EXHIBIT 10.10
(Unofficial English Translation)
MANAGEMENT AGREEMENT entered into in the city of Sainte-Marie, Judicial District
of Beauce, Province of Quebec, Canada
BY AND BETWEEN: MAAX INC., a corporation duly incorporated under Part 1A of
the Companies Act (Quebec), having its registered office at
640, route Cameron, in Sainte-Marie, Province of Quebec G6E
1B2, in the Judicial District of Beauce, herein acting and
represented by Jacques A. VACHON, Esq., its Secretary, duly
authorized to act under the terms of a resolution passed by
the Board of Directors on January 10, 2001, an extract of
which is attached hereto as Schedule "A";
(hereinafter referred to as the "CORPORATION");
AND: GESTION CAMADA INC., a corporation duly incorporated under
Part 1A of the Companies Act (Quebec), having its registered
office at 583, rue Sainte-Madeleine, in Sainte-Marie, Province
of Quebec G6E 3H9, herein acting and represented by Placide
POULIN, its President, duly authorized to act under the terms
of a resolution passed by the Board of Directors on January
10, 2001, a copy of which is attached hereto as Schedule "B";
(hereinafter referred to as the "MANAGER");
PREAMBLE
THE PARTIES HERETO DECLARE AS FOLLOWS:
(A) The Corporation operates a business engaged in the design, manufacture,
sale and distribution of bathtubs, showers, spas, bathroom fixtures and
kitchen cabinets;
(B) For the purposes of internal organization, the Corporation is planning to
create positions at the senior executive level and on the executive
committee, which it wishes to fill;
(C) The Corporation wishes to ensure that it will benefit from sound
management and procure for itself all the necessary management resources
to promote the growth of the Corporation;
(D) The Manager is prepared to provide all the necessary resources to execute
the offices of the Corporation;
(E) It is the wish of the parties that the Corporation shall be managed in
compliance with its mission and growth objectives in the best interests
and for the benefit of its shareholders;
(F) It is in the interest of the parties hereto to record the various terms
and conditions of their agreement in the form of a private contract;
NOW THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
0.00 INTERPRETATION
0.01 DEFINITIONS
Unless otherwise implicitly or explicitly indicated in the text, the
following words and expressions shall be interpreted according to
the definitions set out below every time such words and expressions
appear in this Agreement or in any document subject thereto:
0.01.01 AGREEMENT
means this Agreement, including the preamble, the schedules attached
hereto, any document that may be subject to this Agreement and any
amendments made thereto from time to time by the parties, and the
words "hereof", "herein", "hereto", "hereunder" and "hereby" and any
other similar words or expressions, when used in this Agreement,
shall generally refer to the entirety of the Agreement and not to
any one part thereof, unless otherwise indicated.
0.01.02 CONFIDENTIAL INFORMATION
generally means any information generated for business purposes by
the Corporation, its suppliers or its clients, in any form
whatsoever, which is not freely accessible within the Corporation
and the disclosure of which to a third party could cause serious
harm to the Corporation, including, without limitation, procurement
sources, terms of sale offered by suppliers, product composition,
production and marketing techniques and methods, price lists, client
lists, particular requirements of the clients, internal reports,
market research, personnel files, etc.
0.01.03 INTELLECTUAL PROPERTY
means all intellectual property rights that the Corporation may lay
claim to as an owner, holder, author, licensee or other user during
the term of this Agreement with respect to the following incorporeal
property:
- logos, designs, drawings, crests, emblems, symbols,
pictograms, slogans, signs, plaques, forms, software and any
other work protected under the Copyright Act and used in the
business of the Corporation;
- trademarks, as such expression is defined in the Trade-marks
Act, whether or not they are registered, and used by the
Corporation in connection with the products and services sold
by it;
- industrial designs used in the manufacture of its products and
which may be protected under the Industrial Design Act;
- inventions, processes, methods and techniques, whether or not
they are patented, in compliance with the Patent Act as well
as trade secrets and
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know-how used in the design, production and marketing of its
products and services.
