NON-COMPETITION AGREEMENT
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THIS NON-COMPETITION AGREEMENT (this "Agreement") is made and entered
effective as of the 26th day of August, 1999, by and between The Procter &
▇▇▇▇▇▇ Company and its affiliates ("P&G"), and ▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇").
Purpose:
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Recovery Engineering, Inc. ("REI") has entered into an Agreement and
Plan of Merger (the "Merger Agreement") with The Procter & ▇▇▇▇▇▇ Company and
▇▇▇▇▇▇▇, Inc., ("▇▇▇▇▇▇▇") dated as of August 26, 1999, pursuant to which, at
the Effective Time (as defined in the Merger Agreement), REI shall merge with
▇▇▇▇▇▇▇ (the "Merger"); and
▇▇▇▇▇▇ is the Chief Operating Officer of REI and shall resign his position
at REI on the Effective Date; and
▇▇▇▇▇▇, in his employment with REI, learned confidential information and
trade secrets of REI, and established personal and business relationships with
the REI's customers, suppliers and other business associates, and the use by
▇▇▇▇▇▇ of such relationships or information to compete with P&G or to aid others
to compete with P&G would have a detrimental effect on the future profitable
operation of P&G; and
▇▇▇▇▇▇ has had an opportunity to, and has, reviewed this Agreement and
consulted with counsel regarding same;
NOW, THEREFORE, in consideration of (i) the above premises and (ii) other
good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged by ▇▇▇▇▇▇, ▇▇▇▇▇▇ and P&G hereby covenant and agree as follows:
1. Term and Compensation. The term of this Agreement shall be for a
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period commencing upon the Effective Date and ending two years thereafter (the
"Non-Compete Term"). In consideration for ▇▇▇▇▇▇'▇ obligations under this
Agreement, P&G shall pay ▇▇▇▇▇▇ $425,000 on the Effective Date and $425,000 one
(1) year after the Effective Date.
2. Non-Competition and Non-Solicitation Covenants. During the Non-Compete
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Term, ▇▇▇▇▇▇ shall not, as an employee (other than as a consultant of P&G),
employer, stockholder, officer, director, partner, associate, consultant,
advisor, proprietor, lender, or in any other manner or capacity, directly or
indirectly, (i) solicit or hire any employee of P&G or otherwise interfere with
or disrupt the employment relationship between P&G and any employee, (ii) engage
in any business that is competitive with any business or line of business of
REI, as it existed prior to the Effective Date (the "Business), in any country
in the world and/or (iii)
interfere with or otherwise disrupt the relationship between P&G and any vendor,
supplier or client. Notwithstanding (ii) above, nothing herein shall prohibit
▇▇▇▇▇▇ from owning publicly-traded securities of any company that competes with
the Business, so long as ▇▇▇▇▇▇ does not indirectly or directly control such
company, or is otherwise deemed an affiliate of such company as defined in Rule
144(a)(1) under the Securities Act of 1933, as amended.
▇▇▇▇▇▇ expressly recognizes and agrees that the restraints imposed by this
Section 2 are reasonable as to time and geographic scope and not oppressive.
▇▇▇▇▇▇ further expressly recognizes and agrees that the restraints imposed by
this Section 2 represent a reasonable and necessary restriction for the
protection of the legitimate interests of the P&G, that the failure by ▇▇▇▇▇▇ to
observe and comply with the covenants and agreements in this Section will cause
irreparable harm to P&G, that it is and will continue to be difficult to
ascertain the harm and damages to P&G that such a failure by ▇▇▇▇▇▇ would cause,
that the consideration received by ▇▇▇▇▇▇ for entering into these covenants and
agreements is fair, that the covenants and agreements and their enforcement will
not deprive ▇▇▇▇▇▇ of his ability to earn a reasonable living, and that ▇▇▇▇▇▇
has acquired knowledge and skills in this field that will allow him to obtain
employment without violating these covenants and agreements. ▇▇▇▇▇▇ further
expressly acknowledges that he has been encouraged to and has consulted
independent counsel, and has reviewed and considered this Agreement with that
counsel before executing this Agreement.
3. Memoranda, Notes, Records, Etc. All memoranda, notes, records,
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customer lists or other documents made or compiled by ▇▇▇▇▇▇ or otherwise made
available to him concerning the business of REI or P&G or its subsidiaries or
affiliates shall P&G's property and shall be delivered to P&G at the Effective
Date.
4. Nondisclosure.
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(a) ▇▇▇▇▇▇ hereby acknowledges that in connection with his employment
by REI he was exposed to and obtained certain information (including without
limitation, procedures, memoranda, notes, records and customer lists whether
such information has been or is made, developed or compiled by ▇▇▇▇▇▇ or
otherwise has been or is made available to him) regarding the business and
operations of REI; ▇▇▇▇▇▇ further acknowledges that such information is unique,
valuable, considered trade secrets and deemed proprietary by P&G. For purposes
of this Agreement, such information shall be referred to as "Confidential
Information", except that the following shall not be considered Confidential
Information; (a) information disclosed on a non-confidential basis to third
parties by REI and (b) information disclosed and made available to the general
public under operation of law.
