EXHIBIT (e)(4)
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT (this "Agreement"), dated as of March 16,
2002, by and between Associated Materials Incorporated, a Delaware corporation
(the "Company"), and Xxxxxxx X. Xxxxxxxx, an individual resident in the State of
Texas ("Stockholder").
WITNESSETH:
WHEREAS, on the date hereof, Simon Acquisition Corp. ("Merger Sub"),
Harvest/AMI Holdings Inc. ("Parent") and the Company are entering into an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to which Merger
Sub will merge into the Company (the "Merger"), with the Company as the
surviving corporation;
WHEREAS, Stockholder is the Chairman, President and Chief Executive
Officer of the Company, and since 1984 has had significant managerial
responsibility for the operations and business affairs of the Company in such
capacity;
WHEREAS, Stockholder will receive significant consideration by reason
of the consummation of the transactions contemplated by the Merger Agreement;
WHEREAS, the Company and its Subsidiaries are engaged in two businesses
in numerous jurisdictions throughout the United States of America;
WHEREAS, as a result of his affiliations with the Company, Stockholder
has complete access to all confidential and proprietary information concerning
the business and operations of the Company;
WHEREAS, the Company and Stockholder are entering into this Agreement
for the purpose of preserving the proprietary rights, going concern value and
goodwill of the Company for the benefit of the Company by ensuring that
Stockholder does not use such nonpublic, confidential, and proprietary
information for the Restricted Period (as hereinafter defined); and
WHEREAS, Parent and Merger Sub are unwilling to enter into the Merger
Agreement unless concurrently with the execution and delivery of the Merger
Agreement, this Agreement is executed and delivered by the Company and the
Stockholder.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Stockholder hereby covenant and agree as follows:
1. Effectiveness of Agreement. Notwithstanding any other provision of
this Agreement, this Agreement shall constitute a binding obligation of the
parties hereto as of the date hereof but shall become effective only upon the
Commencement Date.
2. Definitions. Except as otherwise defined in this Agreement, terms
used in this Agreement with initial capital letters have the respective meanings
ascribed to such terms in the Merger Agreement. In addition to the other terms
defined elsewhere in this Agreement, unless
the context shall expressly or by necessary implication indicate to the
contrary, the following terms, as used herein, shall have the following
meanings:
(a) "Commencement Date" shall mean the Offer Completion Date.
(b) "Lines of Business" shall mean (i) the building products/siding and
windows business and (ii) the electrical cable manufacturing business.
(c) "Person" shall mean any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other legal entity.
(d) "Restricted Period" shall mean the period commencing on the
Commencement Date and ending on the date that is three (3) years following the
Commencement Date.
(e) "Subsidiaries" a subsidiary of a specified Person means any other
Person of which (i) such specified Person or any other Subsidiary thereof is a
general partner, (ii) voting power to elect a majority of the board of directors
or others performing similar functions with respect to such other Person is held
by such specified Person and/or by any one or more of its other Subsidiaries, or
(iii) at least 50% of the equity interests of such other Person is, directly or
indirectly, owned or controlled by such specified Person and/or by any one or
more of its Subsidiaries. For purposes of this Agreement, AMI Management Company
is and shall be deemed to be a Subsidiary of the Company.
3. Non-Competition. The Stockholder agrees that, during the Restricted
Period, he shall not directly or indirectly own, operate, manage, control,
consult with, provide services for, or in any manner engage in the Lines of
Business, including by himself or in association with or through any other
Person, in competition with the Company within the United States (collectively,
the "Geographical Area"). Nothing herein shall prohibit the Stockholder from
being an owner of not more than 5% of the outstanding capital stock or the
equity securities of a corporation which is publicly traded, so long as the
Stockholder has no active participation in the management or operations of such
Person.
4. No Solicitation. During the Restricted Period, the Stockholder shall
not directly or indirectly through another Person (i) induce or attempt to
induce any employee of the Company or any of its Subsidiaries to leave the
employ of the Company or any of its Subsidiaries, or (ii) hire any person who is
an employee of the Company, or (iii) induce or attempt to induce any customer,
supplier, distributor or other Person having a significant business relationship
with the Company or any of its Subsidiaries to cease doing business with the
Company or any of its Subsidiaries, or interfere with the relationship between
any such customer, supplier, distributor, or such others and the Company or any
of its Subsidiaries with the intent to adversely affect the business or
operations of the Company and its Subsidiaries.
