EXHIBIT 10.18
CONSULTING, NON-COMPETITION AND
CONFIDENTIALITY AGREEMENT
This Consulting, Non-Competition and Confidentiality Agreement (the
"AGREEMENT") is made as of the 5th day of November 2004 (the "EFFECTIVE DATE"),
by and between Xxxxxxx Xxxxxx ("HARCKE") and Xxxxxx Wire Company, a Delaware
corporation ("BUYER").
PRELIMINARY STATEMENT
Prior to the date hereof, Sellers have engaged in the business of
owning and operating a wire manufacturing business (the "BUSINESS"). This
Agreement is made in connection with and as a condition to consummation of the
transactions contemplated by a certain Asset Purchase Agreement dated October
28, 2004, by and among Harcke, The Branford Wire and Manufacturing Company, a
Connecticut corporation ("BRANFORD"), Carolina Industries, Inc. a Connecticut
corporation ("CAROLINA INDUSTRIES") (Branford and Carolina Industries together,
"SELLERS") and Buyer (the "ASSET PURCHASE AGREEMENT"). Under the terms of the
Asset Purchase Agreement, Buyer has agreed to purchase, and Sellers have agreed
to sell, the assets used in Sellers' operation of the Business. Harcke has
acquired extensive knowledge about the conduct of the Business as the owner and
operator of Sellers. This Agreement is entered into between Buyer and Harcke to
protect the goodwill of the Business that is being sold to Buyer by Sellers and
to protect against unfair competition by Harcke. All capitalized terms not
herein defined have the meaning ascribed to them in the Asset Purchase
Agreement.
AGREEMENT
In consideration of the premises and mutual covenants contained in this
Agreement and as an inducement to Buyer to enter into the Asset Purchase
Agreement, the parties hereby agree as follows:
I. CONSULTING
A. SERVICES. For a period of six (6) months from the Effective Date,
Harcke will, at the request of the officers of Buyer from time to time, provide
consulting services to Buyer or any affiliate of Buyer with respect to all
aspects of the Business, including without limitation the provision of advice on
business strategy and operations for the Business and management advice and
consultation to the officers of Buyer (collectively, the "SERVICES"). Harcke
shall provide the Services at such times as may be reasonably requested by
Buyer.
II. NON-COMPETITION
A. AGREEMENT NOT TO COMPETE. To protect Buyer's interest in the
goodwill acquired by Buyer from Sellers and to prevent unfair competition, for a
period of seven (7) years from the Effective Date (the "RESTRICTED PERIOD"),
except as provided in SECTION II(A) and subject to the geographical limitations
set forth in SECTION II(B), Harcke shall not:
1. Engage in any activity directly or indirectly, as an owner,
consultant, independent contractor or otherwise in the Business or any
related business that is competitive with Buyer, including without
limitation any activity that is necessary or incident to the conduct of
the Business or any related business in a manner similar to any of the
business practices engaged in by either Seller during Harcke's
ownership and operation of such Seller; provided, however, nothing
contained in this Agreement shall prevent either Seller from continuing
to sell the Excess Inventory (as such term is defined in the Asset
Purchase Agreement);
2. Perform, on behalf of himself or any person or entity, the
same or similar services as those performed by Harcke for either Seller
prior to the date of this Agreement;
3. Hire or employ or attempt to hire or employ any person who
on or after the date hereof, is an employee, manager, or officer of
Buyer (each, an "EMPLOYEE"), or in any way cause or assist or attempt
to cause or assist, or, directly or indirectly, seek to solicit,
induce, bring about, influence, promote, facilitate, cause, assist or
encourage any Employee to leave Buyer's employ or to accept employment
with or otherwise perform services for on or on behalf of any person or
entity that engages in, or otherwise competes with, the Business or any
related business ("COMPETITOR"); or
4. Contact any customers or suppliers of Buyer, either
directly or indirectly, for himself or for others, so as to (i)
directly or indirectly divert or influence or attempt to divert or
influence any business of Buyer to a Competitor, or (ii) directly or
indirectly solicit or provide services similar to those provided by
Buyer, or (iii) otherwise directly or indirectly interfere in any
fashion with Buyer's relationship with such customers or suppliers, or
with the business or operations then being conducted by Buyer.
B. GEOGRAPHICAL LIMITATIONS. The restrictions set forth in SECTION
II(A) in this Agreement shall be applicable to the following geographic areas
that can be enforced against Harcke during the Restricted Period:
1. In North America;
2. In the United States of America;
3. In each State in which Sellers previously had operations
and/or conducted significant activities relating to the Business, and
all contiguous states;
4. In the State of North Carolina;
5. In Xxxxxxxxx County, North Carolina, and all contiguous
counties; and
6. Within a fifty (50) mile radius of any location at which
Sellers conducted the Business.
