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EXHIBIT 10.3
NON-COMPETITION AGREEMENT
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THIS NON-COMPETITION AGREEMENT (the "Agreement") is made and entered
into this 4th day of May, 1998, by and among Eagle Research Corporation, a West
Virginia corporation ("Seller"), American Meter Company, a Delaware corporation
("American Meter"), Metretek, Incorporated, a Florida corporation ("Purchaser"),
and Xxxxxx Natural Gas Services, Inc., a Delaware corporation ("Xxxxxx").
W I T N E S S E T H:
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WHEREAS, Seller, American Meter, Purchaser and Xxxxxx are parties to a
certain Asset Purchase Agreement, dated March 23, 1998 ("Purchase Agreement"),
providing for the sale by Seller to Purchaser of certain assets of Seller; and
WHEREAS, in order to induce Purchaser and Xxxxxx to enter into the
Purchase Agreement and to perform their obligations thereunder, and pursuant to
Sections 5.16 and 6.7 of the Purchase Agreement providing that the parties
hereto covenant to execute and deliver this Agreement as a condition to their
respective obligations under the Purchase Agreement, the parties hereto desire
to provide certain non-competition covenants upon the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
SECTION 1. DEFINITIONS. For purposes of this Agreement, the following
terms and phrases shall have the respective meanings set forth below:
(a) AFFILIATE. The term "Affiliate" means, with respect to any
party hereto, any Person directly or indirectly controlling, controlled by or
under common control with such party, including, without limitation, a Person
with respect to which such party possesses, directly or indirectly, the power to
direct or cause the direction of its management and policies, whether through
the ownership of voting securities, by contract or otherwise.
(b) BUSINESS. The term "Business" means the development,
design, manufacture, assembly, packaging, construction, installation, sale,
distribution, marketing, lease, license and sublicense of electronic correctors,
pulse accumulators and transistors and modems and other non-RF meter reading
devices similar in function, and the provision of services related thereto, in
electronic measurement systems for utility, industrial and commercial gas and
electric customers.
(c) CLOSING DATE. The term "Closing Date" shall have the
meaning given to such term in the Purchase Agreement.
(d) COMPETITIVE PRODUCT. The term "Competitive Product" means
any product or related service included in the Business or similar thereto in
function.
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(e) DIRECTLY OR INDIRECTLY. The phrase "directly or
indirectly" (whether or not capitalized) shall be broadly construed so as to
encompass any attempt by a party to circumvent the intent of the covenants and
limitations imposed hereunder, including participation with Affiliates of such
party.
(f) NON-COMPETE PERIOD. The term "Non-Compete Period" means
that period of time commencing on the date hereof and continuing until five (5)
years from the Closing Date.
(g) PERSON. The term "Person" means any individual,
corporation, partnership, limited liability company, joint venture or other
firm, business, association, enterprise or entity.
(h) SUBSIDIARY. The term "Subsidiary" means, with respect to
any party hereto, a Person of which such party owns, directly or indirectly, a
majority of the voting power.
SECTION 2. COVENANT NOT TO COMPETE.
(a) COVENANT. Each of Seller and American Meter hereby agrees,
for itself and its Affiliates (except that as to any of its Affiliates that are
not wholly-owned subsidiaries, then this covenant shall only apply in the U.S.
and Canada), that neither it nor any of its Affiliates shall, directly or
indirectly, during the Non-Compete Period, whether alone or together in
association with others, and whether as a principal, agent, owner, shareholder,
officer, director, partner, member, manager, operator, lender, supplier,
distributor, employee, proprietor, investor, independent contractor, lender,
licenser, licensee, co-venturer, consultant or in any other capacity whatsoever,
engage in the Business or invest in, have a financial interest in, lend money or
to be in any way connected or affiliated with, or render advice, services or
financial assistance to, any Person engaged in the Business, anywhere in the
world.
