Exhibit No. 10.2 Agreement for Non-Competition and Earn-Out Compensation
dated February 24, 2005
AGREEMENT FOR NON-COMPETE AND EARN OUT SCHEDULE
This Agreement for Non-Competition and Earn-Out Compensation ("Agreement") is
made February 24, 2005, by and among the following parties: DataLogic
International, Inc., a Delaware corporation ("Parent"), and DataLogic New
Mexico, Inc., a Delaware corporation("Purchaser") and I.S. Solutions LLC, a
New Mexico limited liability company ("Seller") and Xxxx Xxxxxxxx ("Managing
Member"), Xxxxx X. Xxxx ("Member") and Xxxx X. Xxxxxx ("Member").
WHEREAS, Purchaser and Seller are parties to an Asset Purchase Agreement
executed contemporaneously with this Agreement;
WHEREAS, the execution of this Agreement is a condition precedent to closing
under the Asset Purchase Agreement between Purchaser and Seller; and
WHEREAS, Parent, Purchaser, Seller, Managing Member and Members desire to
enter this Agreement, subject to the terms and conditions set forth below.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged, Parent, Purchaser, Seller, Managing
Member and Members agree as follows.
1. Parent and Purchaser agree to the terms of this Agreement, subject to
closing under the Asset Purchase Agreement described in the recitals.
2. Seller, Managing Member and Members agree to the terms of this
Agreement, subject to closing under the Asset Purchase Agreement described in
the recitals.
3. Parent, Purchaser, Seller, and Managing Member or Member, as the case
may be, shall each execute the Non-Competition Agreements attached hereto as
Exhibit 1 [Xxxx Xxxxxxxx]; Exhibit 2 [Xxxx X. Xxxxxx] and Exhibit 3 [Xxxxx X.
Xxxx].
4. Subject to closing under the Asset Purchase Agreement described in the
recitals, Parent and Purchaser agree that the persons named below shall
participate in the Earn Out Plan during the two years following the closing of
the Asset Purchase Agreement. Moreover, each persons, participation
percentage is set forth opposite their name below.
Xxxx Xxxxxxxx (70%)
Xxxxx X. Xxxx (22%)
Xxxx X. Xxxxxx (8%)
5. Under the Earn Out Plan, the participants, as a group, may earn up to
$400,000.00, payable in shares of restricted common stock of the Parent (the
"Earn Out Payment"). The Earn Out Payment shall be made, if at all, within
two years of the closing Asset Purchase Agreement and upon the achievement of
certain post-closing revenue and net income before tax milestones. All
parties understand and agree that both revenue and net income before tax
targets must be met to earn any portion of the Earn Out Payment.
6. If the Purchaser reports revenue greater than $3,000,000 and net
income before taxes greater than $100,000 at any point during any consecutive
12 months following the Closing, but still within 2 years of Closing, then 25%
of the Earn Out Payment shall be earned and delivered to the persons in the
proportions stated.
If the Purchaser reports revenue greater than $3,500,000 and net income
before taxes greater than $175,000 at any point during any consecutive 12
months following the Closing, but still within 2 years of Closing, then 50% of
the Earn Out Payment shall be earned and delivered to the persons in the
proportions stated.
If the Purchaser reports revenue greater than $4,000,000 and net income
before taxes greater than $250,000 at any point during any consecutive 12
months following the Closing, but still within 2 years of Closing, then 75% of
the Earn Out Payment shall be earned and delivered to the persons in the
proportions stated.
If the Purchaser reports revenue greater than $5,000,000 and net income
before taxes greater than $350,000 at any point during any consecutive 12
months following the Closing, but still within 2 years of Closing, then 100%
of the Earn Out Payment shall be earned and delivered to the persons in the
proportions stated.
There shall be no obligation for the Earn Out Payment unless and until
Purchaser meets the revenue and net income before taxes targets set forth
above during the two years following the Closing.
8. Revenue and net income before taxes shall be calculated in accordance
with generally accepted accounting principles applied upon a consistent basis
and the final accounting information relied upon in preparing the audited
financial statements of Parent and Purchaser shall be determinative for the
purposes of this Agreement. In the event, Purchaser expands the marketing
plan or budget for Purchaser during the term of this Agreement, then Xxxx
Xxxxxxxx and Parent will mutually agree on the revised operating budget for
Purchaser. If a decision is made to front end load marketing expenses, these
expenses will be allocated over a 2 to 4 year period depending upon the load
amount, rather than expensed in a single accounting period. The purpose of
the preceding sentence being to equitably adjust, to the extent possible, the
targets for revenue and net income before taxes caused by a change in the
marketing budget.
9. The table set forth below summarizes agreement and understanding by
and among Parent, Purchaser, Seller, Managing Member and Members concerning
the revenue and net income before tax required during the two years following
closing.
