EXECUTION COPY
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this "Agreement") is made as of
the 31st day of January, 2003 by and between Paragon Dynamics, Inc., a
Delaware corporation formerly known as Zanett Inc. Merger Sub PDI, Inc
("Company"), and Xxxxxxx X. Xxxxxx ("Xxxxxx").
Background
WHEREAS, simultaneously with the execution of this Agreement,
pursuant to an Agreement and Plan of Merger, dated as of January 31, 2003
(the "Merger Agreement"), by and among the Company, Zanett, Inc. ("Zanett"),
a Delaware corporation, Paragon Dynamics, Inc., a Colorado corporation
("PDI"), and Xxxxxx and the other shareholders of PDI identified on the
signature page thereto, PDI is being merged with and into the Company, with
the Company surviving the merger as a Delaware corporation named Paragon
Dynamics, Inc. (the "Merger") (capitalized terms not otherwise defined herein
shall have the respective meanings assigned to such terms in the Merger
Agreement); and
WHEREAS, Xxxxxx is an employee of PDI and will continue as an
employee of the Company after the Merger, and has experience in the business
of providing information technology consulting services in satellite
communications, software development, SETA, networking or database storage
and management for the Intelligence Community (as defined by
xxx.xxxxxxxxxxxx.xxx) currently consisting of 14 executive branch agencies
and organizations, and possesses knowledge of the business and affairs the
Company and its customers, policies, methods, personnel, trade secrets and
confidential information; and
WHEREAS, Xxxxxx acknowledges that each of the Company and Zanett
would be irreparably harmed if the knowledge of Xxxxxx of the business and
affairs, trade secrets or confidential information of the Company were
disclosed or utilized on behalf of any business, person or entity which is
in, or contemplates entering into, competition in any respect, directly or
indirectly with the Company; and
WHEREAS, as a material inducement for Zanett and the Company to
enter into the Merger Agreement and as a material condition to the Closing of
the transactions contemplated by thereby, Xxxxxx agreed to execute and
deliver this Agreement.
NOW, THEREFORE, in consideration for the foregoing and the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound hereby, the parties hereto agree as follows:
1. Covenant Not to Compete. While employed by the Company,
Xxxxxx shall not, directly or indirectly, (i) engage in the business of
providing information technology consulting services in satellite
communications, software development, SETA, networking or database storage
and management for the Intelligence Community (as defined by
xxx.xxxxxxxxxxxx.xxx) currently consisting of 14 executive branch agencies
and organizations (the "Business"), or be or become a stockholder, partner,
owner, officer, director or employee of, or a consultant to, any person or
entity engaging in, or contemplating engagement in, such activities other
than the Company. Notwithstanding anything herein to the contrary, nothing
herein shall prohibit Xxxxxx from owning, as a passive investor, in the
aggregate not more than five percent (5%) of the outstanding shares of
capital stock or other beneficial ownership interests of any entity (other
than a successor in interest to Company) engaged in the Business.
2. Non-Solicitation. For a period of four years from and after
the date hereof, Xxxxxx shall not, directly or indirectly, (i) solicit the
employment of any person who is an employee of Company, Zanett or any of
their affiliates as of and after the date hereof; (ii) solicit any Person who
is a client or customer of the Company, Zanett or any of their affiliates to
sell such Person services competitive with those being offered by the
Company, Zanett or any of their affiliates; or (iii) hire or employ any
person who is an employee of Company, Zanett or any of their affiliates as of
and after the date hereof.
3. Confidentiality. Xxxxxx acknowledges a duty of confidentiality
owed to Company and shall not, at any time during or after his employment by
Company, retain in writing, use, divulge, furnish, or make accessible to
anyone, without the express authorization of the Company, any trade secret,
private or confidential information or knowledge of Company, Zanett or any of
their affiliates obtained or acquired by him while so employed. All computer
software, business cards, telephone lists, customer lists, price lists,
contract forms, catalogs, Company books, records, files and know-how acquired
while an employee of Company are acknowledged to be the property of Company
and shall not be duplicated, removed from Company's possession or premises or
made use of other than in pursuit of Company's business or as may otherwise
be required by law or any legal process, or as is necessary in connection
with any adversarial proceeding against Company and, upon termination of
employment for any reason, Xxxxxx shall deliver to Company, without further
demand, all copies thereof which are then in his possession or under his
control.
4. Inventions and Improvements. Xxxxxx shall promptly communicate to
Company all ideas, discoveries and inventions which are or may be useful to
Company or its business. Xxxxxx acknowledges that all such ideas,
discoveries, inventions, and improvements which heretofore have been or
are hereafter made, conceived, or reduced to practice by him at any time
during his employment with Company heretofore or hereafter gained by him at
any time during his employment with Company are the property of Company, and
Xxxxxx hereby irrevocably assigns all such ideas, discoveries, inventions,
and improvements to Company for its sole use and benefit, without additional
compensation. The provisions of this Section 4 shall apply whether such
ideas, discoveries, inventions, or improvements were or are conceived, made
or gained by him alone or with others, whether during or after usual working
hours, whether on or off the job, whether applicable to matters directly or
indirectly related to Company's business interests (including potential
business interests), and whether or not within the specific realm of his
duties. Xxxxxx shall, upon request of Company, but at no expense to Xxxxxx,
at any time during or after his employment with Company, sign all instruments
and documents reasonably requested by Company and otherwise cooperate with
Company to protect its right to such ideas, discoveries, inventions, or
improvements including applying for, obtaining, and enforcing patents and
copyrights thereon in such countries as Company shall determine.
5. Specific Performance. Xxxxxx expressly acknowledges that damages
alone will be an inadequate remedy for any breach or violation of any of the
provisions of this Agreement and that Company, in addition to all other
remedies, shall be entitled as a matter of right to equitable relief,
including injunctions and specific performance, in any court of competent
jurisdiction. If any of the provisions of this Agreement are held to be in
any respect unenforceable, then they shall be deemed to extend only over the
maximum period of time, geographic area, or range of activities as to which
they may be enforceable.
6. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable under any applicable law, such event shall not affect or render
invalid or unenforceable any other provision of this Agreement and shall not
affect the application of any provision to other persons or circumstances.
7. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, permitted
assigns, heirs, executors, and administrators.
8. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall
be deemed to have been duly given if hand-delivered, sent by documented
overnight delivery service or by certified or registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth
below:
If to the Company:
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Paragon Dynamics, Inc.
0 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
With a copy to:
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Zanett, Inc.
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Chief Legal Officer
Fax: (000) 000-0000
If to Xxxxxx:
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C/O Paragon Dynamics, Inc.
0 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
9. Entire Agreement. This Agreement, together with the Merger
Agreement, sets forth the entire understanding of the parties and supersedes
all prior agreements, arrangements and communications, whether oral or
written, pertaining to the subject matter hereof.
10. Governing Law. The internal law, without regard for
conflicts of law principles, of the State of Colorado will govern all
questions concerning the construction, validity and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement.
11. Consent to Jurisdiction. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Colorado in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court, and (c) agrees that
it will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other than a Federal
court sitting in the State of Colorado.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
PARAGON DYNAMICS, INC.
By:
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Title:
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XXXXXXX X. XXXXXX
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