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EXHIBIT 2.6
NONCOMPETITION AND NONDISCLOSURE AGREEMENT
NONCOMPETITON AND NONDISCLOSURE AGREEMENT (the "Non-Competition
Agreement"), made as of the 23 day of June 2004, by and among HY-Tech Technology
Group, Inc., a Delaware corporation ("Hy-Tech Technology"), Hy-Tech Computer
Systems, Inc., a Delaware corporation ("Hy-Tech Computer Systems" and together
with Hy-Tech Technology, "HYTT"), Xxxx XxXxxx ("XxXxxx") and Xxxxx Xxxxxxx
("Xxxxxxx" and collectively with XxXxxx and HYTT, the "HYTT Parties") and
Encompass Group Affiliates, Inc., a Delaware corporation ("Encompass").
W I T N E S S E T H:
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WHEREAS, pursuant to that certain Agreement, dated May __, 2004, among
Encompass and HYTT (the "Agreement"), HYTT has agreed to (i) refrain from
pursuing certain rights it may have (the "Rights") and (ii) license certain of
its assets to Encompass, in accordance with the terms of certain license
agreements (the "Licenses") to be entered into among Encompass and HYTT on the
date hereof (the "Closing").
WHEREAS, in order to protect the value of the Rights and the Licenses
and to protect the business of Encompass and its Affiliates, the parties hereto
have agreed that, for the consideration contained in the Agreement, the HYTT
Parties shall not compete with Encompass, in accordance with the terms and
conditions hereof; and
WHEREAS, the agreements of the HYTT Parties not to compete with
Encompass as provided herein are an integral part of the transactions
contemplated by the Agreement, and without such agreements, Encompass would not
have entered into the Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the payment of the consideration hereunder and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
1. Certain Definitions. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Agreement;
provided, however, that the following terms shall have the meanings set forth
below irrespective of the meanings such terms may have in the Agreement:
(a) "Affiliate" of any person means any other person,
directly or indirectly, through one or more intermediary persons, controlling,
controlled by or under common control with such person.
(b) "Business" means (i) the marketing, sale,
integration, distribution or repair of computer systems, components, equipment
or peripherals, and any related consulting work, and (ii) conducting any
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business of a nature (A) now or anytime hereafter engaged in by Encompass or its
current or future subsidiaries or (B) engaged in by Hy-Tech Computer Systems or
its subsidiaries at the time of Closing, or (C) engaged in by any of BCD 2000,
Inc., Cyber Test, Inc. or Pacific Magtron International Corp. ("Potential
Encompass Subsidiaries") at the time the stock or assets of which are acquired
by Encompass.
(c) "Confidential Information" means all information
(i) heretofore or hereafter developed or used by a HYTT Party relating to the
Business, or the operations, employees, customers, suppliers or distributors of
HYTT relating to the Business including, but not limited to, customer lists,
customer orders, financial data, pricing information and price lists, business
plans and market strategies and arrangements, all books, records, manuals,
advertising materials, catalogues, correspondence, mailing lists, production
data, sales materials and records, purchasing materials and records, personnel
records, quality control records and procedures included in or relating to the
Business, and (ii) all such information of Encompass, its Affiliates and the
Potential Encompass Subsidiaries obtained by the HYTT Parties prior to the date
hereof.
(d) The term "control", with respect to any person,
means the power to direct the
management and policies of such person, directly or indirectly, by or through
stock ownership, agency or otherwise, or pursuant to or in connection with an
agreement, arrangement or understanding (written or oral) with one or more other
persons by or through stock ownership, agency or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
(e) "Market" means the world.
(f) The term "person" means an individual,
corporation, partnership, joint venture, limited liability company, association,
trust, unincorporated organization or other entity, including a government or
political subdivision or an agency or instrumentality thereof.
(g) "Restricted Period" means the period commencing
from and after the date of this Non-Competition Agreement and ending on the
fifth anniversary hereof.
2. Noncompetition in the Market.
(a) At all times from and after the date of this
Non-Competition Agreement and until the expiration of the Restricted Period, (i)
no HYTT Party will own or control, throughout the Market, any business or any
person who is engaged in any business, that competes, directly or indirectly,
with the Business or is otherwise engaged in activities competitive with the
Business, (ii) no HYTT Party shall directly, indirectly, and whether for itself
or on behalf of any other person (including any of its Affiliates), throughout
the Market, directly or indirectly, engage in, own, manage, operate, provide
financing to, control or participate in the ownership, management or control of,
or otherwise have a financial interest (whether, except as provided in Section
4, as a stockholder, director, officer, representative, subcontractor, partner,
consultant, proprietor, member, agent or otherwise) in, or aid or assist anyone
else in the conduct of, any business or any person who is engaged in any
business, that competes, directly or indirectly, with the Business or is
otherwise engaged in activities competitive with the Business, and (iii) no HYTT
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Party shall, either personally or by its agent or by letters, circulars or
advertisements and whether for itself or on behalf of any other person, canvass
or solicit, or enter into or effect (or cause or authorize to be solicited,
entered into or effected), directly or indirectly, for or on behalf of itself or
any other person, any business relating to the Business from any person who is,
or has at any time within five (5) years prior to the date of such action been,
a customer or supplier of the Business or Encompass or Encompass' Affiliates.