Net Income Earn Out % Profit
Revenue Before Tax Payment
-----------------------------------------------------------------------------------
Phase 1
-------
If the sales are equal to or
greater than $3 Mil and the net
income before tax is equal to
or greater than $100,000 then
the transfer of Parent Stock
will be made $ 3,000,000.00 $ 100,000.00 $ 100,000.00 3.33%
Phase 2
-------
If the sales are equal to or
greater than $3.5 Mil and the
net income before tax is equal
to or greater than $175 K then
the transfer of Parent Stock
will be made $ 3,500,000.00 $ 175,000.00 $ 100,000.00 5.00%
Phase 3
-------
If the sales are equal to or
greater than $4 Mil and the
net income before tax is equal
to or greater than $250 K then
the transfer of Parent Stock
will be made $ 4,000,000.00 $ 250,000.00 $ 100,000.00 6.25%
Phase 4
-------
If the sales are equal to or
greater than $5 Mil and the
net income before tax is equal
to or greater than $350 K then
the transfer of Parent Stock
will be made $ 5,000,000.00 $ 350,000.00 $ 100,000.00 7.00%
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
PARENT:
DATALOGIC INTERNATIONAL, INC., a Delaware corporation
/s/ Xxxxx X. Xxxxx
By: _______________________
Name: Xxxxx X. Xxxxx
Title: Chief Executive Officer
PURCHASER:
DATALOGIC NEW MEXICO, INC., a Delaware corporation
/s/ Xxxxx X. Xxxxx
By: _______________________
Name: Xxxxx X. Xxxxx
Title: President
SELLER:
I.S. SOLUTIONS, LLC, a New Mexico limited liability company
/s/ Xxxx Xxxxxxxx
By: _______________________
Name: Xxxx Xxxxxxxx
Title: Managing Member
MANAGING MEMBER
/s/ Xxxx Xxxxxxxx
By: _______________________
Name: Xxxx Xxxxxxxx
MEMBER
/s/ Xxxx X. Xxxxxx
By: _______________________
Name: Xxxx X. Xxxxxx
MEMBER
/s/ Xxxxx X. Xxxx
By: _______________________
Name: Xxxxx X. Xxxx
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Exhibit 1
NON-COMPETITION AGREEMENT
[Xxxx Xxxxxxxx]
THIS NON-COMPETITION AGREEMENT is made and entered into this 24th day of
February, 2005 (this "Agreement"), between and among DataLogic International
Inc., a Delaware corporation (the "Parent"), its wholly owned subsidiary,
DataLogic New Mexico, Inc., a Delaware corporation (the "Purchaser"), I.S.
Solutions LLC, a New Mexico limited liability company (the Seller) and Xxxx
Xxxxxxxx an individual residing in Albuquerque, New Mexico (the "Managing
Member").
RECITALS:
A. Simultaneously with the execution of this Agreement, the Purchaser,
the Seller, and the Managing Member have consummated the transactions
contemplated by that certain Asset Purchase Agreement, dated February 24,
2005, (the "Asset Purchase Agreement"), among the Parent, the Purchaser, the
Seller, and the Managing Member, providing for, among other things, the
purchase by the Purchaser, and the sale by the Seller, of Seller's Business
Agreements and Seller's Equipment, as defined in the Asset Purchase Agreement.
B. The Managing Member is the primary officer and director, and the
majority member, of the Seller.
C. The execution and delivery of this Agreement is a condition to the
consummation of the asset purchase contemplated by the Asset Purchase
Agreement, and the parties are entering into this Agreement in order to
fulfill such condition.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, hereby agree as follows:
1. Period of Agreement.
The period of this Agreement shall commence on the date hereof and remain in
effect through February 24, 2009 (the "Non-Compete Period").
2. Compensation.
Simultaneously with the execution of this Agreement, the Purchaser has paid or
become obligated to pay the amounts stated in the Asset Purchase Agreement.
The parties acknowledge and agree that the foregoing compensation paid or to
be paid to the Managing Member is independent of the damages that the
Purchaser may suffer in the event of any breach of this Agreement by the
Managing Member and is not intended (and shall not be deemed or construed) to
limit the amount of damages the Purchaser shall suffer or be entitled to
recover in the event of any such breach.
3. Covenant Not to Compete.
The Managing Member covenants and agrees that during the Non-Compete Period,
the Managing Member shall not , without the prior written consent of the
Purchaser, directly or indirectly, and whether as a principal or as an agent,
officer, director, employee, consultant, or otherwise, alone or in association
with any other person, carry on, be engaged, concerned, or take part in,
render services to, otherwise assist in any manner (with or without any form
of compensation), or own, share in the earnings of, or invest in the stock,
bonds, or other securities of, any person which is engaged in a business
competitive with the business conducted under the Seller's Business Agreements
(the "Business") or a similar business of the Purchaser involving the business
of information systems business providing services to Public Safety and
Homeland Security organizations , within the State of New Mexico (the
"Competitive Business"); provided, however, that the Managing Member may
invest in stock, bonds, or other securities of any Competitive Business (but
without otherwise participating in the Competitive Business) if: (A) such
stock, bonds, or other securities are listed on any national securities
exchange or are registered under Section 12(g) of the Securities Exchange Act
of 1934, as amended; (B) the investment does not exceed, in the case of any
class of capital stock of any one issuer, two percent (2%) of the issued and
outstanding shares, or, in the case of bonds or other securities of any one
issuer, two percent (2%) of the aggregate principal amount thereof issued and
outstanding; and ) such investment would not prevent, directly or indirectly,
the transaction of business by the Purchaser or any affiliate of the Purchaser
with any state, district, territory, or possession of the United States or any
governmental subdivision, agency, or instrumentality thereof by virtue of any
statute, law, regulation or administrative practice. The period of time
during which the Managing Member is prohibited from engaging in certain
activities by this Section shall be extended by the length of time during
which the Managing Member is in breach of the terms of this section.
