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NONCOMPETITION AND NONDISCLOSURE AGREEMENT
NONCOMPETITON AND NONDISCLOSURE AGREEMENT (the "Non-Competition
Agreement"), made as of the 24th 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").
WITNESSETH:
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WHEREAS, pursuant to that certain Agreement, dated May 27, 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 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.
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(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
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.
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(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: Xxxx XxXxxx
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:
