COVENANT NOT TO COMPETE
This Covenant Not to Compete ("Covenant") is between XxXxxxx Aircraft
Holdings, Inc. ("Buyer"), Audio International, Inc. ("AI") and Xxxxx Xxxxxx
("Seller").
A. Concurrent with the execution of this Covenant, Seller and the other
shareholders of Audio International, Inc. are selling to Buyer all of the stock
of AI pursuant to a Stock Purchase and Sale Agreement (the "Agreement"). If
Seller were not entering into this Covenant, Buyer would not purchase the stock
of AI for the purchase price specified in the Agreement.
B. Seller, together with the other selling shareholders, has owned and
controlled AI and Seller has knowledge of AI's business, AI's prospects, AI's
customers, needs of the customers for AI's products, product specifications for
AI's products, key employees of AI, each of which (if not otherwise known to
the public or other persons) Seller acknowledges is either a trade secret
("Trade Secret") or confidential information ("Confidential Information") of
AI; and that to the extent that any such Trade Secret or Confidential
Information is a secret or is confidential, it is owned by and belongs to AI.
C. If Seller was to compete with the business of AI, Seller's competition
is likely to cause material harm to AI and diminish the value of the stock of
AI being sold by Seller to Buyer pursuant to the Agreement and thereby also
likely to cause material harm to Buyer.
D. The business of AI is worldwide; AI's sales occur throughout the
United States and in many foreign countries. If this Covenant were limited to
the State of Arkansas, its scope would not be sufficient to protect the
interest of AI.
Based on the foregoing facts and for good and valuable consideration,
receipt of which is hereby acknowledged, Seller and Buyer agree as follows:
1. TERM OF THIS COVENANT.
As used in this Covenant, the "Term of this Covenant" shall mean a
period commencing upon the Closing of the Agreement (the "Closing Date") and
expiring on two years after the Closing Date.
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2. COVENANT NOT TO COMPETE.
For the Term of this Covenant, Seller shall not directly or indirectly
engage in the design, engineering, manufacture, sale or servicing of those
products and services presently listed in AI's sales catalogue for use in
executive or head of state aircraft.
3. COVENANT NOT TO HIRE.
For the term of this Covenant, Seller may hire any employee of AI
under only the following circumstances: (i) for a business from which Seller
is not restricted pursuant to paragraph 2 of this Covenant and (ii) if such
person has been terminated by AI prior to the date such person is solicited to
be hired by Seller or any person who has voluntarily terminated his or her
employment with AI if such solicitation takes place, after such person has
voluntarily terminated his or her employment with AI.
4. COVENANT NOT TO USE TRADE SECRETS.
Seller will not use for the benefit of himself or any other person or
entity any Trade Secret or Confidential Information of AI, except as otherwise
known to the public at the time of such use, or except to the extent that such
Confidential Information or Trade Secret constitutes a general body of
knowledge about the business.
5. RECITALS.
The recitals are a part of this Covenant and shall be used in
construing and interpreting it.
6. IRREPARABLE INJURY.
Seller acknowledges that (i) the violation by Seller of any of the
provisions of Sections 2, 3 and 4 of this Covenant will result in irreparable
injury to Buyer and that Buyer shall be entitled to (i) the issuance of a
temporary restraining order, (ii) a preliminary injunction and (iii) a
permanent injunction to prohibit either the continuation or another breach of
Sections 2, 3 or 4 of this Covenant.
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7. MONETARY DAMAGES.
Notwithstanding any provision of this Covenant, Buyer may seek and
obtain monetary damages according to proof for any breach of this Covenant by
Seller.
8. JURISDICTION AND VENUE.
The Buyer and Seller have chosen the law of the State of Delaware to
resolve any disputes pursuant to the Agreement. Accordingly, the Buyer, Seller
and AI hereby agree that any dispute for breach of, arising under, or to
interpret this Covenant, shall be brought exclusively in state or federal
counts in the State of Delaware. Seller, AI and Buyer hereby consent to the
jurisdiction and venue of the state and federal courts in the State of Delaware
for all purposes in connection with matters arising in connection with this
Covenant.
9. NOTICES.
All notices, requests, demands, deliveries and other communications
hereunder shall be in writing and, except as otherwise specifically provided in
this Covenant, shall be given by commercial courier service providing proof of
delivery to the parties at the following addresses (all such notices shall be
effective upon receipt):
If to Buyer: XxXxxxx Aircraft Holdings, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
and a copy to: Spolin & Xxxxxxxxx
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Fax Number: (000) 000-0000
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If to AI: Audio International, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Fax: (000) 000-0000
and a copy to: Spolin & Xxxxxxxxx
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Fax Number: (000) 000-0000
and XxXxxxx Aircraft Holdings, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: R. Xxxx XxXxxxx, Chief Executive Officer
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Seller: Xxxxx Xxxxxx
00 Xxxxxxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Fax Number: (000) 000-0000
With a copy to: Xxxx X. Peace
Dover & Xxxxxxx
000 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
and Xxxx Xxxxxxxxx
0000 Xxxx Xxxxxx
Xxxxx Xxxxxx Xxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Any of the parties hereto may, from time to time, change its address for
receiving notices by giving written notice thereof in the manner outlined above.
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10. COSTS AND ATTORNEYS' FEES.
If any action, suit or other proceeding is instituted concerning or
arising out of this Covenant, the party in whose favor judgment is rendered
shall recover such party's reasonable costs and attorneys' fees incurred in
connection with such action.
11. GOVERNING LAW.
This Agreement shall in all respects be construed in accordance with
and governed by the substantive law of the State of Delaware without regard to
Delaware law governing choice of law.
12. HEADINGS.
The section and paragraph headings contained in this Covenant are for
convenience only and shall not control or affect the meaning or construction of
any of the provisions of this Agreement.
13. ASSIGNMENT.
This Covenant may be assigned to any successor of Buyer.
14. COUNTERPARTS.
This Covenant may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
"Buyer"
XxXxxxx Aircraft Holdings, Inc.
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By: R. Xxxx XxXxxxx,
Chief Executive Officer
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Audio International, Inc.
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By: R. Xxxx XxXxxxx,
Chief Executive Officer
"Seller"
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Xxxxx Xxxxxx
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