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III. CONFIDENTIALITY
A. CONFIDENTIAL INFORMATION DEFINED. "CONFIDENTIAL INFORMATION" as used
in this Agreement shall mean, collectively, any and all data and information
about Buyer's or Sellers' businesses including, but not limited to (i) all
information relating to selling or financing processes, specifications and
procedures relating to the Business; (ii) customer lists and other
customer-related information including names, addresses, specifications or
requirements, purchase or delivery quantities, lines of credit, and delivery,
financing, and auction schedules; (iii) supplier lists; (iv) marketing plans and
concepts; and (v) sales, costs, profits, profit margins, salaries and other
financial information pertaining to Buyer or either Seller; provided, however,
that "Confidential Information" shall in no event include data or information
that (a) was available to the public prior to the date hereof or (b) becomes
available to the public other than as a result of disclosure by Harcke in
violation hereof.
B. USE OR DISCLOSURE OF CONFIDENTIAL INFORMATION. Throughout the
Restricted Period, Harcke agrees to (i) keep confidential and not to disclose to
anyone except the authorized representatives of Buyer all Confidential
Information; and (ii) refrain from using such Confidential Information in any
manner adverse to the interests of Buyer.
C. RECORDS AND COPIES. Any and all records and copies of records
pertaining to the Confidential Information that were or are made or received by
either Seller or Harcke shall be kept confidential and Harcke shall not disclose
any such records or copies of records to anyone except Buyer and its authorized
representatives. All records and copies of records of Buyer are and shall remain
the property of Buyer and shall be subject to Buyer's custody and control.
IV. COMPENSATION
A. COMPENSATION. In full payment and satisfaction for the Services and
Harcke's agreements and understandings in SECTIONS I and II and subject to the
terms and conditions of this Agreement, Buyer shall compensate Harcke as
follows:
1. Buyer shall pay Harcke seven (7) equal annual installments
of $110,000.00 each. The first installment shall be paid on the
Effective Date and one (1) additional installment shall be paid on each
of the first six (6) anniversaries of the Effective Date; provided that
Buyer shall not be required to make any payment due on any anniversary
following a breach by Harcke of his obligations under SECTIONS I or II
of this Agreement. At any time on or after April 1, 2005, Buyer shall,
upon three (3) Business Days written request from Harcke, escrow the
remaining $660,000 of installments to be paid in exchange for Harcke's
performance under this Agreement with Investors Bank and Trust Company.
In the event that Harcke requests that Buyer provide the escrow as set
forth above and Buyer does not provide such escrow, this Agreement
shall automatically terminate, including all obligations of Harcke not
to compete under ARTICLE II and of Buyer to make payments to Harcke
under this ARTICLE IV.
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2. For a period of three (3) years following the Effective
Date, Buyer shall provide Harcke with office space at the facilities of
Buyer located at 000 X. Xxxxxxx Xxxx, Xxxxxxxx Xxxx, Xxxxx Xxxxxxxx
00000, as the parties shall mutually agree.
3. During the Restricted Period, Buyer shall provide Harcke
and his spouse with medical benefits comparable to those previously
provided to Harcke and his spouse by Sellers.
V. GENERAL PROVISIONS
A. REMEDIES. Harcke acknowledges and agrees that any violation by
Harcke of this Agreement will cause Buyer to suffer irreparable harm for which
Buyer will not have any adequate remedy at law. Therefore, if Harcke threatens
to violate or violates any provision of this Agreement, Buyer shall be entitled
to injunctive relief without bond, including, but not limited to, temporary
restraining orders and/or preliminary or permanent injunctions, to restrain or
enjoin any violation or threatened violation of this Agreement. Buyer's right to
injunctive relief shall be in addition to, and not in lieu of, any other legal
or equitable remedies that may be available to Buyer, including but not limited
to monetary damages to the extent they are calculable, including lost profits.
B. CLAIMS BY HARCKE. Any claim or cause of action by Harcke against
Buyer shall not constitute a defense to the enforcement of the restrictions and
covenants set forth in this Agreement and shall not be used to prohibit
injunctive relief.
