EXHIBIT 10.4
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT
This NON-COMPETITION AND CONFIDENTIALITY AGREEMENT (the "Agreement") is
made and entered into as of this 30th day of November, 2001, by and between
Tekgraf, Inc., a Georgia corporation (the "Company") and Xxxxxxx X. Xxxxxx
("Executive").
W I T N E S S E T H
WHEREAS, Executive is currently employed by the Company as President &
Chief Executive Officer;
WHEREAS, by virtue of his employment with the Company, Executive has had
and will have access to certain Confidential Information as defined herein
during the course of his employment; and
WHEREAS, in order to prevent serious harm to the Company, the Company
wishes to take reasonable steps to assure its Confidential Information will
remain confidential and that it will not be subject to undue and unfair
competition from the Executive during and for a reasonable period of time
following his or her employment.
NOW THEREFORE, in consideration of the promises and covenants herein
contained and other good and valuable consideration, including but not limited
to Executive's continued employment, the receipt and legal sufficiency of which
are hereby acknowledged, the parties agree as follows:
I. CONSIDERATION
Executive hereby acknowledges that this Agreement is being entered into as
a condition to the Company entering into Amendment No. 2 to the Loan Agreement
amending the Loan Agreement dated December 1, 1999, which Amendment No. 2
extends the term of the Company's loan to Executive for an additional year.
II. CONFIDENTIALITY
A. DEFINITIONS
For purposes of this Agreement, Confidential Information includes, without
limitation, designs, including those developed, conceived, originated or
prepared by Executive in the scope of his employment with the Company; Work
Products (as defined herein); financial information; contents of the Company's
databases; lists of actual or potential customers and suppliers; pricing
information; business plans and processes; blueprints; research and development
of new or proposed products and services; plans and specifications for the
Company's products and services; trade secrets (including but not limited to,
Trade Secrets as defined in the Illinois Trade Secrets Act) and other similar
information and data of the Company, unless such information or data is or
becomes generally known to and available for use by the public other than as a
result
of the Executive's or his or her agents' impermissible acts or omissions.
Confidential Information shall further include any information designated or
considered confidential by customers of the Company which is placed in the
custody of the Company and to which Executive has had and will have access to
during the course of his employment.
For purposes of this Agreement, "Work Products" shall be defined as any new
or useful design, invention, idea, art, discovery, development, contribution,
finding or improvement, whether or not patentable or reduced to practice, and
all related know-how that Executive solely or jointly has conceived, developed
or reduced to practice during the term of his employment by the Company that (i)
at the time of conception, development or reduction to practice relates to the
Company's business; (ii) was developed, in whole or in part, on the Company's
time or with the use of any of the Company's, and/or its affiliates' equipment,
supplies, facilities or Confidential Information; or (iii) results from any work
Executive performed or will perform for the Company, and/or its affiliates, and
all other works derived therefrom or based thereon.
B. AGREEMENT NOT TO USE OR DIVULGE CONFIDENTIAL INFORMATION
Executive acknowledges that by virtue of his employment with the Company,
Executive has been and will be intimately involved with and privy to
Confidential Information, which is a valuable asset of the Company's, and which,
if disclosed or used without prior authorization, could cause irreparable harm
to the Company. Executive further acknowledges that all Confidential Information
is the exclusive property of the Company.
Executive agrees to hold all Confidential Information in trust for the
benefit of the Company or any third party as described in Section II(A) above,
and to take all reasonable steps during and after employment to maintain such
confidentiality.
Executive further agrees that he will not, either while employed by the
Company or afterward, in any manner, use, publish, divulge, disclose, authorize
or permit anyone else to use, publish, divulge or disclose, for Executive's
benefit or for the benefit of any other individual or entity, any of the
Company's Confidential Information without the prior written consent of the
Company or as required by the Company in the course of Executive's duties as an
employee of the Company, unless required to do so by legal process; provided
that, before making such disclosure pursuant to legal process, Executive shall
advise the Company and cooperate fully in any legal action the Company may elect
to take in order to attempt to prevent such disclosure.
C. RETURN OF MATERIALS
Immediately upon the Company's request, but in no event later than the
termination of Executive's employment, Executive agrees to promptly deliver to
the Company, without retaining copies, all tangible items which are or contain
Confidential Information, including but not limited to files, records,
advertising materials, reports, price lists, sketches, documents, equipment,
computer print-outs, books, software manuals and directions, floppy disks and
other such media for storing software and information, work papers, customer
lists, supplier lists, employee lists, telephone and/or address books, Rolodex
or equivalent cards, memoranda,
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appointment books, calendar, employee manuals, sales aides, keys and other
tangible things provided to Executive by the Company, or authored in whole or in
part by Executive within the scope of his employment by the Company, even if
they do not contain Confidential Information, provided that Executive shall not
be required to deliver personal files and personal information unrelated to the
Company's business. At the time of such delivery, Executive agrees to disclose
to the Company any passwords or other knowledge required to access and use any
of the foregoing. Executive acknowledges that he does not have and will not
acquire any ownership rights in such materials.