0.02 ENTIRETY OF THE AGREEMENT
This Agreement constitutes the entire agreement entered into between
the parties, to the exclusion of any other document, promise or
previous or concurrent verbal agreement that may have been made in
the course of negotiations leading to the execution of this
Agreement, and no such other document, promise or verbal agreement
may be used as evidence to modify any of the provisions of this
Agreement or affect them in any way.
0.03 JURISDICTION
0.03.01 GOVERNING LAW
This Agreement shall be governed, construed and applied in
accordance with the laws of the Province of Quebec and the laws of
Canada applicable therein.
0.03.02 INVALIDITY
Any provision of this Agreement which is in violation of applicable
law shall be deemed to be null and void to the extent that it is
prohibited by any such law and any other clause that is subject or
related to such provision shall be deemed to be null and void to the
extent that the applicability thereof is conditional upon such
provision.
0.03.03 ADAPTATION
Where a provision is illegal under any law, it shall be construed in
such a manner as to make it consistent with such law or otherwise in
such manner as is most consistent with the intention of the parties
without violating the requirements of such law.
0.03.04 CONTINUATION OR RESCISSION
If any provision of this Agreement is prohibited by law, the
remainder of the Agreement shall remain in full force and effect and
continue to be binding upon the parties, unless the illegal
provision comprises an essential and indivisible condition of this
Agreement, in which case the Agreement may be rescinded and the
parties restored to their previous condition, to the extent possible
given the changes that have been made to their situation since the
coming into force of this Agreement, for the purpose of effecting an
equivalent restitution.
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0.04 GENERAL
0.04.01 CANADIAN CURRENCY
All references to currency in this Agreement are references to
lawful money of Canada.
0.04.02 HEADINGS
The headings included in this Agreement are not to be considered in
the interpretation thereof; they serve only to identify and classify
the provisions agreed to by the parties and set forth in this
Agreement and, as such, have no meaning and no effect whatsoever on
the interpretation of any particular provision.
1.00 ENGAGEMENT OF SERVICES
Subject to the terms and conditions of this Agreement, the
Corporation hereby engages the services of GESTION CAMADA INC. as
MANAGER, and GESTION CAMADA INC. hereby agrees to provide at all
times during the period from March 1, 2001 to February 29, 2004 all
the agents necessary and qualified to act on behalf of the
Corporation for the purpose of fulfilling the obligations set forth
herein.
2.00 REMUNERATION
In consideration of the services rendered to the Corporation by the
Manager under this Agreement, the Corporation hereby agrees to pay
to the Manager the remuneration described below:
2.01 BASE MANAGEMENT FEE
The Corporation hereby agrees to pay to the Manager a base
management fee calculated as follows:
For the period from March 1 to February 28 of each year of the term
of this Agreement, an amount equal to one million fifty thousand
dollars ($1,050,000.00).
The portion of the fee allocated to each agent and the ratio between
the amount of the fee and the amount of the fringe benefits and
training expenses are at the sole discretion and the sole
responsibility of the Manager.
The above fee shall be adjusted on March 1 of each year according to
the fluctuations in the Canadian consumer price index (C.P.I.) for
the region of Quebec.
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The aforementioned fee includes the portion required by the Manager
to pay deductions at source and fringe benefits and covers the
training expenses required by the various levels of government with
respect to each agent for each period of this Agreement.
2.02 PERFORMANCE FEE
In addition to the base fee set forth in section 2.01 hereof, the
Corporation hereby agrees to pay to the Manager an incentive fee
based on the performance of the Corporation. The amount of the
performance fee shall be equal to four and three tenths percent
(4.3%) of earnings before taxes and bonuses of the Corporation,
calculated on the basis of annual data and payable quarterly.
The above performance fee includes the portion required by the
Manager to pay deductions at source and fringe benefits as well as
training expenses attributable to each of its agents.
2.03 STOCK OPTIONS
2.03.01 UPON EXECUTION OF THIS AGREEMENT
Upon the execution of this Agreement and to create a greater
interest in the business of the Corporation on the part of certain
agents of the Manager, the Corporation hereby grants a stock option
with respect to one hundred and forty thousand (140,000) Class A
shares of the share capital of the Corporation.
