EXHIBIT 10.4
NON-COMPETE AGREEMENT
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This Non-Compete Agreement, dated as of September 30, 1998 (the "Effective
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Date"), is among ▇▇▇▇▇ Corning, a Delaware corporation ("Seller"); AGY Holdings
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Corp., a Delaware corporation; and Porcher Industries S.A., a French corporation
(collectively, "Buyer"); and Advanced Glassfiber Yarns, LLC, a Delaware limited
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liability company ("Company").
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WHEREAS, pursuant to an LLC Interest Sale and Purchase Agreement, dated as
of July 31, 1998 (the "SPA"; capitalized terms not defined herein shall have the
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meanings ascribed to them in the SPA or the Patent and Know How License
Agreement, as applicable) among Seller, Company, and AGY Holdings, Inc. (as
assignee of Glass Holdings Corp. under an assignment and assumption agreement
dated as of September 30, 1998), AGY Holdings, Inc. agreed to purchase from
Seller a 51% membership interest ("Interest") in the Company; and
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WHEREAS, Buyer, Seller, and Company have agreed that under the terms and
conditions set forth below, neither Buyer nor Seller will compete with Company
in the manufacture and sale of certain Business Products.
NOW, THEREFORE, in consideration of the premises of and the mutual promises
and agreements in the SPA and contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. NON-COMPETE
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1.1 Acknowledgment
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Buyer and Seller acknowledge that the object of this Non-Compete Agreement
is to protect the Company and to preserve the value of the Business for the
Company and that the
execution of this Non-Compete Agreement by Buyer and Seller is a condition
precedent to the consummation of the purchase of the Interest by the Company, is
part of the consideration of the SPA, and is part of the consideration of this
Non-Compete Agreement.
1.2 Seller Covenant Not to Compete
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Seller hereby covenants and agrees that neither Seller nor any Affiliate of
Seller will:
(a) for the period ending on the later of five years from the Effective
Date or the first day on which the membership interest in the Company of either
Seller together with its Affiliates, or Buyer, together with its Affiliates, is
less than 5% (the "Non-Compete Term"), manufacture or sell:
(i) Business Products other than:
(x) products which are not mechanically twisted in a secondary
operation and have a linear density of a TEX value of
greater than or equal to 180 g/km;
(y) rubber reinforcement with a linear density of a TEX value of
greater than or equal to 100 g/km and a minimum nominal
filament diameter of 8.89 (micronage values herein shall
refer to maximum or minimum nominal values in common usage
in the industry, in this instance, a G filament); or
(z) products which are not mechanically twisted in a secondary
operation and have a linear density of a TEX value equal to
100 g/km for sale in South America;
(ii) S Glass or any product made of S Glass;
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(iii) any twisted and plied combination of polyester and glass
yarns; or
(iv) any air texturized glass fiber yarn having a filament or fiber
diameter having a minimum nominal diameter of less than 12.70(micro),
(collectively, "Restricted Products", provided that Restricted Products shall
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not be considered to include:
(x) any chopped fiber product made of any material other than S
Glass;
(y) intermediate products used to make products which are not
Business Products; or
(z) any product which incorporates the identified Business
Products with other materials);
(b) for a period of five years from the Effective Date, manufacture or
sell High Strength Glass;
(c) for the Non-Compete Term, own, manage, operate, control, or
participate financially or otherwise, directly or indirectly, in a business
manufacturing or selling Restricted Products; or
(d) for the Non-Compete Term, enter into an agreement with any other
Person to do any of the foregoing (collectively, the "Restricted Activities").
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The parties acknowledge and agree that any assignment of all or a portion of
Buyer's membership interest in the Company to one or more Financing Sources (as
defined in Section 3.4
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of this Non-Compete Agreement) shall in no event terminate this Agreement or
Buyer's or Seller's non-complete obligation as set forth in this Section 1.2.
1.3 Buyer Covenant Not to Compete
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Buyer hereby covenants and agrees that neither Buyer nor any Affiliate of
Buyer that receives, directly or indirectly from the Company, any Seller
Licensed Know How or Business Know How, will engage in any Restricted Activities
for the Non-Compete Term.
1.4 Exceptions
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(a) Neither Sections 1.2 and 1.3 nor any other provision of this Non-
Compete Agreement shall be construed to prevent or restrict Buyer or Seller
from, directly or indirectly through any Affiliate:
(i) acquiring any equity or other interest in any entity that
engages, directly or indirectly, in any Restricted Activities (a "Restricted
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Person"), so long as the purchase price for such Restricted Person is less than
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$150,000,000 and the annual revenue of such Restricted Person derived from such
Restricted Activities in the most recent fiscal year prior to the acquisition of
such equity or other interest does not exceed 10% of the total revenue of such
Restricted Person in such fiscal year and Buyer or Seller or such Affiliate of
Buyer or Seller, as the case may be, divests or ceases operation of such portion
of such Restricted Person as is engaged in Restricted Activities within 24
months after such acquisition; or
(ii) acquiring and holding any securities of any Restricted Person
which is publicly owned and traded, but only in an amount not to exceed at any
one time 5% of any class of securities of such Restricted Person.