5. Confidentiality. (a) All information about the business and affairs
of the Company or any of its Subsidiaries acquired by Stockholder prior to or
after the date hereof (other than information which is generally available to
the public or known generally by participants in the Lines of Business, other
than as a result of a breach by any Person known by
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Stockholder to have any confidentiality obligation to the Company or any of its
Subsidiaries), including, without limitation, its secrets and information about
its business, financial condition, prospects, products, technology, know-how,
merchandising and advertising programs and plans, and the names of its suppliers
and customers, and the nature of its dealings with such suppliers and customers
which Stockholder has obtained, or which has been disclosed to him as a result
of his duties performed in his capacity as a director and executive officer of
the Company, constitute "Company Confidential Information." Stockholder
acknowledges that he has had and while he remains a director, officer or
employee of the Company will have access to, and knowledge of, Company
Confidential Information, and that improper use or disclosure of same by
Stockholder, whether during or after the expiration of his term as a director
and executive officer of the Company, could cause serious harm to the business
of the Company or any of its Subsidiaries. Accordingly, Stockholder agrees that,
except as required to perform his duties under this Agreement or with the prior
written permission of the Company or as required by law, for the period ending
on the Restricted Period, he will (i) use his reasonable best efforts to keep
confidential all Company Confidential Information which shall come into his
possession, and (ii) not disclose the same to any other Person for so long as
such Company Confidential Information is not generally known by, or accessible
to, the public or known generally by participants in the Lines of Business. This
Section 5 shall not be violated by Stockholder through disclosure of information
which (i) at the time of disclosure is publicly available or known generally by
participants in the Lines of Business through no act or omission by Stockholder,
(ii) is disclosed pursuant to a court order or as otherwise required by law and
to the extent permitted by applicable law, Stockholder will make reasonable
efforts to give the Company notice of the requirement for such disclosure prior
to Stockholder making any such disclosure and that Stockholder cooperate (at the
Company's sole expense) in such manner as the Company may reasonably request in
resisting such disclosure or (iii) is reasonably necessary in the course of
performing his duties as a director and executive officer of the Company.
Stockholder further agrees that, for the period ending on the Restricted Period,
he will not use any Company Confidential Information for his own benefit or
directly or indirectly for the benefit of any Person other than the Company and
its Subsidiaries.
(b) Stockholder acknowledges that the operation and conduct of the
businesses of the Company and its Subsidiaries is special and unique and
involves the use of trade secrets and confidential information and that during
the period of his employment with the Company or any of its Subsidiaries,
Stockholder acquired special knowledge and/or skill that he could effectively
use in competition with the Company. Stockholder further acknowledges that the
provisions of this Section 5 are essential to the future goodwill and
profitability of the Company and its Subsidiaries and have provided substantial
inducement to the Parent and Purchaser to execute and consummate the
transactions contemplated by the Merger Agreement, and that the application or
operation thereof shall not involve a substantial hardship upon his future
business or livelihood.
(c) All files, records, correspondence, memoranda, notes or other
documents (including, without limitation, those in computer-readable form) or
property belonging to the Company or any of its Subsidiaries, whether prepared
by Stockholder or otherwise coming into his possession in the course of his
performance of his duties as a director, officer or employee of the Company or
any of its Subsidiaries or under any other employment or consulting agreement
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with the Company or any of its Subsidiaries, shall be promptly returned to the
Company and not retained by the Stockholder (including, without limitation, any
copies thereof) upon termination of employment with the Company and its
Subsidiaries for any reason whatsoever.
6. Remedies. Stockholder acknowledges and agrees that a breach of this
Agreement may cause irreparable harm to the Company that may not be remedied
solely by the recovery of damages. Therefore, in the event of a breach by
Stockholder of Sections 3, 4 or 5 of this Agreement, the Company shall, in
addition to any other remedies it may have at law or in equity (including
without limitation damages or action for accounting or restitution) be entitled
to seek equitable relief in the form of an injunction and/or restraining order.
Any and all such remedies shall be cumulative and the election of any remedy, at
law or in equity, by the Company shall not be to the exclusion of any other
remedy then available to the Company.
