Document:

Exhibit 10.5 

FACILITIES AGREEMENT

 

This Facilities Agreement (this “Agreement”), is made as of July 10, 2007 (the “Effective Date”), by and between PCP Acquisition, Inc., a Colorado corporation (the “Company”), and Perfect Circle Projectiles, LLC, an Illinois limited liability company (“Seller”).

 

1.            Background. This Agreement is entered into as consideration for and as a condition to the closing of the transactions contemplated by the Asset Purchase Agreement (the “Purchase Agreement”), dated as of the Effective Date by and between the Company, Seller Gary E. Gibson and Security With Advanced Technology, Inc.. The Company and Seller have entered into certain other agreements in connection with the Purchase Agreement, including, but not limited to, a Royalty Agreement (the “Royalty Agreement”) dated as of the Effective Date by and between the Company and Seller. Unless otherwise defined
herein, capitalized terms used herein shall have the meanings assigned to them in the Purchase Agreement and the Royalty Agreement.

 

2.            Use of Facilities and Facilities Reimbursement. Commencing on the Effective Date and continuing until the termination of this Agreement pursuant to Section 3 (the “Term”), Seller shall produce Products for the Company at Seller’s facilities as requested by the Company. During the term, the Company shall reimburse Seller for all actual, direct and incremental out-of-pocket costs incurred by Seller in producing Products manufactured at Seller’s facilities for the Company. Seller agrees to invoice the Company once per month for such reimbursement of costs and the Company agrees to pay Seller within 30 days of receipt of Seller’s invoice.

 

3.            Termination. Either party may terminate this Agreement (a) upon 180 days’ written notice to the other party for any reason or no reason at all or (b) upon 30 days’ written notice to the other party due to such other party’s material breach of this Agreement if such breaching party has not cured such breach to the satisfaction of the non-breaching party within such 30-day period. At any time during the Term that the Company is able to produce the Products at its own facilities during the Term, the 180-day period set forth in Section 3(a) shall be reduced to 120 days.

 

4.            Amendments. Any waiver, amendment, modification or supplement of or to any term or condition of this Agreement shall be effective only if in writing and signed by all parties hereto.

 

5.            Severable. If any portion of this Agreement is held to be invalid, the same will not affect in any respect whatsoever the validity of the remainder of this Agreement. 

 

6.            Captions. Article or paragraph titles or other headings contained in this Agreement are for convenience only and will not be deemed a part of the context of this Agreement.

 

7.            Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

 

8.            Successors and Assigns. This Agreement may not be assigned by Seller. This Agreement shall inure to the benefit of the Company and its successors and assigns. 

 

9.            Waiver. Any waiver by any party of a breach of any provisions of this Agreement will not operate as or be construed to be a waiver of any subsequent breach hereof.

 

10.          Notices. Any notices or other communications required or permitted to be given or made pursuant to any of the provisions of this Agreement shall be deemed to have been duly given or made for all purposes if (a) hand delivered, (b) sent by a nationally recognized overnight courier for next business day delivery or (c) sent by telephone facsimile transmission (with prompt oral confirmation of receipt) as follows:

 

As to Seller:

 

Perfect Circle Projectiles, LLC

28101 Ballard Drive, Unit C

Lake Forest, Illinois  60045

Fax No.:  (847) 367-8980

Attention: Gary E. Gibson

With a copy to:

Shadle & Associates, Ltd.

1019 W. Wise Road, Suite 200

Schaumburg, Illinois  60193

Fax No:  (847) 891-3038

Attention:  Ronald E. Shadle

 

As to the Company:

PCP Acquistion, Inc.

10855 Dover Street, Suite 1100

Westminster, Colorado  80021

Attention:  Scott Sutton

Fax No.:  (303) 439-0414

 

	
            With a copy to:
 

Brownstein Hyatt Farber Schreck, P.C.

	
             
 	
            410 Seventeenth Street, Suite 2200
 

	
             
 	
            Denver, Colorado 80202
 

	
             
 	
            Attention:  Adam J. Agron
 

	
             
 	
            Fax:  (303) 223-1111
 

 

or at such other address as any party may specify by notice given to the other party in accordance with this Section 10. The date of giving of any such notice shall be the date of hand delivery, the business day sent by telephone facsimile, and the day after delivery to the overnight courier service. 