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(b) Company acknowledges that:
(i) Seller and its Affiliates have entered into joint venture
relationships with the parties listed in Schedule A, and that such relationships
shall not be deemed a violation of Section 1.2, provided, however, that if
Seller or its Affiliates have or obtain control of such joint ventures, Seller
or its Affiliates shall require such joint venture to comply with Section 1.2 of
this Non-Compete Agreement, unless such action would breach an existing
contractual obligation of Seller, its Affiliates, or the joint venture; and
(ii) the acquisition of Buyer, Seller or an assignee of Buyer or
Seller by a Restricted Person, whether by purchase of stock or assets or by
merger, shall not be deemed a violation of Section 1.2, as long as: (a) such
Restricted Person shall agree to assume the obligations set forth herein; (b)
such Restricted Person shall divest or cease operation of such portion of such
Restricted Person as is engaged in Restricted Activities within twelve (12)
months after such acquisition and there is no transfer or communication of any
technology, proprietary information, or personnel between the Company and such
portion of such Restricted Person as is engaged in such Restricted Activities;
or (c) substantially all of the assets of such portion of such Restricted Person
as is engaged in Restricted Activities are contributed to the Company on terms
mutually acceptable to Company, Seller and Buyer.
(c) Seller's Affiliates may engage in Restricted Activities solely for the
purpose of fulfilling its obligations under the Guelph Facility Supply
Agreement, the ▇▇▇▇▇▇▇ Facility Supply Agreement, and the Transitional Services
Agreement, and that this Non-Compete Agreement shall not be construed to
prohibit Seller's Affiliates performance under those agreements.
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(d) Further, Company acknowledges that Seller and its Affiliates have
entered into license agreements with the parties listed in Schedule B, which
license agreements may be construed to license OC patents and/or know how rights
to those parties to make, use, or sell Business Products, and agrees that,
except as indicated on Schedule B, Seller shall have no obligation to seek to
modify such license agreements and the continued license of such rights shall
not be deemed a violation of Section 1.2. Notwithstanding this paragraph 1(d),
no Affiliate of Seller will be permitted to engage in any Restricted Activity
during the term of this Non-Compete Agreement.
1.5 Termination
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Unless otherwise agreed by the parties before such transfer, Seller's
obligations under this Non-Compete Agreement shall terminate immediately upon
the transfer by Company of any rights in any or all of the Business Patents,
Business Know How, Seller Licensed Patents or Seller Licensed Know or any
tangible assets of the Company that incorporate any of the foregoing to CSG or
any Affiliate thereof (unless Company believed in good faith, based upon
reasonable inquiry, that the transferee entity was not at the time of the
transfer an Affiliate of CSG); or (b) upon the Company becoming an Affiliate of
CSG: (i) by CSG acquiring a majority of the voting rights or the right to elect
a majority of the board of directors of the Company, Buyer or Porcher
Industries; or (ii) through actions directly initiated or directly facilitated
by the Company, Buyer or Porcher Industries.
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2. INJUNCTIVE RELIEF
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The provisions of Article 1 are reasonable and necessary to protect the
Company in the conduct and operation of the Business, and Buyer and Seller
acknowledge and agree that damages cannot compensate the Company in the event of
a violation of any of the foregoing covenants. Therefore, Buyer and Seller
agree that in the event of a violation or breach of any covenant set forth in
this Non-Compete Agreement, the Company may institute any action or proceeding
to enforce such covenant at law or in equity, including, but not limited to,
injunctive relief. All provisions of this Non-Compete Agreement constitute a
series of covenants and if any particular provision of this Non-Compete
Agreement is adjudicated invalid or unenforceable, the provision shall be deemed
deleted, and such deletion shall apply only in the particular jurisdiction(s) in
which such adjudication is made; provided, however, to the extent that any
provision hereof is deemed unenforceable because of its scope in terms of time,
territory or business activities, but may be made enforceable by limitations
thereon, such limitations may be made so that the covenant shall be enforceable
to the fullest extent permissible under the laws and public policies applicable
to such jurisdiction(s).
3. GENERAL PROVISIONS
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3.1 Definitions
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As used in this Non-Compete Agreement, the following defined terms shall
have the meanings set forth below.
(a) "Manufacturing Facilities" has the meaning given thereto in the
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Patent and Know How License Agreement.
(b) "Business Products" has the meaning given thereto in the SPA.
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(c) "S Glass" has the meaning given thereto in the Patent and Know
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How License Agreement.