7. Judicial Amendments; Severability. The parties agree and intend that
the covenants contained in this Agreement shall be construed as a series of
separate covenants, and each such separate covenant shall be deemed identical in
terms. It is expressly understood and agreed that, although the Company and
Stockholder consider the restrictions contained in this Agreement to be
reasonable for the purpose of preserving for the Company's benefit the
proprietary rights, going concern value and goodwill of the Company, whenever
possible, each provision, term, and covenant of this Agreement shall be
interpreted in such a manner as to be effective and valid under Applicable Law,
but if any provision, term or covenant of this Agreement, including any of the
separate covenants of this Agreement, shall be held to be prohibited by or
invalid under such Applicable Law, then such provision, term or covenant shall
be ineffective only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provision, term or covenant or the remaining provisions, terms or covenants of
this Agreement; provided that if a court having competent jurisdiction shall
find that any covenant contained in this Agreement is not reasonable, such court
shall have the power to reduce the duration and/or geographic area and/or scope
of such covenant, and the covenant shall be enforceable in such reduced form.
Upon determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
8. Assignment. The rights and obligations of the Company hereunder
shall inure to the benefit of, and be binding upon, its successors and assigns.
Stockholder may not assign his obligations hereunder, provided that the Company
may, at any time, and without the prior consent of Stockholder, assign its
rights under this Agreement to its or any of its affiliates' financing sources
by way of security, to any Person appointed to enforce such security or any
Person in connection with such enforcement.
9. Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when (i) delivered by hand, (ii)
transmitted by telecopier (with receipt confirmed), provided that a copy is sent
at about the same time by registered mail, return receipt requested and,
provided further, that a transmission made on a day which is not a business day
or after 3:00 pm on a business day shall be deemed given on the following
business
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day, (iii) one business day after mailed or otherwise sent for next-day
delivery, to the addressee, if sent by Express Mail, Fed Ex, or other reputable
overnight delivery service, or (iv) five business days after mailed, to the
addressee, by registered mail, return receipt requested, to the addressee at the
following addresses or telecopier numbers (or to such other address or
telecopier number as a party may specify by notice given to the other party
pursuant to this provision):
If to Stockholder, to:
Xxxxxxx X. Xxxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
with a copy (which shall not constitute notice) to:
Xxxxx Day Xxxxxx & Xxxxx
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. X'Xxxxxx
If to the Company, to:
Associated Materials Incorporated
0000 Xxxxx Xxxx
X.X. Xxx 0000
Xxxxx, Xxxx 00000
Fax: (000) 000-0000
Attention: Chief Executive Officer
with copies (which shall not constitute notice) to:
AMI/Harvest Holdings Inc.
c/o Harvest Partners, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxx X. Xxxxxxxx
and:
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
or to such other Person or address as shall be designated in writing by any such
party.
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10. General. (a) The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(b) This Agreement sets forth the entire agreement and understanding of
the parties relating to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or oral, between the
parties relating to the subject matter hereof.
(c) This Agreement may be amended, modified, superseded or canceled,
and the terms or covenants hereof may be waived, only by a written instrument
executed by both 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 of such
party 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.
(d) This Agreement may be executed in counterparts, each of which shall
be deemed to be an original instrument, but all of which taken together shall
constitute one agreement.
(e) This Agreement, and the legal relations between the parties hereto,
shall be governed by and construed in accordance with the laws of the State of
Texas applicable to agreements executed and to be performed solely within such
state.
(f) The parties hereto each waive their respective rights to a trial by
jury of any claim or cause of action based upon or arising out of or related to
this Agreement or the transactions contemplated hereby in any action, proceeding
or other litigation of any type brought by any of the parties against any other
party or parties, whether with respect to contract claims, tort claims, or
otherwise. The parties hereto each agree that any such claim or cause of action
shall be tried by a court trial without a jury. Without limiting the foregoing,
the parties further agree that their respective right to a trial by jury is
waived by operation of this Section 10(f) as to any action, counterclaim or
other proceeding which seeks, in whole or in part, to challenge the validity or
enforceability of this Agreement or any provision hereof. This waiver shall
apply to any subsequent amendments, renewals, supplements or modifications to
this Agreement.
11. Importance of this Agreement. It is understood by and between the
Company and Stockholder that the provisions of Sections 3, 4 and 5 of this
Agreement are an essential element of the Parent's and the Merger Sub's
agreement to consummate the transactions contemplated by the Merger Agreement
and that, but for this Agreement, the Parent and the Merger Sub would not have
entered into nor consummated the Merger Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
ASSOCIATED MATERIALS INCORPORATED
By: /s/ XXXXXXX XXXXXXXX
-------------------------------------
Xxxxxxx Xxxxxxxx, Vice President
XXXXXXX X. XXXXXXXX
/s/ XXXXXXX X. XXXXXXXX
-----------------------------------------
Xxxxxxx X. Xxxxxxxx, Stockholder
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