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CONFIDENTIALITY/NONCOMPETITION AGREEMENT
THIS CONFIDENTIALITY/NONCOMPETITION AGREEMENT ("Agreement") is made this
27th day of October, 1997 by and between ELECTRONIC DESIGNS, INC., a corporation
organized and existing under the laws of the State of Delaware with its
principal place of business at Xxx Xxxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx
("Seller"), and ADVANCED REFRACTORY TECHNOLOGIES, INC., a corporation organized
and existing under the laws of the State of New York with its principal place of
business at 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx ("Buyer").
WHEREAS Buyer and Seller are parties to that certain Asset Purchase
Agreement, dated as of October 27, 1997 ("Asset Purchase Agreement"), pursuant
to which Buyer purchased from Seller the Purchased Assets (as defined in the
Asset Purchase Agreement); and
WHEREAS, as an inducement to Buyer to purchase the Purchased Assets,
Seller agrees to refrain from competition with Buyer and to maintain the
confidentiality of the Confidential Information (as hereinafter defined), upon
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of Buyer entering into the Asset Purchase
Agreement, the covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby expressly
acknowledged, the parties hereto (individually, a "Party,"; collectively, the
"Parties") hereby agree as follows:
1. Noncompetition.
a. Scope - Seller agrees that, for a period of Seven (7) years after
the date of this Agreement ("Noncompetition Term"), neither Seller nor any
Affiliate (as defined in the
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Asset Purchase Agreement) of Seller shall, directly or indirectly, for its own
account or for the account of any third party (as owner, proprietor,
shareholder, joint venturer, partner, principal, consultant, agent or
otherwise):
(1) engage in or with or take part in, or own, operate,
manage, control, affiliate with, be employed by, provide
services to or otherwise participate in any way in the
business of, share in the earnings of or invest in the
stock, bonds or other securities of, any person,
corporation or other entity engaged in any way, directly
or indirectly, in any business competitive with or
substantially similar to the Crystallume Business (as
defined in the Asset Purchase Agreement);
(2) publish or disclose to any third party, the names of
any past or present customers of the Crystallume
Business;
(3) solicit for employment or employ any individual who
on the date of this Agreement is or thereafter
becomes an employee of Buyer; or
(4) with respect to any past or present customer of Seller's
Crystallume Business, either solicit the same in any
manner which could adversely affect Buyer in any way or
make statements to the same which disparage Buyer or its
operations in any way.
b. Limitation - If, prior to the expiration of the Noncompetition
Term, Seller or any Affiliate of Seller shall propose to engage in any of the
activities described in Section
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1a(1) of this Agreement, then, Seller shall provide Buyer with Thirty (30) days
written notice prior to the commencement of any such competitive activity
("Commencement Date"), which notice shall describe such proposed competitive
activity in reasonable detail. Upon commencement of any such competitive
activity: (a) the restrictions upon Seller and Seller's Affiliates contained in
Section 1a(1) of this Agreement, and only such restrictions, shall terminate;
(b) Seller shall refund to Buyer the excess of: (1) the sum of all Installments
and all interest paid by Buyer, through the Commencement Date pursuant to that
certain Royalty Agreement by and between Buyer and Seller, dated of even date
herewith ("Royalty Agreement"), over (2) the aggregate of all Royalties earned
by Seller pursuant to the Royalty Agreement through the Commencement Date; (c)
any unpaid Installment, including interest, whether or not accrued, shall then
be immediately cancelled; and (d) the Royalty Agreement shall terminate.
2. Acknowledgments and Agreements. Seller acknowledges and agrees
that:
a. Valuable Consideration - The covenants and agreements of Seller
herein have been given for adequate and valuable consideration.
b. Necessary Protection - The restrictions and prohibitions
contained in this Agreement as to Seller are fair and reasonable in scope,
duration, geographic limitation and in all other respects, are necessary for the
protection of the legitimate business and commercial interests of Buyer, and
that the scope of such protection has been carefully considered by the Parties.
3. Confidential Information.
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a. Access - Seller hereby acknowledges and agrees that it has had
access to or is aware of certain confidential and/or proprietary information (as
hereinafter defined in this Section 3 in more detail) concerning the operation
of the Crystallume Business, the ownership or use of any of the Purchased
Assets, or the affairs of Seller. Seller hereby undertakes and agrees that it
shall have a duty to Buyer to protect such information from use or disclosure,
as provided in this Section 3.
b. Definitions - For purposes of this Agreement, "Confidential
Information" shall mean any and all data or information which is regarded (or
should be regarded) as confidential and/or proprietary by Seller or which is
otherwise material to the operation of the Crystallume Business, the ownership
or use of any of the Purchased Assets or the affairs of Seller. "Confidential
Information" includes, without limitation, data, formulas, compositions,
processes, descriptions, plans, specifications, reports, studies, findings,
inventions, concepts, ideas, products, product designs, business records,
customer information, pricing information, financial information, costs, supply
information, computer programs, licenses, patent applications, trade secrets,
know-how, techniques, testing and other methods and techniques, marketing/sales
strategies, plans and promotions and any other intellectual property rights of
any kind, whether or not patentable or copyrightable. "Confidential Information"
also includes, without limitation, any and all forms, sketches, graphs,
equipment, drawings, photographs, designs, specifications, formulations,
flowsheets, descriptions, data, samples and other tangible materials, as well as
any and all observations, oral disclosures and any other information (in
whatever form) which may be perceived, reproduced, transmitted or communicated.
