EXHIBIT 5
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
THIS CONFIDENTIALITY AND NON-COMPETITION AGREEMENT (the "Agreement"), dated
_____________ __, 2003 is entered into by and between Analex Corporation, a
Delaware corporation (the "Company"), and Xxx X. Xxxxx (the "Seller") and shall
be effective simultaneously with the Closing of the transactions described in
the Repurchase Agreement, as described below (the "Effective Date").
WHEREAS, pursuant to the terms of the Securities Repurchase Agreement,
dated as of ______________ __, 2003 (the "Repurchase Agreement") by and among
the Company, the Seller, Xxxxxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxx Xxxxx, the Xxxxx
Dynamic Trust, and S Co., LLC, the Company will acquire all rights, title and
interest in and to an aggregate of 2,625,451 shares of Common Stock (the
"Stock"), warrants to purchase an aggregate of 1,134,088 shares of Stock (the
"Warrants") and options to purchase an aggregate of 75,000 shares of Stock, of
the Company (the "Options") (capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Repurchase Agreement);
WHEREAS, the Company desires to repurchase from Seller, and Seller desires
to sell to the Company 146,468 shares of Stock, 235,161 Warrants and 65,000
Options at a price of $2.63 per share;
WHEREAS, the Seller has agreed, as a condition precedent to the
consummation of the transactions contemplated by the Repurchase Agreement (the
"Contemplated Transactions"), among other things, to (i) execute and deliver
this Agreement, (ii) resign as (a) Chairman of the Board of Directors, (b) a
director, and (c) an employee, of the Company, and (iii) terminate a voting
agreement that Seller had entered into with certain other stockholders of the
Company; and
WHEREAS, the Seller will receive substantial economic benefits upon the
consummation of the Contemplated Transactions.
NOW, THEREFORE, in consideration of the foregoing and for good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Company and Seller, intending to be legally bound, agree as follows:
1. Payments. In consideration of the non-competition, non-solicitation,
non-disturbance and confidentiality provisions embodied in Sections 2, 3 and 4
below, the Company shall pay to Seller six hundred thousand dollars ($600,000)
in accordance with the following schedule:
(a) a cash payment in the amount of fifty thousand dollars ($50,000)
(the "Initial Payment") on the Effective Date; and
(b) thereafter, on the date that is three months after the Effective
Date and at the end of each of the next ten (10) three-month periods thereafter,
the Company shall pay to Seller an additional cash payment of fifty thousand
dollar ($50,000) ("Additional Payments" and together with the Initial Payment,
the "Payments").
2. Non-Competition.
(a) As an officer and director of the Company, the Seller has acquired
knowledge of Confidential Information (as defined below), trade secrets and
know-how of the Company. The Seller acknowledges that the Confidential
Information (as defined below), trade secrets and know-how to which he has had
access would play a significant role were he to directly or indirectly be
engaged in any business in Competition (as defined below) with the Company
and/or any of its present or future subsidiaries, or successors or assigns
permitted hereunder (a "Covered Party). For three (3) years following the
Closing Date, the Seller agrees that, without the prior written consent of the
Company, he will not, directly or indirectly, either as principal, manager,
agent, consultant, officer, stockholder, director, consultant, partner,
investor, lender or employee or in any other capacity, carry on, be engaged in
or have any financial interest in (other than a passive ownership or investment
position of less than five percent (5%) in any company whose shares are publicly
traded), any business, which is in Competition (as hereinafter defined) with a
Covered Party.
(b) For purposes of this Section 3, a business shall be deemed to be
in "Competition" with a Covered Party if (i) it is engaged in any business
carried on by the Company or any of its current subsidiaries (or in any business
in which the Company or any of its current subsidiaries has taken concrete steps
towards engaging) as of the date hereof (the "Business"), (ii) provides goods or
services to Customers of a Covered Party or prospective customers to which a
Covered Party has made a bid to sell goods or services, and (iii) operates in
any location in which the business of any Covered Party is then being conducted
or its products or services are being sold.
(c) Excepted Activities. Notwithstanding any provision of this
Agreement to the contrary, Seller shall not be prohibited or restricted by this
Agreement from performing or engaging in any activity that does not constitute
Competition with a Covered Party, which the Covered Parties agree shall include
any of the following: (i) performing speaking engagements and receiving
honoraria in connection with such engagements; (ii) becoming and performing as a
director of a private or public company not engaged in Competition with a
Covered Party; or (iii) becoming and performing as an employee, officer, member
or director of a non-profit organization, trade association or industry group.
