CONSULTING AND NON-COMPETITION AGREEMENT
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CONSULTING AND NON-COMPETITION AGREEMENT ("Agreement")
dated February __, 1997 by and among XXXXXXXXX TECHNOLOGY
CORPORATION, a Delaware corporation ("CTC"), DYNAMET
INCORPORATED, a Delaware corporation formerly known as "DI
Acquisition Corporation" ("DI") and XXXXX X. XXXXXXXX, formerly a
principal shareholder ("Xxxxxxxx") of Dynamet Incorporated, a
Pennsylvania corporation ("Old DI"). CTC and DI are hereinafter
sometimes referred to collectively as the "Companies."
The Companies and Xxxxxxxx are parties to an Agreement
and Plan of Merger dated January 6, 1997 (the "Merger
Agreement"), which provides for the merger on the date hereof of
Old DI with and into DI. It is a condition to the obligations of
the parties to the Merger Agreement that this Consulting and
Non-Competition Agreement be executed and delivered by the
parties hereto, as an undertaking ancillary to the Merger
Agreement.
In consideration of the mutual covenants contained
herein, and INTENDING TO BE LEGALLY BOUND HEREBY, the parties
hereto agree as follows:
I. SERVICES. During the Consulting Term, Xxxxxxxx will
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diligently provide consulting services to the Companies on such
projects as may be designated by the Chief Executive Officer of
CTC and as are reasonable and appropriate in light of Xxxxxxxx'
former role as President of Old DI ("Services"). During the
Consulting Term, Xxxxxxxx shall make himself available to perform
Services on such reasonable basis as may from time to time be
agreed with CTC. The Companies will provide such office and
secretarial support as Xxxxxxxx may reasonably require in his
performance of Services.
1. CONSULTING TERM. The term of this Agreement
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during which Xxxxxxxx will provide Services (the "Consulting
Term") shall begin on March 1, 1997 and shall continue for a
period of six months, unless sooner terminated as hereinafter
provided or extended by mutual agreement.
2. PAYMENTS. In consideration of the covenants and
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undertakings in Sections 1, 7 and 8 hereof, Xxxxxxxx has received
a cash payment in the amount of $3,700,000 contemporaneously with
the execution and delivery of this Agreement and will receive
additional monthly payments of $135,416.67 throughout the first
four years of the Non-Compete Term, payable on the last day of
each such month.
3. EXPENSES. CTC or DI shall pay or reimburse
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Xxxxxxxx for any expenses reasonably incurred by him in
furtherance of Services rendered hereunder, including, without
limitation, expenses for travel (including automobile operating
expenses, meals, hotel accommodations and the like), upon
submission by him of vouchers or itemized lists thereof prepared
in compliance with such rules and policies relating thereto as
CTC may from time to time adopt generally with respect to its
executives and consultants and as may be required in order to
permit such payments as proper deductions to the Companies under
the Internal Revenue Code and the rules and regulations adopted
pursuant thereto now or hereafter in effect.
4. ACCELERATED TERMINATION. The Consulting Term
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shall automatically terminate upon the death of Xxxxxxxx or the
date upon which CTC reasonably determines that the state of
Xxxxxxxx'x health no longer permits Xxxxxxxx to fulfill his
responsibilities hereunder, but such termination shall have no
effect on the obligation of the Companies to continue to make the
payments contemplated by Section 3 hereof.
5. RELATIONSHIP. Xxxxxxxx will act hereunder as an
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independent contractor with no entitlement to any rights or
benefits as an employee of the Companies.
6. CONFIDENTIAL INFORMATION. Xxxxxxxx acknowledges
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that by reason of his relationship with and service to Old DI and
his Services to the Companies, Xxxxxxxx has had and will have
access to confidential information relating to operations and
technology and know-how which have been developed by Old DI and
may be developed in the future by the Companies, including,
without limitation, information and knowledge pertaining to
products and their design and manufacture, methods of operation,
sales and profit data, customer and supplier lists and
relationships between Old DI and its customers, suppliers and
others who have business dealings with it, other information not
readily available to the public, and plans for future
developments relating thereto. In recognition of the foregoing,
Xxxxxxxx will maintain the confidentiality of all such
information and other matters of DI (as the successor to Old DI)
and CTC known to Xxxxxxxx which are not otherwise in the public
domain and will not disclose any such information to any person
outside the respective organizations of DI and CTC, wherever
located, during the term of this Agreement except as required by
law or with CTC's prior written authorization and consent.
7. COVENANT NOT TO COMPETE. During the Non-Compete
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Term, Xxxxxxxx shall not, unless acting with the prior written
consent of CTC, directly or indirectly (i) own, manage, operate,
finance, join, control or participate in the ownership,
management, operation, financing or control of, or be associated
as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with, or use or permit
his name to be used in connection with, any profit or
not-for-profit business or enterprise which at any time during
such period designs, manufactures, assembles, sells, distributes
or provides products (or related services) in competition with
those designed, manufactured, assembled, sold, distributed or
provided, or under active development, by Old DI (including all
future developments in and improvements on such products and
services), other than products (or related services) designed,
manufactured, assembled, sold, distributed or provided, or under
active development by the Forged Products Division of Old DI
(including all future developments in and improvements on such
products and services), immediately prior to the effective time
of the merger contemplated by the Merger Agreement in any part of
the world or (ii) offer or provide employment to, interfere with
or attempt to entice away from either of the Companies, either on
a full-time or part-time or consulting basis, any person who then
currently is, or who within one year prior thereto had been,
employed by DI, Old DI or CTC (other than employees of the Forged
Products Division of Old DI); provided, however, that this
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provision shall not be construed to prohibit the ownership by
Xxxxxxxx of not more than 2% of any class of securities of any
corporation which is engaged in any of the foregoing businesses
that has a class of securities registered pursuant to the
Securities Exchange Act of 1934. If Xxxxxxxx'x spouse engages in
any of the restricted activities set forth in the preceding
sentence, Xxxxxxxx shall be deemed to have indirectly engaged in
such activities in violation of this covenant.