"Confidential Information" shall not include information which:
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(1) was or is generally known to the public or becomes
generally known to the public through no act, failure to
act or breach on the part of Seller in violation of this
Agreement. (To the extent that Confidential Information
consists of a combination of elements individually known
to the public, this exclusion shall not apply if such
elements are not generally known to the public in such
combination);
(2) was or is rightfully furnished to Seller by a third
party without breaching any agreement, understanding or
confidential relationship with Buyer; or
(3) is required to be disclosed by Seller by judicial action
pursuant to an order of a Government Authority (as
defined in the Asset Purchase Agreement) having
jurisdiction thereof.
c. No Use - Seller shall not have any right of any kind to use any
Confidential Information in any way, except financial information relating to
the Crystallume Business used in the preparation of Seller's tax returns as
required by federal and state law.
d. Duty - Seller hereby agrees to: (1) maintain the Confidential
Information in strict secrecy so as to protect the confidential and proprietary
nature of the Confidential Information and to assure complete adherence to this
Agreement by Seller and Seller's Affiliates and their respective officers,
directors, shareholders, employees and representatives; and (2) not publish or
disclose the Confidential Information in any manner or form to any third party
for any reason.
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e. Legal Disclosure - In the event disclosure of any Confidential
Information is required by any legal or regulatory statute, rule, order or
regulation ("Legal Order"), Seller shall provide Buyer with immediate written
notice of same so that Buyer may seek an appropriate protective order or other
remedy. In return, Buyer shall be required to provide Seller with prompt written
notice of its decision as to whether it will seek an appropriate protective
order or other remedy. In the event Buyer notifies Seller of its decision not to
seek a protective order or other remedy, Seller shall have the right to disclose
the Confidential Information required pursuant to the Legal Order, and Seller
shall be required to exercise its commercially reasonable best efforts to obtain
assurance that confidential treatment shall be afforded the Confidential
Information. If Buyer notifies Seller of its decision to seek a protective order
or other remedy, Seller, to the extent reasonably practical, shall not disclose
any part of the Confidential Information pending conclusion of any legal
proceedings regarding such disclosure. In the event that such protective order
or other remedy is not obtained, Seller shall disclose only such part of the
Confidential Information as is specifically required by the terms of the Legal
Order, and Seller shall exercise its commercially reasonable best efforts to
obtain assurance that confidential treatment shall be afforded the Confidential
Information.
4. Reformation. If any provision of this Agreement or the application
thereof to Seller shall, to any extent, be declared invalid or unenforceable,
the remainder of this Agreement or the application of such provision to
circumstances other than those to which it is held invalid or unenforceable
shall not be affected thereby, it being the agreement of the Parties that all
provisions of this Agreement shall be valid and enforceable to the fullest
extent permitted by law. Without limiting the generality of the immediately
preceding sentence, the Parties agree that in
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the event any provision hereof shall be declared invalid or unenforceable
because it extends for too long a period of time or over too great a range of
activities or in too broad an area, it shall be interpreted to extend only over
the maximum period of time, range of activities or geographic areas as to which
it may be enforceable.
5. Remedies.
a. Equity - Seller acknowledges and agrees that in the event of a
breach or threatened breach of any covenant by it herein, irreparable harm will
result to Buyer and its business for which there is no adequate remedy at law,
and Seller agrees that in the event of any such breach or threatened breach,
Buyer shall be entitled, in addition to all other applicable remedies, to
specific performance of the terms of this Agreement and immediate injunctive
relief restraining Seller from activity constituting such breach or threatened
breach; provided, however, that the foregoing equitable remedies shall not apply
in the event of a breach by Seller of the agreement of Seller in Section 1a(1)
herein. Seller further agrees that in the event of such breach or threatened
breach, Seller shall reimburse Buyer for any and all costs and expenses,
including, without limitation, attorneys' fees and costs, incurred by Buyer in
enforcing any provisions of this Agreement. Nothing herein shall be construed as
prohibiting Buyer from pursuing any other remedies available to it for breach or
threatened breach of this Agreement, including, without limitation, the recovery
of damages from Seller.
b. Cumulative - No right or remedy herein conferred upon or reserved
to Buyer is exclusive of any right or remedy herein or permitted by law or
equity, but each shall be cumulative of every other right or remedy given
hereunder or now or hereafter existing at law or
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in equity (or by statute or otherwise), and may be enforced concurrently
therewith or from time to time and as often as may be deemed expedient or
necessary by Buyer, in its sole discretion.