(b) Notwithstanding the foregoing, (i) for a period
of three (3) months following the Closing, Hy-Tech Computer Systems shall be
permitted to sell, in the ordinary course of its business, any inventory not
sold on or prior to the Closing and (ii) provided that HYTT acquires the
business of Robotic Workspace Technology, Inc. ("RWT"), for so long as RWT is
engaged solely in the business of developing and/or acquiring proprietary
computer technology within the robotics field, Encompass shall not deem the HYTT
Parties to be competing with the Business.
3. Excluded Investments and Activities by the HYTT Parties.
Each of the parties hereto acknowledges that nothing contained herein shall
prohibit the HYTT Parties from acquiring equity securities of a publicly held
company engaged in activities which are similar to, or competitive with, the
Business, which in the aggregate do not exceed 1% of the issued and outstanding
equity securities of such publicly held company.
4. Non-Disclosure of Confidential Information. Each HYTT Party
acknowledges that it is the policy of Encompass to maintain as secret and
confidential all Confidential Information. The parties hereto recognize that by
reason of HYTT's operation of its business prior to the Closing, and activities
in connection with the Agreement, the HYTT Parties have acquired Confidential
Information. Each HYTT Party recognizes that, effective upon the Closing, all
such Confidential Information is and shall remain the sole property of
Encompass, free of any rights of any HYTT Party, and acknowledges that Encompass
has a vested interest in assuring that all such Confidential Information remains
secret and confidential. Therefore, each HYTT Party agrees that at all times
from and after the date hereof, it/he will not, directly or indirectly, without
the prior written consent of Encompass, disclose to any person, firm, company or
other entity (other than Encompass or any of its Affiliates) any Confidential
Information, except to the extent that (i) any such Confidential Information
becomes generally available to the public or trade, other than as a result of a
breach by a HYTT Party of this Section 4, or (ii) any such Confidential
Information becomes available to a HYTT Party on a non-confidential basis from a
source other than Encompass; provided, that such source is not known by a HYTT
Party to be bound by a confidentiality agreement with, or other obligation of
secrecy to, Encompass or another party. In addition, it shall not be a breach of
the confidentiality obligations hereof if a HYTT Party is required by law or
legal process to disclose any Confidential Information; provided, that in such
case, the HYTT Parties shall (a) give Encompass the earliest notice possible
that such disclosure is or may be required, and (b) cooperate with Encompass, at
Encompass' expense, in protecting, to the maximum extent legally permitted, the
confidential or proprietary nature of the Confidential Information which must be
so disclosed. The obligations of each HYTT Party under this Section 4 shall
survive any termination of this Non-Competition Agreement.
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5. Non-Solicitation. At all times from and after the date of
this Non-Competition Agreement and until the expiration of the Restricted
Period, no HYTT Party shall, directly, indirectly or otherwise, either by
its/his agent or by letters, circulars or advertisements, and whether for
itself/himself or on behalf of any other person:
(a) seek to persuade any employee of Encompass or any
of its Affiliates to discontinue his or her status or employment therewith or
seek to persuade any employee or former employee of Encompass or any of its
Affiliates to become employed or to provide consulting services or contract
services in a business or activities competitive with the Business, or
(b) solicit or employ or, directly or indirectly,
cause to be solicited or employed, or engage, directly or indirectly, the
services of any employee or former employee of Encompass or any of its
Affiliates.
6. Right to Injunctive Relief. Each HYTT Party acknowledges
that any breach or threatened breach by it of any of the covenants or provisions
contained herein will result in irreparable and continuing harm to Encompass and
its Affiliates for which neither Encompass nor its Affiliates would have an
adequate remedy at law. Therefore, each HYTT Party acknowledges and agrees that,
in addition to any other remedy which Encompass or its Affiliates may have at
law or in equity, Encompass and its Affiliates shall be entitled to injunctive
relief, temporary and permanent restraining orders or other equitable remedies
in the event of any such breach or threatened breach. Each HYTT Party further
acknowledges and agrees that monetary damages would be insufficient to
compensate Encompass and its Affiliates in the event of a breach by any HYTT
Party of any of the covenants or provisions contained herein, and that in the
event of a breach thereof, Encompass and/or its Affiliates shall be entitled to
specific performance of the obligations hereunder without the obligation to post
a bond or to prove damages or that other remedies are insufficient.