 

2

 

11.          Governing Law. This Agreement shall be governed by, and construed in accordance with the internal laws of the State of Delaware, without reference to the choice of law or conflicts of law principles thereof.

 

12.         WAIVER OF TRIAL BY JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF. 

 

13.          Entire Agreement. This Agreement contains the entire agreement of the Parties as to the subject matter hereof and supersedes all prior agreements and understandings, whether oral or written, between the Parties with respect to the subject matter hereof. 

 

14.        Arbitration. The parties will arbitrate any dispute arising out of this Agreement pursuant to the terms of Section 9.12 of the Purchase Agreement.

 

15.        Default. In the event that amounts due to Seller are not paid when due then the unpaid balance shall accrue interest at the rate of 1% per month until paid, and the Company on demand from Seller shall pay to Seller all costs incurred or paid by Seller in connection with this Agreement, including but not limited to attorney’s fees and costs for (i) enforcing or attempting to enforce any of Seller’s rights and remedies, and (ii) collecting the amounts due. 

 

[Remainder of Page Left Blank]

 

3

 

                IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

 

THE COMPANY:

 

PCP Acquistion, Inc.

 

	
            By:
 	
            /s/ Jeffrey G. McGonegal 
 

Jeffrey G. McGonegal

Chief Financial Officer

 

 

SELLER:

 

Perfect Circle Projectiles, LLC

 

	
            By:
 	
            /s/ Gary E. Gibson 
 

Gary E. Gibson

ManagerExhibit 10.6 

CONFIDENTIALITY AND

NON-COMPETITION AGREEMENT

 

THIS AGREEMENT (this “Agreement”) is made and entered into as of the 10th day of July, 2007, by Perfect Circle Projectiles, LLC, an Illinois limited liability company (“PCP”), and certain key employees of PCP party hereto (“Employees”), for the benefit of PCP Acquisition, Inc., a Colorado corporation, and its successors and assigns (collectively, the “Company”).

 

R E C I T A L S:

 

A.          The Company is in the business of developing, marketing and selling various products and services developed for the security and surveillance industry (the “Company Business”). 

 

B.           Prior to the date hereof, PCP has conducted as part of its overall business the manufacture and sale of spherical shaped projectiles, as described in Schedule D of the Asset Purchase Agreement between the parties (the “Business”). 

 

C.          PCP, the Company, Gary E. Gibson and Security With Advanced Technology, Inc. are parties to an Asset Purchase Agreement dated as of the date hereof (the “Purchase Agreement”), pursuant to which PCP will sell and transfer to the Company, and the Company will purchase and assume from PCP, the Assets (as defined in the Purchase Agreement) that are used or useful in connection with the PCP Business. 

 

D.          In order to prevent the improper use of confidential and proprietary information relating to the Assets and the resulting unfair competition and misappropriation and diminution of the goodwill and other proprietary interests of the Assets which were acquired by the Company, PCP and each Employee agree that limitations must be imposed on their right to compete with the Company.

 

E.            As consideration for and as a condition to the closing of the transactions contemplated by the Purchase Agreement, PCP and the Employees shall have entered into certain other agreements, as applicable, including, but not limited to this Agreement. 

 

F.           Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Purchase Agreement. 

 

NOW, THEREFORE, in consideration of the foregoing recitals and the Company acquiring the Assets the parties agree as follows:

 

SECTION 1 - NONDISCLOSURE OF CONFIDENTIAL INFORMATION.

 

 (a)         “Confidential Information” means information, not generally known, that is proprietary exclusively to the Business, including without limitation:

 

 

	
             
 	
            1)
 	
            “Proprietary Rights” means, with respect to the Business, worldwide industrial and intellectual property rights and all rights associated therewith, including all patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof, all inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know how, technology, technical data, proprietary processes and formulae, algorithms, specifications and designs;
 

 

	
             
 	
            2)
 	
            the financial and accounting data, sales records, profit and loss and other performance reports, pricing manuals, selling and pricing procedures relating to the Business;
 

 

	
             
 	
            3)
 	
            the vendor and supplier information relating to the Business;
 

 

	
             
 	
            4)
 	
            confidential information of the clients of the Business.
 

