EXHIBIT 10.41
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this "Agreement"), is made as of the
1st day of October, 1998, by and between PARAVANT COMPUTER SYSTEMS, INC., a
Florida corporation (hereinafter referred to as the "Purchaser"), and X. Xxxxxx
Xxxxxxxx (hereinafter referred to as the "Selling Shareholder").
W I T N E S S E T H:
WHEREAS, the Purchaser, ENGINEERING DEVELOPMENT LABORATORIES,
INCORPORATED, an Ohio corporation ("EDL"), SIGNAL TECHNOLOGY LABORATORIES, INC.,
an Ohio corporation ("STL"), and the Shareholders of both of EDL and STL,
including the Selling Shareholder are parties to an Acquisition Agreement dated
as of March 31, 1998 (the "Acquisition Agreement") providing for the acquisition
by the Purchaser from the EDL as shareholders of all of the EDL common stock,
the acquisition by the Purchaser, directly or indirectly through its wholly-
owned subsidiary NewSTL, from STL of the STL Purchased Assets and the
acquisition by the Purchaser of non-competition agreements from certain of the
shareholders of STL, including the Selling Shareholder;
WHEREAS, it is a condition precedent to the obligation of the Purchaser
to complete the Closing contemplated by the Purchase Agreement (the "Closing")
that the Purchaser shall have received this Agreement from the Selling
Shareholder;
WHEREAS, Selling Shareholder desires to induce the Purchaser to enter
into and complete the Closing and to consummate the transaction contemplated by
the Acquisition Agreement; and
WHEREAS, all capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Acquisition Agreement.
NOW, THEREFORE, in consideration of the foregoing, Selling Shareholder
hereby agrees with the Purchaser as follows:
1. Recitals. The recitals set forth at the beginning of this Agreement
are true and correct and by this reference are incorporated by reference into
the body of this Agreement.
2. Representations and Warranties. Selling Shareholder does hereby
represent and warrant to the Purchaser:
(a) That the delivery of this Agreement to the Purchaser by
Selling Shareholder is ancillary to the main business purpose of the Acquisition
Agreement and is executed by Selling Shareholder to protect the legitimate
interests of the Purchaser with respect to its acquisition of EDL and the STL
Purchased Assets;
(b) That the Non-competition Period (as hereinafter defined)
and the Geographic Area (as hereinafter defined), as described in Section 3 of
this Agreement, is appropriate and reasonable in all respects in light of the
nature of the business conducted by the Purchaser, EDL and NewSTL and the
legitimate need of the Purchaser to protect the investment by the Purchaser in
EDL and NewSTL following the acquisition; and
(c) That the execution and delivery of this Agreement, the
performance by Selling Shareholder of the covenants and agreements contained
herein, and the enforcement by the Purchaser of the provisions contained herein,
will cause no undue hardship on Selling Shareholder.
3. Non-competition. During the period commencing with the date of this
Agreement and continuing until fifteen (15) years thereafter, Selling
Shareholder agrees that, except on behalf of the Purchaser or a subsidiary of
the Purchaser while employed by the Purchaser or a subsidiary of the Purchaser,
and except to the extent set forth in Section 5 of this Agreement, he shall not
engage, directly or indirectly, in any business which competes in any manner
within the United States of America or its possessions or territories or
elsewhere throughout the world (the "Geographic Area") with the Purchaser's
business of design, manufacture, repair and sale of rugged and customized
computer systems and medical computer assemblies, EDL's business of the design,
development, modification and marketing of avionics equipment for use on or with
military airborne systems or the business of the design, development,
production, modification and marketing of digital signal processing equipment
for government intelligence and related applications, which was included in the
STL Purchased Assets. For purposes of this Agreement, the Selling Shareholder
will be deemed to be engaged in a business if he participates in such business,
directly or indirectly, as a stockholder, partner, owner, investor, principal or
agent, employee, officer, director, creditor, consultant, or otherwise in any
manner in such business.