(b) EXCEPTIONS. Notwithstanding any provision of this
Agreement to the contrary, nothing set forth herein shall prevent (i) American
Meter or Seller or any of their Subsidiaries from designing and constructing a
Competitive Product, but only if, after receipt of written request from American
Meter (or one of its Subsidiaries) to design or construct such Competitive
Product, Purchaser or one of its Affiliates gives written notice to American
Meter that it elects not to manufacture such competitive Product or (A) does not
commence the design or construction of such Competitive Product within sixty
(60) days of receipt of such request (or such later time thereafter that is
commercially reasonable to commence such design or construction), (B) complete
the design and construction to American Meter's reasonable satisfaction within a
commercially reasonable time thereafter, and (C) furnish the Competitive Product
to American Meter at "Full Manufacturing Cost" (as such term is defined in the
License Agreement, of even date herewith, among American Meter, Seller and
Purchaser,) plus 10%, if the Competitive Product is an integral part of meters
manufactured by American Meter or any of its Subsidiaries, and at "Full
Manufacturing Cost" plus 20%, in all other cases; (ii) American Meter or Seller
or any of their Affiliates from, as a part of an acquisition of the capital
stock or assets of another Person, acquiring a business ("Acquired Business")
that, among other things, engages in the business (the "Competitive Business")
of the design or construction of Competitive Products and continues to engage in
the Competitive Business, provided that (x) the revenues of the Competitive
Business are not more than twenty percent (20%) of the total revenues of the
Acquired Business, (y) it disposes of the Competitive Business within one (1)
year of such acquisition if the expiration of the one (1) year period is within
the Non-Compete Period, and (z) it offers Purchaser and its Affiliates a right
of first refusal to acquire the Competitive Business on the same
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or no less favorable terms and conditions as offered by any third party; or
(iii) an Affiliate of American Meter from selling a custom self-contained
measurement and regulating station (the "Station") which includes a Competitive
Product if the purchaser of the Station designates a Competitive Product to be
included in the station despite such Affiliate's good faith efforts to utilize a
product manufactured by Purchaser.
SECTION 3. COVENANT REGARDING BUSINESS RELATIONSHIPS. Each of Seller
and American Meter hereby agrees, for itself and its Affiliates, that neither it
nor any of its Affiliates shall, directly or indirectly, during the Non-Compete
Period, (a) solicit or induce any customer, client, lender, lessor, lessee,
licensor, licensee, supplier, distributor, consultant, independent contractor or
agent of Purchaser or any of its Affiliates engaged in the Business to terminate
its engagement by or other relationship with Purchaser or any of its Affiliates
engaged in the Business with respect to Competitive Products, (b) interfere in
any business relationship between Purchaser or any of its Affiliates engaged in
the Business and any other Person with respect to Competitive Products, or (c)
publicly disparage Purchaser or any of its Affiliates, or any of their
directors, officers, shareholders, employees or agents, in connection with the
Business.
SECTION 4. COVENANT REGARDING CONFIDENTIAL INFORMATION. Each of the
parties hereto hereby agrees, for itself and its Affiliates, that it and its
Affiliates shall at all times (during and after the Non-Compete Period) keep and
maintain Confidential Information (as defined below) confidential, and further
agrees that neither it nor any of its Affiliates shall, at any time, either
directly or indirectly, use any Confidential Information for its own benefit or
for the benefit of any other Person or divulge, disclose, communicate or
otherwise reveal any Confidential Information to any Person in any manner
whatsoever, except (i) information that is publicly available other than by
virtue of a direct or indirect disclosure by it, or (ii) to the extent otherwise
required by court order; provided, however, that the obligation of Purchaser and
Xxxxxx and their Affiliates under this Section 4 shall not apply with respect to
information related to the Assets and Business (as such terms are defined in the
Purchase Agreement) being acquired by Purchaser under the Purchase Agreement. As
used herein, "Confidential Information" means any and all information relating
to the "Business" or relating to the parties hereto, including, without
limitation, trade secrets, know-how, intellectual properties, inventions,
financial and sales information, pricing policies, price lists, customer lists,
business plans, products, marketing strategies, budgets, methods and manner of
operations, creditors, lenders, debtors, distributors, wholesalers, licensees,
licensors, lessees, lessors, others having business relationships with other
parties hereto, processes, marketing techniques and methods, computer programs
and software, engineering and technical data, drawings, designs, contracts,
agreements, licenses, leases, permits, raw materials, supplies, formulas,
samples, research and development, or any other information known to be or
considered to be proprietary or confidential.
