EXHIBIT 10.3
CONFIDENTIALITY, NON-SOLICITATION AND NON-COMPETITION AGREEMENT
CONFIDENTIALITY, NON-SOLICITATION AND NON-COMPETITION AGREEMENT, effective
as of the date provided below, by and between, AFC CABLE SYSTEMS, INC. (the
"Company") and XXXXXX X. XXXXXXX ("Executive").
The Company has entered into a merger agreement pursuant to which the
Company will become a subsidiary of a indirect wholly-owned subsidiary of Tyco
International Ltd. (the "Merger Agreement"). The Company wishes to protect the
confidential information of the Company and to protect against the Executive
using his skills, knowledge, experience, ideas and influence for the benefit of
a competitor of the Company. Executive is willing to enter into an agreement to
provide such protection to the Company upon the terms and conditions set forth
in this Agreement. In consideration of the foregoing and the mutual agreements
herein contained, the, parties agree as follows.
1. CONFIDENTIALITY, NON-COMPETITION.
(a) Executive acknowledges that: the business of designing, manufacturing
and supplying pre-wired armored cables as conducted by the Company and its
subsidiaries (the "Business") is intensely competitive and Executive's former
and current position with the Company has exposed, and will continue to expose,
Executive to knowledge of confidential information of the Company; the direct
and indirect disclosure of any such confidential information to existing or
potential competitors of the Company would place the Company at a competitive
disadvantage and would do damage, monetary or otherwise, to the Company's
Business; and the engaging by Executive in any of the activities prohibited by
this Agreement may constitute improper appropriation and/or use of such
information and trade secrets. Executive expressly acknowledges the trade secret
status of the confidential information and that the confidential information
constitutes a protectable business interest of the Company.
(b) For purposes of this Agreement, the Company shall be construed to
include the Company and its current and future subsidiaries and affiliates
engaged in the Business.
(c) From and after the Effective Time (as defined in the Merger Agreement)
(the "Effective Time"), Executive shall not, directly or indirectly, whether
individually, as a director, stockholder, owner, partner, employee, principal or
agent of any business, or in any other capacity, make known, disclose, furnish,
make available or utilize any of the confidential information of the Company
other than in the proper performance of the duties contemplated herein, or as
required by a court of competent jurisdiction or other administrative or
legislative body; PROVIDED THAT, prior to disclosing any of the confidential
information to a court or other administrative or legislative body, Executive
shall promptly notify the Company so that it may seek a protective order or
other appropriate remedy. Executive agrees to return all confidential
information, including all photocopies, extracts and summaries thereof, and any
such information stored electronically on tapes, computer disks or in any other
manner to the Company at any time upon request by the Company and upon the
termination of his engagement for any reason.
(d) From the Effective Time until the fifth anniversary of the Effective
Time (the "Non-Competition Period"), Executive shall not engage in Competition
(as defined below) with the Company. For purposes of this Agreement,
"Competition" by Executive shall mean Executive's engaging in, or otherwise
directly or indirectly being employed by or acting as a consultant or lender to,
or being a director, officer, employee, principal, licensor, trustee, broker,
agent, stockholder, member, owner, joint venturer or partner of, or permitting
his name to be used in connection with the activities of any other business or
organization which is engaged in the same business as the Business of the
Company as the same shall be constituted at any time during or following his
engagement; PROVIDED THAT, it shall not be a violation of this Agreement for
Executive to (i) become the registered or beneficial owner of less than five
percent (5%) of any class of the capital stock of a competing
corporation registered under the Securities Exchange Act of 1934, as amended or
(ii) be employed by an entity that engages in the same business as the Business
of the Company, so long as Executive does not directly perform services for or
work within a division or business unit of such entity that engages in such
business.
(e) Without limiting the generality of the foregoing, during the
Non-Competition Period, Executive agrees that he will not, directly or
indirectly, for his benefit or for the benefit of any other person, firm or
entity, do any of the following:
(i) solicit from any customer doing business with the Company business
of the same or of a similar nature to the Business conducted between the
Company and such customer;
(ii) solicit the employment or services of any person who at the time is
employed by or a consultant to the Company; or
(iii) make any statements or comments of a defamatory or disparaging
nature to third parties regarding the Company or its officers, directors,
personnel, products or services.
(f) Executive acknowledges that this Agreement is being entered into in
connection with the consummation of the transactions contemplated by the Merger
Agreement, that Executive's agreement to the terms set forth herein are a
critical inducement to the entering into the Merger Agreement by the parties
thereto, that the services to be rendered by him to the Company are of a special
and unique character, which gives this Agreement a particular value to the
Company, the loss of which may not be reasonably or adequately compensated for
by damages in an action at law, and that a material breach by him of any of the
provisions contained herein will cause the Company irreparable injury. Executive
therefore agrees that the Company shall be entitled, in addition to any other
right or remedy, to a temporary, preliminary and permanent injunction, without
the necessity of proving the inadequacy of monetary damages or the posting of
any bond or security, enjoining or restraining Executive from any such
violation.