Such stock option shall be distributed as follows among the agents
named below:
HEROUX, Andre 65,000
POULIN, Marie-France 25,000
GARNEAU, Richard 25,000
POULIN, David 25,000
2.03.02 FOR EACH YEAR
For each year between March 1, 2002 and February 29 2004, the
Corporation agrees that a stock option on one hundred thousand
(100,000) Class A shares of its share capital shall be granted
annually, with the approval of the Board of Directors of the
Corporation, to certain agents of the Manager, as follows:
HEROUX, Andre 25,000
POULIN, Marie-France 25,000
GARNEAU, Richard 25,000
POULIN, David 25,000
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2.03.03 STOCK OPTION PLAN
The granting, exercise and conditions of applicability of these
stock options shall be subject to the terms and conditions of the
existing stock option plan of the Corporation.
2.04 ACKNOWLEDGEMENT
The Manager hereby acknowledges that the fee to which it is entitled
under this Management Agreement is limited to the base fee and the
other forms of remuneration set forth in this Agreement and the
Manager accepts and acknowledges that such fee and other forms of
remuneration constitute full and final compensation for the
functions which it is called upon to perform pursuant to this
Agreement, unless otherwise agreed upon in writing by the parties.
3.00 TERMS OF PAYMENT
3.01 BASE FEE
The base fee shall be payable in equal, consecutive, weekly
payments.
3.02 PERFORMANCE FEE
The performance fee shall be payable not later than within five (5)
days after the statement of income has been approved by the Board of
Directors of the Corporation at the end of each quarter.
4.00 OBLIGATIONS OF THE MANAGER
4.01 RESPONSIBILITIES
The Manager shall assume the management of the Corporation through
an executive committee and its agents.
The Manager shall manage the general activities of the Corporation,
including the management of the daily operations and of the short,
medium and long-term objectives.
The Manager shall set up the necessary structures to achieve the
objectives of the Corporation.
Without limiting the generality of the following, management of the
daily operations shall include the following:
- Developing and implementing the general policies of the
Corporation;
- Developing and implementing the budgets approved by the Board
of Directors of the Corporation;
- Evaluating and recruiting the senior management of the
Corporation;
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- Managing and coordinating the various committees;
- Negotiating and managing the consolidated supplies of the
Corporation;
- Managing the aggregate assets of the Corporation;
- Managing the liquid assets, cash flow and debt of the
Corporation;
- Developing the product range and new products;
- Managing communications with the financial community;
Without limiting the generality of the following, management of the
short, medium and long-term objectives shall include the following:
- Prospecting businesses for potential acquisitions;
- Completing and integrating the acquisitions in compliance with
criteria determined by the Board of Directors of the
Corporation;
- Developing strategies for the financial benefit of the
shareholders;
- Planning and managing capital investments;
- Developing new manufacturing processes to ensure that the
Corporation shall maintain and improve its competitive
position.
The parties may agree to make changes to the Manager's
responsibilities described above without terminating this Agreement.
4.02 QUALIFICATIONS
The Manager shall ensure at all times that its agents'
qualifications shall satisfy the requirements of the Corporation
with respect to the functions performed by such agents.
4.03 AGENTS
The Manager shall at all times provide a sufficient number of
sufficiently qualified agents to satisfy the requirements of the
Corporation. Particular attention shall be paid to the agents who
are members of the executive committee. Currently, such agents are:
POULIN, Placide
HEROUX, Andre
GARNEAU, Richard
POULIN, David
POULIN, Marie-France
4.04 RENDERING ACCOUNTS
The Manager hereby agrees to render account of its administration at
each meeting of the Board of Directors or at the request of the
Chairman of the Board, at the discretion of the same.
Notwithstanding the rendering of account mentioned above, the
Manager shall, at the appropriate time, provide the Board of
Directors with all information that may
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have an impact on the Corporation to allow the Corporation to
participate in the making of important decisions.
4.05 BUSINESS OPPORTUNITIES
The Manager acknowledges that all business opportunities presented
to the Corporation by third parties shall become the property of the
Corporation and the Manager hereby agrees not to divert any such
business opportunity for its own benefit.
