NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is made and entered
into as of the 3rd day of June, 1996 by and among T-C THREADS, INC. d/b/a
THREADS USA, a Tennessee corporation ("TUSA"), THREADS OF PUERTO RICO,
INC., a North Carolina corporation ("TPR"), PRODUCTOS PARA LA INDUSTRIA DE
LA MAQUILA, S.A. PRIMA, a Honduras corporation ("Prima"), HILOS Y
ACCESORIOS, S.A. DE C.V., a Mexico corporation ("Hilos") and DIXIE YARNS,
INC., a Tennessee corporation ("Dixie") (TUSA, TPR, Prima and Hilos are
sometimes collectively referred to herein as "Threads" and TUSA, TPR,
Prima, Hilos and Dixie are sometimes referred to herein individually as the
"Seller" and collectively as the "Sellers") and AMERICAN & EFIRD, INC., a
North Carolina corporation (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Sellers and the Buyer have entered into that certain
Asset Purchase Agreement dated May 23, 1996 (the "Asset Purchase
Agreement") pursuant to which the Buyer has agreed to purchase and Threads
and Dixie have agreed to sell to the Buyer all of Threads' right, title and
interest in and to Threads' Assets related to the business of Threads, and
Dixie's right, title and interest in and to certain real property related
to the business of Threads (as such capitalized terms are defined within
the Asset Purchase Agreement); and
WHEREAS, the Sellers heretofore engaged in the business of
manufacturing, distributing and selling industrial sewing thread and yarn
to be used in the manufacture of industrial sewing thread (collectively,
"Thread Products") and distributing notions and other related products and
supplies (the "Business") (for the purposes hereof, Thread Products, (a)
include (i) finished thread of any type, (ii) yarn of any fiber type,
whether for direct sale or for sale for further processing, in a dyed or
unfinished state, to be used in the manufacture of industrial sewing thread
(iii) all products identical or substantially similar to the thread
products currently sold by Threads and the Buyer, including but not limited
to special thread items (for example, tea bag thread and feminine personal
hygiene thread); and (b) exclude yarn manufactured, distributed or sold by
Dixie to be used in the manufacture of embroidery thread); and
WHEREAS, the Sellers acknowledge that the markets for the Buyer's
products are international and are highly competitive; and
WHEREAS, pursuant to Section 13 of the Asset Purchase Agreement the
parties hereto have agreed to enter into this Noncompetition Agreement; and
WHEREAS, the Buyer will not close and complete the Asset Purchase
Agreement without the execution of this Noncompetition Agreement by the
Sellers as such execution of this Noncompetition Agreement is a condition
of closing of the transaction, and the Sellers desire to have the Asset
Purchase Agreement closed and completed; and
WHEREAS, the Sellers are willing to agree to such noncompetition as
provided herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein for other good and valuable consideration, the receipt of
which is hereby acknowledged, the Buyer and Sellers hereby agree as
follows:
1. NONCOMPETITION. The Sellers agree that for a period of five (5) years
from the date hereof, Sellers shall comply with the following provisions:
a. Without the prior approval of the Buyer's President or Executive Vice
President, Sellers shall not, directly or indirectly, solicit for
employment, employees of the Buyer, and shall not, directly or indirectly,
hire any person who, within the preceding six months, was employed by the
Buyer other than as an hourly worker regardless of the reason for the
person's termination of employment with the Buyer.
b. Except as contemplated in Sections 5 and 10 of the Yarn and Finished
Goods Agreement dated as of the date hereof by and among the parties
hereto, within the Restricted Territory (as defined below), Sellers shall
not, either for Sellers or as agent, partner, significant investor (5% or
greater in ownership), consultant, or in any other capacity, directly or
indirectly, participate or engage in, or assist others in participating or
engaging in the Business or any other business which competes with the
Business. For purposes of this Noncompetition Agreement, the "Restricted
Territory" includes:
i. The World;
ii. North America, Central America and South America;
iii. North America; and
iv. The United States of America.
