EXHIBIT 10.4
COVENANT NOT TO COMPETE AGREEMENT dated as of [ ],
1999 (this "Agreement"), between ARCH CHEMICALS, INC., a Virginia
corporation ("Arch"), and XXXX CORPORATION, a Virginia
corporation ("Olin"). Each of Arch and Xxxx are sometimes
hereinafter referred to as a "Party" and collectively referred to
as the "Parties".
WITNESSETH:
-----------
WHEREAS, Olin and Arch have entered into that certain Distribution
Agreement dated as of the date hereof, between Olin and Arch (the "Distribution
Agreement"), providing for the distribution of all of the outstanding shares of
common stock of Arch to the shareholders of Olin;
WHEREAS, prior to entering into the Distribution Agreement, the
Parties and their predecessor businesses freely shared information concerning
their respective businesses, including the research and development of specialty
chemical products and other chemical products and product-related services, as
these businesses were part of a single corporate entity and parent-subsidiary
corporate structure;
WHEREAS, Olin and Arch each have a substantial amount of know-how and
other knowledge concerning the operations of the business of the other entity;
and
WHEREAS, to allow each of Olin and Arch (and their respective
shareholders) to obtain the full value of its respective rights under the
Distribution Agreement, Olin and Arch desire to enter into and execute this
Agreement concerning the Arch Business and the Xxxx Business (as such terms are
defined in the Distribution Agreement).
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants set forth below, the Parties hereby agree as follows:
1. DEFINITIONS.
------------
Capitalized terms used herein without definitions shall have the respective
meanings assigned to them in the Distribution Agreement. As used in this
Agreement, the following terms shall have the following respective
meanings:
"ENGAGE IN" and derivations thereof shall mean directly or indirectly to engage
in, own, manage, participate in, or otherwise obtain an interest in (as
owner, stockholder, agent, partner, representative, director, consultant,
or otherwise).
2
"NON-COMPETE TERM" shall mean a five (5) year period commencing on the
Distribution Date.
"NON-SOLICIT TERM" shall mean a two (2) year period commencing on the
Distribution Date.
"PENSION PLAN" shall mean, with respect to a Party and its Affiliates, any
"employee pension benefit plan" or "pension plan", in each case as defined
in Title 1, Subtitle A, Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended, of such Party and its Affiliates.
"TERRITORY" shall mean the entire world.
"WATER TREATMENT" shall mean the manufacture, sale, marketing or distribution of
water purification products and product-related services for the purpose of
water purification or sanitization.
2. COVENANT NOT TO COMPETE.
------------------------
During the Non-Compete Term:
(a) Olin agrees that it shall not, and shall not permit any of
its Subsidiaries, to Engage In, anywhere in the Territory,
the manufacture, sale, marketing or distribution of products
or product-related services that are the same as or
substantially similar to those which the Arch Business is
manufacturing, selling, marketing or distributing as of the
Distribution Date ("Arch Business Activities"); provided,
--------
however, that nothing herein shall prevent Olin and its
-------
Subsidiaries from (i) Engaging In Water Treatment, except
that Olin and its Subsidiaries may not Engage In Water
Treatment with respect to those products (including products
substantially similar in chemical composition to any such
product or derivative of such product; it being understood
and agreed by the Parties that sodium hydrosulfite is not
substantially similar in chemical composition to calcium
hypochlorite) that are manufactured, sold, marketed or
distributed by the Arch Business as of the Distribution
Date; and/or (ii) making any investment through a Pension
Plan of Olin or any of its Subsidiaries.
(b) Arch agrees that it shall not, and shall not permit any of
its Subsidiaries, to Engage In, anywhere in the Territory,
the manufacture, sale, marketing or distribution of products
or product-related services that are the same as or
substantially similar to those which the Xxxx Business is
manufacturing, selling, marketing or distributing as of the
Distribution Date ("Xxxx Business Activities"); provided,
--------
however, that nothing
-------
3
herein shall prevent Arch and its Subsidiaries from making
any investment through a Pension Plan of Arch or any of its
Subsidiaries.
(c) Nothing herein shall prevent Olin and Arch from mutually
agreeing to develop or manufacture chemical products or
product-related services cooperatively, whether through
subcontracting, work share arrangements or joint development
projects.
