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EXHIBIT 10.8
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this "AGREEMENT") is dated as of November
25, 2002 by and between Invensys plc, a corporation organized under the laws of
England and Wales, having its registered office at Invensys House, Carlisle
Place, London, SW1P1 BX ("INVENSYS") and RBS Acquisition Corporation, a Delaware
corporation ("PURCHASER").
WHEREAS, Purchaser, Invensys and certain subsidiaries and affiliates of
Invensys entered into that certain Stock Purchase Agreement, dated as of
September 27, 2002 (with all addenda thereto, the "STOCK PURCHASE AGREEMENT"),
providing for the acquisition by Purchaser of the Shares. Capitalized terms
used, but not otherwise defined, herein shall have the meanings ascribed to such
terms in the Stock Purchase Agreement.
WHEREAS, Invensys, through the operations of the Companies and the
Subsidiaries, was engaged in the conduct of the Rexnord Business prior to the
Closing Date.
WHEREAS, it was contemplated by the Stock Purchase Agreement that Invensys
would, and would cause its Affiliates to, agree to refrain from competing with
Purchaser, on the terms and conditions set forth in this Agreement.
WHEREAS, Invensys understands that Purchaser shall be entitled to protect
and preserve the going concern value of the Rexnord Business to the extent
permitted by law and that Purchaser would not have entered into the Stock
Purchaser Agreement absent the provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, agreements and understandings contained herein and for other good and
valuable consideration, the receipt, adequacy and sufficiency of which hereby
are acknowledged, the parties hereto agree as follows:
1. PURCHASE PRICE. In consideration of the covenants and agreements
contained in Sections 2, 3, and 4 below, at the Closing, Purchaser shall pay
Invensys Forty-Five Million Dollars ($45,000,000) by wire transfer of
immediately available funds to an account or accounts designated by Invensys in
writing at least three (3) Business Days prior to the Closing Date.
2. NON-COMPETITION. (a) Invensys hereby covenants and agrees that:
(i) Except as otherwise provided herein, for a period of four (4)
years immediately following the Closing Date, Invensys shall not, and shall
cause its Affiliates (including, subject to Section 2(a)(ii) below, those
Persons that become Affiliates during the four (4) years following the Closing
Date) not to, engage in
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activities or businesses, or establish any new businesses, that compete with the
Rexnord Business as it was conducted as of the Closing anywhere in the world.
Nothing contained herein shall prohibit Invensys, or any Affiliate of Invensys,
from being a passive owner of less than one percent (1%) of the outstanding
stock or any class of securities of a corporation or other entity which is
publicly traded and which would otherwise constitute a Competing Business (as
such term is defined herein).
(ii) Notwithstanding the provisions of Section 2(a)(i), Invensys
or any Affiliate (including those Persons that become Affiliates during the four
(4) years following the Closing Date), may acquire control of an entity (an
"ACQUIRED ENTITY") which engages in a business that competes with the Rexnord
Business (a "COMPETING BUSINESS"), if the Acquired Entity derived not more than
twenty-five percent (25%) of its revenues during its most recent fiscal year
prior to acquisition by Invensys or an Affiliate from the Competing Business;
PROVIDED, THAT Invensys shall, within six months following the closing of the
acquisition of the Acquired Entity, commence to negotiate in good faith with
Purchaser for the sale of the Competing Business to (in Purchaser's discretion)
Purchaser, any Company or any Subsidiary; PROVIDED FURTHER, HOWEVER, that in the
event that Invensys or an Affiliate engages in a bona fide solicitation of
offers to purchase the Competing Business from one or more third parties,
Invensys shall be deemed to have complied with its obligation to commence to
negotiate in good faith with Purchaser if it provides Purchaser with an
opportunity to participate in such solicitation process on the same terms and
conditions applicable to any other third party. For the avoidance of doubt,
Purchaser hereby acknowledges and agrees that in the event that Invensys
commences to negotiate in good faith with Purchaser for the sale of the
Competing Business as required in this Section 2(a)(ii), and the parties are
unable to reach a mutually acceptable agreement with respect to such sale,
Invensys shall be entitled to retain and operate the Competing Business.
(b) (i) Notwithstanding anything to the contrary contained herein,
Purchaser acknowledges and agrees that Invensys and any of its Affiliates shall
be permitted to engage each of the businesses and activities identified on
ANNEX A.
