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EXHIBIT 2.5
COVENANT NOT TO COMPETE
THIS COVENANT NOT TO COMPETE agreement is dated May 8, 1995, by and
among SL Industries, Inc., a New Jersey Corporation ("SLI"), SL Industries
Acquisition Corp., a California corporation ("Purchaser") and Robert C.
McLaughlin, a shareholder ("Shareholder") of Teal Electronics Corporation, a
California corporation ("Seller").
W I T N E S S E T H:
A. Purchaser, SLI and Seller entered into an Asset Purchase
Agreement dated as of May 1, 1995 ("Asset Purchase Agreement") providing for
the purchase of substantially all of the assets of Seller, of which Shareholder
is a shareholder.
B. Shareholder will benefit substantially from the sale of
Seller's assets pursuant to the Agreement, and therefore is willing to enter
into this Covenant Not To Compete Agreement, which is a condition precedent to
Purchaser's and SLI's obligations under the Asset Purchase Agreement, and which
is reasonable in light of all the circumstances.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged:
1. Shareholder hereby agrees that for a period commencing from
and after the date hereof and continuing until April 30, 2000, Shareholder will
not, in any city or county in the State of California, or in any other state in
the United States or in Canada, Mexico, Argentina, Brazil, Switzerland,
European Common Market, Israel, South Africa, Australia, Singapore, Taiwan,
Hong Kong, China, Japan or South Korea, participate, directly or indirectly, in
the ownership, management or operation of any person, firm, corporation or
other entity which carries on a Business that is similar to or competitive with
the Business operated by Seller; provided, that Shareholder shall be entitled
to own up to 5% of the capital stock in a public company that operates a
business competitive to that of Seller.
2. The term "Business operated by Seller" is defined to mean the
business of Seller described in Annex A to the Asset Purchase Agreement.
3. It is recognized that damages in the event of a breach of this
Covenant would be difficult, if not impossible, to ascertain, and it is
therefore agreed that Purchaser and SLI shall have the right to an injunction
or other equitable relief in any court of competent jurisdiction enjoining any
such breach, and Shareholder hereby waives any and all defenses which
Shareholder may have on the ground of lack of subject matter jurisdiction or
competence of the court to grant such an injunction or other equitable relief.
The existence of this right shall not preclude any
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other rights and remedies at law or in equity which Purchaser or SLI may have
against Shareholder for breach of this Covenant.
4. Should this Covenant be deemed in restraint of trade by reason
of the broadness of the terms hereof, it shall not be deemed void and shall
nevertheless be enforceable for the maximum term and to the maximum extent that
it is deemed reasonable to restrain such competitive conduct in relation to the
transaction involving the sale by Seller to Purchaser of substantially all of
its assets, including goodwill.
5. Shareholder also agrees that during the period that this
covenant is in effect, Shareholder shall not disrupt, damage, impair, or
interfere with the Business operated by Seller, whether by way of interference
with (a) Purchaser's employees, or (b) Purchaser's relationship with its
customers, agents, vendors or representatives, or otherwise, and shall not
induce or attempt to induce any personnel who are currently employed by, or who
hereafter commence employment with, Purchaser, to discontinue such employment
for the purpose of being employed by any competitor of Purchaser.
6. This Agreement shall be binding upon and inure to the benefit
of Purchaser, SLI and Shareholder and their respective successors and assigns
and shall be governed by the laws of the State of California.
7. No waiver by Purchaser or SLI of any breach of this Covenant
shall be effective unless in writing and shall not in any way prejudice
Purchaser or SLI with respect to any subsequent breach of this Covenant by
Shareholder.
8. The invalidity or unenforceability of any particular provision
of this Covenant as may be determined by a court shall not affect the other
provisions of this Covenant, and the remaining provisions of this Covenant
shall be construed in all respects as if such invalid or unenforceable
provision had not been contained herein.
9. (a) Each individual executing this Agreement on behalf of
Purchaser represents and warrants that he or she is duly authorized to execute
this Agreement on behalf of Purchaser. Each such individual, and Purchaser,
represent and warrant that all proceedings or corporate action required to be
taken by Purchaser relating to the execution and delivery of this Agreement
shall have been taken prior to the Closing.
(b) Each individual executing this Agreement on behalf of SLI
represents and warrants that he or she is duly authorized to execute this
Agreement on behalf of SLI. Each such individual, and SLI, represent and
warrant that all proceedings or corporate action required to be taken by SLI
relating to the execution and delivery of this Agreement shall have been taken
prior to the Closing.
10. ALL DISPUTES, CLAIMS AND CONTROVERSIES ARISING UNDER THIS
AGREEMENT, OR A BREACH THEREOF, SHALL BE RESOLVED BY ARBITRATION THROUGH THE
AMERICAN ARBITRATION ASSOCIATION IN ACCORDANCE WITH
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ITS RULES AND REGULATIONS. Such arbitration shall be held in Southern
California. The award of the arbitrator may be enforced by any court of
competent jurisdiction. The arbitration award shall be final and binding
regardless of whether one of the parties fails or refuses to participate in the
arbitration. Notwithstanding any of the foregoing provisions, either party
may apply to a court of competent jurisdiction for such equitable relief as may
be necessary to preserve and enforce his, her or its rights under the award.
11. If any action is brought to enforce any of the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees
and costs in addition to any other relief.
12. This covenant constitutes the entire agreement of Shareholder,
Purchaser and SLI with respect to the subject matter hereof. It supersedes all
previous agreements with respect to the subject matter hereof and may not be
modified, amended or terminated except by a written agreement specifically
referring to this Covenant Not To Compete agreement signed by Shareholder,
Purchaser and SLI.
IN WITNESS WHEREOF, Purchaser, SLI and Shareholder have executed this
Covenant Not To Compete agreement as of the date and year first above written.
SL INDUSTRIES, INC.,
a New Jersey Corporation
By:
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SL INDUSTRIES ACQUISITION CORP.,
a California corporation
By:
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Shareholder
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