(d) Neither Party shall be deemed to violate this Section 2 in
the event that such Party directly or indirectly acquires in
whole or in part (an "Acquisition") any person or business
(an "Acquired Enterprise"), that Engages In (x) in the case
of Olin, Arch Business Activities and (y) in the case of
Arch, Xxxx Business Activities; provided, that such Acquired
Enterprise does not have a significant portion of its gross
revenues (measured at the time it is acquired by such Party)
attributable to Arch Business Activities or Xxxx Business
Activities, as the case may be. Olin or Arch may continue,
after consummation of an Acquisition, the Arch Business
Activities or the Xxxx Business Activities, as the case may
be, of the Acquired Enterprise as and to the extent, in the
same manner and for the same purposes that the Acquired
Enterprise Engaged In such Arch Business Activities or Xxxx
Business Activities, as the case may be, immediately prior
to the consummation of the Acquisition. Notwithstanding the
foregoing, neither Olin nor Arch may consummate any
Acquisition or series of Acquisitions pursuant to this
Section 2(d), or continue any Arch Business Activities or
Xxxx Business Activities, as the case may be, pursuant to
this Section 2(d), the purpose of which would be to evade,
or that are part of a scheme, device or plan to evade, the
purpose or spirit of this Agreement.
3. COVENANT NOT TO SOLICIT.
------------------------
During the Non-Solicit Term:
(a) Olin agrees that it shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, (i) solicit,
recruit or hire for employment, (ii) induce or encourage to
leave the employment of Arch or its Subsidiaries or (iii)
attempt to do any of the foregoing with respect to, any
employee of Arch or its Subsidiaries, who is (other than
through a violation of Section 3(b)) such during the Non-
Solicit Term.
4
(b) Arch agrees that it shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, (i) solicit,
recruit or hire for employment, (ii) induce or encourage to
leave the employment of Olin or its Subsidiaries or (iii)
attempt to do any of the foregoing with respect to, any
employee of Olin or its Subsidiaries, who is (other than
through a violation of Section 3(a)) such during the Non-
Solicit Term.
(c) Notwithstanding the foregoing, if a Party (the "Solicitor")
desires to engage in any actions with respect to employees
of the other Party (the "Solicitee") that would otherwise be
prohibited by Sections 3(a) or 3(b) above (a "Prohibited
Solicitation"), then the appropriate corporate officer in
charge of human resources matters of the Solicitor shall
contract the analogous corporate officer of the Solicitee
and inform such Solicitee officer of such desire. Only upon
the express prior written consent of the Solicitee, which
consent may be withheld in the Solicitee's sole and absolute
discretion, may the Solicitor engage in such Prohibited
Solicitation with respect to such employee of the Solicitee.
(d) Nothing in this Section 3 shall be deemed to prohibit either
Party or its respective Subsidiaries from (i) making a
general solicitation of employment opportunities or openings
("Opportunities") through the public media (including the
Internet), (ii) posting or advertising Opportunities at any
location where such Party has employees, including common
areas used by the employees of both Parties or any of their
respective Subsidiaries, (iii) listing any Opportunities in
any government or government-sponsored job bank or
opportunity center or (iv) making any dissemination required
to be made by law regarding Opportunities.
(e) This Section 3 shall not apply with respect to (i) any
individual who is the subject of Section 4.3 of the
Information Technology Services Agreement, which Section 4.3
shall preempt this Section 3 with respect to any such
individual, (ii) any employee of Olin who is leased from
Olin to Arch after the Distribution Date and (iii) any
individual who ceases to be an employee of Olin or Arch, for
the time such individual ceases to be such an employee.
4. REASONABLENESS.
---------------
The Parties hereto agree that the terms contained in this Agreement
are reasonable in all respects. In the event that a court determines
that any of the terms or provisions of this Agreement
5
are unreasonable, the court may limit the application of any provision
or term, or modify any provision or term, and proceed to enforce the
Agreement as so limited or modified.
5. SEVERABILITY.
-------------
The Parties hereto agree that each and every paragraph, sentence, term
and provision of this Agreement shall be considered severable in that,
in the event that a court finds any paragraph, sentence, term or
provision to be invalid or unenforceable, the validity and
enforceability, operation or effect of the remaining paragraphs,
sentences, terms or provisions shall not be affected, and this
Agreement shall be construed in all respects as if the invalid or
unenforceable matter had been omitted. The Parties shall endeavor in
good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions. The Parties intend the covenants of
Sections 2 and 3 to be a series of separate covenants, one for each
county of each and every state, province, territory or political
jurisdiction of the Territory and one for each month of the period
specified above. If, in any arbitration or judicial proceeding, an
arbitrator or a court shall refuse to enforce any one or more of such
separate covenants because the total time and/or the geographic
boundaries thereof are deemed to be excessive or unreasonable, then it
is the intent of the parties hereto that such covenants, which would
otherwise be unenforceable due to such excessive or unreasonable
period of time and/or geography, be enforced for such lesser period of
time and/or for such more limited geographic area as shall be deemed
reasonable and not excessive by such arbitrator or court.