 

(b)           PCP and each Employee hereby agrees not to directly or indirectly disclose any Confidential Information to any third party without the prior written consent of the Company or as required by applicable law. PCP and each Employee further agrees not to use, directly or indirectly, any Confidential Information for the benefit of PCP, any Employee, or any third party in competition with the Business. Confidential Information does not include any of the items in this Section which are or become publicly known and made generally available through no wrongful act of PCP or any Employee, or of others who PCP or any Employee did not know and had no reasonable basis for knowing were under confidentiality obligations as to the item or items involved.

 

SECTION 2 - RESTRICTIONS AGAINST COMPETITION.

 

In order to prevent the improper use of Confidential Information and the resulting unfair competition and misappropriation and diminution of the goodwill and other proprietary interests of the Business which were acquired by the Company, PCP and each Employee hereby agrees that for a period of six years, except in the case of Michael Varacins such period shall be two years, after the date of this Agreement, PCP, each Employee, and any of their respective Subsidiaries (as hereinafter defined) will not, directly or indirectly, on their own behalf or in the service or on behalf of others:

 

	
             
 	
            a)
 	
            solicit any client of the Business as of the date hereof, for the purpose of obtaining the business of such client anywhere in the world, in competition with the Business; 
 

 

	
             
 	
            b)
 	
            advise or recommend to any other person that such person solicit any client of the Business as of the date hereof, for the purpose of obtaining the business of such client anywhere in the world, in competition with the Business; 
 

 

	
             
 	
            c)
 	
            solicit any prospective client of the Business as of the date hereof, for the purpose of obtaining the business of such client anywhere in the world, in competition with the Business; 
 

 

2

 

	
             
 	
            d)
 	
            advise or recommend to any other person that such person solicit any prospective client of the Business as of the date hereof, for the purpose of obtaining the business of such client anywhere in the world, in competition with the Business; 
 

 

	
             
 	
            e)
 	
            engage in the Business anywhere in the world in competition with the Business. PCP and the Employees shall be deemed to be engaged in the Business if PCP, any Employee, or any affiliate directly or indirectly controlled by PCP or any Employee (a “Subsidiary”) shall engage in any portion of the Business, whether for their own account or for that of any other person or entity, and whether as a shareholder, member, partner, investor possessing any ownership interest in any such entity, consultant, independent contractor or in any other capacity.
 

 

The phrase “prospective client” shall mean those businesses or persons with whom any representative of the Company had substantial and extended actual and personal contact during the 12-month period immediately preceding the date hereof, including developing sales strategies, marketing information and proposals, and negotiating providing services to such prospective clients, with respect to the Business.

 

PCP and each Employee agrees that it is reasonable to restrict PCP’s and the Employees competition during the time period described above in the entire geographic area of the world and that the restrictions set forth in this Agreement (including, but not limited to, the period of restriction, activity and geographic area set forth) are fair and reasonable and are necessarily required for the protection of the interests of the Company and to prevent the improper use of Confidential Information and the resulting unfair competition and misappropriation and diminution of the goodwill and other proprietary interests of the Business acquired, owned, licensed or otherwise held by the Company.

 

SECTION 3 - ENFORCEMENT OF RESTRICTIONS.

 

PCP and each Employee understands and agrees that its access to the Confidential Information and clients of the Business makes such restrictions both necessary and reasonable.

 

PCP and each Employee agrees with the Company that if PCP or any Employee shall violate any of the terms of this Agreement, then the Company shall be entitled to injunctive relief, and such remedy shall be in addition to and not in limitation of any rights or remedies to which the Company is or may be entitled to at law or in equity.