4. Confidentiality of information, etc. Selling Shareholder shall not
divulge, communicate, use to the detriment of the Purchaser, or for the benefit
of any other business, firm, person, partnership or corporation, or otherwise
misuse, any "Confidential Information", data or trade secrets, including
secret processes, formulas or other technical data, production methods, customer
lists, or personnel or proprietary information, pertaining to the STL Purchased
Assets, the Purchaser, NewSTL or other subsidiaries of the Purchaser, or
their respective businesses. Selling Shareholder acknowledges that any
such information or data he may have acquired was either part of the STL
Purchased Assets which were conveyed to the Purchaser pursuant to the
Acquisition Agreement or was received in confidence and as a fiduciary of the
Purchaser or NewSTL. "Confidential Information" shall be defined as: trade
secrets, customer names, addresses, or particular desires or needs; the
market regions or territories; prices charged for services or products
and the methods and formulas related to pricing; information concerning
product development, manufacturing processes and research and development
projects; formulas, inventions and compilations of such information; information
concerning future product or market developments; financial information;
information regarding suppliers and costs for raw materials and other supplies;
financing programs; business plans; and information regarding personnel,
overhead, distribution and other expenses. The parties stipulate that
Confidential Information and all elements of it are important, material,
confidential and gravely affect the successful conduct of the business of the
Purchaser and NewSTL. Upon termination of his
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employment with the Purchaser and its subsidiaries for any reason and at any
other time the Purchaser or New STL may request, Selling Shareholder agrees to
deliver to the Purchaser, all memoranda, notes, plans, records, reports,
information and other documentation (and copies thereof), however recorded,
relating to the business of the Purchaser or NewSTL, or which contain
Confidential Information which he may possess or have under his control.
Confidential Information, data or trade secrets shall not include any
information which: (a) at the time of disclosure is within the public domain;
(b) after disclosure becomes a part of the public domain or generally known
within the industry through no fault, act or failure to act, error, effort or
breach of this Agreement by Selling Shareholder; (c) is known to the recipient
at the time of disclosure; (d) is subsequently discovered by Selling Shareholder
independently of any disclosure by the Purchaser, STL or NewSTL; (e) is required
by order, statute or regulation, of any governmental authority to be disclosed
to any federal or state agency, court or other body; or (f) is obtained from a
third party who has acquired a legal right to possess and disclose such
information.
5. Exceptions and Exclusions. With respect to the restrictions and
prohibitions set forth in Sections 3 and 4, such restrictions and prohibitions
shall not:
(a) Restrict or prohibit the Selling Shareholder from engaging
in the activities required, but only to the extent required, to permit STL to
enter into a new contract or accept a new order, to subcontract with NewSTL, or
to complete any backlog order in accordance with the provisions of Section 5.3.3
of the Acquisition Agreement; and
(b) Nothing herein contained shall be deemed to prevent or
limit the right of Selling Shareholder to own capital stock or other securities
of any corporation which are publicly owned or regularly traded in the
over-the-counter market or on any securities exchange; provided, however, such
investment does not exceed five percent 5% of the issuer's outstanding
securities of that class.
6. Equitable Remedies and Remedies at Law. The parties recognize that,
because of the nature of the subject matter of this Agreement, it would be
impracticable and extremely difficult to determine actual damages to the
Purchaser or NewSTL or in the event of a breach of this Agreement by Selling
Shareholder. Accordingly, if Selling Shareholder commits a breach, or threatens
to commit a breach of any of the provisions of this Agreement, the Purchaser or
NewSTL shall be entitled to all available legal and equitable remedies,
including without limitation, injunctive relief, both preliminary and permanent,
and none of such parties shall be required to post a surety bond in connection
therewith and each of such parties will also be entitled to money damages for
any loss suffered or to be suffered as a consequence of Selling Shareholder's
breach of this Agreement.
7. Severability. If any of the covenants contained in Section 3, or
any part thereof, are held to be unenforceable because of the duration of such
provisions or the area covered thereby, or ever be deemed to exceed the scope of
business, the undersigned agrees that the court making such determination shall
have the power to reform the provisions of this Agreement to the maximum scope,
time or geographic limitations permitted by applicable law.
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8. Reasonableness. The Purchaser and Selling Shareholder agree that the
covenants of Selling Shareholder set forth in this Agreement are appropriate and
reasonable when considered in light of the nature and extent of the business
acquired by the Purchaser as the STL Purchased Assets and the business conducted
by the Purchaser and the business to be conducted by NewSTL.
