EXHIBIT 10.4
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT
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THIS AGREEMENT is made as of April 4, 1996, between LANCE H. WOELTJEN,
an individual resident of San Luis Obispo, California ("Shareholder"), and ROM
TECH, INC., a Pennsylvania corporation (the "Company").
W I T N E S S E T H:
WHEREAS, contemporaneously with the execution and delivery hereof, the
Company is acquiring all of the outstanding shares (the "Stock") of Virtual
Reality Laboratories, Inc., a California corporation ("Virtual Reality"),
pursuant to an Agreement and Plan of Reorganization, dated as of April 4, 1996,
to which the Company, VR Acquisition Company ("Sub"), Virtual Reality and
Shareholder are parties (the "Reorganization Agreement"); and
WHEREAS, execution by Shareholder of this Agreement is a condition
precedent to the Company's and Sub's respective obligations to perform under the
Reorganization Agreement; and
WHEREAS, by virtue of the purchase of the Stock, the Company and/or Sub
are and will be engaged throughout the Area (as hereinafter defined) in the
Business (as hereinafter defined) of the Company which was formerly conducted by
Virtual Reality throughout the Area (the "Business"); and
WHEREAS, prior to the consummation of such purchase, Shareholder was an
owner of Virtual Reality and as a stockholder, director and officer of Virtual
Reality served in various and significant capacities for Virtual Reality and,
as such, had control over and was familiar with the business and affairs of
Virtual Reality; and
WHEREAS, the parties to this Agreement acknowledge that the market for
products of the type sold by Virtual Reality is worldwide, and the area where
the goodwill of Virtual Reality has been established through sales, production,
promotion and marketing of its products includes each of the states and counties
in the United States, including each county in California; and
WHEREAS, competition by Shareholder with the Company and/or Sub or use
or disclosure by Shareholder of confidential and proprietary information of
Virtual Reality will result directly in damage to the Company and/or Sub and
their respective businesses, properties, assets, and goodwill and will cause the
loss by the Company of the benefit of its bargain with Virtual Reality;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. The following terms shall have the definitions set forth below:
(a) "Area" shall mean anywhere within the United States.
(b) "Business" shall mean and include the business of selling or
otherwise providing the same or similar goods and/or services sold or provided
by Virtual Reality.
(c) "Closing Date" shall mean the date of this Agreement.
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(d) "Competing Business" shall mean any business, person or entity
which is engaged in a business substantially the same as the Business.
(e) "Confidential Information" shall mean and include, but shall not
be limited to, all of the following materials and information (whether or not
reduced to writing and whether or not patentable) pertaining to Virtual Reality,
to which Shareholder has received access or develops or has developed in whole
or in part as (i) a direct or indirect result of his performance of services for
Virtual Reality or through the use of any of Virtual Reality's facilities or
resources, or (ii) as a direct or indirect result of having been a shareholder,
director, officer, partner or employee of Virtual Reality:
(1) All items of information that could be classified as a trade
secret pursuant to law;
(2) The names and addresses of the customers, (not including
distributors), of Virtual Reality and the nature and amount of business done
with such customers;
(3) The names and addresses of employees, suppliers and other
business contacts of Virtual Reality;
(4) The particular names, methods and procedures utilized by
Virtual Reality in the conduct and advertising of its Business;
(5) The discoveries, concepts and ideas, whether patentable or
not, including without limitation, the nature and results of research and
development activities, processes, techniques, "know-how", designs, drawings and
specifications of Virtual Reality;
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(6) Application, operating system, communication and other
computer software and derivatives thereof, including without limitation, source
and object codes, flowcharts, algorithms, coding sheets, routines, subroutines,
compilers, assemblers, design concept and related documentation and manuals of
Virtual Reality;
(7) Production processes, marketing techniques, purchasing
information, price lists, pricing policies, quoting procedures, financial
information, customer names and requirements, customer data and other materials
or information relating to Virtual Reality's manner of doing business;
(8) Any other materials or information related to the Business
or activities of Virtual Reality which are not generally known to others engaged
in similar business activities; and
(9) All inventions and ideas which are derived from or relative
to Shareholder's access to or knowledge of any of the above enumerated materials
and information.
Company's, Sub's or Virtual Reality's failure to make and keep any of
the foregoing confidential shall not affect its status as part of the
Confidential Information under the terms of this Agreement.