It is understood by and between the parties hereto that the foregoing covenant
by the Managing Member not to enter into competition with the Business or a
similar business of the Purchaser is an essential element of this Agreement
and the Asset Purchase Agreement and that, but for the agreement of the
Managing Member to comply with such covenant, the Purchaser would not have
agreed to enter into this Agreement or the Asset Purchase Agreement. The
Managing Member has independently consulted with the Managing Member's counsel
and has been advised in all respects concerning the reasonableness and
propriety of such covenant, with specific regard to the Business and the
nature of the business conducted by the Purchaser and its affiliates. The
Managing Member agrees that such covenant is reasonable in scope, geographic
area, and duration, and that compliance with such covenant would not impose
economic or professional hardship on the Managing Member.
4. Restrictions on Soliciting Business of the Purchaser.
Each of the Seller and the Managing Member further covenants and agrees that,
during the Non-Compete Period, neither the Seller nor the Managing Member
will, either for itself or himself or herself or for any other person or
entity, directly or indirectly, engage in any of the following activities
without the express prior written consent of the Purchaser:
(a) Solicit or hire any of the employees of the Purchaser or solicit or
take away any of the Purchaser's customers, lessors, or suppliers or attempt
any of the foregoing;
(b) Acquire or attempt to acquire rights providing any product or service
in a Competitive Business within the territory described in Section 3 hereof;
or
(c) Solicit or accept orders for services competitive to those previously
provided or sold by the Seller in the Business from any then or previous
customer of the Seller or the Business or otherwise induce or attempt to
induce any such customer to reduce such customer's patronage of the business
with the Purchaser or otherwise engage in any act which would interfere with
or harm any business relationship the Purchaser has with any customer, lessor,
employee, principal, or supplier.
5. Specific Performance.
Without intending to limit the remedies available to the Purchaser, each of
the Seller and the Managing Member acknowledges that the Purchaser will have
no adequate remedies at law if the Seller or any Member violates the terms of
Section 3 or 4, hereof. In such event, each of the Seller and the Managing
Member agrees that the Purchaser shall have the right, in addition to any
other rights it may have (including, without limitation,) to obtain in any
court of competent jurisdiction specific performance of such Sections of this
Agreement or injunctive relief to restrain any breach or threatened breach
thereof. Nothing herein shall be construed as prohibiting the Purchaser from
pursuing any other remedies available to the Purchaser (whether at law or in
equity) for such breach or threatened breach, including, without limitation,
the recovery of monetary damages from the Seller and the Managing Member and
the right of recoupment set forth in the Asset Purchase Agreement. The
provisions of this Section 5 shall survive the expiration, termination or
cancellation of this Agreement.
6. Attorneys Fees and Costs.
If an action at law or in equity is necessary to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorneys fees, costs, and necessary expenses in addition to any other relief
to which that party may be entitled. This provision is applicable to this
entire Agreement.
7. Representations and Warranties of the Purchaser, the Seller, and the
Managing Member.
(a) Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Seller and the Managing Member that: (I) the
Purchaser has all requisite power to enter into and perform the Purchaser's
obligations under this Agreement; (ii) this Agreement has been duly and
validly authorized by all necessary corporate action on the part of the
Purchaser; (iii) the execution of this Agreement by the Purchaser and
performance of the Purchaser's obligations hereunder do not require the
consent or approval of any other party; and (iv) this Agreement is a valid and
binding obligation of the Purchaser.
(b) Representations and Warranties of the Seller and the Managing Member.
The Seller and the Managing Member hereby jointly and severally represent and
warrant to the Purchaser that: (I) the Seller and the Managing Member have the
capacity and power to enter into and perform their obligations under this
Agreement; (ii) the Seller and the Managing Member have duly and validly
executed this Agreement; (iii) the execution of this Agreement and performance
of obligations of the Seller and the Managing Member hereunder do not require
the consent or approval of any other party; and (iv) this Agreement
constitutes a valid and binding obligation of the Seller and the Managing
Member.
8. General Provisions.
(a) Compliance with Laws. The parties agree that they will comply with
all applicable laws and regulations of government bodies or agencies in their
respective performance of their obligations under this Agreement.
(b) Governing Law and Construction. This Agreement will be governed by
and construed in accordance with the laws of the State of New Mexico without
reference to its conflict-of-laws principles. This Agreement's final form
resulted from review and negotiations among the parties and their attorneys,
and no part of this Agreement should be construed against any party on the
basis of authorship.
(c) Forum for Dispute Resolution. If any dispute arises among the parties
concerning the interpretation or performance of any portion of this Agreement
which the parties are unable to resolve themselves, and any party brings an
action against any other party seeking a declaratory order, specific
performance, damages, or any other legal or equitable relief based on this
Agreement, the parties agree that the forum for any such action shall be an
appropriate federal or state court in New Mexico having jurisdiction, agree
that venue will be proper in such courts, and waive any objections based on
inconvenience of the forum, and further agree that the prevailing party in any
such action, as determined by the court, shall be awarded its reasonable
attorneys' fees and costs in addition to any relief or judgment the court
awards.
