EXHIBIT 10.3
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of the
26th day of April, 2005, by and between RMK HOLDINGS, LLC, a Delaware limited
liability company ("RMK"), and RCG COMPANIES INCORPORATED, a Delaware
corporation ("RCG").
Statement of Purpose
RMK, Logisoft Corp., a wholly-owned subsidiary of RCG ("Logisoft"), and
eStorefronts.net Corp., a wholly-owned subsidiary of Logisoft (together with
Logisoft, "Sellers"), have entered into that certain Asset Purchase Agreement,
dated April 26, 2005 (the "Asset Purchase Agreement"), pursuant to which Sellers
are selling to RMK, or its affiliate, certain items of inventory, intellectual
property, customer list, contracts, equipment and other assets used in Sellers'
business, as presently conducted, which consists of reselling computer software
and hardware, sales, design, hosting and maintenance of internet and intranet
websites, information technology consulting and ecommerce software development
and consulting (the "Business"). In order to protect the RMK's legitimate
business interests, as a condition to and as further consideration for RMK
entering into the Asset Purchase Agreement, RCG has agreed to enter into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing Statement of Purpose and
the mutual promises contained herein, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
Capitalized terms used herein shall have the meanings set forth in Annex
A.
ARTICLE 2.
NON-DISCLOSURE COVENANT; EMPLOYEE INVENTIONS
2.1 Acknowledgments by the RCG. RCG acknowledges that (a) as a result of
its ownership of Logisoft, RCG possesses Confidential Information; (b) public
disclosure of such Confidential Information could have an adverse effect on RMK
and its business; and (c) the provisions of this Article 2 are reasonable and
necessary to prevent the improper use or disclosure of Confidential Information.
2.2 Agreements of RCG. In consideration of the foregoing and the Statement
of Purpose other good and valuable consideration, RCG covenants as follows:
(a) Confidentiality.
(i) RCG shall hold in confidence all Confidential Information
and shall not disclose Confidential Information to any Person or use
Confidential Information in any way whatsoever, except as otherwise expressly
permitted by the terms of this Agreement or as
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(ii) required by law. This Section 2.2(a)(i) shall not be
construed as preventing RCG from using its general skills, knowledge and
expertise so long as RCG does so without using or disclosing Confidential
Information.
(iii) Any trade secrets of RMK or the Business shall be
entitled to all of the protections and benefits under the North Carolina Trade
Secrets Protection Act, N.C. Gen. Stat. ss. 66-152 et seq. and any other
applicable law. If any information that RMK deems to be a trade secret is found
by a court of competent jurisdiction not to be a trade secret for purposes of
this Agreement, such information may, nevertheless, be considered Confidential
Information for purposes of this Agreement. RCG hereby waives any requirement
that RMK submit proof of the economic value of any trade secret or post a bond
or other security.
(iv) None of the foregoing obligations and restrictions
applies to any part of Confidential Information that is or becomes generally
available to the public other than as a result of a disclosure or use by RCG or
unlawful use or disclosure by some other Person or that is required to be
disclosed by RCG by law or by a court of competent jurisdiction.
2.3 Disputes or Controversies. RCG recognizes that should a dispute or
controversy arising from or relating to this Agreement be submitted for
adjudication to any court, arbitration panel or other third party, the
preservation of the secrecy of Confidential Information may be jeopardized. All
pleadings, documents, testimony and records relating to any such adjudication
shall be maintained in secrecy and shall be available for inspection by RMK,
RCG, and their respective attorneys and experts, who shall agree, in advance and
in writing, to receive and maintain all such information in secrecy, except as
may be limited by them in writing.
ARTICLE 3.
NON-COMPETITION AND NON-INTERFERENCE
3.1 Acknowledgments by RCG. RCG acknowledges that (a) it has great
familiarity with and expertise relating to the Business, having owned Logisoft
for many years, (b) upon the closing of the transactions contemplated by the
Asset Purchase Agreement, RMK and the Business will compete with other
businesses that are or could be located in any part of the states of (1) New
York, (2) New Jersey, (3) Connecticut, (4) Pennsylvania, (5) Massachusetts, (6)
Vermont (7) Maryland or (8) North Carolina (the "Restricted Area"), and (c) the
provisions of this Article 3 are reasonable and necessary to protect RMK's
legitimate business interests.