6. Survivability. Notwithstanding anything contained to the contrary in
this Agreement, in the Asset Purchase Agreement or in any other Covered
Agreement (as defined in the Asset Purchase Agreement), all representations,
warranties and agreements contained herein shall survive and continue to bind
the Parties after the execution and delivery of this Agreement, the expiration
of this Agreement, and any investigation conducted by either Party, to the
extent and for as long as may be necessary to give effect to the rights, duties
and obligations of the Parties pursuant to this Agreement, subject to any
applicable statute of limitations.
7. Entire Agreement. This Agreement constitutes the entire agreement by
and between the Parties regarding the subject matter contained herein and
supersedes all prior and contemporaneous undertakings and agreements by and
between the Parties, whether written or oral, with respect to such subject
matter.
8. Amendment. This Agreement shall not be amended except by a writing
executed by both Parties.
9. Parties Bound. This Agreement shall be binding upon and shall inure to
the benefit of the Parties and their respective successors and permitted
assigns, subject to the restrictions against assignment provided in Section 10.
10. Assignment. This Agreement shall not be assignable by Seller without
Buyer's prior written consent; provided, however, that EDI shall have the right,
without obtaining ART's prior written consent but upon prior written notice to
ART, to assign all of its rights, duties and obligations under this Agreement to
a Surviving Entity (as hereinafter defined), if: (a) through an
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acquisition or merger (a "Corporate Event"), EDI is acquired by, or is merged
with and into, an entity ("Surviving Entity") which after such Corporate Event
will have revenues, net income and net assets at least equal to those of EDI at
the time of such Corporate Event; and (b) the Surviving Entity assumes all of
EDI's duties and obligations under each of the Covered Agreements. Buyer shall
have the right, without obtaining Seller's prior written consent, upon prior
notice to Seller, to assign its rights under this Agreement. Notwithstanding
anything to the contrary contained herein, no assignment of any rights, duties
or obligations under this Agreement relieves the assigning Party of primary
liability for its duties and obligations under this Agreement, and as between
the Parties, the assigning Party shall continue to be liable for all of its
duties and obligations under this Agreement as though no assignment has been
made.
11. Counterparts. This Agreement may be executed simultaneously in Two (2)
or more counterparts, any of which shall be deemed an original, and all of which
together shall constitute one and the same instrument, notwithstanding that both
Parties are not a signatory to the original or the same counterpart.
12. Headings. The headings used herein are inserted for convenience only
and are in no way intended to describe, interpret, define or limit the scope,
extent or intent of this Agreement.
13. Waiver. Failure by either Party to insist upon strict performance of
any provision herein by the other Party shall not be deemed a waiver by such
Party of its rights or remedies or a waiver by it of any subsequent default by
the other Party and no waiver shall be effective unless it is in writing and
duly executed by the Party entitled to enforce the provision being waived.
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14. Notices. All notices required or permitted hereunder shall be in
writing and shall be: (a) sent by telex or facsimile transmission (to be
effective when receipt is acknowledged unless sent after 5:00 p.m. on any
business day, in which event notice shall be deemed received on the next
business day); (b) personally delivered; (c) sent by certified mail, return
receipt requested; or (d) sent by a nationally recognized, commercial overnight
delivery service with provisions for a receipt, postage or delivery charges
prepaid, and, except as otherwise provided in Section 14(a), shall be deemed
given when personally delivered or when placed in the possession of such mail or
delivery service, and addressed to the Parties, as follows:
To Seller: Electronic Designs, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn.: Xxxxx X. Xxxxxxx, Senior Vice President
Facsimile no.: (000) 000-0000
with a copy to: Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn.: Xxxxxx X. Xxxxxx, P.C.
Facsimile no.: (000) 000-0000
To Buyer: Advanced Refractory Technologies, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attn.: Xxxxx X. Xxxxxxx, President
Facsimile no.: (000) 000-0000
with a copy to: Damon & Xxxxx LLP
0000 Xxxxxxxxx Xxxxx
000 Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Attn.: Xxxx X. Xxxxxxx, Esq.
Facsimile no.: (000) 000-0000
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Notice of change of address shall be given in accordance with the terms of this
Section 14 and shall be effective only upon receipt.
15. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York without giving effect
to the principles of conflicts of laws.
16. Cooperation. If at any time either Party reasonably requests that any
further agreement or assurance is reasonably necessary or desirable to fully
carry out the provisions of this Agreement and the transactions contemplated in
this Agreement, then the other Party shall execute and deliver, or cause to be
executed and delivered, any and all reasonably necessary agreements and
assurances, and do or cause to be done all things reasonably necessary or
desirable to fully carry out the provisions of this Agreement and the
transactions contemplated herein.
IN WITNESS WHEREOF, the Parties have caused this
Confidentiality/Noncompetition Agreement to be executed by their duly authorized
officers on the day and year first above written.
ELECTRONIC DESIGNS, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, Senior Vice President
ADVANCED REFRACTORY TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, President
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