(C) MAY NOT BE SOLD, ASSIGNED, PLEDGED, GIFTED, CONVEYED, OR
OTHERWISE TRANSFERRED, EXCEPT BY OPERATION OF LAW OR IN CONNECTION WITH THE
DISSOLUTION OF SELLER AND ANY SUCH TRANSFER OF SUCH RIGHT IN VIOLATION OF THIS
ARTICLE SHALL BE NULL AND VOID.
3.4
COMPETING PRODUCTS. BUYER AND ITS AFFILIATES MAY, IN THEIR SOLE
DISCRETION, DECIDE TO ACQUIRE, RESEARCH, DEVELOP AND/OR MARKET PRODUCTS AND/OR
SERVICES THAT COMPETE WITH THE EARNOUT PRODUCTS. SELLER FURTHER ACKNOWLEDGES,
UNDERSTANDS AND AGREES THAT WHETHER OR NOT BUYER OR ANY OF ITS AFFILIATES MAKE
ANY SALES OF EARNOUT PRODUCTS AFTER THE EFFECTIVE DATE, NEITHER BUYER NOR ANY OF
ITS AFFILIATES IS PROHIBITED FROM MANUFACTURING, MARKETING, OR SELLING OTHER
PRODUCTS THAT MAY REDUCE MARGIN PAYMENTS. SELLER AND LESLEY AGREE THAT BUYER'S
PRIOR WRITTEN CONSENT IS REQUIRED, PRIOR TO THE USE OR DEVELOPMENT, OF ANY
VORTEX-BRANDED PRODUCT DEVELOPED, INTRODUCED, MANUFACTURED OR SOLD AFTER THE
EFFECTIVE DATE THAT A) IS NOT PART OF THE EXCLUDED BUSINESS AND B) WAS NOT
DEVELOPED, INTRODUCED, MANUFACTURED OR SOLD AS OF THE EFFECTIVE DATE. SELLER AND
LESLEY ACKNOWLEDGE THAT BUYER MAY REJECT AND NOT CONSENT TO ANY VORTEX-BRANDED
PRODUCT DEVELOPED, INTRODUCED OR MANUFACTURED AFTER THE EFFECTIVE DATE THAT WAS
NOT DEVELOPED, INTRODUCED, MANUFACTURED OR SOLD PRIOR TO THE EFFECTIVE DATE AND,
IN THE JUDGMENT OF BUYER, DIRECTLY COMPETES WITH ANY RELEASABLE BODY ARMOR VEST
SYSTEM OFFERED BY BUYER.
3.5
RESTRICTIVE COVENANT PAYMENTS. IN CONSIDERATION FOR LESLEY ABIDING
BY THE RESTRICTIVE COVENANTS SET FORTH IN ARTICLE 8 HEREOF, BUYER SHALL MAKE
MONTHLY PAYMENTS OF $3,024.49 TO LESLEY THE FIRST YEAR FROM THE EFFECTIVE DATE
AND MONTHLY PAYMENTS OF $2,000 TO LESLEY FOR A PERIOD OF FOUR YEARS FOLLOWING
SUCH FIRST YEAR OF PAYMENTS (THE "RESTRICTIVE COVENANT PAYMENTS"). IN THE EVENT
LESLEY BREACHES OR THREATENS TO BREACH ANY COVENANT CONTAINED IN ARTICLE 8
HEREOF, BUYER SHALL BE ENTITLED TO IMMEDIATELY END MAKING THE RESTRICTIVE
COVENANT PAYMENTS, AND LESLEY SHALL BE REQUIRED TO REIMBURSE BUYER FOR ALL
RESTRICTIVE COVENANT PAYMENTS MADE PRIOR TO HIS BREACH OF ANY COVENANT CONTAINED
IN ARTICLE 8 HEREOF. NOTWITHSTANDING THE ABOVE, THE TAKING OF ANY SUCH ACTION BY
BUYER WILL NOT IN ANY WAY LIMIT BUYER'S OTHER RIGHTS OR REMEDIES AVAILABLE UNDER
THIS AGREEMENT OR APPLICABLE LAW. PETRIE ACKNOWLEDGES THAT LESLEY OR HIS
DESIGNEE IS RECEIVING THE ENTIRE BENEFIT TO THE RESTRICTIVE COVENANT PAYMENTS
PAYABLE HEREUNDER AND WAIVES ANY RIGHTS OR CLAIMS HE MAY HAVE RELATED TO THE
RESTRICTIVE COVENANT PAYMENTS AS A SHAREHOLDER OF SELLER OR PARTY TO THIS
AGREEMENT.
4
3.6
INVENTORY ADJUSTMENT. IN THE EVENT THAT ANY OF THE INVENTORY HELD
BY SELLER ON THE EFFECTIVE DATE AND SOLD HEREUNDER TO BUYER REMAINS UNSOLD AFTER
SEPTEMBER 30, 2008, SUCH INVENTORY WILL BE CONSIDERED TO BE OBSOLETE AND BUYER
SHALL HAVE A RIGHT TO SET-OFF THE AMOUNT OF THE INVENTORY (AS DETERMINED BY THE
BOOK VALUE OF SUCH INVENTORY), AS SET FORTH ON SCHEDULE 1.1(F) HERETO, OF SUCH
OBSOLETE INVENTORY ON A DOLLAR-FOR-DOLLAR BASIS AGAINST, IN BUYER'S SOLE
DISCRETION, ANY FUTURE MARGIN PAYMENTS, RESTRICTIVE COVENANT PAYMENTS, ANY
AMOUNTS DUE