Replies to post #329956 on Spongetech Delivery Systems, Inc. (fka SPNGQ)

[lbdave]

Could the bolded text (by me) nullify this agreement if there is no Spongetech busisness to be in competition with?



"8. You agree that you will not, at any time, during the Term of this Agreement, and for one (1) year following (a) the termination of this Agreement or your employment hereunder by the Company or SpongeTech for Cause, or (b) your termination of this Agreement for Good Reason, either directly or indirectly, engage in, with or for any enterprise, institution, whether or not for profit, business, or company, competitive with the “Business” of the Company or Spongetech as such Business may be conducted on the date thereof, as a creditor, guarantor, or financial backer, stockholder, director, officer, consultant, advisor, employee, member, or otherwise of or through any corporation, partnership, association, sole proprietorship or other entity; provided, that an investment by you, your spouse or your children is permitted if such investment is not more than four percent (4%) of the total debt or equity capital of any such competitive enterprise or business. Spongetech shall have the right in its sole discretion to waive this covenant not to non-compete. As used herein, the Term “Business” shall mean, with respect to the Company, the development, manufacture and distribution of products derived from “Hydrophilic Urethane Chemistry,” and with respect to Spongetech, the development, manufacture, sale and distribution of hydrophilic polyurethane and polyurethane sponge cleaning and waxing products."

[overachiever]

Fraud by either party to the contract would nullify the contract. I think we should all recognize by now that SPNG (Moskowitz and Metter) was conducting itself in a fraudulent manner.

For one thing, they had been lying about their revenues and profits to Celia and the World. When he questioned them about it, Metter threatened him. He was under no obligation to stay or to honor a non-compete

[starfire]

How much of a fraud can that be when compared to the fact that he sold Dicon for $4.5 M which includes SPNG to payoff $2.5M loan to Wachovia Bank and then turning around, forcing (indirectly) Dicon into BK with about $150K in Liabilities and further offering to buy Dicon for $825K which is less than the value of the inventory and has a break up fee clause indicating about $70K! I think what he has in hand is the agreement with HHBrown & Diversified Technologies (Note: WC is owner or principal of DT LLC). HHBrown questionably terminated the agreement with Dicon.

edit: HOWEVER, it's possible that WC could establish that he was fraudulently induced to sign the agreement in the first place. In which case you can probably trash this whole post :O)