NONCOMPETITION AGREEMENT
AGREEMENT made and entered into this 21st day of July, 1994 by and between
THE EASTERN COMPANY, a Connecticut corporation having its principal office at
000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000 (hereinafter the "Company"), and
PRESTOLOCK INTERNATIONAL, LTD., a Michigan corporation having an office at 000
Xxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000 (hereinafter "Seller").
W I T N E S S E T H :
WHEREAS, the Company and the Seller have entered into an Asset Purchase
Agreement dated July 21, 1994 (the "Purchase Agreement") pursuant to which the
Seller is transferring that portion of its assets pertaining to its Padlock
Product Line business; and
WHEREAS, a condition of closing under the Purchase Agreement is that the
parties enter into this Noncompetition Agreement on the terms and conditions
contained herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties agree as follows:
1. Definitions. For purposes of this Agreement:
(a) the term "Padlock Product Line Business" shall mean the business
of manufacturing, assembling, purchasing, designing, marketing and selling
wheel-dialed padlocks, gunlocks and deadbolts; and
(b) all other capitalized terms used herein which have not been
defined shall have the same definitions ascribed to them in the Purchase
Agreement.
2. Restrictions Against Competition During the term of this Agreement (such
period not to include any period of violation or period of time required for
litigation to enforce this covenant), Seller will not, either itself or through
any parent, subsidiary or affiliated corporation, joint venture or any entity in
which it has a controlling interest, conduct, own, invest in, or otherwise
engage in any business (whether by carrying on
research, development, manufacturing, assembling, marketing, selling or
otherwise) in the Territory defined below, which is competitive with the Padlock
Product Line Business as heretofore conducted by Seller and as conducted by the
Company, nor will it or any of said corporations or other entities render any
services to any person or entity engaged in such activities or acquire any
direct or indirect interest in such person or entity as a shareholder,
principal, agent, trustee, consultant or in any other capacity relating to the
Padlock Product Line Business.
(a) As used herein, the term "Territory" means United States, its
territories and possessions, and any other country or independent
governmental entity in the world in which the Seller heretofore or the
Company may hereafter markets, sells, distributes or has manufactured for
its account any products constituting part of the Padlock Product Line.
(b) Notwithstanding the restrictions set forth above, the Seller
directly or indirectly may own, solely as an investment, securities of any
public company which directly or indirectly conducts a business engaged in
the manufacture or sale of products constituting the Padlock Product Line,
if the Seller is not the owner of more than five percent (5%) of the
outstanding stock of such company or is otherwise a controlling person, or
a member of a group which controls such company.
3. Term. The term of this Agreement shall commence on the date hereof and
shall terminate on December 31, 2000.
4. Remedies for Breach. The Seller specifically acknowledges the necessity
for this noncompetition covenant, given the nature of the Company's business.
The parties agree that the remedy at law for any breach or threatened breach of
any obligation under this Agreement will be inadequate and in addition to any
other rights and remedies to which the Company might be entitled to hereunder,
by law or in equity, the Company shall be entitled to injunctive relief or
specific performance and (subject to the exception set forth below)
reimbursement for all attorney's fees and other expenses incurred in connection
with the enforcement hereof. Nothing herein shall be construed as prohibiting
the Company from pursuing any other remedies available to it for such breach or
threatened breach, including the recovery of damages from Seller. The
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foregoing remedies are exclusive of any remedies provided for in the Purchase
Agreement and no limitation of remedies contained in the Purchase Agreement
(including the time during which they are available) shall be construed to apply
to or limit in any way the remedies available under this Agreement.
Notwithstanding the foregoing, in the event that a court of competent
jurisdiction hearing an action brought by the Company against the Seller under
this Agreement determines that the Seller did not violate the restrictions
against competition contained in Section 2 above, then the Seller shall be
entitled to an award by the court of its costs and expenses, including
reasonable attorney's fees, incurred in connection with defending against said
action; provided, however, the Seller shall not be entitled to reimbursement for
said costs and expenses if it is the successful party in said proceeding by
virtue of the court finding that any portion of this Agreement is illegal,
invalid or unenforceable or by reason of any provisions in this Agreement being
held to be excessively broad as to time, duration, geographical scope, activity
or subject.
5. Severability. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein. If, moreover, any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
excessively broad as to time, duration, geographical scope, activity or subject,
it shall be construed, by limiting and reducing it, so as to be enforceable to
the fullest extent compatible with the applicable law as it shall then appear.
6. Amendment This Agreement may be amended, modified, superseded or
terminated, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by Seller
and the Company, or, in the case of a waiver, by or on behalf of the party or
parties waiving compliance.
7. Non-Waiver. The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the right at a
later time to enforce the same. No waiver by any party of any condition, or of
any breach of any term,
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covenant, representation or warranty contained in this Agreement, in any one or
more instances, shall be deemed to be construed as a further or continuing
waiver of any such condition or breach or a waiver of any other condition or of
any breach of any other term, covenant, representation or warranty contained in
this Agreement.
8. Binding Effect. This Agreement and the rights and obligations hereunder
shall inure to the benefit of, and be binding upon, the Seller's and the
Company's successors and assigns; provided, however, the Seller may not assign
any rights hereunder without the consent of the Company. The rights of the
Company hereunder shall pass to any successor to its business and affairs by
merger, consolidation, acquisition of substantially all of its assets or
substantially all of its stock; and further provided the Company may assign this
Agreement to a parent, affiliate or subsidiary corporation or to a purchaser of
the Padlock Product Line Business.
9. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally or to a local or national courier service, or mailed by
registered, certified, or express mail, return receipt requested addressed to
the addresses herein designated or to such other address as may be designated in
writing by notice given by the party in the same manner as herein specified:
If to the Seller, at:
Prestolock International, Ltd. FAX: (000) 000-0000
Attn: Xxxxxx X. Scandalaris, Chairman
00 Xxxxxxxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
and a copy to:
Xxxxxx & Xxxxxx FAX: (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
The Xxxxxxxxx Xxxxxx Xxxxxx, Xxxxx 000
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, XX 00000-0000
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It to Company, at:
The Eastern Company FAX: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx, Xx., Vice President
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and a copy to:
Xxxxx & Xxxxx FAX: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
Xxx Xxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
10. Captions. The captions contained in this Agreement are for convenient
reference only shall not in any way affect the meaning or interpretation of this
Agreement.
11. Governing Law. The Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
IN WITNESS WHEREOF, the Company and the Seller have caused their respective
corporate names to be hereunto subscribed, each by its officer "hereunto duly
authorized, as of the day and year first above written.
SELLER: COMPANY:
PRESTOLOCK INTERNATIONAL, LTD. THE EASTERN COMPANY
By /s/Xxxxxx X. Xxxxxxxxxxx By /s/Xxxxxx X. Xxxxxxx
------------------------ ---------------------
Xxxxxx X. Xxxxxxxxxxx Xxxxxx X. Xxxxxxx
Its Chairman Its Vice President
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