6. SPECIFIC PERFORMANCE.
---------------------
Each of the Parties hereto acknowledges that its covenants in this
Agreement are of a special and unique character, and that there is no
adequate remedy at law for failure by such Parties to comply with the
provisions of this Agreement and that such failure would cause
immediate harm that would not be adequately compensable in damages,
and therefore agree that their covenants and agreements contained
herein may be specifically enforced without the requirement of posting
a bond or other security, in addition to all other remedies available
to the Parties hereto under this Agreement or at law or in equity.
7. MERGER, SALE OF ASSETS, SPIN-OFF, ETC. During the Noncompete Term,
--------------------------------------
neither Party shall (i) consolidate with or merge into any
6
other person, (ii) convey, transfer or lease its properties and assets
substantially as an entirety to any other person or (iii) spin off,
distribute the capital stock to its shareholders of, or engage in a
similar divisive transaction with respect to, a subsidiary, division
or any of its assets (each of the transactions described in clauses
(i) through (iii) being referred to as a "Transaction"), in each case,
unless:
(a) The person formed (if other than Olin or Arch) by or party to
such Transaction shall (x) be a corporation, (y) be organized and
validly existing under the laws of the United States of America,
any State thereof or the District of Columbia and (z) expressly
assume, by an instrument satisfactory to the other Party, each
and every obligation of said Party to be performed or observed
hereunder;
(b) The Party attempting to consummate a Transaction shall have
delivered to the other Party immediately prior to the
consummation of such Transaction a Certificate executed by its
Chief Executive Officer and Chief Financial Officer stating that
such Transaction complies with this Section 7 and that all
conditions precedent herein relating to such Transaction have
been complied with; and
(c) Notwithstanding anything to the contrary in this Agreement, in
the event that a Transaction (other than a Transaction described
in clause (iii) of the first paragraph of this Section 7) is
consummated, the person (other than Olin or Arch) who is a party
to such Transaction (the "Acquiror"), after consummation of such
Transaction may (x) in the case of a Transaction involving Olin,
Engage In Arch Business Activities or (y) in the case of a
Transaction involving Arch, Engage In Xxxx Business Activities,
in either case, only as and to the extent the Acquiror Engaged In
such Arch Business Activities or Xxxx Business Activities, as the
case may be, immediately prior to such Transaction; provided,
--------
however, that nothing in this Agreement shall prohibit the
-------
Acquiror from expanding its Engagement In such Arch Business
Activities or Xxxx Business Activities, as the case may be,
within the scope thereof that the Acquiror Engaged In immediately
prior to the consummation of such Transaction.
8. DISPUTE RESOLUTION. In the event of a controversy, dispute or claim
------------------
arising out of, in connection with, or in relation to the
interpretation, performance, nonperformance, validity or breach of
this Agreement or otherwise arising out of, or in any way related to
this Agreement, including, without limitation, any claim based on
contract, tort, statute or constitution (collectively, "Agreement
7
Disputes"), the respective General Counsels of the Parties or their
designees shall negotiate, commencing within 30 days of the occurrence
of such Agreement Dispute, in good faith for a reasonable period of
time to settle such Agreement Dispute. If after such reasonable
period such General Counsels or their designees are unable to settle
such Agreement Dispute (and in any event after 60 days have elapsed
from the time the relevant parties began such negotiations), such
Agreement Dispute shall be determined, at the request of any relevant
party, by arbitration conducted in New York City before and in
accordance with the then-existing Rules for Commercial Arbitration of
the American Arbitration Association (the "Rules"), and any judgment
or award rendered by the arbitrator shall be final, binding and
nonappealable (except upon grounds specified in 9 U.S.C. (S)10(a) as
in effect on the date hereof), and judgment may be entered by any
state or Federal court having jurisdiction thereof in accordance with
Section 13 hereof. Unless the arbitrator otherwise determines, the
pre-trial discovery of the then-existing Federal Rules of Civil
Procedure and the then-existing Rules 46 and 47 of the Rules of the
United States District Court for the Southern District of New York
shall apply to any arbitration hereunder. Any controversy concerning
whether an Agreement Dispute is an arbitrable Agreement Dispute,
whether arbitration has been waived, whether an assignee of this
Agreement is bound to arbitrate, or as to the interpretation or
enforceability of this Section 8 shall be determined by the
arbitrator. The arbitrator shall be a retired or former judge of any
United States District Court or Court of Appeals or such other
qualified person as the relevant parties may agree to designate,
provided such individual has had substantial professional experience
--------
with regard to settling commercial disputes. The Parties intend that
the provisions to arbitrate set forth herein be valid, enforceable and
irrevocable. The designation of a situs or a governing law for this
Agreement or the arbitration shall not be deemed an election to
preclude application of the Federal Arbitration Act, if it would be
applicable. In his award the arbitrator shall allocate, in his
discretion, among the Parties to the arbitration all costs of the
arbitration, including, without limitation, the fees and expenses of
the arbitrator and reasonable attorneys' fees, costs and expert
witness expenses of the Parties. The Parties agree to comply with any
award made in any such arbitration proceedings that has become final
in accordance with the Rules and agree to the entry of a judgment in
any jurisdiction upon any award rendered in such proceedings becoming
final under the Rules. The arbitrator shall be entitled, if
appropriate, to award any remedy in such proceedings, including,
without limitation, monetary damages, specific performance and all
other forms of legal and equitable
8
relief; provided, however, the arbitrator shall not be entitled to
-------- -------
award punitive damages.