9. Exclusive Jurisdiction. The parties hereto intend to and hereby
confer jurisdiction to enforce the covenants contained in Section 3 upon the
courts of any state within the geographical scope of such covenants. In the
event that the courts of any one or more of such states shall hold such
covenants wholly unenforceable by reason of the breadth of their scope or
otherwise, it is the intention of the parties hereto that such determination not
bar or in any way affect the Purchaser's right to the relief provided above in
the courts or any other state within the geographical scope of such covenants as
to any subsequent breach, as to breaches of such covenants in such other
respective jurisdictions, the above covenants as they relate to each state
being, for this purpose, severable into diverse and independent covenants.
10. Governing Law. Except as otherwise provided in Section 9, this
Agreement shall be construed, and the legal relations between the parties hereto
determined, in accordance with the laws of the State of Florida applicable to
agreements made and to be performed entirely within the State of Florida,
without giving effect to its conflicts of laws provisions.
11. Attorneys' Fees. In the event any party hereto institutes
litigation to enforce its rights or remedies under this Agreement, the party
prevailing in such litigation shall be entitled to receive an award from the
non-prevailing party of the prevailing party's reasonable attorneys' fees and
costs incurred in connection with such litigation. The foregoing shall include
reasonable attorneys' fees and costs (including paralegals' fees) incurred at
trial, on any appeal and in any proceeding in bankruptcy. The agreement of the
parties represented by this Agreement is in addition to, and not in lieu of, any
other agreement or obligation of the parties contained in this Agreement or in
the Acquisition Agreement.
12. Enforcement. The covenants of Selling Shareholder under this
Agreement shall be independent of any other contractual relationship between the
Purchaser and Selling Shareholder. Consequently, the existence of any claim or
cause of action of Selling Shareholder against the Purchaser shall not
constitute a defense to the enforcement by the Purchaser of this Agreement.
13. Assignability and Parties in Interest. This Agreement shall inure
to the benefit of and be binding upon (i) the Purchaser and NewSTL and their
respective successors and assigns, including, but not limited to, any
corporation which may acquire all or substantially all of the assets and
business of the Purchaser or NewSTL and any corporation with and into which any
of the Purchaser or NewSTL may be consolidated or merged, or any corporation
that is the successor corporation of any of them in an exchange of stock; and
(ii) Selling Shareholder, his heirs, guardians and personal and legal
representatives. Selling Shareholder may not assign any of his rights or
delegate any of its obligations hereunder without the prior written consent of
the Purchaser. This Agreement shall inure
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to the benefit of the Purchaser and NewSTL, notwithstanding the fact that NewSTL
is not a party hereto. All references in this Agreement to the Purchaser shall
be deemed to include NewSTL.
14. Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered will be deemed to be an original and all of
which counterparts taken together will constitute but one and the same
instrument. The execution of this Agreement by any party hereto will not become
effective until counterparts hereof have been executed by all the parties
hereto.
15. Waiver. The failure of any party to insist upon strict performance
of any of the terms or conditions of this Agreement will not constitute a waiver
of any of its rights hereunder.
16. Complete Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and the subject matter hereof and, except as provided herein, supersedes all
previous oral and written and all contemporaneous oral negotiations,
commitments, writings and understandings relating to the subject matter hereof.
17. Modifications, Amendments and Waivers. All modifications or
amendments to this Agreement shall be in writing and signed by both parties
hereto.
18. Interpretation. The headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
19. Gender, Number. Words of gender may be read as masculine, feminine,
or neuter, as required by context. Words of number may be read as singular or
plural, as required by context. All terms such as "herein," "hereby" or
"hereunder" refer to this Agreement as a whole.
(Signatures on following page.)
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(Signatures to Non-Competition Agreement.)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
"Purchaser"
PARAVANT COMPUTER SYSTEMS, INC.
a Florida corporation
Attest: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxx
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Xxxxx X. Xxxxxxxx, Secretary
[Corporate Seal]
Signed, Sealed and Delivered in "Selling Shareholder"
the Presence of Two Subscribing
Witnesses:
/s/ Xxxxx X. Xxxxx /s/ X. Xxxxxx Xxxxxxxx
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Witness X. Xxxxxx Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxxxxxxxx
--------------------------------
Witness
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