 

The parties agree that the covenants contained in Sections 1 and 2 of this Agreement are independent of one another and are severable. In the event any part of the covenants contained in Section 1 or 2 of this Agreement shall be held to be invalid or unenforceable, the remaining parts thereof shall nevertheless continue to be valid and enforceable as though the invalid and unenforceable part had not been included herein. If any provisions of these covenants relating to the time period, activity and/or area of restriction shall be declared by a court of competent jurisdiction to exceed the maximum time periods, activities or areas which such court deems reasonable and enforceable, the parties agree that the court making such a determination shall have

 

3

 

the power to reduce the time period, activity and/or area of restriction to the maximum time period, activity and/or area which such court deems reasonable and enforceable.

 

SECTION 4 - CONSIDERATION.

 

The execution and delivery of this Agreement are conditions to the obligation of the Company to consummate the transactions contemplated in the Purchase Agreement, which the Company would not do absent this Agreement.

 

SECTION 5 - ATTORNEY REVIEW.

 

PCP and each Employee acknowledge that it was advised and encouraged to review this Agreement with its attorneys before signing it. To the extent, if any, that PCP or any Employee desired, PCP or any Employee has taken advantage of this right. PCP and each Employee acknowledge that it has carefully read and fully understands all of the provisions of this Agreement and is voluntarily entering into this Agreement.

 

SECTION 6 - SUCCESSORS, ASSIGNS AND THIRD PARTY BENEFICIARIES.

 

This Agreement is not assignable by PCP or any Employee, on one hand, or the Company, on the other hand, without the prior written consent of the other party; provided, however, in the case of assignment by the Company, the consent of PCP and the Employees shall not be unreasonably withheld so long as the Company gives PCP (on behalf of itself and the Employees) 30 days advance notice of such proposed assignment. This Agreement and all rights under this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective successors and permitted assigns.

 

SECTION 7 - MISCELLANEOUS.

 

This Agreement, the Purchase Agreement and the related agreements contemplated therein constitute the entire agreement between the parties hereto and supersede any prior understanding or agreements among them respecting the subject matter hereof. Except as otherwise set forth in this Agreement, the Purchase Agreement and the related agreements contemplated therein, there are no extraneous representations, arrangements, understandings, or agreements, oral or written, among the parties hereto, except those fully expressed herein or therein. No amendments or modifications to the terms of this Agreement shall be made unless made in writing and signed by all the parties hereto. The failure of any party to enforce at any time any of the provisions of this Agreement shall not be construed as a waiver of such provisions or of the right of such party thereafter to enforce any such provisions. The
existence of any claim or cause of action by PCP or any Employee against the Company, whether based upon this Agreement or otherwise, shall not constitute a defense to the enforcement of this Agreement by the Company.

 

SECTION 8 - HEADINGS.

 

The headings of the paragraphs contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement.

 

4

 

SECTION 9 - APPLICABLE LAW.

 

This Agreement shall be governed by, and construed in accordance with the internal laws of the State of Delaware, without reference to the choice of law or conflicts of law principles thereof.

 

SECTION 10 - ARBITRATION.

 

The parties will arbitrate any dispute arising under this Agreement pursuant to the terms of Section 9.12 of the Purchase Agreement.

 

*****

 

5

 

                 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

THE COMPANY:

 

PCP Acquisition, Inc.

 

	
             
 	
            By:
 	
            /s/ Jeffrey G. McGonegal 
 

	
             
 	
            Jeffrey G. McGonegal
 

	
             
 	
            Chief Financial Officer
 

 

PCP:

 

Perfect Circle Projectiles, LLC

 

	
             
 	
            By:
 	
            /s/ Gary E. Gibson 
 

	
             
 	
            Gary E. Gibson
 

	
             
 	
            Manager
 

 

 

EMPLOYEES:

 

	
             
 	
            By:
 	
            /s/ Gary E. Gibson 
 

	
             
 	
            Name:
 	
            Gary E. Gibson
 

 

 

	
             
 	
            By:
 	
            /s/ Michael Varacins 
 

	
             
 	
            Name:
 	
            Michael Varacins
 

 

 

	
             
 	
            By:
 	
            /s/ Mary Gibson 
 

	
             
 	
            Name:
 	
            Mary Gibson

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]