9. ATTORNEY FEES. A Party in breach of this Agreement shall, on demand,
--------------
indemnify and hold harmless the other parties hereto for and against
all out-of-pocket expenses, including, without limitation, legal fees,
incurred by such other Party by reason of the enforcement and
protection of its rights under this Agreement. The payment of such
expenses is in addition to any other relief to which such other Party
may be entitled hereunder or otherwise.
10. NOTICES.
--------
All notices and other communications hereunder shall be in writing and
hand delivered or mailed by registered or certified mail (return
receipt requested) or sent by any means of electronic message
transmission with delivery confirmed (by voice or otherwise) to the
Parties at the following addresses (or at such other addresses for a
Party as shall be specified by like notice) and will be deemed given
on the date on which such notice is received:
To Xxxx Corporation:
000 Xxxxxxx 0
0xx Xxxxx
Xxxxxxx, XX 00000
Attn: General Counsel
To Arch Chemicals, Inc.:
000 Xxxxxxx 0
0xx Xxxxx
Xxxxxxx, XX 00000
Attn: General Counsel
11. SUCCESSORS.
-----------
This Agreement shall be binding upon and shall inure to the benefit of
and be enforceable by the Parties and their respective successors and
permitted assigns.
12. APPLICABLE LAW.
---------------
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Virginia, without giving effect to its
conflict of laws provisions.
9
13. CONSENT TO JURISDICTION.
------------------------
Without limiting the provisions of Section 8 hereof, each of the
Parties irrevocably submits to the exclusive personal jurisdiction and
venue of (a) the Circuit Court of Henrico County, Commonwealth of
Virginia, and (b) the United States District Court for the Eastern
District of Virginia (Richmond Division) for the purposes of any suit,
action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each of the Parties agrees to
commence any action, suit or proceeding relating hereto either in the
United States District Court for the Eastern District of Virginia
(Richmond Division) or if such suit, action or other proceeding may
not be brought in such court for jurisdictional reasons, in the
Circuit Court of Henrico County, Commonwealth of Virginia. Each of
the Parties further agrees that service of any process, summons,
notice or document by U.S. registered mail to such Party's respective
address set forth above shall be effective service of process for any
action, suit or proceeding in Virginia with respect to any matters to
which it has submitted to jurisdiction in this Section 13. Each of
the Parties irrevocably and unconditionally waives any objection to
the laying of venue of any action, suit or proceeding arising out of
this Agreement or the transactions contemplated hereby in (i) the
Circuit Court of Henrico County, Commonwealth of Virginia, or (ii) the
United States District Court for the Eastern District of Virginia
(Richmond Division), and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such
court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum, and the right to
object, with respect to such action, suit or proceeding, that such
court does not have jurisdiction over such Party.
14. MISCELLANEOUS.
--------------
(a) AMENDMENTS. This Agreement may not be modified or amended except
-----------
by an agreement in writing signed by the Parties.
(b) WAIVERS. The failure of either Party to require strict
--------
performance by the other party of any provision in this Agreement
will not waive or diminish that Party's right to demand strict
performance thereafter of that or any other provision hereof.
(c) TITLE AND HEADINGS. Titles and headings to sections herein are
-------------------
inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or
interpretation of this Agreement.
10
(d) THIRD PARTY BENEFICIARIES. This Agreement is solely for the
--------------------------
benefit of the Parties hereto and should not be deemed to confer
upon third parties any remedy, claim, liability, reimbursement,
claim of action or other right in excess of those existing
without reference to this Agreement.
(e) COMPLETE AGREEMENT; CONSTRUCTION. This Agreement shall constitute
--------------------------------
the entire agreement between the Parties with respect to the
subject matter hereof and shall supersede all previous
negotiations, commitments and writings with respect to such
subject matter.
11
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date and year first above written.
ARCH CHEMICALS, INC.
By:__________________________________
Name:
Title:
XXXX CORPORATION
By:__________________________________
Name:
Title:
