1
EXHIBIT # 10.1
AGREEMENT NOT TO COMPETE
THIS AGREEMENT is dated this 26th day October, 1995 by Xxxx Xxxxxx an
individual and Ballistic Recovery Systems, Inc., ("BRS") a Minnesota
corporation.
Xxxx Xxxxxx desires and intends to enter this Covenant Not to Compete related
to the design, development,manufacturing, marketing and distribution of "Whole
Aircraft Recovery Systems" to BRS, based upon the terms and conditions set
forth.
BRS desires to compensate Xxxx Xxxxxx for his Covenant Not to Compete (the
"Agreement") with BRS based upon the terms and conditions set forth.
In consideration of the covenants and agreements contained herein and for other
good and valuable consideration, the value of which is acknowledged and the
parties agree as follows:
Except as specifically consented to by BRS in writing, from the date of this
Agreement and for a Ten (10) year period, Xxxx Xxxxxx shall not, in the United
States of America, Canada or worldwide, either directly or indirectly compete
with BRS in any of BRS's current or future markets, provided BRS is not in
default under the Agreement, as set forth:
1. Xxxx Xxxxxx has all requisite corporate power and authority for and on
behalf of Second Chantz Aerial Survival Equipment, Inc. ("SCI"). Upon
execution of the terms of this Agreement, SCI shall cease all business
activities, as set forth herein.
2. Xxxx Xxxxxx is in the business of designing, developing, manufacturing,
marketing and distributing "Whole Aircraft Recovery Systems" and components
which includes, but is not limited to: Ultralights, R.P.V.'s, Hanggliders,
Paragliders, Home build Aircraft, Microlights, Rotorcraft, Balloons and
Certified Aircraft. Other "recovery systems" used for applications other
than "Whole Aircraft Recovery Systems" shall be excluded.
3. During the term of this Covenant Not to Compete, Xxxx Xxxxxx will neither
directly or indirectly, own, manage, finance, operate or control,
participate in, act as a consultant or advisor, or be connected in any way
with business activities which are competitive or become competitive with
BRS and further will not disclose trade secrets, price lists, customer
lists, financial information, technical information, or other confidential
information concerning BRS or SCI business affairs, for the Ten year term.
4. Xxxx Xxxxxx directing SCI will cease taking customer orders within Two (2)
working days from the date of execution of this Agreement. Xxxx Xxxxxx
will direct SCI to fill the current backlog of orders that it has as of
the date of execution of this Agreement and be completed within Ninety (90)
days of execution.
5. Xxxx Xxxxxx will continue to service SCI parachute units for Ninety (90)
days after the execution of this Agreement. BRS agrees not to service SCI
units, but will provide update options to BRS units for all SCI customers.
29
2
6. All repairs and re-pack work will be discontinued by SCI and Xxxxxx Ninety
(90) days after execution of this Agreement, except for warranty service,
set forth herein.
7. Xxxx Xxxxxx has the option of becoming an exclusive North American
distributor for BRS parachutes designed for the Air Creation Trike and
would receive the most favorable OEM pricing which is currently
twenty-eight (28%) percent. Xxxx Xxxxxx shall further have the option to
become a distributor for other BRS systems.
8. Xxxx Xxxxxx retains the rights to produce the patented invention termed
the A.I.R.(R) Rocket device for "Whole Aircraft Recovery Systems" and other
applications, which are beyond the scope of this Agreement. Should BRS
decide to introduce the A.I.R.(R) Rocket into its product line, Xxxx Xxxxxx
agrees to supply the product for "Whole Aircraft Recovery Systems"
exclusively to BRS. Xxxx Xxxxxx will provide BRS with plans and
specifications of the A.I.R.(R) Rocket System which are presently
available. Xxxx Xxxxxx will further work diligently to help integrate his
A.I.R.(R) Rocket into the BRS product line. Xxxx Xxxxxx will supply free
of charge several working samples and parachute container for BRS
inspection and tests. Any sales for the A.I.R.(R) Rocket Device for UP
Europe shall be sold exclusively through BRS.
9. Any and all inquiries regarding warranty service of the A.I.R.(R) Rocket
will be forwarded by BRS to Xxxx Xxxxxx for servicing and shall continue so
long as Xxxx Xxxxxx designates.
10. As a condition to this Agreement, it is understood and the parties agree
that all press releases and other announcements, regarding this Agreement,
whether written or oral shall be subject to mutual agreement and consent
prior to dissemination.
11. It is understood that as a condition to this Agreement (whether written or
oral) any and all information concerning this Agreement, including the
parties, terms, conditions, consideration shall remain in strict
confidence. No portion of its contents shall be unnecessarily disclosed,
released, or divulged to any person, corporation, business, opposing
attorney, or the public. That any necessary disclosure imposed on BRS by
law, shall be limited to only that information imposed by law and as set
forth in this Agreement.
12. BRS agrees and acknowledges that it has all requisite corporate power and
authority to enter into this valid and binding contract and to consummate
the transactions contemplated. This agreement and any other agreements and
instruments to be executed by BRS in connection have been or will be duly
executed and authorized by all necessary action, corporate or otherwise and
constitute a legal, valid, and binding obligation of BRS and be enforceable
in accordance with the terms. The execution of this Agreement will not
result in a breach or be in conflict with any other agreement, Article of
Incorporation or Bylaw, or other regulation applicable to BRS.