(d) Entire Agreement; Amendment. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter contained
herein and supersedes any previous oral or written communications,
representations, understandings or agreements with respect thereto. The terms
of this Agreement may be modified only in writing, signed by authorized
representatives of both parties.
(e) Assignability. This Agreement will be binding upon the parties'
respective successors and permitted assigns. No party may assign this
Agreement and/or any of its rights and/or obligations hereunder without the
prior written consent of the other party or parties, and any such attempted
assignment will be void; provided, however, that the Purchaser may assign this
Agreement without the prior written consent of the Seller or the Managing
Member.
(f) Waiver. A waiver of a breach or default under this Agreement will
not constitute a waiver of any other breach or default. Failure or delay by
either party to enforce compliance with any term or condition of this
Agreement will not constitute a waiver of such term or condition.
(g) Severability. If any provision of this Agreement is declared to be
invalid, the parties agree that such invalidity will not affect the validity
of the remaining provisions of this Agreement, and further agree, to the
extent possible, to substitute for the invalid provision a valid provision
that approximates the intent and economic effect of the invalid provision as
closely as possible.
(h) Headings. The titles of the Sections and subsections of this
Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
(i) Notice. Any notice, request, consent, demand or other communication
required to be given under this Agreement will be in writing and will be given
personally, by facsimile or by mailing the same, first-class, postage prepaid
to the appropriate address and facsimile number set forth below or to such
other person or at such other address as may hereafter be designated by like
notice. Notices by mail will be considered delivered and become effective
three days after the mailing thereof. All notices by facsimile will be
considered delivered and become effective immediately upon the confirmed (by
answer back or other tangible printed verification or successful receipt)
sending thereof.
To the Parent or Purchaser:
DataLogic International Inc.
00000 Xxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Irvine, California
Xxxxx Xxxxx, CEO
To the Seller or the Member:
I.S. Solutions, LLC
0000 Xxx Xxxxx Xxxxx, XX
Xxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
(j) Counterparts. This Agreement may be executed in counterparts and by
the parties hereto in separate counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have caused this Non-Competition Agreement
to be executed by their respective representatives as of the day and year
first above written.
"PARENT"
DataLogic International Inc.
A Delaware corporation
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X Xxxxx
Title: CEO
"PURCHASER"
DataLogic New Mexico Inc.
A Delaware corporation
By: /s/ Xxxxx X Xxxxx
Name: Xxxxx X Xxxxx
Title: CEO
"SELLER"
I.S. Solutions LLC
A New Mexico limited liability corporation
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Managing Member
"MANAGING MEMBER"
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
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Exhibit 2
LIMITED NON-COMPETITION AGREEMENT
[Xxxx X. Xxxxxx]
THIS LIMITED NON-COMPETITION AGREEMENT is made and entered into this 24th day
of February, 2005 (this "Agreement"), between and among DataLogic
International Inc., a Delaware corporation (the "Parent"), its wholly owned
subsidiary, DataLogic New Mexico, Inc., a Delaware corporation (the
"Purchaser"), I.S. Solutions LLC, a New Mexico limited liability company (the
Seller) and Xxxx X. Xxxxxx an individual residing in Albuquerque, New Mexico
(the "Member").
RECITALS:
A. Simultaneously with the execution of this Agreement, the Purchaser,
the Seller, and the Member have consummated the transactions contemplated by
that certain Asset Purchase Agreement, dated February 24, 2005, (the "Asset
Purchase Agreement"), among the Parent, the Purchaser, the Seller, and the
Member, providing for, among other things, the purchase by the Purchaser, and
the sale by the Seller, of Seller's Business Agreements and Seller's
Equipment, as defined in the Asset Purchase Agreement.
B. The Member is a minority owner of a limited liability company
membership interest in the Seller.
C. The execution and delivery of this Agreement is a condition to the
consummation of the asset purchase contemplated by the Asset Purchase
Agreement, and the parties are entering into this Agreement in order to
fulfill such condition.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, hereby agree as follows:
1. Period of Agreement.
The period of this Agreement shall commence on the date hereof and remain in
effect through February 24, 2007 (the "Non-Compete Period").
2. Compensation.
Simultaneously with the execution of this Agreement, the Purchaser has paid or
become obligated to pay the amounts stated in the Asset Purchase Agreement.
The parties acknowledge that any breach of this Agreement by the Member may
cause damage to Purchaser, which entitles it to seek judicial relief and that
the amount of damages may be difficult to ascertain. The parties therefore
agree that liquidated damages may be payable, at the election of the
Purchaser, in addition to the equitable relief described in paragraph 5.
However, the parties agree that the amount of liquidated damages cannot exceed
the amount paid to the Member under the Asset Purchase Agreement, upon a
determination in an Arbitration Proceeding that the Member breached this
Agreement.
