10.9 RESTRICTIVE COVENANT AGREEMENT AMONG REGISTRANT, ADS ACQUISITION, INC.
AND GERALD R. ALLARD, TRUSTEE OF THE GERALD R. ALLARD REVOCABLE TRUST OF 1994
RESTRICTIVE COVENANT AGREEMENT
This Restrictive Covenant Agreement ("Covenant") is among DeCrane
Aircraft Holdings, Inc. ("Buyer"), ADS Acquisition, Inc. ("Acquisition",
collectively with Buyer "Buyers") and Gerald R. Allard, Trustee of The
Gerald R. Allard Revocable Trust of 1994 ("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 THIS 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 $1 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
Allard 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
Robert G. Martin sign a three (3) year employment agreement and
thereafter Buyer terminates Robert G. Martin other than "for cause" and
does not compensate him for the
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three (3) year period from the Closing, then Allard and the Principal
Shareholders shall have the right, after such termination, to employ Robert G.
Martin.
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: DeCrane Aircraft Holdings, Inc.
2201 Rosecrans Avenue
EL Segundo, California 90245
Attention: R. Jack DeCrane
Fax Number: (310) 536-0257
with a copy to: DeCrane Aircraft Holdings, Inc.
155 Montrose West Avenue, Suite 210
Copley, OH 44321
Fax Number: (216) 668-2518
and a copy to: Spolin & Silverman
100 Wilshire Boulevard, Suite 940
Santa Monica, California 90401
Attention: Stephen A. Silverman, Esq.
Fax Number: (310) 576-4844
If to seller: Gerald R. Allard
520 S. Collier Blvd.
Apt. 301
Marco Island. FL 34145
With a copy to: William V.A. Zorn, Esq.
McLane, Graf, Raulerson & Middleton
900 Elm Street
Manchester, NH 03105-0326
Fax No. (603) 625-5650
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"
DeCrane Aircraft Holdings, Inc.
/s/ R. Jack DeCrane
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By: R. Jack DeCrane,
Chief Executive Officer
ADS Acquisition, Inc.
/s/ R. Jack DeCrane
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By: R. Jack DeCrane,
Chief Executive Officer
/s/ Gerald R. Allard
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Seller
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