4.06 CONFIDENTIALITY
The Manager hereby acknowledges that, in the performance of its
duties under this Agreement, its agents will have access to
confidential information relating to the business and operations of
the Corporation. Furthermore, the Manager acknowledges that such
confidential information could be used to the detriment of the
Corporation.
Therefore, the Manager hereby agrees that each of its agents shall
undertake and agree not to disclose any such confidential
information to any person, business or corporation during the term
of this Agreement and for an additional period of TWO (2) years
commencing on the date of the termination of such agent's functions
as officer of the Corporation, without the prior written
authorization of the Corporation.
4.07 INTELLECTUAL PROPERTY
The Manager shall ensure that the intellectual property of the
Corporation shall be classified internally and, if applicable, duly
protected pursuant to the laws governing intellectual property that
are applicable in the jurisdictions where the products and services
are marketed.
4.08 NON-COMPETITION
The Manager hereby undertakes and agrees, for the full term of this
Agreement and for an additional term of one (1) year following the
termination thereof, not to work, invest, offer its services or
otherwise be involved in any way whatsoever, either directly or
indirectly, as a director, officer, agent, employee, provider of
funds or investor in a sole proprietorship, corporation,
governmental agency or other entity that is in direct or indirect
competition with the Corporation, within the following
jurisdictions:
- Canada
- United States of America
- All jurisdictions where the Corporation has a place of
business.
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5.00 OBLIGATIONS OF THE CORPORATION
5.01 AUTHORITY
The Manager shall exercise the power and authority of the Board of
Directors over the operations of the Corporation except for such
power and authority as are by law expressly reserved for the Board
of Directors.
The Manager is responsible for hiring, firing and fixing the
remuneration of the employees and agents of the Corporation.
5.02 INDEMNIFICATION
The Corporation hereby agrees to defend and, if applicable,
indemnify the Manager and each of its agents against any third-party
claim that could be brought against any of them personally in
connection with the performance of its functions within the
Corporation. However, the Corporation is not required to fulfill
this undertaking where the claimant is able to show that the
Manager's agent acted in bad faith in the exercise of his or her
functions.
5.03 RESOURCES
The Corporation hereby agrees to provide the Manager with adequate
human, financial and material resources, having regard to the
circumstances and subject to availability, to enable the Manager to
achieve the financial and strategic objectives of the Corporation
and periodically to re-assess the requirements thereof.
5.04 PENSION FUND
The Corporation hereby agrees to pay to the Manager on a yearly
basis an aggregate amount equal to sixty-seven thousand five hundred
dollars ($67,500) which the Manager shall use to contribute to an
individual pension fund for the exclusive benefit of certain agents
designated by the Manager.
6.00 MISCELLANEOUS PROVISIONS
6.01 FORCE MAJEURE
No party hereto shall be considered to be in default under its
obligations set forth in this Agreement if the performance of such
obligations is delayed, impeded or prevented as a result of force
majeure. Force majeure is any cause or event beyond the control of
the parties hereto, which they could not reasonably have foreseen
and against which they could not protect themselves, including,
without limitation, any Act of God, fortuitous event, strike, total
or partial work stoppage, lockout, fire, riot, intervention by the
civil or military authorities, compliance with the regulations or
orders of any governmental authority and acts of war (whether or not
war has been declared).
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6.02 NO ASSIGNMENT
This Agreement is unassignable and no rights, duties or obligations
thereunder may be sublet, assigned or transferred by any of the
parties without the prior written authorization of the other. Any
attempt to sublet, assign or transfer any rights, duties or
obligations hereunder shall be null and void.
7.00 GENERAL PROVISIONS
7.01 SCHEDULES
Any document attached to this Agreement and initialed by the parties
for identification purposes forms an integral part hereof.
7.02 ELECTION
The parties hereby agree to elect domicile in the Judicial District
of Beauce in the Province of Quebec, Canada as the appropriate venue
for the hearing of any claim or legal action brought on any grounds
whatsoever, to the exclusion of all other Judicial Districts which
may, by law, have jurisdiction over such proceedings.
