Noncompetition Agreement
October 28, 1998
Special Metals Corporation
0000 Xxxxxx Xxxxxxxxxx Xxxx
Xxx Xxxxxxxx, XX 00000
Dear Sirs:
As you know, Inco Limited ("Inco") has for many years conducted its
nickel alloys business through a number of subsidiaries. This business currently
consists of the development, manufacture and marketing of high-performance
nickel- containing alloys, wrought nickel products (including anodes) ("Wrought
Products"), electroformed nickel foil and electroformed nickel strip except
electroformed nickel foil for solar-power or any other power panel applications,
mechanically alloyed powders except powders that would represent Battery Grade
Material (as defined below) or powders which would be used in any flake form,
and the operation of subsidiary wire drawing and processing facilities, welding
product manufacturers and distributors (the "Current Business").
By virtue of its relationship with the Current Business, Inco has
obtained know-how and other confidential or proprietary information regarding
the Current Business which is not available to unrelated parties; Inco
acknowledges that the covenants contained in this Agreement are essential to
protect the value of the Current Business being acquired by Special Metals
Corporation.
In connection with your purchase of the Current Business pursuant to
the Stock Purchase Agreement dated as of July 8, 1998, as amended as of October
28, 1998, between Inco, Special Metals Corporation and certain other parties
referred to therein (the "Stock Purchase Agreement"), Inco agrees that, in
consideration for (a) your payment to Inco of $20 million in cash to be paid at
the Closing and (b) your issuance to Inco of the Preferred Shares in accordance
with, and as defined in, the Stock Purchase Agreement, it will not (and will not
permit its subsidiaries or any other company or other entity it controls (as
defined below) (a "Controlled Affiliate") to), for a period of ten years from
the Closing Date under the Stock Purchase Agreement, directly or indirectly,
anywhere in the word, engage in the business of manufacturing, developing,
marketing, distributing or selling the same or substantially similar types of
nickel-containing alloy products, Wrought Products, electroformed nickel foil
and electroformed nickel strip (excluding electroformed nickel foil for
solar-power or any other power panel applications), mechanically alloyed powders
except powders that would represent Battery Grade Material (as herein defined),
wire or welding products, in each case as currently manufactured by the Current
Business for the same or similar markets in and to which the Current Business
currently markets its products. However, nothing in this
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Agreement, including the non-competition covenant in the preceding sentence,
shall affect, limit or restrict in any way the business, operations or products
which have been developed and/or are currently being marketed, distributed or
sold, or are under development as of the date hereof or may be developed in the
future, by Inco or any subsidiary of Inco (other than by any subsidiary which as
of the date hereof is part of the Current Business) or any Controlled Affiliate
in respect of their continuing businesses and operations that are not part of
the Current Business, including, but not limited to, their worldwide primary
metals business, which includes the development, production, marketing,
distribution and sale of nickel, copper, precious metals, cobalt, and their
respective nickel and other metals smelting and refining businesses, as well as
the development, production, marketing, distribution and sale of (1) any forms
of pellet or electronickel strip material currently marketed, distributed or
sold or to be developed by Inco or any of its subsidiaries or Controlled
Affiliates which has competed in any way, or may directly or indirectly compete,
with any Wrought Products, (2) any metal matrix composites with aluminum and
nickel, zinc and nickel or with any other metals, (3) any metal products in
foam, felt or fiber form, whether graphitic or non-graphitic in nature or in any
way organic, (4) any foundry additive products or master alloys, including those
marketed or sold under the registered or unregistered trademarks INCOMAG #1,
INCOMAG 3LC, INCOCAL 10 as well as F shot, (5) any product in foam, felt or
fiber form or particulate which is coated with or converted into nickel or
nickel alloys during any processing, (6) any metal- containing material
developed for use in any automotive or other vehicle, industrial or dry cell
battery or other power source applications ("Battery Grade Material") and (7)
sulphuric acid and liquid sulphur dioxide.
In addition, from the Closing Date under the Stock Purchase Agreement
until the fifth anniversary of the Closing, Inco shall not, and shall not permit
any of its subsidiaries to, directly or indirectly, anywhere in the world, (i)
license or permit any person or entity to use confidential or proprietary
information or trade secrets currently used by the Current Business or (ii)
employ or solicit to hire, or otherwise receive the services of, any Employee
(as defined in the Stock Purchase Agreement) (x) so long as such Employee is
employed by the Current Business and (y) within six months after the termination
of such employment of such Employee; provided that general solicitation not
specifically directed at any such Employee by a disinterested third party
through published notices, advertisements or the like shall not be considered a
violation of this paragraph.
In the event this Agreement is held to be in any respect an
unreasonable restriction upon Inco or any of its subsidiaries or Controlled
Affiliates by any court having competent jurisdiction, the court so holding may
reduce the territory to which this Agreement pertains and/or the period of time
for which it is intended to operate, or effect any other change to the extent
necessary to render this Agreement enforceable by such court. As so modified,
this Agreement will continue in full force and effect. Such a decision by any
such court shall not invalidate this
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Agreement, but this Agreement shall be interpreted, construed and enforced as
not containing such invalidated provision.
For purposes of this Agreement, (i) a "subsidiary" of any entity shall
mean any corporation or other entity of which at least a majority of the
outstanding stock voting power under ordinary circumstances to elect a majority
of the board of directors of such entity shall at the time be beneficially owned
by such entity or by such entity and one or more subsidiaries or by one or more
subsidiaries and (ii) "controls" means the exercise of the power, through
ownership of voting securities or other interests, by contract or otherwise, to
direct or cause the direction of the businesses that such entity will engage in.
If this Agreement is subject to registration under the Restrictive
Trade Practices Act of 1976, none of the parties to this Agreement who carry on
business within the United Kingdom should give effect to, or enforce or purport
to enforce, this Agreement until the day after particulars of the Agreement have
been furnished to the Director General of Fair Trading under Section 24 of such
Act.
The parties agree that a remedy at law for any breach of any obligation
under this Agreement will be inadequate and that in addition to any other rights
and remedies to which they may be entitled hereunder, at law or in equity,
Special Metals Corporation shall be entitled to injunctive relief and
reimbursement for all reasonable attorney's fees and other expenses incurred in
connection with the enforcement hereof.
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario; shall be binding upon and enure to the
benefit of the parties hereto and their respective successors and assigns;
contains the entire understanding of the parties hereto in respect of the
subject matter contained herein; and may be signed in one or more counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
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Please confirm our agreement by signing and returning the enclosed copy
of this letter whereupon such letter will constitute a binding agreement between
us.
Yours truly,
INCO LIMITED
By: ____________________________
Its: ___________________________
Accepted and Agreed
SPECIAL METALS CORPORATION
By: _____________________________
Its: ____________________________
Date: ___________________________