The sale of machinery by Sellers shall not constitute assisting others
in the participating or engaging in the Business, even if such machinery
could be used for the manufacturing of industrial sewing thread or yarn for
industrial sewing thread, unless Sellers assist in or consult with the
purchaser of such machinery in the conversion of the machinery to such
purpose.
c. Without limiting the restrictions contained in paragraph b above,
within the Restricted Territory, Sellers shall be allowed to sell yarn to a
customer that manufactures thread unless the Sellers have knowledge that
such yarn will be used in the manufacture of thread, and, in any event,
Sellers shall notify the Buyer promptly (and shall identify in such notice
the type of product sold) following a determination that such purchaser
manufactures thread.
d. The parties hereto agree that the restrictive covenants contained in
this paragraph 1 hereof (including the most extensive description of
"Restricted Territory" set forth above) are essential elements of this
Noncompetition Agreement and that this paragraph 1 shall be enforced as
written. If, however, any provision, or any part thereof is held to be
unreasonable, arbitrary, against public policy or otherwise unenforceable,
then the parties agree that the court in making such determination shall
have the power to reduce the duration and/or geographic area to one that is
otherwise reasonable, nonarbitrary, not against public policy and otherwise
enforceable against the Sellers, and in its reduced or modified form, this
provision shall then be enforceable. The parties hereto agree that the
provisions of this paragraph 1 are appropriate and reasonable when
considered in light of the nature and extent of the Business conducted by
the Buyer and that the restrictions in this paragraph 1 as to duration and
geographic area are reasonable and necessary for the protection of the
Buyer's respective legitimate interests.
2. FAILURE TO COMPLY. In the event of breach or threatened breach by the
Sellers of the provisions of paragraph 1, the Buyer shall have and may
exercise any and all rights and remedies available to the Buyer at law, in
equity or otherwise, including but not limited to obtaining an injunction
from a court of competent jurisdiction, enjoining and restraining the
Sellers from committing any such violation, and the Sellers hereby consent
to the issuance of such injunction without the requirement of the Buyer
posting bond.
3. SUCCESSORS AND ASSIGNS. This Noncompetition Agreement shall inure to
the benefit and be binding upon any successors of the Buyer which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets of the Buyer.
4. MODIFICATION AND WAIVER. This Noncompetition Agreement may not be
modified or amended except by an instrument in writing signed by the
parties hereto. No term or condition of this Noncompetition Agreement
shall be deemed to have been waived, nor shall there by any estoppel
against enforcement of any provision of this Agreement, except by written
instrument of the party charged with such waiver or estoppel. No such
written waiver shall be deemed a continuing waiver unless specifically
stated therein, and each such waiver shall operate only as to the specific
term and condition waived and shall not constitute a waiver of such terms
or conditions or as to any act other than that specifically waived.
5. GOVERNING LAW. This Agreement will be governed in all respects by the
internal laws (as opposed to the laws with respect to conflicts of law) of
the State of North Carolina.
6. SEVERABILITY. The provisions of this Noncompetition Agreement shall be
severable, and the invalidity or unenforceability of any provision shall
not affect the validity or unenforceability of the other provisions hereof.
7. HEADINGS. The paragraph headings in this Noncompetition Agreement are
for convenience only, and they form no part of this Noncompetition
Agreement and shall not affect its interpretation.
8. ENTIRE AGREEMENT. This Noncompetition Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
all prior or contemporaneous written or oral agreements with respect to the
subject matter hereof are superseded hereby.
IN WITNESS WHEREOF, the Sellers and the Buyer have caused this
Agreement to be executed in their respective names by their duly authorized
officers and their respective seals to be hereunto affixed all as of the
day and year first above-written.
ATTEST: T-C THREADS, INC.
/s/GARY A. HARMON By:/s/GLENN M. GRANDIN
Assistant Secretary Glenn M. Grandin, President
(CORPORATE SEAL)
ATTEST: THREADS OF PUERTO RICO, INC.
/s/GARY A. HARMON By:/s/GLENN M. GRANDIN
Assistant Secretary Glenn M. Grandin, President
(CORPORATE SEAL)
ATTEST: DIXIE YARNS, INC.
/s/GARY A. HARMON By:/s/GLENN M. GRANDIN
Treasurer Glenn M. Grandin, Senior
Vice President
(CORPORATE SEAL)
ATTEST: PRODUCTOS PARA LA INDUSTRIA DE
LA MAQUILA, S.A. PRIMA
/s/GARY A. HARMON By:/s/GLENN M. GRANDIN
Assistant Secretary Glenn M. Grandin, President
(CORPORATE SEAL)
ATTEST: HILOS Y ACCESORIOS, S.A. DE
C.V.
/s/GARY A. HARMON By:/s/GLENN M. GRANDIN
Assistant Secretary Glenn M. Grandin, President
(CORPORATE SEAL)
ATTEST: AMERICAN & EFIRD, INC.
/s/CRAIG G. STOVER By:/s/THOMAS W. DICKSON
Secretary Thomas W. Dickson, President
(CORPORATE SEAL)