III. DISCLOSURE AND ASSIGNMENT OF WORK PRODUCTS AND TRADE SECRETS
Executive agrees that all Work Products reduced to tangible form shall be
"works for hire" as defined in Section 101 of the United States Copyright Act of
1976. Executive hereby assigns and agrees to assign to the Company all of his
rights, title and interest in the Work Products and in all intellectual property
rights based on the Work Products, including all trade secrets; patents; patent
applications and substitutions therefor; divisions; continuations; extensions;
continuations in part, renewals, reissues, and reexaminations of patents and
patent applications; and copyrights, copyright registrations, renewals and
applications.
Executive agrees to disclose immediately to the Company any trade secrets
and improvements to trade secrets conceived or developed by Executive at any
time prior to termination of Executive's employment, and Executive shall at the
same time deliver to the Company all documents with regard thereto. Executive
hereby assigns and agrees to assign to the Company, its nominees, successors and
assigns, his entire right, title and interest in and to all such trade secrets
and improvements. Such assignment shall include the rights to obtain patent or
copyright protection thereof in the United States and foreign countries.
Executive agrees to provide all reasonable assistance to enable the Company to
prepare and prosecute any application before any governmental agency. Executive
further agrees to execute all documents and assignments and to make all oaths
necessary to vest ownership of such intellectual property rights in the Company.
It is understood that these obligations do not apply to intellectual
property for which no equipment, supplies, facility or Confidential Information
of the Company and/or its affiliates is used and which is developed entirely on
Executive's own time unless (a) the intellectual property relates to (i) the
business of the Company, or (ii) the Company's and/or its affiliates' actual or
demonstratively anticipated research or development; or (b) results from any
work performed by Executive for the Company and/or its affiliates.
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IV. NON-COMPETITION
During the term of Executive's employment and for a period of one (1) year
after termination of Executive's employment for any reason, Executive will not,
directly or indirectly, for him/herself or for others, individually, jointly or
as a partner, agent or otherwise:
(a) own, operate, manage, engage in, consult for, solicit business for, be
affiliated with, be employed by or render services , in any capacity which is
the same or similar to the capacity in which Executive worked for the Company
and/or its affiliates in any business that is competitive with the Company,
within the geographic area in which the Company conducts its business and sells
its products (the "Business Area") as of the date of Executive's termination;
(b) induce, entice, solicit, hire, attempt to hire or employ, or endeavor
to entice away from the Company any person employed by the Company within six
(6) months before and six (6) months after Executive's termination date in order
to accept employment or association with Executive or any other person, firm,
corporation, or entity whatsoever, or authorize or knowingly cooperate with the
taking of any such action by any other person, firm, corporation or entity
whatsoever; and
(c) contact, solicit or do business with or attempt to solicit or do
business with any customer or potential customer of the Company and/or its
affiliates, who was a customer or potential customer of the Company and/or its
affiliates, during the time of Executive's employment with or termination from
the Company for the purpose of diverting that customer or potential customer
from doing business with the Company.
V. MISCELLANEOUS
A. ENTIRE AGREEMENT/AMENDMENTS
This Agreement represents the parties' entire agreement, superseding all
prior and contemporaneous agreements, if any, dealing with the subject matter
hereof. This Agreement may be amended only in writing signed by Executive and
the Company.
B. REFORMATION
If any provision of this Agreement as applied to either party or to any
circumstances shall be adjudged by a court of competent jurisdiction to be void
or unenforceable, the same shall in no way affect any other provision of this
Agreement or the validity or enforceability of this Agreement. In the event any
restriction set forth in this Agreement is determined to be unreasonable and/or
unenforceable with respect to scope, time, geographical or customer coverage,
Executive agrees that such a restriction or restrictions may be modified and
narrowed, either by a court or by the Company, so as to provide the maximum
legally enforceable protection of the Company's interests as described in this
Agreement, and without negating or impairing any other restrictions or
agreements set forth herein. Furthermore, if any of the agreements or
restrictions in this Agreement are held invalid by a court of competent
jurisdiction
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because of failure of consideration or otherwise, it is expressly agreed and
understood by Executive that restrictive covenants and agreements in any other
agreements between Executive and the Company, or its predecessors in interest,
will inure to the benefit of and be enforceable by the Company to the fullest
extent permitted by law.