7.03 AMENDMENT
This Agreement may be amended or modified in whole or in part at the
option of the parties, provided that no amendment or modification so
made shall be valid unless effected in writing and duly signed by
the parties and attached to this Agreement.
7.04 NO WAIVER
Failure by a party, through silence, negligence or delay, to
exercise any of its rights or remedies hereunder shall never be
construed and set up against such party as a waiver of its rights
and remedies, so long as the contractual or legal prescription for
the exercise of such rights or remedies has not expired.
7.05 CONFIDENTIALITY
The parties hereby agree not to disclose for the entire term of
their mandate any confidential information brought to their
attention.
8.00 EXPIRY OR TERMINATION OF THE AGREEMENT
8.01 EARLY TERMINATION
8.01.01 AUTOMATIC TERMINATION
This Agreement shall terminate automatically and of right, without
notice or demand, and no indemnity shall be paid to the Manager or
the Corporation if any of the following events should occur:
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- if a receiving order is rendered by a bankruptcy court against
the Corporation or the Manager or if either the Corporation or
the Manager makes an assignment of its property or is declared
bankrupt as the result of the rejection of a proposal
submitted to its creditors;
- where the Manager is found guilty of theft, fraud or
embezzlement with respect to the Corporation.
8.01.02 WITH PRIOR NOTICE FROM THE MANAGER
Notwithstanding any provision hereof to the contrary, the Manager
may terminate this Agreement in any of the following cases:
- upon the expiry of a FORTY-FIVE (45) day period following the
date on which the Corporation receives a notice of default
sent by the Manager or the relevant agent stating that the
Corporation is in default under its obligations hereunder and
the Corporation does not remedy such default within the
aforementioned time;
- if this Agreement is terminated on the ground that the
Corporation has failed to perform its obligations pursuant to
this Agreement, the Manager shall be entitled to claim and
receive, as liquidated damages, an indemnity equal to the base
fee and performance fee that the Manager would have received
had this Agreement not been terminated, which indemnity shall
be payable concurrently with the termination of this
Agreement. Such indemnity shall be equal to not less than the
fees for one year, being the fees received by the Manager for
the twelve (12) months preceding the termination of the
Agreement.
8.01.03 CHANGE IN CONTROL
If the business is sold or in the event of a change in control of
the Corporation, the Manager or the Corporation may terminate this
Agreement within TWELVE (12) months following the sale or change in
control by TWELVE (12) month prior notice. If this Agreement is
terminated for such a reason, the Manager shall be entitled to claim
and to receive severance pay in an amount equal to the base
management fee and the performance fee that the Manager would have
received had the Agreement not been terminated, provided that such
severance pay shall not be less than two (2) years of fees under
this Agreement, based on the last twelve (12) months preceding the
notice, which severance pay shall be payable concurrently with the
termination of this Agreement.
8.01.04 RENEWAL OF THIS AGREEMENT
The Corporation shall, by prior notice sent six (6) months before
the expiry of this Agreement, notify the Manager of its intention to
renew or not renew the Agreement upon the expiry thereof. In the
event that this Agreement is not renewed, the Corporation shall pay
to the Manager a severance pay equal to
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twelve (12) months of base management fee and performance fee, based
on the last twelve (12) months of the Agreement.
8.02 RESCISSION OF THIS AGREEMENT
If, for any reason, the Corporation wishes to rescind this
Agreement, the Corporation shall pay to the Manager, as liquidated
damages, a lump sum equal to the base management fee and the
performance fee which the Manager would have received had the
Agreement not been rescinded. Such lump sum shall be equal to not
less than twelve (12) months of fees, based on the last twelve (12)
months preceding the notice, which indemnity shall be payable
concurrently with the rescission of the Agreement.
However, if this Agreement is rescinded as the result of a change in
control, the specific provisions of section 8.01.03 shall apply.
9.00 COMING INTO FORCE
This Agreement shall come into force on March 1, 2001,
notwithstanding the date on which it is actually executed.
10.00 TERM
This Agreement shall remain in full force and effect for a term of
THREE (3) years until February 29, 2004.
