Exhibit(e)(3)
FORM OF NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this "AGREEMENT") is entered into as
of __________ __, ______ by and among K2 Inc., a Delaware corporation
("PARENT"), Brass Eagle Inc., a Delaware corporation (the "Company"), and the
undersigned stockholder of the Company, Charter Oak Capital Partners, LP, a
Connecticut limited partnership ("STOCKHOLDER").
RECITALS
A. Parent and the Company are parties to that certain Agreement and
Plan of Merger and Reorganization, dated as of October 22, 2003 (the "MERGER
AGREEMENT"), by and among Parent, Xxxx Acquisition Sub, Inc., a Delaware
corporation and wholly-owned subsidiary of Parent ("ACQUISITION SUB"), and the
Company.
B. The Merger Agreement provides for the merger of the Company with
and into Acquisition Sub with the Company continuing as the surviving company
and as a wholly-owned subsidiary of Parent (the "Merger"). Pursuant to the
Merger Agreement, such Merger shall be accomplished by (a) Parent commencing an
exchange offer to acquire all of the shares of common stock, $.01 par value, of
the Company issued and outstanding (each, a "SHARE") in which exchange offer
each Share validly tendered and not properly withdrawn would be exchanged for a
number of fully paid and nonassessable shares of common stock, par value $1.00
per share, of Parent to be determined in accordance with the terms of the Merger
Agreement (such exchange offer, as it may be amended from time to time as
permitted by the Merger Agreement, the "OFFER") and (b) following the
consummation of the Offer, the merger of Acquisition Sub with and into the
Company, with the Company being the surviving corporation, in accordance with
the Delaware General Corporation Law.
C. Stockholder has entered into that certain Exchange Agreement, dated
as of October 22, 2003, with Parent, pursuant to which it has agreed to tender
its Shares in the Offer pursuant to the terms and conditions of such Agreement.
D. The Company is engaged in the business of (i) manufacturing,
marketing, designing and distributing products and accessories for the paintball
industry, including without limitation, paintball guns, paintball markers,
paintball masks, paintballs and CO2 gas cartridges for the paintball industry
(the "PAINTBALL BUSINESS"), (ii) manufacturing, marketing, designing and
distributing protective gear and apparel for the paintball, BMX bike racing,
motocross racing, skateboarding, inline skating and mountain biking industries
(the "PROTECTIVE GEAR BUSINESS") and (iii) through the Company's Challenge Park
Xtreme LLC division, promoting and operating a recreational sporting facility
for extreme sports (the "FACILITIES BUSINESS") (collectively, as such businesses
are being conducted as of the date hereof, the "BUSINESS;" provided, however,
that the manufacturing, marketing and distributing of CO2 gas cartridges for
non-paintball products shall be excluded from the definition of the "Paintball
Business").
E. The parties acknowledge that Stockholder has considerable
knowledge, business contacts and expertise relating to the Paintball Business
and limited knowledge and business contacts in the Protective Gear Business and
the Facilities Business, which knowledge, if used in competition with the
Company (as the surviving entity in the Merger), would substantially harm the
business and financial prospects of the Company. Therefore, in order to protect
the goodwill, trade secrets, and other confidential and proprietary information
related to the Business, Parent and the Company have agreed that Parent's
obligation to consummate the transactions contemplated by the Merger Agreement
is subject to the condition, among others, that Stockholder execute and deliver
this Agreement.
F. Parent and the Company desire to enter into this Agreement to
prohibit Stockholder from, among other things, competing against the Company or
Parent by engaging in the Business during the term of this Agreement.
G. As a condition to Parent's willingness to enter into the Merger
Agreement and consummate the transactions contemplated thereby, Stockholder has
agreed to enter into this Agreement and thereby be bound by the material,
significant and essential covenants not to compete and the confidentiality
agreements provided in this Agreement, for which good and valuable consideration
has been transferred from Parent to Stockholder in exchange for such covenants.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and to
induce Parent and the Company to consummate the transactions contemplated by the
Merger Agreement, and in connection with, and in consideration of, Stockholder's
participation in the Offer, Stockholder hereby covenants and agrees as follows:
1. NONCOMPETITION. During the period commencing on the date hereof and
ending on the expiration of five years following the date hereof, Stockholder
shall not, directly or indirectly, own, manage, operate, join, advise, control
or otherwise engage or participate in or be connected as an officer, director,
employee, partner, principal, member, stockholder, guarantor, advisor, agent,
representative or consultant of or in any business which competes against the
Paintball Business, the Protective Gear Business or the Facilities Business
anywhere in the world (a "COMPETING BUSINESS"). Notwithstanding the foregoing,
Stockholder may own securities in any publicly held corporation (i.e. a
corporation whose shares are listed, quoted or traded on any national securities
exchange or automated quotation system), but only to the extent Stockholder owns
of record or beneficially less than 5% of the outstanding beneficial ownership
of such corporation.
2. NONSOLICITATION OF EMPLOYEES. For the period commencing on the date
hereof and ending on the expiration of five years following the date hereof,
Stockholder shall not, directly or indirectly either on Stockholder's own
account or for any person, firm or company (other than on behalf and at the
direction of Parent or its successors), interfere with the Business, or solicit,
induce or endeavor to cause any employee, consultant or independent contractor
of Parent, the Company or their respective successors or controlled affiliates,
to alter
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in any way, terminate or breach his, her or its relationship or agreement with
Parent, the Company or their respective successors.