3.2 Covenants of RCG. In consideration of the acknowledgments by RCG, the
Statement of Purpose and the terms and conditions of the Asset Purchase
Agreement, RCG covenants that it will not, directly or indirectly:
(a) at any time during the Restricted Period, engage or invest in,
own, manage, operate, finance, control or participate in the ownership,
management, operation, financing or control of, be employed by, lend RCG's name
or any similar name to, lend RCG's credit to, render services or advice to, any
business or Person whose products, services or activities compete in whole or in
part with the products produced or activities conducted by RMK or any of its
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affiliates with respect to the Business (each a "Competitor"), in each case in
the Restricted Area; provided, however, that RCG may purchase or otherwise
acquire up to (but not more than) 5% of any class of securities of any
enterprise (but without otherwise participating in the activities of such
enterprise) if such securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the Securities Exchange
Act of 1934;
(b) at any time during the Restricted Period, solicit business of
the same or similar type being carried on by RMK solely with respect to the
Business from any Person known by RCG to be a customer of RMK with respect to
the Business within the Restricted Area;
(c) whether for RCG's own account or the account of any other Person
(i) at any time during the Restricted Period, solicit, employ or otherwise
engage as an employee, independent contractor or otherwise, any Person who is or
was an employee of RMK during the six-month period prior to engagement by RCG or
in any manner induce or attempt to induce any employee of RMK to terminate his
employment with RMK; or (ii) at any time during the Restricted Period, knowingly
interfere with RMK's relationship with any Person, including any Person who is
or was an employee, contractor, supplier or customer of RMK with respect to the
Business, in each case in the Restricted Area; or
(d) at any time during the Restricted Period, disparage RMK or any
of its members, managers, officers, employees or agents.
(e) Nothing contained in this Article 3 shall be construed to
prevent RCG from maintaining or hosting internet or intranet websites relating
to the sales of travel or leisure services if such activities do not otherwise
violate the terms of this Agreement.
(f) For purposes of this Section 3.2, the term "Restricted Period"
means the period beginning on the Closing Date and ending on the fifth
anniversary of the Closing Date. If any covenant in this Section 3.2 is held to
be unreasonable, arbitrary or against public policy, such covenant shall be
considered to be divisible with respect to scope, time and geographic area, and
such lesser scope, time or geographic area, or all of them, as a court of
competent jurisdiction may determine to be reasonable, not arbitrary, and not
against public policy, shall be effective, binding and enforceable against RCG.
If RCG shall be found to be in violation of this Agreement, the period of time
applicable to any covenant in this Section 3.2 shall be extended by the duration
of any violation by RCG of such covenant.
ARTICLE 4.
GENERAL PROVISIONS
4.1 Injunctive Relief and Additional Remedy. RCG acknowledges that the
injury that would be suffered by RMK as a result of a breach of the provisions
of this Agreement (including any provision of Articles 2 and 3) would be
irreparable and that an award of monetary damages alone to RMK for such a breach
would be an inadequate remedy. RMK shall have the right, in addition to any
other rights it may have, to obtain injunctive relief to restrain any breach or
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threatened breach or otherwise to specifically enforce any provision of this
Agreement, and RMK shall not be obligated to post bond or other security in
seeking such relief.
4.2 Covenants of Articles 2 and 3 are Independent Covenants. RMK and RCG
have independently consulted their respective counsel and have been advised in
all respects concerning the reasonableness and propriety of such covenants, with
specific regard to the nature of the Business. RCG's covenants in Articles 2 and
3 are independent covenants and the existence of any claim by RCG against RMK
under this Agreement or otherwise shall not excuse RCG's breach of any covenant
in Articles 2 and 3.
4.3 Representations and Warranties by RCG. RCG represents and warrants to
RMK that the execution and delivery by RCG of this Agreement do not, and the
performance by RCG of RCG's obligations hereunder will not, with or without the
giving of notice or the passage of time, or both, (a) violate any judgment,
writ, injunction or order of any court, arbitrator or governmental agency
applicable to RCG or (b) conflict with, result in the breach of any provisions
of or the termination of, or constitute a default under, RCG's Articles of
Incorporation or Bylaws, or any agreement to which RCG is a party or by which
RCG is or may be bound.
4.4 Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by either
party in exercising any right, power or privilege under this Agreement will
operate as a waiver of such right, power or privilege, and no single or partial
exercise of any such right, power or privilege shall preclude any other or
further exercise of such right, power or privilege or the exercise of any other
right, power or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party shall be applicable except in the specific instance for which it is
given and (c) no notice to or demand on one party shall be deemed to be a waiver
of any obligation of such party or of the right of the party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement.
4.5 Binding Effect; Delegation of Duties Prohibited. This Agreement shall
inure to the benefit of, and shall be binding upon, the parties hereto and their
respective successors and assigns, including any entity with which RMK or RCG
may merge or consolidate or to which all or substantially all of its assets may
be transferred. The duties and covenants of RCG under this Agreement may not be
delegated, transferred or otherwise assigned, except pursuant to such merger,
consolidation or sale of substantially all of RCG's assets.
