EXHIBIT 10.1
NON-COMPETITION AGREEMENT
This Non-Competition Agreement (this "Agreement") is entered into as of
June 23, 1998 by and between Digital Video Systems, Inc., a Delaware corporation
("DVS") and Hyundai Electronics Industries Company, Ltd. ("Hyundai"). For
purposes of this Agreement all references to Dollars or "$" mean lawful currency
of the United States of America. Terms used herein and not otherwise defined
shall have the meaning given to such terms in the Purchase Agreement (defined
below).
WHEREAS, pursuant to the Asset Purchase Agreement dated as of May 8, 1998,
as amended (the "Purchase Agreement"), by and among DVS and Hyundai, DVS has
agreed to purchase the Tangible Assets and to license the Intangible Assets, and
Hyundai has agreed to sell the Assets and to grant to DVS certain additional
rights, for $1,000,000 in cash and 2,000,000 shares of the common stock of DVS,
all as set forth in the Purchase Agreement (the "Transaction"); and
WHEREAS, in connection with the negotiations for the Transaction, the
parties have agreed to enter into this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereby agree as follows:
1. Non-Competition and Non-Solicitation.
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1.1 Hyundai agrees that for a period of three years beginning on the
later to occur of the IP Closing Date and the Asset Closing Date, it shall not
directly or through any wholly-owned subsidiary (other than Maxtor), in any
capacity, engage or participate in, the DVD-ROM, CD-R, CD-RW and DVD-RAM
businesses or render advisory or consulting or other services in connection with
any Competing Business in the United States, Canada, Europe or China. For
purposes of this Agreement, "Competing Business" shall be defined as any
business and any branch, office or operation thereof, which competes in whole or
in part with the DVD-ROM, CD-R, CD-RW and DVD-RAM business of DVS, its
subsidiaries and its affiliates, including, without limitation, DVS-Korea
(collectively, the "Company").
1.2 Hyundai agrees that for a period of three years beginning on the
later to occur of the IP Closing Date and the Asset Closing Date, it shall not,
and it shall not permit its wholly-owned subsidiaries (other than Maxtor) to,
make any financial investment, whether in the form of equity or debt, or own any
interest, directly or indirectly, in any Competing Business in the United
States, Canada, Europe or China. Nothing in this paragraph shall, however,
restrict Hyundai from making any investment in any company whose stock is listed
on a national securities exchange in the United States, Korea or elsewhere;
provided, that (a) such investment does not give Hyundai the
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1.
right to control or influence the policy decisions of any Competing Business,
and (b) such investment constitutes an ownership interest of less than 5% of any
such Competing Business.
1.3 Hyundai agrees that for a period of three years beginning on the
later of the IP Closing Date and the Asset Closing Date, Hyundai shall not,
directly or indirectly (a) encourage any employee, supplier or customer of the
Company or any of its successors in interest to end his or its employment or
supplier or customer relationship, as the case may be, with the Company or any
of its successors in interest, (b) employ, hire, solicit or cause to be
employed, hired or solicited (other than by the Company or any of its successors
in interest), or encourage others to employ or hire any person who within three
years prior thereto was employed by the Company or its successors in interest,
or (c) establish a business with, or encourage others to establish a business
with, any person who within three years prior thereto was an employee, supplier
or customer of the Company, or any of its successors in interest.
1.4 If the Transaction is not consummated, this Agreement shall
terminate and shall be without further force and effect, and none of the parties
hereto shall have any further obligation of any nature or kind whatsoever in
connection with this Agreement.
2. Term. The term of this Agreement shall be for three years beginning
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on the Closing Date.
3. Reasonable Limitations. Hyundai acknowledges that, given the nature
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of the Company's business, the covenants set forth in Section 1 hereof contain
reasonable limitations as to time, geographical area and scope of activity to be
restrained, and do not impose a greater restraint than is necessary to protect
the legitimate business interests of the Company. If, however, Section 1 is
determined by any court of competent jurisdiction, to be unenforceable by reason
of its extending for too long a period of time or over too large a geographic
area or by reason of its being too extensive in any other respect or for any
other reason, it will be interpreted to extend only over the longest period of
time for which it may be enforceable and/or over the largest geographical area
as to which it may be enforceable and/or to the maximum extent in all other
aspects as to which it may be enforceable, all as determined by such court.
4. Acknowledgement. Hyundai understands that the restrictions in Section
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1 hereof may limit its ability to generate revenue or profits in a business
similar to a Competing Business, but Hyundai nevertheless believes that it has
received and will receive sufficient consideration under the Purchase Agreement
to justify such restrictions.
5. Miscellaneous.
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5.1 Succession and Assignment. This Agreement shall be binding upon
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and inure to the benefit of the parties named herein and their respective
successors and
2.
permitted assigns. No party may assign either this Agreement or any of his or
its rights, interests, or obligations hereunder without the prior written
consent of the other party.
5.2 Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
5.3 Headings. The section headings contained in this Agreement are
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inserted for convenience only and shall not affect in any way the meaning or
interpreta tion of this Agreement.
5.4 Notices. All notices, requests, demands, claims, and other
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communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given: when received, if
personally delivered; when transmitted, if transmitted by telecopy, electronic
or digital transmission method; five business days after such notice, request,
demand claim or other communication is sent (unless there is a postal strike in
effect at the time such mail is sent, in which case delivery shall be deemed to
have occurred five business days after the cessation of such postal strike), if
sent by registered or certified mail, return receipt requested, postage prepaid,
and addressed to the intended recipient as set forth below:
IF TO HYUNDAI:
HYUNDAI ELECTRONICS INDUSTRIES COMPANY, LTD.
12th Fl. Hyundai Jeonja Xxxx.
00, Xxxxxxxx-xxxx Xxxxxx-xx
Xxxxx, Xxxxx
Attention: Xxxxx X. Xxx, Esq.
Fax: (00) 000-0000, or 2146 or 2147
COPY TO:
HYUNDAI ELECTRONICS INDUSTRIES COMPANY, LTD.
International Finance Department, 12th Fl.
000-0 Xxx-Xxxx Xxxxxxx-Xx
Xxxxx, Xxxxx
Attention: X.X. Xxx
Fax: (00) 000-0000
IF TO DVS:
Digital Video Systems, Inc.
000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx, XXX 00000
Attention: Xxxxxx X. Xxxxxxxxx, President
Facsimile: (000) 000-0000
3.
COPY TO:
Xxxx & Xxxxx Professional Corporation
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx, XXX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means, but no such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it actually is received
by the intended recipient. Any party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
5.5 Governing Law. This Agreement shall be governed by and construed
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in accordance with the internal laws of the State of California without giving
effect to any choice or conflict of law provision or rule (whether of the State
of California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California.
5.6 Amendments and Waivers. No amendment of any provision of this
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Agreement shall be valid unless the same shall be in writing and signed by each
of the parties hereto. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
5.7 Severability. Any term or provision of this Agreement that is
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invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
5.8 Submission to Jurisdiction. Each of the parties hereto submits
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to the exclusive jurisdiction of any state or federal court sitting in the State
of California, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each of the parties hereto waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety, or other security that might be required
of any other party with respect thereto.
4.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the day
and year first above written.
DIGITAL VIDEO SYSTEMS, INC.
By: /s/ Xxxxxx X. Sun
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Name: Xxxxxx X. Sun
Title: Chairman
HYUNDAI ELECTRONICS INDUSTRIES COMPANY, LTD.
By: /s/ Youn Huh
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Name: Youn Huh
Title: Senior VP
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