(d) "High Strength Glass" means glass (i) having a tensile strength
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at room temperature (x) for a pristine single filament of greater than 675 kpsi
determined in accordance with the OC Procedure as set forth in Schedule C to
this Non-Compete Agreement and (y) for an impregnated strand determined in
accordance with ASTM D2343 of greater than 450 kpsi and (ii) that further meets
at least three of the following criteria:
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CRITERION TEST STANDARD VALUE
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Softening point ASTM C-338 greater than 1900 degrees F
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Tensile Modulus at Room ASTM D2101 greater than 12.5 Mpsi
Temperature
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Strain to Failure ASTM D2101 greater than 5.4%
(Elongation at Break)
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Dimensional Stability less than 2.0 x 10E-6 in/in-
(Coefficient of Thermal degrees F
Expansion)
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3.2 Notices
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All communications provided for hereunder shall be in writing and
shall be deemed to be given when delivered in person or by private courier with
receipt, when telefaxed and received, or three (3) days after being deposited in
the United States mail, first-class, registered or certified, return receipt
requested, with postage paid and,
If to Company: Advanced Glassfiber Yarns LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: General Manager
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With a copy to: AGY Holdings, Inc.
c/o Glass Holdings Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: President
And to: Jefferson Holdings, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Corporate Secretary
If to Buyer: AGY Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
Attn: President
With a copy to: ▇▇▇▇▇▇ & Bird, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
If to Seller: ▇▇▇▇▇ Corning World Headquarters
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Corporate Secretary
With a copy to: ▇▇▇▇▇ Corning World Headquarters
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Law Department
or to such other address as any such party shall designate by written notice to
the other parties hereto.
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3.3 Governing Law
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This Non-Compete Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without giving effect to the
conflicts of law principles thereof.
3.4 Assignability
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This Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective successors and assigns. Except as otherwise
expressly provided herein, this Agreement shall not be assigned by any party
hereto without the express prior written consent of the other parties, and any
attempted assignment, without such consents, shall be null and void.
Notwithstanding any nonassignment provisions contained in this Section 3.4,
Company, or any permitted assignee or transferee of Company, may assign or
otherwise transfer all of its rights and/or obligations hereunder (i) to any
entity or entities, or any assignee of such entity or entities, providing
financing for the transactions contemplated by this Agreement or to any entity
or entities providing to Company, Company's Affiliates, or to any such permitted
assignee of Company, financing relating to the Business (collectively, the
"Financing Sources"), (ii) to any Affiliate of Company, provided that (x) such
Affiliate shall agree with Company and its permitted assignees or transferees,
if any, in writing to assume the Company's obligations hereunder and (y) any
such assignment to an Affiliate of the Company shall not relieve the Company
from its obligations hereunder or (iii) to any entity to which Company, or any
assignee or transferee of Company, assigns, sells, transfers or otherwise
conveys (A) all or substantially all of the assets constituting the Business (a
"Complete Assignment") or (B) all or substantially all of the assets
constituting either the Aiken Facility, the Huntington Facility or the South
Hill Facility (a "Partial Assignment"), and further provided that such entity or
Affiliate is not CSG,
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provided that such acquiring entity agrees with and acknowledges in writing to
Buyer and Seller and their permitted assignees or transferees, if any, that this
Agreement shall be binding upon and enforceable against such entity as though
such acquiring entity were Company and that such entity shall perform all of
Company's obligations hereunder. Notwithstanding any nonassignment provisions
contained in this Section 3.4, Buyer or Seller, or any permitted assignee or
transferee of Buyer or Seller, may assign or otherwise transfer some or all of
its rights and/or obligations hereunder to any Affiliate of Buyer or Seller,
provided that (x) such Affiliate shall agree with Seller and Buyer and/or their
permitted assignees or transferees, if any, in writing to assume the Buyer's or
Seller's obligations hereunder and (y) any such assignment to an Affiliate of
the Buyer or Seller shall not relieve the Seller from its obligations hereunder.
To the extent that assignment and/or transfer of any of the rights, privileges,
and/or obligations is permitted, this Agreement shall be binding on, and except
as otherwise expressly provided, shall inure to the benefit of, the legal
successors, assigns, or representatives of the parties.
3.5 Entire Agreement
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This Non-Compete Agreement supersedes any prior agreement between the
parties with respect to the subject hereof, and constitutes the entire agreement
between the parties with respect to the subject hereof.
3.6 Amendment; Waiver
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This Non-Compete Agreement may be amended, supplemented or otherwise
modified only by a written instrument executed by the parties hereto. No waiver
by either party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and executed by the party so waiving. Except as
provided in the preceding sentence, no action taken
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pursuant to this Non-Compete Agreement, including without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained herein, and in any documents
delivered or to be delivered pursuant to this Non-Compete Agreement and in
connection with the closing hereunder. The waiver by any party hereto of a
breach of any provision of this Non-Compete Agreement shall not operate or be
construed as a waiver of any subsequent breach.
3.7 Counterparts
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This Non-Compete Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same interest.
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IN WITNESS WHEREOF, the parties have caused this Non-Compete Agreement to
be duly executed as of the Effective Date.
AGY HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
PORCHER INDUSTRIES S.A.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇ CORNING
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
ADVANCED GLASSFIBER YARNS, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: General Manager
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