3. Limited Covenant Not to Compete.
It is understood that Member is a minority Member of Seller and that Member
owns and operates Advanced Presentation Systems ("APS") which is engaged in
the audio visual industry, which includes the designs, sales, services,
installation and control of all audio and visual equipment, including
conference room design, video teleconferencing, audio teleconferencing,
control systems, display products, video, plasma and other projection
monitors, audio and video switching equipment, complete system integration
with and without existing hardware and integrating IT based products to the
audiovisual installation, and other state of the art technological innovations
related to visual or audio presentations for commercial, individual,
governmental, and educational customers. APS's current services include the
ancillary use of information systems and web based control to the extent
necessary to implement a complete audiovisual installation. (these services
and goods are collectively defined as "Video Systems"). APS is a
sub-contractor of Seller and APS and Purchaser will continue the relationship
on similar terms as with Seller as follows: APS will provide Video Systems
under Purchaser's contracts (including, Seller's Business Agreements) with the
State of New Mexico and in exchange Purchaser shall charge APS a fee equal to
five percent (5%) of Video Systems sales made under the contracts with the
State of New Mexico.
The Member covenants and agrees that during the Non-Compete Period, the Member
will continue to provide Video Systems that he has delivered in the past, as
reflected by paid invoices issued by APS. Member shall not, without the prior
written consent of the Purchaser, directly or indirectly, and whether as a
principal or as an agent, officer, director, employee, alone or in association
with any other person, carry on, be engaged, concerned, or take part in, own,
share in the earnings of, or invest in the stock, bonds, or other securities
of, any person who is engaged in business other than Video Systems competitive
with the business conducted by either (1) the Seller immediately prior to the
Asset Purchase Agreement or (2) Purchaser, including that portion of the
business involving information systems providing services to Public Safety and
Homeland Security organizations, within the State of New Mexico (the
"Competitive Business"). The Member may invest in stock, bonds, or other
securities of any Competitive Business (but without otherwise participating in
the Competitive Business) if: (A) such stock, bonds, or other securities are
listed on any national securities exchange or are registered under Section
12(g) of the Securities Exchange Act of 1934, as amended; (B) the investment
does not exceed, in the case of any class of capital stock of any one issuer,
two percent (2%) of the issued and outstanding shares, or, in the case of
bonds or other securities of any one issuer, two percent (2%) of the aggregate
principal amount thereof issued and outstanding; and ) such investment would
not prevent, directly or indirectly, the transaction of business by the
Purchaser or any affiliate of the Purchaser with any state, district,
territory, or possession of the United States or any governmental subdivision,
agency, or instrumentality thereof by virtue of any statute, law, regulation
or administrative practice.
It is understood by and between the parties hereto that the foregoing covenant
by the Member not to enter into competition with the Competitive Business of
the Purchaser is an essential element of this Agreement and the Asset Purchase
Agreement and that, but for the agreement of the Member to comply with such
covenant, the Purchaser would not have agreed to enter into this Agreement or
the Asset Purchase Agreement. The Purchaser agrees the Member may continue in
the business of Video Systems. The Member has independently consulted with
the Member's counsel and has been advised in all respects concerning the
reasonableness and propriety of such covenant, with specific regard to the
Competitive Business. The Member agrees that such covenant is reasonable in
scope (the Competitive Business, excepting Video Systems), geographic area
(New Mexico), and duration (two years), and that compliance with such covenant
would not impose an undue economic or professional hardship on the Member.
4. Restrictions on Soliciting Business of the Purchaser.
Each of the Seller and the Member further covenants and agrees that, during
the Non-Compete Period, neither the Seller nor the Member will, either for
itself or himself or for any other person or entity, directly or indirectly,
engage in any of the following activities without the express prior written
consent of the Purchaser:
(a) Solicit or hire any of the employees of the Purchaser or solicit or
take away any of the Purchaser's customers, lessors, or suppliers or attempt
any of the foregoing;
(b) Acquire or attempt to acquire rights providing any product or service
in the Competitive Business within New Mexico other than Video Systems; or
(c) Solicit or accept orders for services competitive to those previously
provided or sold by the Seller in the Competitive Business other than Video
Systems from any customer of the Purchaser or Seller or otherwise induce or
attempt to induce any such customer to reduce such customer's patronage of the
Competitive Business with the Purchaser or otherwise engage in any act which
would interfere with or harm any business relationship the Purchaser has with
any customer, lessor, employee, principal, or supplier.
5. Specific Performance.
Without intending to limit the remedies available to the Purchaser, the Seller
and the Member acknowledge that the Purchaser will have no adequate remedies
at law if the Seller or the Member violates the terms of Section 3 or 4,
hereof. In such event, each of the Seller and the Member agrees that the
Purchaser shall have the right, in addition to any other rights it may have
(including, without limitation,) to obtain in any court of competent
jurisdiction specific performance of such Sections of this Agreement or
injunctive relief to restrain any breach or threatened breach thereof.
Nothing herein shall be construed as prohibiting the Purchaser from pursuing
any other remedies available to the Purchaser (whether at law or in equity)
for such breach or threatened breach, including, without limitation, the
recovery of monetary damages from the Seller and the Member and the right of
recoupment set forth in the Asset Purchase Agreement. The provisions of this
Section 5 shall survive the expiration, termination or cancellation of this
Agreement.
6. Arbitration.
Any and all disagreements, disputes or claims listed below will be resolved
exclusively by arbitration in Albuquerque, New Mexico. Arbitration will be
conducted under the Employment Dispute Resolution Rules of the American
Arbitration Association. A legal judgment based upon the Arbitrator's award
may be entered in any court having jurisdiction over the matter. The parties
agree to arbitrate anything:
a. related in any way to the validity of this Agreement or how it is
interpreted or implemented; and
b. that involves any dispute arising under local, state or federal
statutory or common law regarding the breach of this Agreement by either
party.