7. Enforceability; Severability. If any provision of this
Non-Competition Agreement shall be adjudicated to be invalid or unenforceable,
then such provision shall be deemed modified, as to duration, territory or
otherwise, so as to be enforceable as similar as possible to the provision at
issue, in order to render the remainder of this Non-Competition Agreement valid
and enforceable and to the extent found necessary, such provisions shall be
revised, reformed or redrafted or a new agreement created by a court of
competent jurisdiction to accomplish the foregoing. The invalidity or
unenforceability of any provision of this Non-Competition Agreement shall not
affect the other provisions hereof, and this Non-Competition Agreement shall be
construed in all respects as if such invalid or unenforceable provision were
omitted.
8. Successors and Assigns. This Non-Competition Agreement
shall be binding upon and shall inure to the benefit of each party hereto and
their respective Affiliates, successors and assigns.
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9. Entire Agreement. This Non-Competition Agreement, together
with the Agreement and the documents and instruments referenced herein and
therein, contains the entire understanding among the parties hereto with respect
to the subject matter hereof and supersedes all prior negotiations and
understandings among Encompass, Encompass' Affiliates and each HYTT Party with
respect hereto. This Non-Competition Agreement may not be amended or modified
except by a written instrument signed by the parties hereto.
10. Applicable Law; Submission to Jurisdiction.
(a) This Non-Competition Agreement and the rights,
obligations and relations of the parties hereto shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware.
(b) The parties hereto hereby, to the fullest extent
permitted by law, (i) agree to submit themselves, and any legal action or
proceeding relating to this Non-Competition Agreement or for recognition and
enforcement of any judgment in respect hereof, to the exclusive jurisdiction of
the courts of the State of Delaware, the courts of the United States District
Court for the District of Delaware, and appellate courts from any therefor, (ii)
consent that any action or proceeding shall be brought in such courts, and waive
any objection that each may now or hereafter have to the venue of any such
action or proceeding in any such court, (iii) agree that service of process of
any such action or proceeding may be effected by serving the appropriate party
personally at its address as set forth herein, and service made shall be deemed
to be completed upon actual receipt thereof, and (iv) agree that nothing herein
shall affect the right to effect service of process in any other manner
permitted by law.
11. Notices.
(a) Except as provided in Section 10(b)(iii) with
respect to service of process which must be delivered personally, any notice or
other communication required or permitted hereunder shall be in writing and
shall be delivered personally by hand or by recognized overnight courier or
mailed (by registered or certified mail, postage prepaid) or telecopied, as
follows:
(i) If to Encompass :
000 Xxxxxxxxx Xxxxxx, Xxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, President
Telecopier: 000-000-0000
with a simultaneous copy to:
Xxxx X. Xxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxx & Xxxxxxx, LLC
0000 Xxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopier: (000)000-0000
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and
Xxxxxxxx Xxxxxxxx, Esquire
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxx Xxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Telecopier: (561) 869-260
(ii) If to a HYTT Party, one copy to:
c/o of Hy-Tech Technology Group, Inc.
0000 Xxx Xxxxx Xx.
Xx. Xxxxx, XX
Attention: President
Telecopier:
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with a simultaneous copy to:
Xxxx X. Xxxxxxxxxx, Esquire
Gottbetter & Partners, LLP
000 Xxxxxxx Xxx., 00xx Xx
Xxx Xxxx, XX 00000-0000
Telecopier: (000) 000-0000
(b) Each such notice or other communication shall be
effective (i) if given by telecopier, when such telecopy is transmitted to the
telecopier number specified in Section 11(a) (with confirmation of
transmission), or (ii) if given by other means, when delivered at the address
specified in Section 11(a). Any party by notice given in accordance with this
Section 11 to the other party may designate another address or person for
receipt of notices hereunder. Notices by a party may be given by counsel to such
party.
12. Headings. The headings of sections and subsections of this
Non-Competition Agreement are for convenience only and are not to be considered
in construing this Non-Competition Agreement.
13. Execution in Counterparts. This Non-Competition Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, but all of which, when taken together, shall constitute one and
the same instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Non-Competition
Agreement to be executed as of the day and year first above written.
HY-TECH TECHNOLOGY, INC.
By:
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Name:
Title:
HY-TECH COMPUTER SYSTEMS, INC.
By:
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Name:
Title:
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XXXXX XXXXXXX
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XXXX XXXXXX
ENCOMPASS GROUP AFFILIATES, INC.
By:
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Name:
Title:
