EXHIBIT 10.12
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
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August 31, 1992 among SANDY'S POOL SUPPLY, a California corporation (the
"Company"), XXXXXX X. XXXXXX, a former shareholder of the Company
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("Shareholder") and LESLIE'S POOLMART, a California corporation ("Purchaser").
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R E C I T A L S
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A. Purchaser, Shareholder and one other shareholder of the Company
entered into a Stock Purchase Agreement dated as of August 31, 1992 (the
"Purchase Agreement"), pursuant to which Purchaser has agreed to purchase all of
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the capital stock of the Company.
B. It is a condition precedent to the obligations of Purchaser to
consummate the transactions contemplated by the Purchase Agreement that
Shareholder enter into this Agreement and be bound by its terms.
C. The execution and delivery of this Noncompetition Agreement by
Shareholder and the agreement by Shareholder to be bound by its terms are
necessary to cause the effective preservation of the goodwill and business of
the Company and to provide assurance to Purchaser and the Company that
Shareholder will not take any action that could frustrate or interfere with such
preservation or transfer or otherwise impair such goodwill or business.
NOW, THEREFORE, in consideration of the premises and the covenants of the
parties contained herein and in the Purchase Agreement and Purchaser's payment
of $10,000, the parties hereto agree as follows:
1. Confidential Information; Covenant Not To Compete. Shareholder hereby
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covenants to and agrees with Purchaser and the Company that, except as otherwise
expressly consented to, approved or otherwise permitted by the Board of
Directors of Purchaser in writing, for a period of ten (10) years commencing on
the date hereof (provided, however, that such period shall be extended by and
for the duration of any period of time during which Shareholder is in violation
of any provision hereof), Shareholder shall not,
(a) directly or indirectly, acting alone, through his spouse or other
family member, or as a member of a partnership or other business entity or as a
holder of any security of any class issued by a corporation or other business
entity (other than as a holder of less than one percent (1%) of the outstanding
amount of any security listed on a national securities exchange or designated as
a National Market System security by the National Association of securities
Dealers, Inc.) or as an officer, director, partner, employee, consultant, agent
or representative of any corporation, partnership or other business entity,
engage in any business, trade or other enterprise substantially similar to, or
directly or indirectly in competition with, Purchaser or the Company or any
affiliate of Purchaser or the Company with respect to the manufacture,
marketing, distribution or sale of above-ground swimming pools, swimming pool
equipment, and swimming pool supplies including related installation, service
and repair activities (the
"Business") in (i) each county in the States of California, Arizona, Texas,
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Pennsylvania and Ohio (it being agreed by Purchaser, the Company and Shareholder
that the Company currently carries on the Business or has established goodwill
in each of such counties), (ii) any county in the United States of America or
provincial subdivision in Canada in which the Company has carried on the
Business or established goodwill prior to the date hereof, (iii) any county in
the United States of America or provincial subdivision in Canada in which
Purchaser has carried on the Business or established goodwill prior to the date
hereof, and (iv) each state and country in which Purchaser or the Company
conducts the Business during the term of this Agreement; or loan or provide
money or other property to any such business, trade, or enterprise; or extend,
or assist in arranging, credit or resources to establish or conduct any such
business, trade, or enterprise; or permit his name, reputation or affiliations
TO be used, in connection with any such business, trade or enterprise;
(b) use or disclose (or cause to be disclosed) to any person, firm,
corporation, association or her entity (except as required by law) any
confidential or proprietary information pertaining to the organization,
business, inventions, discoveries, customers, suppliers, operations, affairs or
other trade secrets (including all trade secrets as defined by Section 3426.1(d)
of the California Civil Code) of the Company or Purchaser, including any
Customer List (as defined in the Purchase Agreement) or any portion thereof or
information therein, at any time; provided, however, that such obligations of
non-use and non-disclosure shall not apply to information that is or becomes a
part of the public domain without breach of the foregoing obligations of
Shareholder;
(c) request, induce or attempt to influence (or cause a Person to
request, induce or attempt to influence) any current, future or prospective
customer or supplier of the Company or Purchaser in connection with the Business
to limit, curtail or cancel its business with the Company or Purchaser; or
(d) request, induce or attempt to influence (or cause a Person to
request, induce or attempt to influence) any then-current officer, director,
employee, consultant, agent or representative of the Company or Purchaser to (i)
terminate his, her or its employment or business relationship with the Company
or Purchaser or (ii) commit any act that, if committed by Shareholder would
constitute a breach of any provision hereof.