3. Other Restrictive Covenants. The Seller covenants and agrees as follows:
(a) Non-Solicitation. For a period of three (3) years following the
Closing Date, the Seller shall not, individually or on behalf of any other
Person, directly or indirectly:
(i) (A) seek to induce or otherwise cause any client or customer
of the Business under contract with any Covered Party or any prospective
client or customer of the Business to which any Covered Party has made or
intends to make a proposal at that time to (1)
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cease being a Business customer of or to not become a Business customer of
any Covered Party, (2) divert any business of such customer with respect to
the Business from any Covered Party, or otherwise to discontinue or alter
in a manner adverse to any Covered Party, such business relationship
relating to the Business, or (3) otherwise interfere with, disrupt, or
attempt to interfere with or disrupt, the contractual relationship between
any Covered Party and any of its customers or clients, suppliers or
consultants, in each case relating to the Business, or employees, or (B)
solicit for business, provide services to or do business with any client or
customer of any Covered Party with respect to the Business or any potential
customer solicited by any Covered Party with respect to the Business,
except that nothing herein shall restrict the ability or right of Seller to
become employed by any government agency, or
(ii) without the prior written consent of the applicable Covered
Party, directly or indirectly hire, solicit or encourage to leave the
employment or service of any Covered Party, any officer or employee of, or
any consultant to, any Covered Party, or hire or participate (with another
company or third party) in the process of hiring any Person who is then, or
who within the preceding six (6) months was, an employee of any Covered
Party, or provide names or other information about the Company's employees
to any Person or business under circumstances which could lead to the use
of that information for purposes of recruiting or hiring; provided, however
that Seller shall not be deemed to have violated this clause (ii) if (a) an
employee of a Covered Party responds directly to a general advertisement of
another Person or business as long as Seller has no involvement or
participation, either directly or indirectly, in the employment of such
Person, or (b) an employee of a covered party is terminated by such Covered
Party at least six months prior to the commencement of any activities of
Seller that would otherwise violate this clause (ii).
(iii) For purposes of this Agreement "Person" shall mean an
individual, a corporation, an association, a limited liability company, a
partnership, an estate, a trust or any other entity or organization.
(b) Non-Disturbance. For a period of three (3) years following the
Closing Date, the Seller shall not engage in any conduct that involves the
making or publishing of written or oral statements or remarks (including,
without limitation, the repetition or distribution of derogatory rumors,
allegations, negative reports or comments) which are disparaging, deleterious or
damaging to the integrity, reputation or goodwill of the Business as conducted
by a Covered Party or its management, or any other entity in which any Covered
Party has a joint venture equity interest. In addition, during this three (3)
year period, Seller shall not (i) take any action that would adversely affect
any contractual or customer or supplier relationships of any Covered Party or
other entity in which the Covered Party has a joint venture equity interest,
including without limitation any action that would result in a diminution in
business, or (ii) otherwise take any action that is known by Seller to be
detrimental to the best interests of a Covered Party or other entity in which a
Covered Party has a joint venture equity interest.
4. Confidentiality.
(a) The Seller shall keep confidential and shall not, without the
prior express written consent of the Company, use, disclose, reveal, publish,
transfer or provide access to any and all information relating to the Business'
products, facilities, methods, know-how, trade secrets and
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other intellectual property, software, source code, systems, procedures,
manuals, confidential reports, product price lists, customer and supplier lists,
financial information (including revenues, costs or profits associated with any
of the Business' products), bids and proposals, legal opinions, records and
specifications which are owned, developed, used or retained by any Covered Party
in connection with the Business and which have not been publicly disclosed
(excluding limited disclosures for business purposes) and other information of
any third party which any Covered Party is under an obligation to keep
confidential, and any and all documentation in any form and of every kind or
type relating to the foregoing (hereinafter collectively referred to as the
"Confidential Information").
(b) Notwithstanding the foregoing limitation, the obligations set
forth in Section 4(a) hereof shall not apply to any information that would
constitute Confidential Information but that (i) is known or available through
other lawful sources not bound by a confidentiality agreement with the
disclosing party; (ii) is or becomes publicly known or generally known through
no fault of the Seller; (iii) is already in the possession of the Person
receiving the information through lawful sources not bound by a confidentiality
agreement and through no fault of the Seller; (iv) the applicable Covered Party
agrees in writing may be disclosed or (v) is required to be disclosed pursuant
to Law (provided that, if possible, the applicable Covered Party is given
reasonable prior written notice).
5. Consideration. Seller and Company hereby acknowledge and agree the
Payments made by the Company to Seller under the terms of this Agreement are
adequate consideration for the Seller to enter into this Agreement.
6. Not Related to Employment. The restrictive covenants contained in
Sections 2, 3 and 4 hereof (the "Restrictive Covenants") have been agreed to as
part of the Contemplated Transactions and shall continue to apply throughout the
entire stated term of this Agreement without regard to the circumstances
surrounding any employment or termination of employment of Seller by any Covered
Party.
7. Rights and Remedies Upon Breach. If the Seller breaches any of the
Restrictive Covenants, the Company shall have the following rights and remedies,
each of which rights and remedies shall be independent of the others and
severally enforceable, and each of which is in addition to, and not in lieu of,
any other rights and remedies available to the Company under law or in equity:
(a) the right and remedy to have the Restrictive Covenants specifically enforced
by any court of competent jurisdiction, without any requirement that the Company
post any bond, it being agreed that any breach of the Restrictive Covenants
would cause irreparable injury to the Company and that money damages would not
provide an adequate remedy to the Company (b) the right to recover actual
damages, (c) the right to terminate future payments hereunder (described in
Section 1) and (d) the right to receive reimbursement for Company's reasonable
attorneys' fees and costs incurred as a result of Seller's breach.