4.6 Notices. All notices, consents, waivers and other communications under
this Agreement must be in writing and shall be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
electronic mail, provided that a copy is mailed by registered mail, return
receipt requested or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate addresses and facsimile numbers set forth below (or to such other
addresses and electronic mail addresses as a party may designate by notice to
the other parties):
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If to RMK:
RMK Holdings, LLC
4201 Congress Street, Suite 145
Charlotte, NC 28209
Attn: K. Wesley M. Jones
E-mail Address: wes.jones@fiveoakscapital.com
With a copy to:
Mayer, Brown, Rowe & Maw LLP
214 North Tryon Street, Suite 3800
Charlotte, North Carolina 28202
Attn: Jeffrey P. Cantrell
E-mail Address: jcantrell@mayerbrownrowe.com
If to RCG:
RCG Companies Incorporated
6836 Morrison Boulevard, Suite 200
Charlotte, NC 28211
Attn: Michael D. Pruitt, President
E-mail Address: mdp@rcgcompanies.com
With a copy to:
Adorno & Yoss, LLP
350 East Las Olas Boulevard
Suite 1700
Fort Lauderdale, Florida 33301
Attn: Joel D. Mayersohn
E-mail Address: jmayersohn@adorno.com
Any Party may change the address to which notice is to be given by notice
given in the manner set forth above.
4.7 Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof. Notwithstanding any
legal principle to the contrary, the parties expressly agree that any oral
amendment to or modification of this Agreement, including any oral modification
to this Section 4.7, shall be ineffective, and that this Agreement, including
this Section 4.7, may be amended only by an agreement in writing signed by the
parties hereto, it being the express intent of the parties that such amendment
in writing shall be the exclusive means of effecting any amendment or
modification of any provision of this Agreement whatsoever.
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4.8 Governing Law. This Agreement shall be governed by the laws of the
State of North Carolina without regard to conflicts of laws principles.
4.9 Jurisdiction. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may be
brought against either of the parties in the courts of the State of North
Carolina, County of Mecklenburg, or, if it has or can acquire jurisdiction, in
the United States District Court for the Western District of North Carolina, and
each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred to
in the preceding sentence may be served on either party anywhere in the world.
4.10 Section Headings; Construction. The headings of Sections in this
Agreement are provided for convenience only and shall not affect its
construction or interpretation. All references to "Sections" or "Articles" refer
to the corresponding Sections or Articles of this Agreement unless otherwise
specified. All words used in this Agreement shall be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
4.11 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement shall remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree shall remain in
full force and effect to the extent not held invalid or unenforceable.
4.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original copy of this
Agreement and all of which, when taken together, shall be deemed to constitute
one and the same agreement. Signatures transmitted by facsimile shall be deemed
originals for this purpose.
[Signatures appear on the following page.]
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IN WITNESS WHEREOF, the parties have executed and delivered this
NONCOMPETITION AGREEMENT as of the date above first written above.
RMK HOLDINGS, LLC
By: ______________________________
K. Wesley M. Jones
Manager
RCG COMPANIES INCORPORATED
By: ______________________________
Michael D. Pruitt
President
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ANNEX A
DEFINITIONS
"Agreement" means this Noncompetition Agreement, including this Annex A.
"Asset Purchase Agreement" has the meaning assigned such term in the
Statement of Purpose.
"Business" has the meaning assigned such term in the Statement of Purpose.
"Closing Date" has the meaning assigned such term in the Asset Purchase
Agreement.
"Competitor" has the meaning assigned such term in Section 3.2(a).
"Confidential Information" means any and all:
(a) trade secrets concerning the Business, product specifications, data,
know-how, formulae, compositions, processes, designs, sketches, photographs,
graphs, drawings, samples, inventions and ideas, current and planned
distribution methods and processes, customer lists, current and anticipated
customer requirements, advertising methods, sales methods, price lists, market
studies, business plans, computer software and programs (including object code
and source code), computer software and database technologies, systems,
structures and architectures (and related formulae, compositions, processes,
improvements, devices, know-how, inventions, discoveries, concepts, ideas,
designs, methods and information), and any other information, however
documented, that is a trade secret within the meaning of the North Carolina
Trade Secrets Protection Act, N.C. Gen. Stat. ss. 66-152 et seq.;
(b) information concerning the Business (which includes historical
financial statements, financial projections and budgets, historical and
projected sales, capital spending budgets and plans, the names and backgrounds
of key personnel, personnel training and techniques and materials and operating
procedures), however documented; and
(c) notes, analyses, compilations, studies, summaries and other material
containing or based, in whole or in part, on any information included in the
foregoing.
"date hereof" means the date stated in the first paragraph of the
Agreement.
"Person" means any individual, corporation, general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, business unit, division, facility, governmental body
or other entity.
"RCG" has the meaning assigned such term in the introductory paragraph.
"Restricted Period" has the meaning assigned such term in Section 3.2(e).
"RMK" has the meaning assigned such term in the introductory paragraph.
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