SECTION 5. INTERPRETATION OF COVENANTS. Each of the parties hereto
acknowledges and agrees that the duration and area for which the covenant not to
compete and other covenants set forth in this Agreement as to be effective are
fair and reasonable and are reasonably required for the protection of Xxxxxx and
Purchaser and their business and good will. In the event that any court
determines that any portion of the time period or the area, or both of them, are
unreasonable, arbitrary or against public policy as to any covenant and that
such covenant is to that extent unenforceable, illegal or invalid, each party
hereto agrees that the covenant shall be amended to delete therefrom such
provision or portion determined to be unenforceable, illegal or invalid so that
the covenant shall remain in full force and effect for the greatest time period
and in the greatest area that would render it enforceable, legal and valid. The
parties intend that each covenant shall be deemed to be a series of
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separate covenants, one for each and every county of each and every state of the
United States of America and one for each and every political subdivision of
each and every other country in which the covenant not to compete or other
covenant is intended to be effective and is not proscribed by law.
SECTION 6. WAIVER OF DEFENSE. Each of the parties hereto, for itself
and its Affiliates, hereby expressly waives any objection to or defense in
respect of the geographical scope or duration of the restriction on competition
and other covenants for the protection of the business of the Company provided
in Sections 2, 3 and 4 of this Agreement. Each of the parties hereto also
acknowledges and agrees that the covenants set forth herein are of material
importance to the other parties hereto, that the parties hereto have conditioned
their obligations to consummate the transactions contemplated by the Purchase
Agreement upon the execution, delivery and performance by the other parties
hereto of this Agreement, and that each party hereto is relying on the covenants
of the other parties hereto as set forth herein.
SECTION 7. EQUITABLE REMEDIES. Each of the parties hereto acknowledges
and agrees that its obligations set forth in this Agreement are of special,
unique and personal character which give them a peculiar value to the other
parties hereto, that the other parties hereto will suffer immediate significant
and irreparable harm to their good will and business which cannot be reasonably
or adequately compensated by money damages alone in the event such party
repudiates or breaches the provisions hereof or threatens or attempts to do so,
and that the provisions of this Agreement are reasonable and necessary to
protect the business and the good will of the other parties hereto. Each of the
parties hereto therefore expressly agrees that, in addition to all other rights
and remedies which the other parties hereto may have at law or in equity or by
reason of any other agreement, the other parties hereto shall be entitled to
obtain a temporary, preliminary and/or permanent injunction and other equitable
relief in order to prevent or restrain any such breach by such party or any of
its Affiliates and/or other Persons acting directly or indirectly in concert or
in participation with it, and the other parties hereto shall not be required to
post a bond or other security or to prove actual damages as a condition for the
granting of such relief.
SECTION 8. GENERAL PROVISIONS.
(a) GOVERNING LAW. This Agreement shall in all respects be
governed by and construed in accordance with the internal substantive laws of
the State of Florida, without giving effect to any principles or rules of
conflicts or choice of laws. Any action, suit or other proceeding seeking to
enforce any right, remedy, obligation, duty, covenant or provision of, or
arising out of, this Agreement shall be brought and entered against any party
hereto exclusively in any federal or state court of the State of Florida or of
the United States located in the State of Florida. Each party hereto irrevocably
submits to the personal jurisdiction of any such court and irrevocably waives,
to the fullest extent of the law, any objection that it may now or hereafter
have to the laying of venue in any such court and any claim that such action,
suit or proceeding has been brought in an inconvenient form.