8. Severability of Covenants. The Seller acknowledges and agrees that the
Restrictive Covenants are reasonable and valid in geographical and temporal
scope and in all other respects. If any court determines that any of the
Restrictive Covenants, or any part thereof, are invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected and shall
be given full effect without regard to the invalid portions.
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9. Blue-Penciling. If any court determines that any of the Restrictive
Covenants, or any part thereof, is unenforceable because of the duration or
geographical scope of such provision, such court shall have the power to reduce
the duration or scope of such provision, as the case may be, and, in its reduced
form, such provision shall then be enforceable. The Seller shall, at the
Company's request, join the Company in requesting that such court take such
action.
10. Miscellaneous.
(a) Severability. In case any provision in this Agreement shall be
deemed to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
(b) Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission (if confirmed by telephone conversation), overnight
delivery service or certified, registered or express mail, postage prepaid. Any
such notice shall be deemed given when so delivered personally, or sent by
facsimile transmission, or by overnight delivery service, one day after the date
of deposit to such overnight delivery service or, if mailed, three days after
the date of deposit in the United States mail, as follows:
(i) if to the Company, to:
Analex Corporation
0000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx, Xx., President & CEO
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Holland & Knight LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
if to the Seller, to:
Xxx X. Xxxxx
00000 Xxxx Xxxx Xxxx, #000X
Xxxxxxxxxx, Xxxxxxx 00000
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with a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
Any party may, by notice given in accordance with this Section 10(b) to the
other party, designate another address or entity for receipt of notices
hereunder.
(c) Entire Agreement. This Agreement, together with the Repurchase
Agreement, and the other Transaction Documents, contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements, written or oral, with respect thereto.
(d) Waivers and Amendments, Non-Contractual Remedies. This Agreement
may be amended, superseded, canceled, renewed or extended, and the terms hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof. Nor shall any waiver on the part of any party of any such right,
power or privilege nor any single or partial exercise of any such right, power
or privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.
(e) Governing Law and Forum. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia, without
regard to any conflict of laws provisions that might indicate the applicability
of any other laws.
(f) Jurisdiction; Venue. Each of the parties hereto by its execution
hereof:
(i) irrevocably submits to the exclusive jurisdiction and venue
of the Commonwealth of Virginia (the Eastern District of Virginia for
Federal matters and Fairfax County court for State matters) for the purpose
of any suit, action or other proceeding arising out of or based on this
Agreement or the subject matter hereof; and
(ii) waives to the extent not prohibited by applicable law, and
agrees not to assert, by way of motion, as a defense or otherwise, in any
such proceeding brought in any of the above-named courts, any claim that it
is not subject personally to the jurisdiction of such courts, that its
property is exempt or immune from attachment or execution, that any such
proceeding is brought in an inconvenient forum, that the venue of such
proceeding is improper, or that this Agreement, or the subject matter
hereof, may not be enforced in or by such court.
(iii) the parties hereto hereby consent to service of process in
any such proceeding in any manner permitted by the laws of the Commonwealth
of Virginia, and agree that service of process by registered or certified
mail, return receipt requested, at its address specified in or pursuant to
Section 10(b) is reasonably calculated to give actual notice.
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(iv) each of the parties hereto hereby irrevocably waives any and
all right to trial by jury in any legal proceeding arising out of or
related to this Agreement or the transactions contemplated hereby.
(g) Binding Effect; No Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and, with respect to the Company, assigns. The
rights and remedies hereunder are not assignable by the Seller or the Company,
except the Company may assign its rights and remedies, together with its
obligations hereunder, (i) to any one or more of its Affiliates, or (ii) in
connection with a sale, transfer or other disposition of all or substantially
all, of its assets or the assets of any Affiliate of the Company, without the
consent of the Seller and without payment of any amounts to the Seller in
connection with such assignment, provided, that the Company's transferee shall
assume all of the Company's obligations under this Agreement, in which case the
Company shall be released automatically and without any action by the Seller
from its obligations hereunder; provided, further, that the Seller shall be
released from her obligations hereunder if the Company's transferee does not
assume and fulfill the Company's obligations under this Agreement.
(h) Variations in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require. Any term defined herein may be used in either its singular or
plural form whether or not defined in such form.
(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which when so executed and delivered shall be an original,
and all of which taken together shall constitute one and the same instrument.
(j) Headings. The headings in this Agreement are for reference only,
and shall not affect the interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
COMPANY:
ANALEX CORPORATION
By: _____________________________________
Name: Xxxxxxxx X. Xxxxxxxx, Xx.
Title: President and Chief Executive Officer
SELLER:
____________________________________________
Xxx X. Xxxxx, individually
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