(e) make (or cause to be made) any false, misleading or disparaging
statements regarding Purchaser, the Company or any of their respective officers,
directors, employees, shareholders, businesses, operations, products or
financial conditions;
(f) incorporate, form or become affiliated or associated with (or
cause a Person to be incorporated, formed or become affiliated with) any
corporation or entity with a name or trade name that includes the name "Xxxxxx,"
"Leslie's," "Xxxxx" or "Sandy's" or is otherwise similar to the name of
Purchaser or the Company, or that employs any such name in any trademark, trade
name, trade dress, or in any other manner; or
(g) represent or otherwise suggest that he, or any business in which
he may become affiliated, is in any way affiliated with Purchaser or the
company;
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2. Remedy for Breach of Provisions Hereof.
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(a) Xxx xxxxxxxxxx xx xxxxxxx (x), (x), (x), (x), (x), (x) and (g) of
Section 1 above are separate and distinct commitments independent of each of the
other such clauses. Shareholder agrees that the provisions of such clauses are
reasonable and necessary to protect the legitimate interests of the Company and
Purchaser and that the Company and Purchaser have no adequate remedy at law for
any breach or threatened or attempted breach by him thereof and, accordingly,
Shareholder also agrees that the Company and Purchaser may, in addition to the
other remedies that may be available to them hereunder or at law, commence
proceedings in equity for an injunction temporarily or permanently enjoining
Shareholder from breaching or threatening or attempting any such breach of such
provisions and to command specific performance by shareholder of such
provisions; and for purposes of any such proceeding in equity, it shall be
presumed and it is hereby agreed by the parties hereto that the remedies at law
available to the company and Purchaser would be inadequate and that the Company
and Purchaser would suffer immediate and irreparable harm as a result of the
violation of any provision hereof by Shareholder.
(b) In the event of any use or disclosure of the Customer Lists (or
any portion thereof) by Shareholder in violation of Section 1(b) above,
Shareholder shall pay to Purchaser $1,000,000, as liquidated damages, for each
such use or disclosure. Purchaser, the Company and Shareholder agree that. (i)
it would be difficult to ascertain the amount of damages resulting from any such
use or disclosure and (ii) the foregoing amount stated as liquidated damages is
reasonable under the circumstances existing on the date hereof. The parties
acknowledge and agree that the liquidated damage remedy specified in this
subsection (b) is not intended to limit the other remedies of Purchaser or the
Company, as specified in subsection (a) above or otherwise, including injunctive
relief prohibiting the use or disclosure of the Customer Lists in violation of
Section 1(b). The remedy described in this subsection (b) shall not apply with
respect to the first three Isolated Disclosures. As used in the foregoing
sentence, an "Isolated Disclosure" shall mean the oral disclosure by Shareholder
of a single customer name on the Customer Lists (but not the address, telephone
number, sales information or any other information in the Customer Lists
relating to the customer), if such disclosure was not intended to be used, and
could not reasonably be expected to be used by the recipient, for commercial
purposes.
(c) The prevailing party in any proceeding in equity or at law
commenced in respect of this Agreement shall be entitled to recover from the
other party or parties to such proceeding, in addition to any other award to
which such party may be entitled, all fees, costs and expenses (including all
reasonable fees and disbursements of counsel) incurred in connection with such
proceeding and any appeals therefrom.