7. Representations and Warranties of the Purchaser, the Seller, and the
Member.
(a) Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Seller and the Member that: (I) the
Purchaser has all requisite power to enter into and perform the Purchaser's
obligations under this Agreement; (ii) this Agreement has been duly and
validly authorized by all necessary corporate action on the part of the
Purchaser; (iii) the execution of this Agreement by the Purchaser and
performance of the Purchaser's obligations hereunder do not require the
consent or approval of any other party; and (iv) this Agreement is a valid and
binding obligation of the Purchaser.
(b) Representations and Warranties of the Seller and the Member. The
Seller and the Member hereby jointly and severally represent and warrant to
the Purchaser that: (I) the Seller and the Member have the capacity and power
to enter into and perform their obligations under this Agreement; (ii) the
Seller and the Member have duly and validly executed this Agreement; (iii) the
execution of this Agreement and performance of obligations of the Seller and
the Member hereunder do not require the consent or approval of any other
party; and (iv) this Agreement constitutes a valid and binding obligation of
the Seller and the Member.
8. General Provisions.
(a) Compliance with Laws. The parties agree that they will comply with
all applicable laws and regulations of government bodies or agencies in their
respective performance of their obligations under this Agreement.
(b) Governing Law and Construction. This Agreement will be governed by
and construed in accordance with the laws of the State of New Mexico without
reference to its conflict-of-laws principles. This Agreement's final form
resulted from review and negotiations among the parties and their attorneys,
and no part of this Agreement should be construed against any party on the
basis of authorship.
(c) Entire Agreement; Amendment. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter contained
herein and supersedes any previous oral or written communications,
representations, understandings or agreements with respect thereto. The terms
of this Agreement may be modified only in writing, signed by authorized
representatives of both parties.
(d) Assignability. This Agreement will be binding upon the parties'
respective successors and permitted assigns. No party may assign this
Agreement and/or any of its rights and/or obligations hereunder without the
prior written consent of the other parties, which consent cannot be
unreasonably withheld. Any attempted assignment done without consent will be
voidable. The Member specifically agrees to the assignment of this Agreement
to a New Mexico corporation, DataLogic New Mexico, Inc. or other similar name,
formed to cause Purchaser to have its corporate domicile in the State of New
Mexico.
(e) Waiver. A waiver of a breach or default under this Agreement will
not constitute a waiver of any other breach or default. Failure or delay by
either party to enforce compliance with any term or condition of this
Agreement will not constitute a waiver of such term or condition.
(f) Severability. If any provision of this Agreement is declared to be
invalid, the parties agree that such invalidity will not affect the validity
of the remaining provisions of this Agreement, and further agree, to the
extent possible, to substitute for the invalid provision a valid provision
that approximates the intent and economic effect of the invalid provision as
closely as possible. The Purchaser may waive any provision of this Agreement
upon the prior written approval of its CEO.
(g) Headings. The titles of the Sections and subsections of this
Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
(h) Notice. Any notice, request, consent, demand or other communication
required to be given under this Agreement will be in writing and will be given
personally, by facsimile or by mailing the same, first-class, postage prepaid
to the appropriate address and facsimile number set forth below or to such
other person or at such other address as may hereafter be designated by like
notice. Notices by mail will be considered delivered and become effective
three days after the mailing thereof. All notices by facsimile will be
considered delivered and become effective immediately upon the confirmed (by
answer back or other tangible printed verification or successful receipt)
sending thereof.
To the Parent or Purchaser:
DataLogic International Inc.
00000 Xxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Irvine, California
Xxxxx X. Xxxxx, CEO
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Seller or the Member:
I.S. Solutions, LLC
0000 Xxx Xxxxx Xxxxx, XX
Xxxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
000-000-0000 fax
(j) Counterparts. This Agreement may be executed in counterparts and by
the parties hereto in separate counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have caused this Non-Competition Agreement
to be executed by their respective representatives as of the day and year
first above written.
"PARENT"
DataLogic International Inc.
A Delaware corporation
By: /s/ Xxxxx X Xxxxx
Name: Xxxxx X. Xxxxx
Title: CEO
"PURCHASER"
DataLogic New Mexico Inc.
A Delaware corporation
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: CEO
"SELLER"
I.S. Solutions LLC
A New Mexico limited liability corporation
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Managing Member
"MEMBER"
By: /s/ Xxxx Xxxxxx
Name: Xxxx X. Xxxxxx
-----------------------------------------------------------------------------
Exhibit 3
NON-COMPETITION AGREEMENT
[Xxxxx X. Xxxx]
THIS NON-COMPETITION AGREEMENT is made and entered into this 24th day of
February, 2005 (this "Agreement"), between and among DataLogic International
Inc., a Delaware corporation (the "Parent"), its wholly owned subsidiary,
DataLogic New Mexico, Inc., a Delaware corporation (the "Purchaser"), I.S.
Solutions LLC, a New Mexico limited liability company (the Seller) and Xxxxx
X. Xxxx, an individual residing in Albuquerque, New Mexico (the "Member").
RECITALS:
A. Simultaneously with the execution of this Agreement, the Purchaser,
the Seller, and the Member have consummated the transactions contemplated by
that certain Asset Purchase Agreement, dated February 24, 2005, (the "Asset
Purchase Agreement"), among the Parent, the Purchaser, the Seller, and the
Member, providing for, among other things, the purchase by the Purchaser, and
the sale by the Seller, of Seller's Business Agreements and Seller's
Equipment, as defined in the Asset Purchase Agreement.
B. The Member is the primary officer and director, and the majority
member, of the Seller.
C. The execution and delivery of this Agreement is a condition to the
consummation of the asset purchase contemplated by the Asset Purchase
Agreement, and the parties are entering into this Agreement in order to
fulfill such condition.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, hereby agree as follows:
1. Period of Agreement.
The period of this Agreement shall commence on the date hereof and remain in
effect through February 24, 2009 (the "Non-Compete Period"), or may be
extended if Member is employed by or contracted by Parent or Purchaser.
2. Compensation.
Simultaneously with the execution of this Agreement, the Purchaser has paid or
become obligated to pay the amounts stated in the Asset Purchase Agreement.
The parties acknowledge and agree that the foregoing compensation paid or to
be paid to the Member is independent of the damages that the Purchaser may
suffer in the event of any breach of this Agreement by the Member and is not
intended (and shall not be deemed or construed) to limit the amount of damages
the Purchaser shall suffer or be entitled to recover in the event of any such
breach.
3. Covenant Not to Compete.
The Member covenants and agrees that during the Non-Compete Period, the Member
shall not , without the prior written consent of the Purchaser, directly or
indirectly, and whether as a principal or as an agent, officer, director,
employee, consultant, or otherwise, alone or in association with any other
person, carry on, be engaged, concerned, or take part in, render services to,
otherwise assist in any manner (with or without any form of compensation), or
own, share in the earnings of, or invest in the stock, bonds, or other
securities of, any person which is engaged in a business competitive with the
business conducted under the Seller's Business Agreements (the "Business") or
a similar business of the Purchaser involving the business of information
systems business providing services to Public Safety and Homeland Security
organizations , within the State of New Mexico (the "Competitive Business");
provided, however, that the Member may invest in stock, bonds, or other
securities of any Competitive Business (but without otherwise participating in
the Competitive Business) if: (A) such stock, bonds, or other securities are
listed on any national securities exchange or are registered under Section
12(g) of the Securities Exchange Act of 1934, as amended; (B) the investment
does not exceed, in the case of any class of capital stock of any one issuer,
two percent (2%) of the issued and outstanding shares, or, in the case of
bonds or other securities of any one issuer, two percent (2%) of the aggregate
principal amount thereof issued and outstanding; and ) such investment would
not prevent, directly or indirectly, the transaction of business by the
Purchaser or any affiliate of the Purchaser with any state, district,
territory, or possession of the United States or any governmental subdivision,
agency, or instrumentality thereof by virtue of any statute, law, regulation
or administrative practice. The period of time during which the Member is
prohibited from engaging in certain activities by this Section shall be
extended by the length of time during which the Member is in breach of the
terms of this section.
It is understood by and between the parties hereto that the foregoing covenant
by the Member not to enter into competition with the Business or a similar
business of the Purchaser is an essential element of this Agreement and the
Asset Purchase Agreement and that, but for the agreement of the Member to
comply with such covenant, the Purchaser would not have agreed to enter into
this Agreement or the Asset Purchase Agreement. The Member has independently
consulted with the Member's counsel and has been advised in all respects
concerning the reasonableness and propriety of such covenant, with specific
regard to the Business and the nature of the business conducted by the
Purchaser and its affiliates. The Member agrees that such covenant is
reasonable in scope, geographic area, and duration, and that compliance with
such covenant would not impose economic or professional hardship on the
Member.
4. Restrictions on Soliciting Business of the Purchaser.
Each of the Seller and the Member further covenants and agrees that, during
the Non-Compete Period, neither the Seller nor the Member will, either for
itself or himself or herself or for any other person or entity, directly or
indirectly, engage in any of the following activities without the express
prior written consent of the Purchaser:
(a) Solicit or hire any of the employees of the Purchaser or solicit or
take away any of the Purchaser's customers, lessors, or suppliers or attempt
any of the foregoing;
(b) Acquire or attempt to acquire rights providing any product or service
in a Competitive Business within the territory described in Section 3 hereof;
or
(c) Solicit or accept orders for services competitive to those previously
provided or sold by the Seller in the Business from any then or previous
customer of the Seller or the Business or otherwise induce or attempt to
induce any such customer to reduce such customer's patronage of the business
with the Purchaser or otherwise engage in any act which would interfere with
or harm any business relationship the Purchaser has with any customer, lessor,
employee, principal, or supplier.
5. Specific Performance.
Without intending to limit the remedies available to the Purchaser, each of
the Seller and the Member acknowledges that the Purchaser will have no
adequate remedies at law if the Seller or the Member violates the terms of
Section 3 or 4, hereof. In such event, each of the Seller and the Member
agrees that the Purchaser shall have the right, in addition to any other
rights it may have (including, without limitation,) to obtain in any court of
competent jurisdiction specific performance of such Sections of this Agreement
or injunctive relief to restrain any breach or threatened breach thereof.
Nothing herein shall be construed as prohibiting the Purchaser from pursuing
any other remedies available to the Purchaser (whether at law or in equity)
for such breach or threatened breach, including, without limitation, the
recovery of monetary damages from the Seller and the Member and the right of
recoupment set forth in the Asset Purchase Agreement. The provisions of this
Section 5 shall survive the expiration, termination or cancellation of this
Agreement.
6. Attorneys Fees and Costs.
If an action at law or in equity is necessary to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorneys fees, costs, and necessary expenses in addition to any other relief
to which that party may be entitled. This provision is applicable to this
entire Agreement.
7. Representations and Warranties of the Purchaser, the Seller, and the
Member.
(a) Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Seller and the Member that: (I) the
Purchaser has all requisite power to enter into and perform the Purchaser's
obligations under this Agreement; (ii) this Agreement has been duly and
validly authorized by all necessary corporate action on the part of the
Purchaser; (iii) the execution of this Agreement by the Purchaser and
performance of the Purchaser's obligations hereunder do not require the
consent or approval of any other party; and (iv) this Agreement is a valid and
binding obligation of the Purchaser.
(b) Representations and Warranties of the Seller and the Member. The
Seller and the Member hereby jointly and severally represent and warrant to
the Purchaser that: (i) the Seller and the Member have the capacity and power
to enter into and perform their obligations under this Agreement; (ii) the
Seller and the Member have duly and validly executed this Agreement; (iii) the
execution of this Agreement and performance of obligations of the Seller and
the Member hereunder do not require the consent or approval of any other
party; and (iv) this Agreement constitutes a valid and binding obligation of
the Seller and the Member.
8. General Provisions.
(a) Compliance with Laws. The parties agree that they will comply with
all applicable laws and regulations of government bodies or agencies in their
respective performance of their obligations under this Agreement.
(b) Governing Law and Construction. This Agreement will be governed by
and construed in accordance with the laws of the State of New Mexico without
reference to its conflict-of-laws principles. This Agreement's final form
resulted from review and negotiations among the parties and their attorneys,
and no part of this Agreement should be construed against any party on the
basis of authorship.
(c) Forum for Dispute Resolution. If any dispute arises among the
parties concerning the interpretation or performance of any portion of this
Agreement which the parties are unable to resolve themselves, and any party
brings an action against any other party seeking a declaratory order, specific
performance, damages, or any other legal or equitable relief based on this
Agreement, the parties agree that the forum for any such action shall be an
appropriate federal or state court in New Mexico having jurisdiction, agree
that venue will be proper in such courts, and waive any objections based on
inconvenience of the forum, and further agree that the prevailing party in any
such action, as determined by the court, shall be awarded its reasonable
attorneys' fees and costs in addition to any relief or judgment the court
awards.
(d) Entire Agreement; Amendment. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter contained
herein and supersedes any previous oral or written communications,
representations, understandings or agreements with respect thereto. The terms
of this Agreement may be modified only in writing, signed by authorized
representatives of both parties.
(e) Assignability. This Agreement will be binding upon the parties'
respective successors and permitted assigns. No party may assign this
Agreement and/or any of its rights and/or obligations hereunder without the
prior written consent of the other party or parties, and any such attempted
assignment will be void; provided, however, that the Purchaser may assign this
Agreement without the prior written consent of the Seller or the Member.
(f) Waiver. A waiver of a breach or default under this Agreement will
not constitute a waiver of any other breach or default. Failure or delay by
either party to enforce compliance with any term or condition of this
Agreement will not constitute a waiver of such term or condition.
(g) Severability. If any provision of this Agreement is declared to be
invalid, the parties agree that such invalidity will not affect the validity
of the remaining provisions of this Agreement, and further agree, to the
extent possible, to substitute for the invalid provision a valid provision
that approximates the intent and economic effect of the invalid provision as
closely as possible.
(h) Headings. The titles of the Sections and subsections of this
Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
(i) Notice. Any notice, request, consent, demand or other communication
required to be given under this Agreement will be in writing and will be given
personally, by facsimile or by mailing the same, first-class, postage prepaid
to the appropriate address and facsimile number set forth below or to such
other person or at such other address as may hereafter be designated by like
notice. Notices by mail will be considered delivered and become effective
three days after the mailing thereof. All notices by facsimile will be
considered delivered and become effective immediately upon the confirmed (by
answer back or other tangible printed verification or successful receipt)
sending thereof.
To the Parent or Purchaser:
DataLogic International Inc.
00000 Xxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Irvine, California
Xxxxx Xxxxx, CEO
To the Seller or the Member:
I.S. Solutions, LLC
0000 Xxx Xxxxx Xxxxx, XX
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx
(j) Counterparts. This Agreement may be executed in counterparts and by
the parties hereto in separate counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have caused this Non-Competition Agreement
to be executed by their respective representatives as of the day and year
first above written.
"PARENT"
DataLogic International Inc.
A Delaware corporation
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X Xxxxx
Title: CEO
"PURCHASER"
DataLogic New Mexico Inc.
A Delaware corporation
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X Xxxxx
Title: CEO
"SELLER"
I.S. Solutions LLC
A New Mexico limited liability corporation
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Managing Member
"MEMBER"
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