8. REMEDIES. Xxxxxxxx acknowledges that a breach of
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the provisions of Section 7 or Section 8 will cause irreparable
damage to the Companies, the exact amount of which will be
difficult or impossible to ascertain, and that Companies'
remedies at law for any such breach will be inadequate.
Accordingly, upon a breach of the covenants and agreements
contained in Section 7 or Section 8, the Companies shall be
entitled to injunctive or other equitable relief, without posting
bond or other security. Xxxxxxxx shall be liable for any
monetary damages awarded by a court of competent jurisdiction to
either of the Companies as the result of any breach or violation
of the provisions of this Agreement, such liability to be borne
in accordance with the judgment of such court.
9. NON-COMPETE TERM. The term of this Agreement with
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respect to which the covenants in Sections 7 and 8 shall remain
in effect (the "Non-Compete Term") shall begin on the date hereof
and shall extend for five years thereafter, ending on the fifth
anniversary of such date.
10. NOTICES. Any notice, request, demand, waiver,
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consent, approval or other communication which is required or
permitted to be given to any party hereunder shall be in writing
and shall be deemed given only if delivered to the party
personally or sent to the party by overnight courier or facsimile
transmission or by registered or certified mail (return receipt
requested) with postage and registration or certification fees
thereon prepaid, addressed to the party at the address set forth
below:
(a) If to DI or CTC, to:
Xxxxxxxxx Technology Corporation
000 Xxxx Xxxx Xxxxxx
P. O. Box 14662
Reading, PA 19612-4662
Attention: Xxxx X. Xxxxx,
Vice President & General
Counsel
Fax Number: 000-000-0000
(b) If to Xxxxxxxx, to:
Xx. Xxxxx X. Xxxxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
or to such other person or address as either party shall furnish
to the other party in writing. All notices required or permitted
hereunder shall be deemed duly given and received on the second
day next succeeding the date of mailing if sent by certified or
registered mail and on the next day if delivered by overnight
courier.
11. SEVERABILITY. If any term or provision of this
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Agreement or the application thereof to any person or
circumstance shall, to any extent, be held invalid or
unenforceable by a court of competent jurisdiction, the remainder
of this Agreement or the application of any such term or
provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected
thereby, and each term and provision of this Agreement shall be
valid and enforceable to the fullest extent permitted by law. If
any of the provisions contained in this Agreement shall for any
reason be held to be excessively broad as to duration, scope,
activity or subject, it shall be construed by limiting and
reducing it, so as to be valid and enforceable to the extent
compatible with the applicable law or the determination by a
court of competent jurisdiction.
12. UNCONDITIONAL OBLIGATIONS. This Agreement
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establishes and vests in Xxxxxxxx a contractual right to the
benefits to which he is entitled hereunder. Except in the event
of a material breach by Xxxxxxxx of the covenants and
undertakings in Sections 7 and 8 hereof, the Companies'
obligations under this Agreement shall be absolute and
unconditional, and shall not be affected by any circumstances,
including, without limitation, any offset, counterclaim,
recoupment, defense, or other right which the Companies or their
affiliates may have against Xxxxxxxx or any other party. Each
and every payment made hereunder by the Companies shall be final,
and the Companies shall not seek to recover all or any part of
such payment from Xxxxxxxx or from whomsoever may be entitled
thereto, for any reasons whatsoever.
13. JOINT AND SEVERAL OBLIGATIONS. Notwithstanding any
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provision of this Agreement to the contrary, the Companies shall
be jointly and severally liable to Xxxxxxxx and his heirs or
estate for all payment obligations under this Agreement.
14. BINDING EFFECT. This Agreement shall be binding
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upon and inure to the benefit of the heirs and representatives of
Xxxxxxxx and the successors and assigns of the Companies. CTC
and DI shall each require any successor (whether direct or
indirect, by purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation, or otherwise) to
all or a significant portion of their respective assets, by
agreement in form and substance satisfactory to Xxxxxxxx,
expressly to assume and agree to perform this Agreement in the
same manner and to the same extent that CTC or DI, as the case
may be, would be required to perform this Agreement if no such
succession had taken place. Regardless whether such agreement is
executed, this Agreement shall be binding upon any successor of
CTC or DI in accordance with the operation of law and such
successor shall be deemed "CTC" or "DI", as the case may be, for
purposes of this Agreement.
15. MISCELLANEOUS PROVISIONS.
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(a) This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania without regard to its choice of law doctrine.
(b) This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an
original, but which together shall constitute one and the same
instrument.
(c) This Agreement constitutes the entire
agreement with respect to the subject matter hereof between the
parties hereto and replaces and supersedes as of the date hereof
and all prior oral or written agreements and understandings
between the parties hereto. This Agreement may be modified only
by an agreement in writing executed by the Companies and
Xxxxxxxx.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
XXXXXXXXX TECHNOLOGY CORPORATION
By:_____________________________
Title:
DYNAMET INCORPORATED
By:_____________________________
Title:
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Xxxxx X. Xxxxxxxx