(b) SUCCESSORS AND ASSIGNS. This Agreement and all of the
provisions hereof shall inure to the benefit of, and be binding upon, the
parties hereto and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned (by operation of law or otherwise) by any of the parties hereto
without the prior written consent of the other parties hereto, except that the
rights and interests of Purchaser in this Agreement can be assigned to another
Person acquiring the Purchaser in a merger or sale of substantially all of its
assets.
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(c) AMENDMENT. This Agreement may not be amended, supplemented
or modified in any manner, in whole or in part, except by a written instrument
signed all parties hereto that specifies that it amends, supplements or modifies
this Agreement.
(d) NOTICES. Any and all notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally, or if sent
by facsimile transmission (upon receipt of confirmation of delivery), on the
next business day if sent by overnight courier service, or three business days
after being sent by first class registered or certified U.S. Mail, postage
prepaid, return receipt requested, to the parties at the following addresses:
If to Purchaser and/or Xxxxxx:
Metretek, Incorporated
000 Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. XxXxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Xxxxxx Natural Gas Services, Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: W. Xxxxxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Kegler, Brown, Hill & Xxxxxx
00 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to Seller and/or American Meter:
Eagle Research Corporation
000 Xxxxxxx Xxxx
Xxxxx Xxxxx, Xxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
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American Meter Company
000 Xxxxx Xxxx, Xxxxxxxx Xxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxxxxx & Berlin, Chtd.
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
Any party may change its designated address by giving written notice thereof to
all other parties hereto in the manner provided in this Section 8(d). Any party
hereto may send any notice, request, demand or other communication to the
intended recipient at the address above by using any of the means (such as
telecopy, telex, expedited courier, messenger, ordinary mail or electronic
mail), but no such notice, demand, request or other communication shall be
deemed to have been given until it is actually received by the recipient.
(e) SEVERABILITY. If, for any reason, any provision of this
Agreement or any covenant set forth herein is held to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement, and each other provision of this Agreement shall continue in full
force and effect to the maximum extent permitted by law.
(f) WAIVER. No term or condition of this Agreement shall be
deemed to have been waived, nor shall there be an estoppel against the
enforcement of any provision of this Agreement, except by written instrument of
the party charged with such waiver or estoppel. The failure of a party to insist
upon strict adherence to any provision of this Agreement on one or more
occasions shall not be considered a continuing waiver or deprive that party of
the right thereafter to insist upon strict adherence to that provision or any
other provision of this Agreement.
(g) NO THIRD PARTY BENEFICIARIES. Except as expressly provided
in this Agreement, this Agreement does not confer or create and is intended by
the parties hereto to confer or create, and shall not be construed as conferring
or creating, upon any Person other than the parties hereto and their successors
and permitted assigns, any rights, privileges or causes of action under or by
reason of this Agreement.
(h) HEADINGS. The headings used in this Agreement are solely
for convenience of reference and shall not be considered or given any effect in
construing or interpreting this Agreement.
(i) CUMULATIVE REMEDIES. Each and every right and remedy
conferred upon Purchaser and Xxxxxx under this Agreement shall be in addition to
any other right or remedy hereunder or otherwise existing at law, in equity or
by agreement.
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(j) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, including counterparts executed by less than all parties
hereto, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
(k) ENTIRE AGREEMENT. This Agreement and Sections 5.16, 6.7,
7.4 and 8.3 of the Purchase Agreement constitute the full and entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and thereof, and supersede all prior and contemporaneous
arrangements, agreements and understandings, oral or written, among the parties
hereto with respect to the subject matter herein.
[The next page is the signature page]
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IN WITNESS WHEREOF, the parties hereto have caused this Non-Competition
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the date first set forth above.
EAGLE RESEARCH CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
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Its: Vice President
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AMERICAN METER COMPANY
By: /s/ Xxxxx X. Xxxxxxx
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Its: President and Chief Executive Officer
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METRETEK, INCORPORATED
By: /s/ W. Xxxxxxx Xxxxxx
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Its: Chief Executive Officer
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XXXXXX NATURAL GAS SERVICES, INC.
By: /s/ W. Xxxxxxx Xxxxxx
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Its: President
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