Exhibit 10.5
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NON-COMPETITION AND CONFIDENTIALITY AGREEMENT
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THIS NON-COMPETITION AND CONFIDENTIALITY AGREEMENT (the "Agreement") is
made as of this 31st day of January, 2002, by and between XXXXX X. XXXXXX
("Xxxxxx"), and PARADIGM MEDICAL INDUSTRIES, INC., a Delaware 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 the business, goodwill, and substantially all of the assets
(the "Assets and Business") of Innovative Optics, Inc., a Georgia corporation
("Seller"), pursuant to an Asset Purchase Agreement, dated as of January 31,
2002, to which the Company, Seller and Xxxxxx Xxxxxxxx Investments, L.P. are
parties (the "Purchase Agreement"); and
WHEREAS, execution by Xxxxxx of this Agreement is a condition precedent
to the Company's obligation to perform under the Purchase Agreement; and
WHEREAS, by virtue of the purchase of the Assets and Business, the
Company is and will be engaged throughout the Area in the Business of the
Company which was formerly conducted by Seller throughout the Area; and
WHEREAS, prior to the consummation of such purchase, Xxxxxx was Chief
Executive Officer and a director of Seller in which capacities he served in
various and significant capacities for Seller and, as such, had control over and
was familiar with the business and affairs of Seller; and
WHEREAS, competition by Xxxxxx with the Company or use or disclosure by
Xxxxxx of confidential and proprietary information of Seller will result
directly in damage to the Company and its business, properties, assets, and
goodwill and will cause the loss by the Company of the benefit of its bargain
with Seller;
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 s follows:
1. The following terms shall have the definitions set forth below:
(a) "Area" shall mean any state or locality in which the Business
of Seller has been conducted prior to, and such Business will be conducted by
the Company after, the closing of the purchase of the Assets and Business,
pursuant to the Purchase Agreement on the date hereof.
(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 Seller.
(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 Seller, to
which Xxxxxx 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
Seller or through the use of any of Seller's facilities or resources, or (ii) as
a direct or indirect result of having been a director, officer or employee of
Seller:
(1) All items of information that could be classified as a
trade secret pursuant to law;
(2) The names and addresses of the customers of Seller and
the nature and amount of business done with such customers;
(3) The names and addresses of employees, suppliers and
other business contacts of Seller.
(4) The particular names, methods and procedures utilized
by Seller 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 Seller;
(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
Seller;
(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 Seller's manner of doing business;
(8) Any other materials or information related to the
Business or activities of Seller which are not generally known to others engaged
in similar business activities, including, without limitation, information about
acquisitions and acquisition strategies of Company and/or Company's parent
companies; and
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(9) All inventions and ideas which are derived from or
relative to Xxxxxx'x access to or knowledge of any of the above enumerated
materials and information.
2. Xxxxxx covenants that he shall, for a period of five (5) years from and after
the Closing Date, observe the following separate and independent covenants:
(a) Agreement Not to Compete. Xxxxxx shall not anywhere within the
Area, directly or indirectly, on his own behalf or in the service or on behalf
of others, engage in or 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 except for services that involve business activities
unrelated to the Business.
(b) Agreement Not to Solicit Customers. Xxxxxx 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
Seller was sold or serviced by or under his direction or supervision while he
was associated with the Seller at any time prior to the Closing Date.
(c) Agreement Not to Solicit Employees. Xxxxxx 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 Seller of the Company,
whether or not such employee is a full-time employee or a temporary employee of
the Company or Seller 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.
3. Ownership and Non-Disclosure and Non-Use of Confidential Information. Xxxxxx
acknowledges and agrees that all Confidential Information, and all physical
embodiments thereof, are confidential to and shall be and remain the sole and
exclusive property of the Company. Xxxxxx agrees that he will not, except as
required by law: (i) disclose or make available any Confidential Information to
any person or entity (including any affiliate), 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.
4. Acknowledgment. Xxxxxx acknowledges that Seller has been for many years, and
that the Company is now, engaged in the Business throughout the Area; that as a
director or officer of Seller, he acquired unique knowledge of the customers,
Business, and operations of Seller; that the within and foregoing covenants are
made by him in consequence of and as an inducement to the Company to acquire the
Business and Assets and to protect and preserve to the Company the benefit of
its bargain in the acquisition of the Business and Assets, including,
particularly, the goodwill associated therewith; that each of the above and
foregoing covenants is reasonable and necessary to protect and preserve the
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benefits of such purchase; and that irreparable loss and injury would result
should Xxxxxx breach any of the foregoing covenants.
5. General.
(a) 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.
(b) 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 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.
(c) In addition to all other remedies provided at law or in
equity, the Company shall be entitled to both preliminary and permanent
injunctions against Xxxxxx to prevent a breach or contemplated or threatened
breach by Xxxxxx 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 Xxxxxx against the Company, whether predicted 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 Xxxxxx to account for and pay
over to the Company all profits or other benefits (collectively "Benefits")
derived or received by Xxxxxx as a result of any transactions constituting such
breach, and Xxxxxx 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.
(d) This Agreement shall not be assignable in whole or in part by
Xxxxxx except with the consent in writing of the Company, which consent may be
withheld in the Company's sole discretion. Any purported assignment without such
consent shall be void. Xxxxxx hereby agrees that the Company may assign its
rights and obligations hereunder to an affiliate of the Company without the
necessity of obtaining Xxxxxx'x consent.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah.
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(f) 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.
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
PARADIGM MEDICAL INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Chairman and
Chief Executive Officer
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