C. GOVERNING LAW; JURISDICTION AND VENUE. This Agreement shall be
construed and enforced in accordance with, and governed by, the Laws of the
State of Indiana (without giving effect to the principles of conflicts of Laws
thereof). The parties hereto irrevocably agree and consent to the non-exclusive
jurisdiction of the courts of the State of Indiana and the federal courts of the
United States, sitting in Indianapolis, Indiana for the adjudication of any
matters arising under or in connection with this Agreement.
D. COSTS AND ATTORNEYS' FEES. In the event any party brings suit to
construe or enforce the terms hereof, or raises this Agreement as a defense in a
suit brought by another party, the prevailing party shall be entitled to recover
its reasonable costs and expenses, including, without limitation, reasonable
attorneys' fees incurred by that party in enforcing the terms and conditions of
this Agreement.
E. SEVERABILITY. Harcke acknowledges and agrees that the restrictions
contained in this Agreement are reasonable and necessary to safeguard the
protectable interests of Buyer. If, notwithstanding such acknowledgement and
agreement, any clause, portion, section, restriction or paragraph of this
Agreement is determined to be unreasonable, unenforceable or invalid for any
reason, such determination shall not affect the enforceability or validity of
the remainder of this Agreement, and the unreasonable, unenforceable or invalid
provision shall be deemed amended and modified and shall be given effect and
enforced to the maximum extent that is determined to be reasonable and
enforceable.
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F. ENTIRE AGREEMENT, MODIFICATIONS, INTERPRETATION. This Agreement
constitutes the entire agreement by and between Buyer and Harcke with respect to
the matters addressed herein and shall supersede all prior and contemporaneous
agreements, representations, and understandings whether written or oral, with
respect to such obligations. No amendment to or modification of this Agreement
shall be effective unless the amendment or modification is in writing and signed
by the parties. This Agreement shall be construed as a whole, according to its
fair meaning, and not strictly construed for or against either party.
G. SUCCESSORS AND ASSIGNS. Neither party hereto shall assign or
delegate this Agreement or any rights or obligations hereunder without the prior
written consent of the other party hereto, and any attempted assignment or
delegation without prior written consent shall be void and of no force or
effect; provided, however, Buyer may without consent assign this Agreement and
all of its rights and delegate its obligations hereunder to an affiliate of
Buyer or to any person or entity who shall acquire all or substantially all of
the assets of Buyer. This Agreement shall inure to the benefit of and shall be
binding upon the successors and permitted assigns of the parties hereto.
H. NON-WAIVER. No act or omission by Buyer shall be deemed a waiver by
Buyer of any of Buyer's rights under this Agreement. Therefore, the failure of
Buyer to enforce any restriction against Harcke or to seek a different remedy
shall not be construed as a waiver or estoppel to the enforcement of the
restrictions against Harcke.
I. NOTICES. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission, with confirmation of successful
transmission, and mailed (first class postage prepaid) to the parties at the
following addresses or facsimile numbers:
If to Buyer: Xxxxxx Wire Company
0000 Xxxx Xxxx Xxxxxx
X.X. Xxx 0000
Xxxxxx, XX 00000-0000
Tel. No. (000) 000-0000
Fax. No. (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, President and CEO
With a copy to: Ice Xxxxxx
Xxx Xxxxxxxx Xxxxxx, Xxx 00000
Xxxxxxxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx
If to Harcke: Xxxxxxx Xxxxxx
000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Tel. No. 000-000-0000
Fax No. 000-000-0000
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J. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, and all such counterparts taken together shall constitute one and the
same instrument. Signatures on this Agreement may be communicated by facsimile
transmission and shall be binding upon the parties transmitting the same by
facsimile transmission. Counterparts with original signatures shall be mailed to
the other parties within three (3) calendar days of the applicable facsimile
transmission; PROVIDED, that the failure to provide the original counterpart
shall have no effect on the validity or the binding nature of this Agreement.
[SIGNATURES ON FOLLOWING PAGE]
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THE PARTIES HERETO ACKNOWLEDGE THAT THEY HAVE READ THIS AGREEMENT,
UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS TERMS. They further acknowledge that
they have exercised due diligence in reviewing this Agreement, and that each has
had adequate opportunity to consult with legal counsel or other advisors to the
extent that each deemed such consultation necessary.
IN WITNESS WHEREOF, Buyer and Harcke have executed this Agreement
effective for all purposes as of the Effective Date.
"BUYER" "HARCKE"
XXXXXX WIRE COMPANY
By: /s/Xxxxxx Xxxxxx By: /s/Xxxxxxx Xxxxxx
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Xxxxxx Xxxxxx, Vice President-Finance, Xxxxxxx Xxxxxx
Chief Financial Officer and Treasurer
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