EXHIBIT 2.2
AGREEMENT NOT TO COMPETE
(▇▇▇▇▇ ▇▇▇)
THIS NONCOMPETITION AGREEMENT is made and entered into as of the 14th day
of March, 2003, by and between APA Optics, Inc. and its wholly-owned subsidiary
APA Acquisition, Inc., both Minnesota corporations, (collectively with their
present and future affiliates, "APA") and ▇▇▇▇▇ ▇▇▇ (the "Shareholder").
WHEREAS, the Shareholder has been a principal shareholder, officer and
director of Computer System Products, a Minnesota corporation (the "CSP"), for
many years and has developed and received special, unique and extraordinary
knowledge, information and goodwill in connection therewith;
WHEREAS, contemporaneously with the execution of this Agreement, CSP and
the shareholders of CSP (including the Shareholder ) have sold certain assets of
CSP to APA Acquisition, Inc. pursuant to an Asset Purchase Agreement dated March
3, 2003 (the "Purchase Agreement");
WHEREAS, APA Acquisition, Inc. would not have agreed to purchase CSP's
Assets pursuant to the Purchase Agreement in the absence of the Shareholder's
agreement herein not to compete with APA;
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. NONCOMPETITION AGREEMENT. During the period of three (3) years from
and after the date hereof, the Shareholder covenants and agrees that he will
not, without APA's prior written consent, voluntarily or involuntarily, directly
or indirectly, at any location within the United States, Canada, and Mexico,
lend his credit, advice or assistance, or engage in any activity or act in any
manner, including but not limited to, as an owner, sole proprietor, founder,
associate, promoter, partner, joint venturer, shareholder, officer, director,
trustee, manager, employer, employee, licensor, licensee, principal, agent,
salesman, broker, representative, consultant, advisor, investor or otherwise,
for the purpose of establishing, operating or managing any business or entity
that is engaged in activities competitive with (i) the business of APA as
carried on immediately prior to the date of this Agreement (but including the
business of Americable, Inc. as carried on immediately before the date of this
Agreement, if Americable, Inc. is acquired by APA subsequent to the date of this
Agreement) and/or (ii) the business of CSP as carried on immediately prior to
the date of this Agreement; provided, however, that Shareholder may continue to
own, operate and oversee Engineered Products Co. ("EPCO"), ▇▇▇ Communications,
Inc. ("LCI") and their respective subsidiaries and affiliates, so long as (A)
the business activities of EPCO and LCI do not include any of those listed on
Schedule 1, attached, and (B) EPCO and LCI are owned (beneficially and of
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record) solely by Shareholder and members of his immediate family. "Immediate
family" means Shareholder's spouse, children, and parents. Shareholder shall
provide written notice to APA not less than five (5) business days in advance of
sale by Shareholder or any other shareholder of EPCO or LCI of any of such
person's stock in EPCO or LCI to a person not already a shareholder of EPCO or
LCI, issuance by EPCO or LCI of stock to any person not already a shareholder of
EPCO or LCI, or sale of all or substantially all of the business or assets of
EPCO or LCI (by merger, sale of stock, sale of assets, exclusive license, or
otherwise); provided, however, that no such notice shall be required for any
such transactions with or for the benefit of immediate family members of
Shareholder.
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2. NONSOLICITATION AGREEMENT. As used in this Agreement, the term
"Person" means any individual, corporation, joint venture, general or limited
partnership, association or other entity. During the period of three (3) years
from and after the date hereof, the Shareholder covenants and agrees that he
will not, whether for his own account or for the account of any other Person,
directly or indirectly interfere with APA's relationship with or endeavor to
divert or entice away from APA any Person who or which at any time during the
term of the Shareholder's prior employment by CSP is or was an employee, vendor,
supplier or customer of or otherwise in the habit of dealing with CSP.
3. CONFIDENTIAL INFORMATION. The Shareholder understands and agrees
that the business of APA is based upon specialized work and that as an officer,
director and shareholder of CSP he received, had access to and/or contributed to
Confidential Information (as hereinafter defined) and that APA Acquisition,
Inc., has paid good and valuable consideration for such Confidential
Information. The Shareholder agrees that at all times from and after the date
of this Agreement, he shall keep secret all such Confidential Information and
that he will not directly or indirectly "Use" (as hereinafter defined) or
"Disclose" (as hereinafter defined) the same to any Person without first
obtaining the written consent of APA. At any time that APA may so request, the
Shareholder shall turn over to APA all books, notes, memoranda, manuals,
notebooks, tables, drawings, calculations, records and other documents made,
compiled by or delivered to the Shareholder containing or concerning any
Confidential Information, including copies thereof, in his possession, it being
agreed that the same and all information contained therein are at all times the
exclusive property of APA.
