EXHIBIT 10.12
FORM OF NON-COMPETITION AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into as of this 4th day of
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June, 2004 by and between ____________ (the "Executive") and Maax Corporation, a
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Nova Scotia unlimited company (the "Company").
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WHEREAS, MAAX Inc., a company governed under the laws of the Province of
Quebec ("MAAX"), 3087052 Nova Scotia Company, a Nova Scotia unlimited company,
3087053 Nova Scotia Company, a Nova Scotia unlimited company, 9139-4460 Quebec
Inc., a company governed under the laws of the Province of Quebec ("Subco I")
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and 9139-7158 Quebec Inc., a company governed under the laws of the Province of
Quebec ("Subco II"), have entered into a Merger Agreement (as amended,
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supplemented, amended and restated or otherwise modified from time to time, the
"Merger Agreement"), dated as of March 10, 2004;
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WHEREAS, in connection with the closing of the amalgamation and the other
transactions contemplated by the Merger Agreement, it is contemplated that,
among other things, at the effective time of the amalgamation, Subco I and Subco
II will amalgamate with MAAX to form Amalco, a company governed under the laws
of the Province of Quebec, which will be a wholly-owned subsidiary of the
Company;
WHEREAS, in connection with the amalgamation contemplated by the Merger
Agreement, Executive, as a selling shareholder under the Merger Agreement will
receive the consideration specified therein in exchange for the common shares,
without par value, of MAAX (the "Common Shares"), and the other securities of
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MAAX held by him immediately prior to the effective time of the amalgamation;
WHEREAS, as a condition to the consummation of the amalgamation and the
other transactions contemplated by the Merger Agreement, the parties hereto
desire to enter into certain agreements restricting the activities of Executive
in an effort to eliminate potential conflicts of interest that may arise in the
future, to protect MAAX's legitimate business interests and for other business
purposes; and
WHEREAS, the Executive is entering into this Agreement as additional
consideration for the consideration being paid to him in connection with the
amalgamation under the Merger Agreement for his Common Shares and other
securities of MAAX.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Executive
agree as follows:
1. Protection of Confidential Information; Non-Competition;
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Non-Solicitation; Non-Disparagement.
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1.1. Acknowledgment. The Executive agrees and acknowledges that in the
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course of rendering services to MAAX and its clients and customers he has
acquired access to and become acquainted with confidential information about the
professional, business and financial affairs of MAAX, its subsidiaries and
affiliates that is non-public, confidential or proprietary in nature. The
Executive acknowledges that the Company is engaged in a highly competitive
business and that the success of the Company in the marketplace depends upon its
goodwill and reputation for quality and dependability. The Executive agrees and
acknowledges that reasonable limits on his ability to engage in activities
competitive with the Company are warranted to protect its substantial investment
in developing and maintaining its status in the marketplace, reputation and
goodwill. The Executive recognizes that in order to guard the legitimate
interests of the Company, it is necessary for it to protect all of its and its
subsidiaries confidential information, including, without limitation, the
confidential information of MAAX and its subsidiaries acquired as a result of
the Company's acquisition of MAAX and its subsidiaries. The existence of any
claim or cause of action by the Executive against the Company shall not
constitute and shall not be asserted as a defense to the enforcement by the
Company of this Agreement. The Executive further agrees that his obligations
under this Section 1 shall be absolute and unconditional.
1.2. Confidential Information. During and at all times after the date
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hereof, the Executive shall keep secret all non-public information, matters and
materials of MAAX (including its subsidiaries and affiliates), including, but
not limited to, know-how, trade secrets, mail order and customer lists, pricing
policies, operational methods, any information relating to MAAX's (including its
subsidiaries' and affiliates') products or product development, processes,
product specifications and formulations, artwork, designs, graphics, services,
budgets, business and financial plans, marketing and sales plans and techniques,
employee lists and other business, financial, commercial and technical
information of MAAX (including its subsidiaries and affiliates) (collectively,
the "Confidential Information"), to which he has had access and shall not use or
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disclose such Confidential Information to any person other than (a) the Company,
its authorized employees and such other persons to whom the Executive has been
instructed to make disclosure by the board of directors of the Company, (b) as
may be required by law and then only after providing reasonable prior written
notice to the board of directors of MAAX Holdings, Inc. or (c) to the
Executive's personal advisors for purposes of enforcing or interpreting this
Agreement, or to a court for the purpose of enforcing or interpreting this
Agreement, and who in each case have been informed as to the confidential nature
of such Confidential Information and, as to advisors, their obligation to keep
such Confidential Information confidential. "Confidential Information" shall not
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include any information which is in the public domain, provided such information
is not in the public domain as a consequence of disclosure by the Executive in
violation of this Agreement or by the Executive or any other party in violation
of a confidentiality or non-disclosure agreement with MAAX or the Company. The
Executive shall use his commercially reasonable efforts to deliver to the
Company, at the time of consummation of the amalgamation contemplated by the
Merger Agreement, all documents, data, papers and records of any nature and in
any medium (including, but not limited to, electronic media) or copies
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thereof in his possession or subject to his control that (i) belong to MAAX or
(ii) contain or reflect any information (the "Company Documents"), including,
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but not limited to, Confidential Information concerning MAAX, its subsidiaries
and affiliates. To the extent not delivered at the time of consummation of the
amalgamation, the Executive will use his commercially reasonable efforts to
deliver the Company Documents as soon as reasonably practicable thereafter.
1.3. Non-Competition. For a period of five (5) years from the date hereof
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(the "Restrictive Period"), the Executive shall not, in any capacity, whether
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for his own account or on behalf of any other person or organization, directly
or indirectly, with or without compensation, (a) own, operate, manage or
control, (b) serve as an officer, director, partner, member, employee, agent,
consultant, advisor or developer or in any similar capacity to or (c) have any
financial interest in, or aid or assist anyone else in the conduct of, any
person or enterprise engaged in North America in any of the businesses in which
MAAX (including its subsidiaries and affiliates) is engaged as of the date
hereof, including, but not limited to the production, distribution, marketing
and sale (including, without limitation, sales through wholesalers, showrooms,
specialty retailers, dealers and home centers) of bathroom products, kitchen
cabinetry, spas and/or providing related services in North America (a
"Competitor"). Executive shall be prohibited from acquiring or holding any
direct or indirect interest in any customers, clients, vendors or distributors
of the Company (including its subsidiaries and affiliates); provided, however,
that nothing in this Agreement shall prohibit the Executive from acquiring or
holding not more than five percent of any class of publicly-traded securities.
1.4. Non-Solicitation. During the Restrictive Period, the Executive shall
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not, in any capacity, whether for his own account or on behalf of any other
person or organization, directly or indirectly, with or without compensation,
(i) solicit, divert or encourage any officers, directors, employees, agents,
consultants or representatives of the Company (including its subsidiaries and
affiliates), to terminate his, her or its relationship with the Company
(including its subsidiaries and affiliates), (ii) solicit, divert or encourage
any officers, directors, employees, agents, consultants or representatives of
the Company (including its subsidiaries and affiliates) to become officers,
directors, employees, agents, consultants or representatives of another
business, enterprise or entity, (iii) solicit, divert or appropriate any
customers, clients, vendors, distributors or business partners of the Company
(including its subsidiaries and affiliates), or (iv) influence or attempt to
influence any of the customers, clients, vendors, distributors or business
partners of the Company (including its subsidiaries and affiliates) to transfer
his, her or its business or patronage from the Company (including its
subsidiaries and affiliates) to any Competitor of the Company (including its
subsidiaries and affiliates).
1.5. Non-Disparagement. During the Restrictive Period, (a) the Executive
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on the one hand, and the Company, its subsidiaries, J.W. Childs Associates, L.P.
("Childs"), Borealis Private Equity Limited Partnership and Borealis (QLP)
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Private Equity Limited Partnership (collectively referred to herein as
"Borealis") and Ontario Municipal Employees Retirement Board ("OMERS", and
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together with Childs and Borealis, the "Sponsors") and their respective
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affiliates, on the other hand, shall not, except to the extent required by law,
directly or indirectly (i) engage in any conduct or make any statement, whether
in commercial or non-commercial speech, disparaging or criticizing in any way
the other party, or (ii) impair the goodwill or
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reputation in any way of the other party, and (b) the Executive shall not
directly or indirectly engage in any other conduct or make any other statement,
whether in commercial or non-commercial speech, disparaging or criticizing, in
each case, which could be reasonably expected to impair the goodwill or
reputation of the foregoing entity's products or services or the marketing of
any of the foregoing entity's products or services, except to the extent
required by law and then, in the case of the Executive, only after consultation
with the Sponsors to the extent possible, or in connection with any dispute
between the Executive and any of the foregoing entities.
1.6. Remedies for Breach. The Company and the Executive agree that the
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restrictive covenants contained in this Agreement are severable and separate,
and the unenforceability of any specific covenant herein shall not affect the
validity of any other covenant set forth herein. The Executive and the Company
each acknowledge that the other party will suffer irreparable harm as a result
of a breach of such restrictive covenants by the other party for which an
adequate monetary remedy does not exist and a remedy at law may prove to be
inadequate. Accordingly, in the event of any actual or threatened breach by
either party of any provision of this Agreement, each party shall, in addition
to any other remedies permitted by law, be entitled to obtain equitable
remedies, including, but not limited to, specific performance, injunctive
relief, a temporary restraining order, and/or a preliminary and/or permanent
injunction in any court of competent jurisdiction, to prevent or otherwise
restrain a breach of this Section 1 without the necessity of proving damages,
posting a bond or other security, and to recover any and all costs and expenses,
including reasonable counsel fees, incurred in enforcing this Agreement against
the other party, and each party hereby consents to the entry of such relief
against it and agrees not to contest such entry. Such relief shall be in
addition to and not in substitution of any other remedies available to the
parties. The existence of any claim or cause of action of either party against
the other party, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by such party of said covenants. Neither
party shall defend on the basis that there is an adequate remedy at law.
1.7. Modification. The parties agree and acknowledge that the duration,
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scope and geographic area of the covenants described in this Section 1 are fair,
reasonable and necessary in order to protect the Confidential Information,
goodwill and other legitimate interests of the Company and that adequate
consideration has been received by the Executive for such obligations.
2. Intellectual Property. All copyrights, trademarks, trade names, service
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marks and all ideas, inventions, discoveries, secret processes and methods and
improvements, together with any and all patents that may be issued thereon, and
all other intangible or intellectual property rights that were invented,
conceived, developed or enhanced by Executive during the term of his employment
with MAAX that relate to the business or operations of MAAX or any subsidiary or
affiliate thereof or that result from any work performed by the Executive for
MAAX or any such subsidiary or affiliate shall be the sole property of MAAX or
such subsidiary or affiliate, as the case may be, and Executive hereby waives
any right or interest that he may otherwise have in respect thereof. Upon the
reasonable request of the Company, Executive shall execute, acknowledge and
deliver any instrument or document reasonably necessary or appropriate to give
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effect to this Section 2 and, at the Company's cost, do all other acts and
things reasonably necessary to enable the Company or such subsidiary or
affiliate, as the case may be, to exploit the same or to obtain patents or
similar protection with respect thereto.
3. Notices. All notices or other communications hereunder shall be in
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writing and shall be deemed to have been duly given (a) when delivered
personally, (b) upon confirmation of receipt when such notice or other
communication is sent by facsimile, (c) one day after delivery to an overnight
delivery courier, or (d) on the fifth day following the date of deposit in the
United States mail if sent first class, postage prepaid, by registered or
certified mail. The addresses for such notices shall be as follows:
(a) For notices and communications to the Company:
Maax Corporation
640 Cameron Road
Sainte-Marie, Quebec G6E 1B2
Fax: (418) 387-4155
Attn: Andre Heroux
President and Chief Executive Officer
with copies to:
J.W. Childs Associates, L.P.