2. Shareholder covenants that he shall, for a period of three (3) years
from and after the Closing Date, observe the following separate and independent
covenants:
(a) Agreement Not to Compete. Shareholder shall not within the Area,
directly or indirectly, on his own behalf or in the service or on behalf of
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others, become financially interested in a Competing Business (other than as a
holder of less than five percent of the outstanding voting securities of any
entity whose voting securities are listed on a national securities exchange or
quoted by the National Association of Securities Dealers, Inc. Automated
Quotation System), or render any services to any Competing Business as an
employee, consultant, partner, officer, director or in any other relationship
whatsoever.
(b) Agreement Not to Solicit Customers. Shareholder shall not,
either directly or indirectly, on his own behalf or in the service or on behalf
of others, solicit, divert, or appropriate, or attempt to solicit, divert, or
appropriate, to any Competing Business, any person or entity whose account with
Virtual Reality was sold or serviced by or under his direction or supervision
while he was associated with Virtual Reality at any time prior to the Closing
Date.
(c) Agreement Not to Solicit Employees. Shareholder shall not,
either directly or indirectly, on his own behalf or in the service or on behalf
of others, solicit, divert or hire away, or attempt to solicit, divert, or hire
away, to any Competing Business, any person employed by Virtual Reality, the
Company or Sub, whether or not such employee is a full-time employee or a
temporary employee of the Company, Sub or Virtual Reality and whether or not
such employment is pursuant to written agreement and whether or not such
employment is for a determined period or is at will.
(d) Ownership and Non-Disclosure and Non-Use of Confidential
Information. Shareholder acknowledges and agrees that all Confidential
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Information, and all physical embodiments thereof, are confidential to and shall
be and remain the sole and exclusive property of the Company. Shareholder agrees
that he will not: (i) disclose or make available any Confidential Information to
any person or entity, or (ii) make or cause to be made, or permit, either on his
own behalf or in the service or on behalf of others, any use of such
Confidential Information.
3. Shareholder acknowledges that Virtual Reality has been for many
years, and that the Company and/or Sub are now, engaged in the Business
throughout the Area; that as a stockholder, director or officer of Virtual
Reality, he acquired unique knowledge of the customers, Business, and operations
of the Virtual Reality; that the within and foregoing covenants are made by him
in consequence of and as an inducement to the Company to acquire the Stock and
to protect and preserve to the Company the benefit of its bargain in the
acquisition of the Stock; that each of the above and foregoing covenants is
reasonable and necessary to protect and preserve the benefits of such purchase;
and that irreparable loss and injury would result should Shareholder breach any
of the foregoing covenants.
4. Each of the covenants hereinabove contained shall be deemed
separate, severable, and independent covenants, and in the event any covenant
shall be declared invalid by any court of competent jurisdiction, such
invalidity shall not in any manner affect or impair the validity or
enforceability of any other part or provision of such covenant or of any other
covenant contained herein.
5. If any of the covenants contained in Section 2, or any part thereof,
is held to be unenforceable because of the duration of such provision or the
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scope of the subject matter thereof or the area covered thereby, the parties
agree that the court making such determination shall have the power to reduce
the duration, scope and/or area of such provision and, in its reduced form, said
provision shall then be enforceable.
6. In addition to all other remedies provided at law or in equity, the
Company shall be entitled to both preliminary and permanent injunctions against
Shareholder to prevent a breach or contemplated or threatened breach by
Shareholder of any of the foregoing covenants, without the necessity of proving
actual damages; and the existence of any claim, demand, cause of action, or
action of Shareholder against the Company and/or Sub, whether predicated upon
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of any such covenants. In the event of an actual breach of any of
the foregoing covenants, the Company shall have the right to recover damages for
all losses, actual and contingent, and the right to require Shareholder to
account for and pay over to the Company all profits or other benefits
(collectively "Benefits") derived or received by Shareholder as a result of any
transactions constituting such breach, and Shareholder hereby agrees to account
for and pay over such Benefits to the Company. Each of the rights and remedies
enumerated above shall be independent of the other, and shall be severally
enforceable, and all of such rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company at law or
equity.
7. The provisions of Sections 2 through 5 hereof shall be deemed to
supplement the provisions of the Employment Agreement of even date between the
Company and Shareholder ("Employment Agreement"). In the event of inconsistency
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between the terms of this Agreement and the Employment Agreement, this Agreement
and the Employment Agreement shall be construed together so as to provide the
broadest possible protection to the Company.
8. This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
9. This Agreement may be executed and delivered in any number of
counterparts, each of which, when executed and delivered, shall be an original,
but all of which shall together constitute one and the same agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the date first above written.
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Witness LANCE H. WOELTJEN
ROM TECH, INC.
By:
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Joseph A. Falsetti, Chairman and
Chief Financial Officer
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