As used in this Agreement, the term "Confidential Information" means any
information or compilation of information not generally known to the public or
the industry, which was proprietary to CSP and/or is proprietary to APA,
relating to APA's and/or CSP's procedures, techniques, methods, concepts, ideas,
affairs, products, processes and services, including, but not limited to,
information relating to marketing, merchandising, selling, research,
development, manufacturing, purchasing, accounting, engineering, financing,
costs, customers, plans, pricing, billing, needs of customers and services used
by customers. Confidential Information for purposes of this Agreement shall
also include all lists of customers, addresses, prospects, sales calls,
suppliers, vendors, products, services, prices and the like as well as any
specifications, formulas, plans, drawings, accounts or sales records, sales
brochures, books, code books, records, manuals, trade secrets, knowledge,
know-how, pricing strategies, operating costs, sales margins, methods of
operations, invoices or statements and the like. All information about CSP
disclosed to the Shareholder during his relationship with CSP, all information
about APA disclosed to Shareholder in the course of negotiating and consummating
the Purchase Agreement, and all information about APA or CSP disclosed or which
otherwise becomes known to Shareholder during the term of this Agreement (as an
employee of APA or CSP or otherwise) which the Shareholder has a reasonable
basis to believe to be Confidential Information or which is or was treated by
APA and/or CSP as being Confidential Information, shall be presumed to be
Confidential Information.
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As used in this Agreement, the term "Disclose" means to reveal, deliver,
divulge, disclose, publish, copy, communicate, show or otherwise make known or
available to any other Person, or in any way to copy, any of APA's and/or CSP's
Confidential Information.
As used in this Agreement, the term "Use" means to appropriate any of APA's
and/or CSP's Confidential Information for the benefit of oneself or any other
Person other than APA.
4. REASONABLENESS OF COVENANTS. The Shareholder acknowledges and
agrees that the geographic scope and period of duration of the restrictive
covenants contained in this Agreement are both fair and reasonable and that the
interests sought to be protected by APA are legitimate business interests
entitled to be protected. The Shareholder further acknowledges and agrees that
APA would not have purchased CSP pursuant to the Purchase Agreement unless the
Shareholder entered into this Agreement.
5. INJUNCTIVE RELIEF. The parties agree that the remedy of damages at
law for the breach by the Shareholder of any of the covenants contained in this
Agreement is an inadequate remedy. In recognition of the irreparable harm that
a violation by the Shareholder of any of the covenants, agreements or
obligations arising under this Agreement would cause APA , the Shareholder
agrees that in addition to any other remedies or relief afforded by law, an
injunction against an actual or threatened violation or violations may be issued
against him and every other Person concerned thereby, it being the understanding
of the parties that both damages and an injunction shall be proper modes of
relief and are not to be considered alternative remedies. In the event of any
such actual or threatened violation, the Shareholder agrees to pay the costs,
expenses and reasonable attorneys' fees incurred by APA in pursuing any of its
rights and remedies with respect to such actual or threatened violation, in
addition to the actual damages sustained by APA as a result thereof.
6. BLUE PENCIL DOCTRINE. In the event that any of the restrictive
covenants contained in this Agreement shall be found by a court of competent
jurisdiction to be unreasonable by reason of its extending for too great a
period of time or over too great a geographic area or by reason of its being too
extensive in any other respect, then such restrictive covenant shall be deemed
modified to the minimum extent necessary to make it reasonable and enforceable
under the circumstances.
7. COMPENSATION. The Shareholder shall receive a warrant to purchase
175,000 shares of the common stock of APA Optics, Inc. (as more fully detailed
in the Purchase Agreement).
8. ENTIRE AGREEMENT. This Agreement together with the Purchase
Agreement and the documents executed by the parties related thereto contain the
entire agreement of the parties hereto and supersedes all prior or
contemporaneous agreements and understandings, oral or written, between the
parties hereto and thereto with respect to the subject matter hereof and
thereof.
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9. AMENDMENT; WAIVER. No amendment or waiver of any provision of this
Agreement shall be effective unless the same shall be in writing and signed by
all of the parties and then such waiver shall only be effective in the specific
instance and for the specific purpose for which it was given. No failure on the
part of the Purchaser to exercise, and no delay in exercising, any right or
remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right or remedy granted hereby or
by any related document or by law.
10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, personal
representative(s), successors and permitted assigns, but nothing in this
Agreement is to be construed as an authorization or right of any party to assign
its/his rights or delegate its/his duties under this Agreement without the prior
written consent of the other party hereto.
11. GOVERNING LAW. This Agreement shall be construed, governed by and
enforced in accordance with the laws of the State of Minnesota, without giving
effect to the principles of conflicts of laws thereof.
12. HEADINGS. The headings to the paragraphs of this Agreement are
intended for the convenience of the parties only and shall in no way be held to
explain, modify, amplify or aid in the interpretation of the provisions hereof.
13. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and if any portion hereof shall be held invalid, illegal or
unenforceable for any reason, the remainder shall not thereby be invalidated but
shall remain in full force and effect.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day, month and year first above written.
APA:
APA OPTICS, INC.
By
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▇▇▇▇ ▇. ▇▇▇▇
Its President
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APA ACQUISITION, INC.
By
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▇▇▇▇ ▇. ▇▇▇▇
Its President
SHAREHOLDER:
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▇▇▇▇▇ ▇▇▇
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SCHEDULE 1
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Excluded Activities of EPCO and LCI
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Sell or distribute custom and standard fiber optic and copper cable assemblies,
cabling systems, or data network hardware to end users, value added resellers,
original equipment manufacturers, datacom and telecom distributors, and
broadband providers for use in the telecom industry or datacom industry, but
specifically excluding from this constraint the following:
- power cable assemblies;
- residential telephone, CATV and data networking hardware; and
- all products currently (as of March 2003) distributed or sold by EPCO and
LCI as described in EPCO and LCI catalogs supplied to Buyer.