11.00 SCOPE
This Agreement shall be binding upon the parties hereto and the
intervenors herein as well as their successors, heirs, legatees,
administrators, assigns and other legal representatives, and shall
enure to their benefit.
IN WITNESS WHEREOF, THE PARTIES HAVE SIGNED IN TRIPLICATE AT SAINTE-MARIE,
BEAUCE, ON JANUARY 10, 2001.
THE CORPORATION
MAAX INC.
_____________________________ ___________________________________
Witness Jacques A. Vachon
THE MANAGER
GESTION CAMADA INC.
_____________________________ ___________________________________
Witness Placide Poulin
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ADDENDUM
This Addendum forms an integral part of the Management Agreement entered into on
January 10, 2001 between
GESTION CAMADA INC.
AND
MAAX INC.
The parties hereby acknowledge that the accounting rules respecting the
amortization of goodwill have been amended since July 1, 2001 (CICA Handbook
Section 3062 entitled "Goodwill and Other Intangible Assets"). In fact, the new
rules provide that goodwill will no longer be amortized over time. However,
goodwill will be subject to an annual amortization test.
The parties hereby agree to amend section 2.02 Performance Fee to reflect
the new accounting rules mentioned above.
The method of calculation for determining incentive fees shall take into
account the fact that, as regards the amortization of goodwill, the method of
calculation in effect upon the execution of the Management Agreement shall be
maintained, being an annual expenditure based on a forty-year amortization
period. This calculation basis shall apply to all acquisitions prior to July 31,
2001.
Therefore, the first paragraph of section 2.02 - Performance Fee shall
read as follows:
In addition to the base fee set forth in section 2.01
hereof, the Corporation hereby agrees to pay to the
Manager an incentive fee based on the performance of the
Corporation. The amount of the performance fee shall be
equal to four and three tenths percent (4.3%) of earnings
before taxes, consolidated bonuses and amortization of the
goodwill of the Corporation minus $3,423,000 calculated on
the basis of annual data and payable quarterly.
IN WITNESS WHEREOF, the parties hereto have signed in triplicate at Sainte-Marie
on November 1, 2001.
MAAX INC. GESTION CAMADA INC.
Per: Jacques A. Vachon Per: Placide Poulin
ADDENDUM
This Addendum forms an integral part of the Management Agreement entered into on
January 10, 2001 between
GESTION CAMADA INC.
and
MAAX INC.
The parties hereby acknowledge that the resolution passed by the Board of
Directors of MAAX Inc. at the October 14, 2003 meeting regarding the non-renewal
of the agreement entered into with Gestion Camada Inc. has given rise to the
following facts:
- The agreement entered into with Gestion Camada Inc. expires on
February 29, 2004 and shall not be renewed.
- As a result, section 8.02 (RESCISSION OF THIS AGREEMENT) is
triggered and the 12-month indemnity under section 8.02 shall be
payable on February 29, 2004 as regards the equivalent of the first
9 months of the fiscal year based on the financial results as at
30-11-03. The balance, which is the equivalent of the last quarter,
shall be payable upon the annual financial results of MAAX Inc.
being known but not later than April 30, 2004.
- As part of the sale process involving all the shares of MAAX Inc.,
which was initiated on September 8, 2003, section 8.01.03 (CHANGE IN
CONTROL) will also be triggered pursuant to the terms and conditions
thereof, regardless of whether the closing of the transaction is
completed before or after 28-02-04. The severance pay payable by
MAAX Inc. to Gestion Camada Inc. shall be equal to 12 months of base
fee and performance fee, based on the 12 complete months preceding
the date of the closing or the 12 months ended at 29-02-04 if the
closing takes place after 29,02-04. The severance pay payable on the
date of the closing shall be equal pro rata to 9 months ended on
30-11-03 and the balance of the severance pay, which is the
equivalent of the 3 months preceding the date of the closing, shall
be payable upon the annual financial results of MAAX Inc. being
known but not later than 30 days after the date of the closing.
IN WITNESS WHEREOF, the parties hereto have signed in triplicate at Ste-Marie on
October 20, 2003.
MAAX Inc. Gestion Camada Inc.
Per: Per: Placide Poulin