3. Consent to Partial Enforcement; Severability. It is the desired
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intent of the parties hereto that the provisions of Section 1 hereof shall be
enforced to the fullest extent permissible in each jurisdiction in which
enforcement is sought. Accordingly, Purchaser, the Company and Shareholder
agree that if any of the provisions set forth in Section 1 hereof are deemed by
any court to be invalid, unenforceable or overly broad, the court may, reduce,
amend or reform such
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provisions to a scope which it deems reasonable under the circumstances. If any
one or more provisions hereof or portions thereof are held to be invalid or
unenforceable, the validity and enforceability of the remaining provisions and
portions thereof shall not be affected thereby.
4. Independent of Other Agreements. The covenants and agreements of
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Shareholder hereunder are independent of the covenants, representations,
warranties and agreements of the parties to the Purchase Agreement, and no
default, breach or failure to perform by any party to the Purchase Agreement
shall constitute an excuse or other justification for Shareholder to fail to
observe fully his covenants and agreements hereunder. No course of dealing
among Purchaser, the Company and Shareholder and no delay by Purchaser or the
Company in exercising any right, power or remedy hereunder, in equity or at law,
shall constitute a waiver of, or otherwise prejudice, any such right, power or
remedy.
5. Knowledge; Advice of Counsel. Shareholder represents and warrants
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that he has read and understands each of the provisions of this Agreement and
that he has sought and obtained the advice of legal counsel before agreeing to
be bound by the terms hereof. Shareholder presents and warrants to the Company
and Purchaser that (i) this Agreement is a valid and binding obligation of
shareholder, enforceable against him in accordance with its terms (except to the
extent that a court may decline to enforce Sections 1(a), 2(b), 3 or 4 hereof
and (ii) he is free to enter into this Agreement and not under any contractual
or other restraint that would prohibit or impede in any respect his performance
hereunder. Shareholder acknowledges and agrees that Purchaser would not have
agreed to enter into the Purchase Agreement but for the execution, delivery and
performance by Shareholder of this Agreement.
6. Miscellaneous. This Agreement (i) constitutes the entire agreement
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and supersedes all prior and contemporaneous agreements and understandings, both
written and oral, among the parties hereto with regard to the subject matter
hereof [except that the Covenant Not To Compete between Shareholder and
Purchaser dated as of December 30, 1988 shall remain in full force and effect],
(ii) is not intended to confer upon any person any rights or remedies hereunder
or with respect to the subject matter hereof except as expressly set fort
herein, (iii) shall inure to the benefit of and be enforceable by the Company
and Purchaser and its successors and assigns and (iv) may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which counterparts shall together constitute a single agreement.
7. Permitted Activities.
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(a) Notwithstanding anything in Section 1(a) to the contrary,
Shareholder may with respect to "Xxxxx Xxxxx," "Explorer" and "Custodian"
products only, market and sell such products (i) to wholesalers and retailers,
(ii) through direct mail solicitation of end-users or (iii) by retail sale
through a single store factory outlet location located in the city of Simi
Valley which only sells Xxxxx Xxxxx products and does not advertise for, or
solicit sales from, such location. Except as expressly described in clauses
(ii) and (iii) of the foregoing sentence, Shareholder may not engage in retail
sales of such products.
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(b) Notwithstanding anything in Section 1(b) to the contrary,
Purchaser shall, upon written request of Shareholder, provide the Customer Lists
to a third party mailing house for use by Shareholder on a "blind basis" for any
advertising purpose relating to the activity described in subsection (a) of this
Section 7 that Purchaser, in its reasonable discretion, deems appropriate..
Without limiting Purchaser's discretion under the foregoing sentence, the
parties acknowledge and agree that Shareholder may not use Customer Lists as a
"broker" for any other person or entity or for any similar purpose.
8. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of California.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Noncompetition Agreement, or has caused this Noncompetition Agreement to be
executed on its behalf by a representative duly authorized, as of the date first
above set forth.
LESLIE'S POOLMART
By /s/ Xxxxx X. XxXxxxxxx
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SANDY'S POOL SUPPLY
By /s/ Xxxxx X. XxXxxxxxx
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/s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX
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