C. SEVERABILITY
If any one or more of the provisions, portions or sections of this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, and is not subject to reformation pursuant to Section V(B)
above, such invalidity, illegality or unenforceability will not affect any other
provision, portion or section of this Agreement, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision, portion or
section had never been contained herein.
D. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
Company and its successors and assigns and upon any person acquiring, whether by
merger, consolidation, purchase of assets or otherwise, all or substantially all
of any of the Company's assets and business, and the Company's rights hereunder
may be assigned.
E. GOVERNING LAW
In the event of any dispute arising under this Agreement, it is agreed that
the law of the State of Illinois shall govern the interpretation, validity and
effect of this Agreement without regard to the place of performance or execution
hereof. The Company and Executive agree that service by registered mail to the
Company's principal executive office and to Executive's residence as reflected
in the records of the Company shall constitute sufficient service of process for
any such action. If the Company is required to seek enforcement of any of the
provisions of this Agreement, it will be entitled to recover from Executive
reasonable attorneys' fees, costs and expenses.
F. NOTICES
Notices and all other communications provided for in this Agreement shall
be in writing and shall be delivered personally or sent by registered or
certified mail, return receipt requested, postage prepaid, or sent by facsimile
or prepaid overnight courier to the company at its principal executive office
and to Executive at his residence as reflected in the records of the Company.
G. WAIVER OF BREACH
No waiver of either party hereto of a breach of any provision of this
Agreement by the other party will operate or be construed as a waiver of any
subsequent breach by such other party. The failure of either party to take any
action by reason of such breach will not deprive such party of the right to take
action at any time while such breach continues. This Agreement is
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in addition to and does not in any way waive or detract from any rights or
causes of action the Company may have relating to trade secrets or Confidential
Information under statutory or common law or under any other agreement.
H. SURVIVAL OF AGREEMENT
Except as otherwise expressly provided in this Agreement, the rights and
obligations of the parties to this Agreement shall survive the termination of
Executive's employment for any reason.
I. DEFENSE OR PROSECUTION OF CLAIMS
Executive agrees that during employment and following the termination of
employment for any reason, Executive will cooperate at the request of the
Company in the defense or prosecution of any lawsuits or claims in which the
Company or its officers, directors or employees may be or become involved and
which relate to matters occurring while Executive was employed by the Company.
J. REPRESENTATION OF EXECUTIVE
Executive represents that he is not a party to any agreement with any third
party containing a non-competition provision or other restriction which would
prohibit Executive's employment with the Company or any part of the services
which Executive provides to the Company. Moreover, Executive represents that he
is not limited by any court order or other legal obligation from performing all
assigned duties for the Company.
K. INJUNCTIVE RELIEF
Executive acknowledges that Executive has had and will have access to
Confidential Information during the course of his employment and such
information is vital to the Company's business. By reason of this, Executive
consents and agrees that if Executive violates any of the provisions of Sections
II, III or IV of this Agreement, the Company would sustain irreparable harm.
Therefore, in addition to any other remedies which the Company may have under
this Agreement, common or statutory law or otherwise, the Company shall be
entitled to an injunction from any court of competent jurisdiction restraining
Executive from committing, threatening to commit or continuing any violation of
this Agreement, including, but not limited to, restraining Executive from
disclosing, using for any purpose, selling, transferring or otherwise disposing
of, in whole or in part, any Confidential Information. Executive acknowledges
that damages at law would not be an adequate remedy for violation of this
Agreement, and Executive therefore agrees that the provisions of Sections II,
III and IV may be specifically enforced against Executive in any court of
competent jurisdiction. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies available to it for a
breach or threatened breach of any of the provisions of Sections II, III and IV
including, but not limited to, the recovery of damages, costs and fees.
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L. REASONABLENESS
In connection with the limited protection afforded the Company by the
covenants contained herein, Executive acknowledges that his rights to compete
and to disclose Confidential Information are limited hereby only to the extent
necessary to protect the Company and that, in the event his employment with the
Company terminates for any reason, he will be able to earn a livelihood without
violating the foregoing restrictions. Executive further acknowledges that the
restrictions cited herein are reasonable and necessary for the protection of the
Company's legitimate business interests, and injunctive or other equitable
relief is an appropriate, but not an exclusive, remedy for any breach of the
provisions herein.
M. ADDITIONAL RIGHTS AND CAUSES OF ACTION
This Agreement is in addition to and does not in any way waive or detract
from the rights or causes of action available to the Company under any statutory
or common law.
N. ACKNOWLEDGMENT BY EXECUTIVE
Executive represents that he is knowledgeable as to business matters,
including the subject matter of this Agreement, that he has read this Agreement
and that he understands its terms.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
EXECUTIVE TEKGRAF, INC.
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxxx Its: CFO
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