10.7 RESTRICTIVE COVENANT AGREEMENT AMONG REGISTRANT, ADS ACQUISITION, INC.
AND XXXXXX XXXXXXXX
RESTRICTIVE COVENANT AGREEMENT
This Restrictive Covenant Agreement ("Covenant") is among XxXxxxx
Aircraft Holdings, Inc. ("Buyer"), ADS Acquisition, Inc. ("Acquisition",
collectively with Buyer "Buyers") and Xxxxxx Xxxxxxxx ("Seller");
A. Seller acknowledges that the consideration received from Buyers by
Seller for these Covenants is adequate.
B. Seller has owned and controlled ADS and has knowledge of the
business, prospects, customers, needs of the customers, product
specifications, key employees, future development of the business of ADS,
each of which (if not otherwise known to the public or other persons) Seller
acknowledges that ADS has advised Seller is either a trade secret ("Trade
Secret") or confidential information ("Confidential Information") of ADS; and
that to the extent that such Trade Secret or Confidential Information is a
secret or is confidential, it is owned by and belongs to ADS.
C. If Seller were to compete with the business of ADS, Seller's
competition is likely cause material harm to ADS and diminish the value of
the assets of ADS being sold by Seller to Buyers pursuant to the Agreement.
D. The Business of ADS is worldwide; ADS's sales occur throughout the
United States and in many foreign countries. If this Covenant were limited to
the Commonwealth of Pennsylvania, its scope would not be sufficient to
protect the interest of ADS.
Based on the foregoing facts, Seller and Buyers agree as follows:
1. TERM OF COVENANT AND CONSIDERATION.
1.1. As used in this Covenant, the "Term of this Covenant" shall
mean a period commencing upon the Closing of the Agreement and expiring on
September 17, 2000. Notwithstanding the foregoing, in the event that prior
to the expiration hereof (i) ADS ceases business operations and there is no
successor in interest to ADS's business (and ADS or the corporate entity of
which it is a part is not a Debtor operating a business pursuant to any
bankruptcy law), this Covenant shall terminate concurrent with such a
cessation of business operations of ADS (ii) or within 10 days after notice
from Seller to Buyers, any payment required pursuant to Section 1.2 is not
made the restriction set forth in Section 2 shall terminate (Buyers shall
nonetheless be liable for the payments pursuant to Section, 1.2).
1.2. Buyers will pay to Sellers the aggregate sum of $181,818.18
which Seller is entitled to receive which amount shall be paid in 36 equal
monthly installments commencing on the Closing Date. In the event that
Buyers fail to make any payment pursuant to this Section 1.2 and such failure
continues for a more than 10 days following notice from Seller to Buyers of
such failure and demanding payment, Seller shall have the right to accelerate
the full amount which is owing and unpaid pursuant to this Section 1.2 by
giving notice to Buyers. Notwithstanding the foregoing sentence, Seller
acknowledges that pursuant to an agreement with a senior lender, Buyers are
prevented from making any payment pursuant to this Covenant at any time
during which Buyers are in payment default to such senior lender.
2. COVENANT NOT TO COMPETE.
For the Term of this Covenant, Seller shall not directly or indirectly
engage in the design, engineering, manufacture or sale of dichroic liquid
crystal displays ("LCDs") or dichroic LCD modules, or active matrix displays or
otherwise engage in any business which competes with the business of ADS.
"Directly or indirectly" means that Seller will not participate as an officer,
director, shareholder, partner, member or consultant. The business of ADS is
the design, engineering, manufacture and sale of dichroic LCDs, dichroic LCD
modules and components incidental thereto to the Aircraft Industry. The
"Aircraft Industry" means the manufacture, repair or assembly of airframes or
component parts for commercial and military aircraft and aerospace applications.
Notwithstanding the provisions of this Section 2, nothing shall prevent Seller
from making a passive investment in up to 5% of the securities of any company
whose common stock is traded on any national securities exchange or on NASDAQ.
3. COVENANT AGAINST HIRING. Seller understands that it is essential
to the successful operation of the business to be acquired hereunder that Buyer
retain substantially unimpaired ADS's operating organization. Seller agrees that
neither he nor it shall purposefully take any action which would induce any
employee or representative of Xxxxxx not to become or continue as an employee or
representative of Buyer. Without limiting the generality of the foregoing,
Seller shall not, whether directly or indirectly through any subsidiary or
affiliate, for a three (3) year period from the Closing Date solicit to employ
(whether as an employee, officer, director, agent, consultant or independent
contractor), or enter into any partnership, joint venture or other business
association with, any person who was at any time using the 12 months preceding
the Closing Date an employee, partner, representative, or manager of ADS.
Provided, however, if the Buyer and Xxxxxx X. Xxxxxx sign a three (3) year
employment agreement and thereafter Buyer terminates Xxxxxx X. Xxxxxx other than
"for cause" and does not compensate him for the
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three (3) year period from the Closing, then Xxxxxx and the Principal
Shareholders shall have the right, after such termination, to employ Xxxxxx X.
Xxxxxx.
4. COVENANT NOT TO USE TRADE SECRETS. Seller agrees not to (a) disclose
to any person, association, firm, corporation or other entity (other than Buyer
or those designated in writing by Buyer) in any manner, directly or indirectly,
any information or data relevant to the business of ADS, or whether of a
technical or commercial nature, or (b) by use, or permit or assist, by
acquiescence or otherwise, any person, association, firm corporation or other
entity (other than Buyer or those designated in writing by Buyer) to use in any
manner, directly or indirectly, any such information or data, excepting only use
of such data or information as is at the time generally known to the public
other than by any breach of any provision of this Section 4.
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 of this Covenant will result in irreparable
injury to Buyers and that Buyers, 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.
7. MONETARY DAMAGES.
Notwithstanding any provision of this Covenant, Buyers may seek and obtain
monetary damages according to proof for any breach of this Covenant by Seller.
8. JURISDICTION.
Seller and Buyers hereby consent to the jurisdiction and venue of the state
and federal courts in the Commonwealth of Pennsylvania.
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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 Buyers: XxXxxxx Aircraft Holdings, Inc.
0000 Xxxxxxxxx Xxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: R. Xxxx XxXxxxx
Fax Number: (000) 000-0000
with a copy to: XxXxxxx Aircraft Holdings, Inc.
000 Xxxxxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax Number: (000) 000-0000
and a copy to: Spolin & Xxxxxxxxx
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax Number: (000) 000-0000
If to seller: Xxxxxx Xxxxxxxx
0000 Xxxxxxxx Xxxx. #000
Xxxxxxx Xxxxx, XX 00000
With a copy to: Xxxxxxx V.A. Xxxx, Esq.
McLane, Graf, Xxxxxxxxx & Middleton
000 Xxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Fax No. (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. GOVERNING LAW.
This Agreement shall in all respects be construed in accordance with and
governed by the laws of the Commonwealth of Pennsylvania.
11. HEADINGS.
The 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.
12. ASSIGNMENT.
This Covenant may be assigned to any successor of Buyers; provided,
however, Buyers shall remain primarily liable for the payments in Section 1.2.
13. 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.
"Buyers"
XxXxxxx Aircraft Holdings, Inc.
/s/ R. Xxxx XxXxxxx
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By: R. Xxxx XxXxxxx,
Chief Executive Officer
ADS Acquisition, Inc.
/s/ R. Xxxx XxXxxxx
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By: R. Xxxx XxXxxxx,
Chief Executive Officer
/s/ illegible
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Seller
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