(b) ▇▇▇▇▇▇ agrees that all Confidential Information is and will remain
the property of the P&G. ▇▇▇▇▇▇ further agrees, for the duration of the Non-
Compete Term and thereafter, to hold in the strictest confidence all
Confidential Information, and to not, directly or indirectly, duplicate, sell,
use, lease, commercialize, disclose or otherwise divulge to any person or entity
any portion of the Confidential Information or use any Confidential Information
for his own benefit or profit or allow any person or entity, other than P&G and
its authorized employees, to use or otherwise gain access to any Confidential
Information.
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5. Enforcement. The parties hereto recognize that the covenants of ▇▇▇▇▇▇
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hereunder are special, unique and of extraordinary character. If ▇▇▇▇▇▇ shall
breach or fail to perform any term, condition or duty in this Agreement required
to be observed or performed by ▇▇▇▇▇▇, P&G shall be entitled, inter alia, to
institute and prosecute proceedings in any court of competent jurisdiction, to
enforce the specific performance thereof by ▇▇▇▇▇▇ and to enjoin ▇▇▇▇▇▇ from
performing services for any person or entity or otherwise acting in violation of
Sections 2, 3 and 4 hereof. In the event of a breach of the provisions of this
Agreement, ▇▇▇▇▇▇ agrees that the remedies at law available to P&G would be
inadequate to protect P&G's interests; accordingly, ▇▇▇▇▇▇ agrees not to
challenge the claim by P&G for any equitable remedy including specific
performance on the basis that there are adequate remedies at law. In case of
any breach of this Agreement, nothing herein contained shall be construed to
prevent P&G from seeking such other remedy in the courts as P&G may elect or
invoke.
6. Severability/Modification. If any term or provision of this Agreement
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is held or deemed to be invalid or unenforceable, in whole or in part, by a
court of competent jurisdiction, such term or provision shall be ineffective to
the extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement.
7. Entire Agreement/Amendment. This instrument contains the entire
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agreement between the parties hereto with respect to the subject matter hereof,
and may be amended only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification or discharge is sought.
8. Assignment.
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(a) ▇▇▇▇▇▇ may not delegate the performance of any of his obligations
or duties hereunder, or assign any rights hereunder, without the prior written
consent of P&G. Any such purported delegation or assignment in the absence of
such written consent shall be null and void with not force or effect.
(b) The P&G may not assign this Agreement except to any P&G affiliate.
(c) Subject to the limitations imposed by this Section 10, this
Agreement shall be binding on and inure to the benefit of the parties hereto and
their respective successors, permitted assigns, heirs and legal representatives.
9. Governing Law. THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS
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AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MINNESOTA WITHOUT REGARD
TO THE LAWS OF CONFLICT OF LAWS.
10. Headings. The section headings herein are for convenience only and
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shall not be used in interpreting or construing this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first above written.
▇▇▇▇ ▇▇▇▇▇▇:
/s/ ▇▇▇▇ ▇▇▇▇▇▇
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The Procter & ▇▇▇▇▇▇ Company:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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By: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its: Treasurer
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Letter of Understanding
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This Letter of Understanding (the "Agreement") is made and entered
effective as of the 26th day of August, 1999, by and between Recovery
Engineering, Inc. ("REI") The Procter & ▇▇▇▇▇▇ Company and its affiliates
("P&G"), and ▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇").
Purpose
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Recovery Engineering, Inc. ("REI") has entered into an Agreement and Plan
of Merger (the "Merger Agreement") with P&G, dated as of August 26, 1999,
pursuant to which, at the Effective Time (as defined in the Merger Agreement),
REI shall merge with a subsidiary of P&G (the "Merger"); and
▇▇▇▇▇▇ is the President and Chief Operating Officer of REI.
As mutual inducements for the parties to enter into the Merger Agreement,
the parties agree to the following:
1. Options. ▇▇▇▇▇▇ owns 150,000 outstanding stock options which were granted
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under various REI stock option plans. Pursuant to such plans (including,
without limitation, change of control provisions in such plans), ▇▇▇▇▇▇ has
the right to exercise such options on or about the Effective Time.
Notwithstanding the foregoing, ▇▇▇▇▇▇ agrees that pursuant to the Merger
Agreement, at the Effective Time, all of his 150,000 stock options will be
canceled. With respect to 98,000 of such 150,000 stock options, ▇▇▇▇▇▇ will
have the right to receive the difference between the strike price and the
Offer Price ($2,730,000). ▇▇▇▇▇▇ will have no rights with respect to the
remaining 52,000 stock options.
2. Non-Competition Agreement. ▇▇▇▇▇▇ has executed a Non-Competition Agreement
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at an even date herewith.
3. Severance Agreement. ▇▇▇▇▇▇ agrees that REI shall terminate or cause to be
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terminated the Change-in-Control Severance Pay Agreement between REI and
▇▇▇▇▇▇ immediately prior to the Effective Date, such that ▇▇▇▇▇▇ shall not
have any rights thereunder.
Agreed and accepted:
▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
___________________
Recovery Engineering, Inc.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
___________________
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Executive Officer
The Procter & ▇▇▇▇▇▇ Company
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
________________________
By: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