13. This Agreement shall be governed by, construed and enforced in accordance
with the laws of the State of Nevada.
14. This Agreement, the exhibits and the documents delivered with this
Agreement contain or will contain the entire agreement between the parties
and supersede all previous oral and written commitments, negotiations and
understandings.
30
3
15. Any provision of this Agreement which is invalid, illegal or unenforceable
shall be ineffective as to the other provisions of this Agreement and will
not affect the legality and enforceability of the remaining provisions.
16. BRS, SCI, and Xxxx Xxxxxx and their respective directors, officers,
employees and assigns shall jointly and severally, indemnify and hold
harmless one another and their representatives and assigns at all times
from any and all claims, losses, damages, liabilities, assessments, suits,
actions, legal or otherwise, including any costs, expenses or accounting
for any actions incurred or suffered by the other party in connection with
a breach by BRS, SCI, or Xxxx Xxxxxx of any obligation contained in this
Agreement.
17. The parties agree and understand that any breach of this Agreement will
cause one another irreparable harm for which there is no adequate remedy at
law, and, in addition to whatever rights they may otherwise have under
applicable law; further, each party consents to special damages of a
reasonable amount for the breach of any of the covenants or agreements
herein. Any controversy, claim or dispute arising from the breach of this
Agreement shall be initially submitted to binding arbitration in the state
of Xxxx Xxxxxx'x residence first and any subsequent to the state of BRS
choosing.
18. In the event of a dispute or breach of this Agreement, the party against
whom such claim is finally determined agrees to pay the court costs and
reasonable attorney fees of the party who prevails on such claim.
19. This Agreement shall inure and be assignable to the benefit of and be
binding upon the parties and their respective permitted successors, heirs
and assigns.
20. BRS, SCI and Xxxx Xxxxxx and their respective directors, officers,
employees, and assigns shall jointly and severally, indemnify and hold
harmless one another and their representatives and assigns at all times as
a result of any claims against, or liabilities or obligations of BRS, SCI
and Xxxx Xxxxxx related to their respective business or the products.
(I) BRS disclaims any and all responsibility and liability for
Xxxx Xxxxxx'x and SCI's, past, present, and future products and
business activities; and
(II) Xxxx Xxxxxx and SCI disclaim any and all responsibility and
liability for BRS's, past, present, and future products and business
activities.
IN CONSIDERATION of the representations, covenants and agreements set forth,
the parties agree to the following terms: BRS promises to pay Xxxx Xxxxxx, his
successors, heirs or assigns, Five Hundred Thousand Dollars ($500,000.00) as
follows:
a. Upon execution of this Agreement, BRS shall immediately pay to Xxxx
Xxxxxx, a payment of Five Thousand Dollars ($5,000.00) by certified
check.
31
4
b. Simultaneously with the execution of this Agreement, BRS shall
give an invoice crediting Xxxx Xxxxxx in the amount of Fifteen Thousand
Dollars ($15,000.00) for BRS complete, assembled parachute systems the
model designated by Xxxx Xxxxxx and delivery taken of no more than four
(4) units per month in each of January and February 1996, with the
remaining units taken at any time thereafter.
c. Eighty-Thousand Dollars ($80,000.00) which amount shall not
accrue interest, shall be payable over a maximum of four (4) years.
Any amount unpaid shall be paid in full on November 1, 1999. The
parties have agreed to a minimum monthly payment of Fifteen Hundred
Dollars ($1500.00) payable by check to Xxxx Xxxxxx as designated. The
first payment will be due One Hundred (100) days from the date of
execution of this Agreement and continuing the tenth day of each
month thereafter.
d. The remaining balance of Four Hundred Thousand Dollars
($400,000.00) is payable over a maximum of Ten (10) years. Any
amount unpaid shall be paid in full on November 1, 2005, with amortized
interest of Four (4%) percent per annum. Simultaneously with the
execution of this Agreement, BRS will pay to Xxxx Xxxxxx as designated,
on the first day of each month and continuing until paid in full. BRS
may pre-pay any amount outstanding under this agreement in whole or in
part without penalty.
e. BRS shall grant to Xxxx Xxxxxx, simultaneously with the
execution of this Agreement, a stock option of Fifty-Thousand (50,000)
shares of BRS voting common stock. The strike price (issue price) will
be $0.25 cents per share with a ten (10) year life and will vest on the
following schedule:
i. 20% vesting at the time of the execution of this agreement;
ii. 20% vesting on the first anniversary date;
iii. 20% vesting on the second anniversary date;
iv. 20% vesting on the third anniversary date; and
v. 20% vesting on the fourth anniversary date.
In the event BRS fails to make any payment or payments required to be made
under this Agreement, and having thirty (30) days to cure the default, following
written notice by Xxxx Xxxxxx to BRS the Covenant Not to Compete granted to BRS
shall automatically and without further action terminate and be null and void
and BRS shall be in breach of this contract and subject to the conditions set
forth and Xxxx Xxxxxx will be entitled to all remedies at law, including
liquidated damages.
In Witness Whereof, each of the parties has executed this Agreement as of this
26th day of October, 1995.
BALLISTIC RECOVERY SYSTEMS, INC. XXXX XXXXXX
BY: /s/ Xxxx X. Xxxxxx BY: /s/ Xxxx Xxxxxx
-------------------------------------------- ------------------
Chief Financial Officer/Chief Operations Officer
duly authorized by the Board of Directors of BRS
to enter into this agreement.
32