(ii) Notwithstanding anything to the contrary contained herein,
if any third party not currently an Affiliate of Invensys as of the date hereof
acquires, prior to the fourth anniversary of the Closing Date, (A) fifty percent
(50%) or more of the voting securities of Invensys, including by way of merger
or any other business combination with Invensys or (B) all or substantially all
assets of Invensys, then, nothing in this Agreement shall: (y) be a limitation
on any activities of such acquiring party or any entity directly or indirectly
controlling, controlled by or under common control with such acquiring party
(other than Invensys or Invensys' Affiliates who are acquired and are subject to
the provisions of this Agreement, who shall remain subject to the provisions of
this Agreement through the fourth anniversary of the Closing Date) or (z) give
rise to any obligation of Invensys with respect to the activities of such
acquiring party or any entity directly or indirectly controlling, controlled by
or under common control with such acquiring party (other than Invensys or
Invensys' Affiliates who are
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acquired and are subject to the provisions of this Agreement at the time of such
acquisition).
(c) It is the intention of the parties hereto that this Agreement be
enforced to the fullest extent permitted by applicable law and, therefore, in
the event that any provision of this Agreement or the application thereof is
held to be unenforceable in any jurisdiction because of the duration or scope
thereof, the parties hereto agree that the court or panel or arbitrators making
such determination shall have the power to reduce the duration and scope of such
provision to the extent necessary to make it enforceable, and that the Agreement
in its reduced form shall be valid and enforceable to the full extent permitted
by law, but no such reduction shall affect the enforceability of the express
terms hereof in any other jurisdiction.
3. NON-SOLICITATION. Invensys hereby covenants and agrees that for a period
of two (2) years following the Closing Date that it shall not, and shall cause
its Affiliates (including those Persons that become Affiliates during the two
(2) years following the Closing Date) not to: (a) solicit, entice, persuade or
induce any of the individuals listed on ANNEX B to terminate his or her
employment with Purchaser or its Affiliates; (b) solicit the employment of any
such individual; (c) approach any such individual for any of the foregoing
purposes; or (d) assist in taking such actions by any third party, in each case
without the prior written consent of Purchaser; PROVIDED, HOWEVER, that this
Agreement shall not prohibit soliciting the employment of any such individual
who has been terminated by Purchaser or its Affiliates; and PROVIDED, FURTHER,
that the placement of advertisements in newspapers or journals of general
circulation not directed or targeted to any such individual shall not constitute
solicitation for purposes of this Section 3.
4. NON-HIRE. Invensys hereby covenants and agrees that for a period of two
(2) years following the Closing Date that it shall not, and shall cause its
Affiliates (including those Persons that become Affiliates during the two (2)
years following the Closing Date) not to: (a) hire any of the individuals listed
on ANNEX C; (b) approach any such individual for the foregoing purpose; or (c)
assist in taking such actions by any third party, in each case without the prior
written consent of Purchaser; PROVIDED, HOWEVER, that this Agreement shall not
prohibit hiring of any such individual who has been terminated by Purchaser or
its Affiliates.
5. ACKNOWLEDGEMENT. Invensys acknowledges that the restrictions on its
activities under this Agreement are necessary for the reasonable protection of
Purchaser and constitute a material inducement to Purchaser's entering into and
performing its obligations under the Stock Purchase Agreement. Invensys further
acknowledges, stipulates and agrees that a breach of any of such obligations and
agreements will result in irreparable harm and continuing damage to Purchaser
for which there will be no adequate remedy at law and further agrees that in the
event of any breach of said obligations and agreements, Purchaser and its
successors and assigns will be entitled to injunctive relief and to such other
relief as is proper under the circumstances.
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6. NOTICES. All notices and other communications under this Agreement shall
be in writing and shall be deemed given when (i) delivered personally or (ii)
mailed by certified or registered mail, return receipt requested, or (iii) sent
by FedEx or other nationally recognized express carrier, fee prepaid to the
parties (and shall also be transmitted by facsimile to the Persons receiving
copies thereof) at the following addresses (or to such other address as a party
may have specified by notice given to the other party pursuant to this
provision):
If to Invensys:
Invensys plc
Carlisle Place
London, SWIP IBX
United Kingdom
Attn: Corporate Secretary
Facsimile: (44)(207)821-3806
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Paul R. Lovejoy, Esq.
