
corporation ( “GSI” )
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935 First
Avenue
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King of
Prussia, PA 19406
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October 5,
2008
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A. GSI and
Innotrac Corporation, a Georgia corporation (the
“Company” ), intend to enter into an
Agreement and Plan of Merger, dated as of the date hereof (the
“Merger Agreement” ), which provides for
Bulldog Acquisition Corp., a wholly-owned subsidiary of GSI, to be
merged with and into the Company (the
“Merger” ). Following the Merger, GSI
will own all of the outstanding stock of the Company.
B. Stakeholder
owns approximately forty six percent (46%) of the issued and
outstanding capital stock of the Company and desires that the
Merger be completed.
C. As
contemplated by the Merger Agreement, the Company will become a
wholly owned subsidiary of GSI and will carry on the business being
conducted by the Company before the Merger.
Now, Therefore , in consideration
of the recitals stated above and the promises, agreements and
covenants hereinafter contained, and intending to be legally bound
hereby, the parties agree as follows:
(a) “Closing Date” means the date
of the consummation of the Merger.
(b) “GSI Group” means GSI and all
existing and future subsidiaries of GSI including the
Company.
(c) “Business” means the provision
of order processing, fulfillment and/or customer care services as a
third-party service provider to e-commerce and other
direct-to-consumer businesses.
(d) “including” means including
without limitation.
2.
Acknowledgment. The Stakeholder acknowledges
that:
(a) The
GSI Group expends substantial time and money, on an ongoing basis,
to train its employees, maintain and expand its customer base, and
improve and develop its products, services, software, technology
and databases;
(b) During
Stakeholder’s tenure as a creditor, shareholder, employee
and/or director of the Company before the Merger, and during such
Stakeholder’s tenure as an employee of the GSI Group after
the Merger , Stakeholder has had and may continue to have
access to, receive, learn, develop and/or conceive Proprietary
Information of the Company and its affiliates and/or the GSI Group;
such Proprietary Information is for the benefit of the
Company’s and its affiliates’ and/or GSI Group’s
competitive position in the marketplace; and such Proprietary
Information could be useful to competitors of the Company and its
affiliates and/or the GSI Group;
(c) The
execution and delivery of this Nondisclosure, Noncompetition and
Nonsolicitation Agreement (the
“Agreement” ) is a condition to
GSI’s execution and delivery of the Merger Agreement and its
obligation to consummate the Merger and grant Stakeholder
restricted stock award with a value of $2.5 million at the
time of grant and that he will benefit from the Merger and the
grant of the restricted stock award.
(d) The
covenants of this Agreement (the
“Covenants” ) are supported by good and
adequate consideration; and the Covenants are reasonable and
necessary to protect the legitimate business interests of the
Company and the GSI Group in acquiring the Company; and
(e) In
connection with the consummation of the Merger, the Stakeholder
will receive consideration having a significant economic
value.
3.
Nondisclosure. At all times after the Closing Date,
except with the express prior written consent of an executive
officer of GSI or in connection with the proper performance of
services under his Employment Agreement, Stakeholder will not,
directly or indirectly, communicate, disclose or divulge to any
Person, or use for the benefit of any Person, any Proprietary
Information or any Third Party Information.
“Proprietary Information” means any and
all confidential and/or proprietary knowledge, data or information
of the Company or GSI or any of their affiliates, no matter when or
how acquired. By way of illustration, but not limitation,
Proprietary Information includes (i) Inventions; (ii) the
terms and details of contracts and arrangements with and proposals
to any customers of the Company or its affiliates (
“Customers” ) and any prospective Customers
or any entities for which GSI or its affiliates operate e-commerce
businesses or provide marketing services (
“Partners” ) and any prospective
Partners; (iii) personal, financial and other information
obtained from customers of Customers or Partners (
“Consumers” ); (iv) non-public
pricing information, vendor prices, buying and pricing strategies
and merchandise plans, including the terms of contracts and
arrangements with vendors; (v) promotional, marketing and
advertising strategies and plans, including the terms of contracts
and arrangements relating to promotions, marketing and advertising;
(vi) non-public financial and statistical information
relating
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to the Company
or GSI or any of their affiliates, or the Business operated by the
Company and its affiliates or the business and the e-commerce
businesses operated by GSI and its affiliates, including budgets,
financial and business forecasts, expansion plans and business
strategies; and (vii) information regarding the skills and
compensation of other employees of the Company and GSI and their
affiliates. For purposes of this Section 3, Proprietary
Information will not include any information which is now known by
or available to the general public or generally in the industry,
which becomes known by or available to the general public or
generally in the industry other than as a result of a breach of
this Agreement by Stakeholder or which is independently acquired by
Stakeholder. “Person” means any
individual, sole proprietorship, joint venture, partnership,
corporation, association, cooperative, trust, estate, government
body, administrative agency, regulatory authority or other entity
of any nature. “Third Party Information”
means any and all confidential or proprietary data, knowledge and
information received from third parties, including Customers and
Partners, prospective Customers and Partners and Consumers, subject
to a duty on the part of the Company or GSI or any of their
affiliates to maintain the confidentiality of such data, knowledge
or information and to use it only for certain purposes.
“Inventions” means all trade secrets,
inventions, mask works, ideas, processes, formulas, source and
object codes, data, programs, other works of authorship, know-how,
improvements, discoveries, developments, designs and techniques,
whether or not patentable or registrable under copyright or similar
statutes.
4.
Non-Competition. Stakeholder acknowledges that the
Business of the Company and its affiliates and the business of GSI
and its affiliates are highly competitive, that he has Proprietary
Information of the Company and its affiliates and Third Party
Information of their Customers and Consumers and that as a result
of the Company being acquired by GSI, Stakeholder will receive and
be privy to Proprietary Information of GSI and its affiliates and
Third Party Information of their Partners and Consumers.
Stakeholder further acknowledges that the Company and GSI and their
affiliates are engaged in the provision of services to support the
e-commerce and direct-to-consumer businesses of their Customers and
Partners and that due to the nature of such businesses, the work
performed by Stakeholder for the Company may not be bound by any
geographical or territorial limitations. Accordingly, for four
(4) years after the Closing Date (the “Restricted
Period” ), except with GSI’s express prior
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