111 Huntington Avenue
Suite 2900
Boston, Massachusetts 02199
Fax: (617) 753-1101
Attn: Steven G. Segal
Borealis Private Equity Limited Partnership
1 Adelaide Street East
Suite 2800, Box 198
Toronto, Ontario M5C 279
Fax: (416) 361-5042
Attn: Andre LaForge
Ontario Municipal Employees Retirement Board
One University Avenue, Suite 700
Toronto, Ontario M5J 2P1
Fax: (416) 369-0675
Attn: Michael Graham
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Kaye Scholer LLP
425 Park Avenue
New York, New York 10022
Fax: (212) 836-8689
Attn.: Stephen C. Koval, Esq.
Fasken Martineau DuMoulin LLP
Stock Exchange Tower
800, Place Victoria, Suite 3400
P.O. Box 242
Montreal, Quebec H4Z 1E9
Fax: (514) 397-7600
Attn.: Robert Pare, Esq.
(b) For notices and communications to the Executive, to the address
or facsimile set forth below his signature hereto. Any party hereto may, by
notice to the other, change its address for receipt of notices hereunder.
4. General.
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4.1. Governing Law. This Agreement shall be governed by the laws of the
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Province of Quebec, without regard to any conflicts of law principles thereof
that would call for the application of the laws of any other jurisdiction.
Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against either of the
parties in the courts of the Province of Quebec (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world, whether
within or without the Province of Quebec.
4.2. Amendment; Waiver. This Agreement may be amended, modified,
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superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument executed by the parties hereto or, in the case of a
waiver, by the party waiving compliance. The failure of either 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 either party
of the breach of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
4.3. Successors and Assigns. This Agreement shall be binding upon the
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Executive, and inure to the benefit of his administrators, executors, heirs and
assigns, although the obligations of the Executive are personal and may be
performed only by him. The Company may assign this Agreement and its rights,
together with its obligations, hereunder (a) in connection
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with any sale, transfer or other disposition of all or substantially all of its
assets or business(es), whether by merger, consolidation, amalgamation or
otherwise; or (b) to any wholly owned subsidiary of the Company, provided that
the Company shall remain liable for all of its obligations hereunder. This
Agreement shall also be binding upon and inure to the benefit of the Company and
its subsidiaries, successors and assigns.
4.4. Counterparts. This Agreement may be executed in multiple
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counterparts, each of which shall be considered to have the force and effect of
an original.
4.5. Severability. If any portion of this Agreement is held invalid or
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inoperative, the other portions of this Agreement shall be deemed valid and
operative and, so far as is reasonable and possible, effect shall be given to
the intent manifested by the portion held invalid or inoperative.
4.6. Third Party Beneficiaries. Nothing in this Agreement will confer any
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rights upon any person or entity other than the parties hereto, all subsidiaries
of the Company (who are expressly made third party beneficiaries hereof) and
with respect to Section 1.5 hereof, the Sponsors (who are expressly made third
party beneficiaries hereof) and their respective heirs, successors and assigns.
4.7. Entire Agreement. This Agreement supersedes all prior agreements
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between the parties with respect to its subject matter (including the
Executive's Non-Competition Agreement Term Sheet dated March 10, 2004) and is
intended as a complete and exclusive statement of the terms of the agreement
between the parties with respect thereto.
4.8. Language. The parties have explicitly requested that this Agreement
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be drafted in the English language; les parties ont expressement demande que les
presentes soient redigees en anglais.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
MAAX CORPORATION
By: ________________________
Name:
Title:
EXECUTIVE:
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Address and Facsimile:
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Address Line 1
Address Line 2
Facsimile:
[Non-Competition Agreement Signature Page]