Facsimile: (212)310-8007
If to Purchaser, to:
RBS Acquisition Corporation
c/o The Carlyle Group
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, D.C. 20004
Attn: Jerome H. Powell
Facsimile: (202)347-1818
With a copy to:
Latham & Watkins
555 Eleventh Street, N.W.
Suite 1000
Washington, D.C. 20004
Attn: Daniel T. Lennon, Esq.
Facsimile: (202)637-2201
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7. CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
8. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with the Stock
Purchase Agreement and the ancillary documents executed in connection therewith,
contains the entire understanding of the parties, supersedes all prior and
contemporaneous agreements and understandings relating to the subject matter
hereof and shall not be amended except by a written instrument hereafter signed
by all of the parties hereto.
9. COUNTERPARTS. This Agreement may be executed by the parties in separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all of which, when taken as a whole, shall constitute one and the
same instrument.
10. SECTION HEADINGS AND REFERENCES. The headings of each Section,
subsection or other subdivision of this Agreement are for reference purposes
only and are to be given no effect in the construction or interpretation of this
Agreement.
11. BINDING EFFECT; NO THIRD PARTY BENEFICIARIES; ASSIGNMENT. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Nothing in this Agreement
shall create or be deemed to create any third party beneficiary rights or any
obligations in any Person or entity not a party to this Agreement. No party may
assert any claim against any officer, director, stockholder, partner or member
of any party hereto (unless such officer, director, stockholder, partner or
member is also a party hereto) under this Agreement with respect to any
obligation arising out of this Agreement or the transactions contemplated
hereby. No assignment of this Agreement or of any rights or obligations
hereunder may be made by either Invensys or Purchaser (by operations of law or
otherwise) without the prior written consent of the other parties hereto and any
attempted assignment without the required consents shall be void; PROVIDED,
HOWEVER, that Purchaser may assign this Agreement and any or all rights or
obligations hereunder (including, without limitation, Purchaser's rights to
purchase the Shares and Purchaser's rights to seek indemnification hereunder)
to (i) any Affiliate of Purchaser, (ii) any lender of Purchaser as collateral
security or (iii) any successor in interest to Purchaser, provided that such
successor in interest acquires all or substantially all of the Shares or all or
substantially all of the assets of all of the Companies and all of the
Subsidiaries. Upon any such permitted assignment, the references in this
Agreement to Purchaser shall also apply to any such assignee unless the context
otherwise requires.
12. EXPENSES. Each party hereto shall pay its own expenses in connection
with the execution, delivery and performance of its obligations under this
Agreement.
[The Remainder of this Page Is Intentionally Left Blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
INVENSYS PLC
By: /s/ Irwin Shur
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Name: Irwin Shur
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Title: Attorney-in-fact
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RBS ACQUISITION CORPORATION
By: /s/ Praveen R. Jeyarajah
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Name: Praveen R. Jeyarajah
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Title: Vice President
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Annex A
BUSINESSES EXCLUDED FROM THE NON-COMPETE
1. The large gear business operated by Hansen Transmissions, including the
design, manufacture, marketing, sale and distribution of P-4 gearbox
products. Invensys and its Affiliates also shall be permitted to acquire a
designer, manufacturer, seller or distributor of large gearbox products.
2. APV Baker assembles/manufactures conveyors for the food and bakery
industries. These include patented conveyor assemblies for bakery ovens and
circuitous conveyors that move through such ovens to assure proper
baking/cooking.
3. Barber-Colman/Invensys Building Systems manufacturers small rotary and
linear actuators that control valves and dampers in HVAC applications. Some
of these actuators/assemblies need to be quite accurate to control building
heating and cooling.
4. Foxboro-Eckardt manufactures a precision valve actuator for rotary valves.
5. Robertshaw/Invensys Energy Management manufactures and sells boiler
controls for HVAC that include safety valves.
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Annex B
INDIVIDUALS SUBJECT TO NON-SOLICITATION
Don Anderson
Mike Andrzejewski
Gavin Brydon
Tindaro Caputo
Guido de Gols
Max de Jong
Pete Ensch
Lance Fleming
Dave Gruettner
Lisa Hesse
Bob Hitt
Kevin Holt
Tom Jansen
Rob Johnston
Mark Kohler
Dan Linegar
Dennis Missun
Jim Richard
Ross Rivard
Tom Smith
John Spano
Kraig Tabor
Gerhard Weber
Ralph Whitley
Larry Wiles
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Annex C
INDIVIDUALS SUBJECT TO NON-HIRE
Mike Andrzejewski
Bob Hitt
Tom Jansen