(g) Executive further acknowledges and agrees that due to the uniqueness of
his services and confidential nature of the information he will possess, the
covenants set forth herein are reasonable and necessary for the protection of
the business and goodwill of the Company; and it is the intent of the parties
hereto that if in the opinion of any court of competent jurisdiction any
provision set forth in this Agreement is not reasonable in any respect, such
court shall have the right, power and authority to modify any and all such
provisions as to such court shall appear not unreasonable and to enforce the
remainder of this Agreement as so modified.
2. CONSIDERATION.
In consideration for and subject to Executive's agreement to the covenants
set forth herein, the Company shall pay to Executive $1,200,000 (the
"Non-Competition Fee"), payable in monthly installments of $20,000 paid by the
Company as of the 15th day of each month occurring during the Non-Competition
Period, subject to the following:
(i) in the event Executive's employment with the Company is
involuntarily terminated by the Company during the Non-Competition Period,
the Company shall pay to Executive the full amount of any then remaining
unpaid balance of the Non-Competition Fee within thirty (30) days following
the date of Executive's termination of employment;
(ii) in the event Executive voluntarily resigns his employment with the
Company during the Non-Competition Period, the Company shall continue to pay
to Executive the Non-Competition Fee in monthly installments of $20,000
until the first anniversary of Executive's termination of employment (or, if
sooner, until the full amount of the Non-Competition Fee has been paid) and
shall pay the then remaining unpaid balance of the Non-Competition Fee, if
any, as of the anniversary of Executive's termination of employment subject
to earlier payment under clause (iii) immediately following;
(iii) in the event of Executive's death during the Non-Competition
Period, the Company shall pay to Executive's estate the full amount of any
then remaining unpaid balance of the Non-Competition Fee within thirty (30)
days following Executive's death; and
(iv) notwithstanding anything to the contrary contained above in this
Section 2, if at any time during Non-Competition Period it is determined by
a court of competent jurisdiction that Executive has breached the covenants
contained in this Agreement, the Company may withhold any portion of the
Non-Competition Fee not yet paid, without prejudice to the Company's right
to pursue equitable and legal remedies for enforcement and recovery under
this Agreement.
(a) EFFECTIVENESS; TERMINATION; SURVIVAL.
Notwithstanding any provision hereof to the contrary, it is the intention of
the parties hereto that: (i) this Agreement shall become effective at the
Effective Time; and (ii) from and after the termination of the Merger Agreement
in accordance with its terms at any time prior to the Effective Time, the
covenants contained herein shall be deemed abandoned and this Agreement shall
forthwith become void.
3. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement between
the parties with respect to its subject matter and merges and supersedes all
prior discussions, agreements and understandings of every kind and nature
between any of them and neither party shall be bound by any term or condition
other than as expressly set forth or provided for in this Agreement. This
Agreement may not be changed or modified nor may any of its provisions be
waived, except by an agreement in writing, signed by the parties hereto.
4. INDEMNIFICATION. Anything in this Agreement to the contrary
notwithstanding, the Company agrees to pay all costs and expenses incurred by
Executive in connection with the enforcement of his rights and entitlements
under this Agreement and will indemnify and hold harmless Executive from and
against any damages, liabilities and expenses (including without limitation fees
and expenses of counsel) incurred by Executive in connection with any litigation
or threatened litigation, including any regulatory proceedings arising out of
the making of this Agreement or the enforcement of Executive's rights under this
Agreement.
5. WAIVER. The failure of any party to this Agreement to enforce any of its
terms, provisions or covenants shall not be construed as a waiver of the same or
of the right of such party to enforce the same. Waiver by any party hereto of
any breach or default by any other party of any term or provision of this
Agreement shall not operate as a waiver of any other breach or default.
6. SEVERABILITY. In the event that any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remainder of the Agreement shall
not in any way be affected or impaired thereby. Moreover, if any one or more of
the provisions contained in this Agreement shall be held to be excessively broad
as to duration, activity or subject, such provisions shall be construed by
limiting and reducing them so as to be enforceable to the maximum extent allowed
by applicable law.
7. NOTICES. Any notice given hereunder shall be in writing and shall be
deemed to have been given when delivered by messenger or courier service
(against appropriate receipt), or mailed by registered or certified mail (return
receipt requested), addressed as follows.
If to the Company: AFC Cable Systems, Inc.
50 Xxxxxxx Plaza, Suite 1250
Providence, Rhode Island 02903
Attention: President
If to Executive: Xxxxxx X. Xxxxxxx
000 Xxxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
with a copy to: Xxxxx X. Xxxxxx, Esq.
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
or at such other address as shall be indicated to either party in writing.
Notice of change of address shall be effective only upon receipt.
8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Rhode Island without regard to
conflicts of law principles.
9. DESCRIPTIVE HEADINGS. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
10. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original for all purposes but which, together, shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Time.
AFC CABLE SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Chairman and Chief
Executive Officer
/s/ Xxxxxx X. Xxxxxxx
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XXXXXX X. XXXXXXX