3. NONSOLICITATION OF CUSTOMERS, SUPPLIERS AND VENDORS. For the period
commencing on the date hereof and ending on the expiration of five years from
the date hereof, Stockholder shall not, directly or indirectly either on
Stockholder's own account or for any person, firm or company (other than on
behalf and at the direction of Parent or its successors) solicit, induce or
attempt to induce any past, present, prospective or future customer, contractor,
supplier or vendor of Parent, the Company or their respective successors or
controlled affiliates to cease doing business in whole or in part or alter in
any way, terminate or breach his, her or its relationship or agreement with
Parent, the Company or their respective successors; provided, however, that the
foregoing restriction shall not prevent Stockholder from approaching Xx. Xxxx
Xxxxx with Parent's prior written consent to serve on the Board of, or to invest
in, any non-competing Business now or hereafter owned or controlled by
Stockholder.
4. CONFIDENTIALITY. Stockholder shall keep confidential, and shall not
divulge to any other party, any Confidential Information without the prior
written consent of Parent. For purposes hereof, "CONFIDENTIAL INFORMATION" means
all information that Parent or the Company protects or historically has
protected from unrestricted disclosure to another party, including, without
limitation, trade secrets or private or confidential data, information or
knowledge of the Business or of Parent or the Company including, but not limited
to, data, information or knowledge relating to such matters as the finances,
methods of operation and competition, marketing plans and strategies, equipment
and operational requirements and information concerning personnel, customers and
suppliers of Parent or the Company generally, manufacturing processes, know-how,
show-how, designs, formulas, developmental or experimental work, computer
software and programs (whether in object or source code), data bases, other
original works of authorship and other non-public information regarding Parent
or the Company the disclosure of which could result in competitive disadvantage
to Parent or the Company or could provide a competitive advantage to other
parties. "CONFIDENTIAL INFORMATION" does not include data, information or
knowledge that (a) is or becomes generally available to the public other than as
a result of a disclosure by Stockholder or any other Stockholder of the Company,
(b) is independently developed without access to any Confidential Information by
a party who has no duties to Parent or the Company to keep such information
confidential or (c) Stockholder is legally compelled to disclose whether by law
or by or to a judicial, administrative or regulatory authority; provided,
however, that Stockholder shall provide Parent with prompt prior written notice
of any such legal compulsion on Stockholder so that Parent may seek a protective
order or other available remedy or measures to preserve confidentiality. If a
protective order or other remedy is not obtained and Stockholder does not obtain
from Parent a waiver of compliance with this Section, Stockholder nevertheless
may disclose on such information that otherwise would be considered Confidential
Information as knowledgeable counsel advises Stockholder in writing must be
disclosed lest Stockholder stand liable for contempt or other censure or
penalty. In such event, Stockholder will use Stockholder's commercially
reasonable efforts to obtain reliable assurance that information so disclosed
will be treated confidentially, and shall cooperate with Parent or the Company
to provide them an opportunity to appear at and object to disclosure if such
action is permitted under applicable law. Stockholder shall return or destroy
all documents or things in
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Stockholder's possession or control that contain or embody any Confidential
Information promptly upon written request from Parent or the Company.
5. STOCKHOLDER REPRESENTATIONS AND WARRANTIES. Stockholder represents
and warrants that Stockholder has the full right, power and authority to enter
into and observe and perform Stockholder's obligations under this Agreement, and
this Agreement is a legal, valid and binding obligation of Stockholder,
enforceable against Stockholder in accordance with its terms to the fullest
extent permissible under applicable law. Stockholder further represents and
warrants that (a) Stockholder has carefully read this Agreement, (b) Stockholder
is entering into this Agreement with full knowledge of its contents and the
legal consequence and significance of its provisions, (c) Stockholder has had
the opportunity to receive independent legal advice with respect to the matters
set forth in this Agreement and the effects and significance of entering into
the same and thereby agreeing to be bound by its covenants and (d) Stockholder
is not entering into this Agreement in reliance on any representation or
warranty or inducement other than as set forth herein.
6. INJUNCTIVE RELIEF; SPECIFIC PERFORMANCE. The parties acknowledge
and agree that any remedy at law for any breach of this Agreement is and will be
inadequate, and in the event of a breach or threatened breach by Stockholder of
any provision of this Agreement, Parent, the Company and their respective
successors and controlled affiliates would suffer substantial and irreparable
damage for which damages, even if available, will not provide an adequate
remedy. Therefore Parent and the Company, without proving actual damages, shall
be entitled (in addition to any other rights and remedies available at law or in
equity) to seek specific performance and injunctive and other equitable relief
to prevent or restrain Stockholder from (a) soliciting or interfering with
employees, consultants, independent contractors, customers or suppliers of
Parent, the Company or their respective successors as described above, (b)
disclosing, in whole or in part, any Confidential Information, or rendering any
services to any person, firm, corporation, association or other entity to whom
such Confidential Information has been disclosed, or is threatened to be
disclosed, (c) engaging, participating or otherwise being connected with any
Competing Business as described in SECTION 1 above or (d) otherwise breaching or
violating the provisions of this Agreement. Nothing herein contained shall be
construed as prohibiting Parent, the Company or their respective successors or
controlled affiliates from pursuing any other remedies available to it or them
at law or in equity for such breach or threatened breach, including, without
limitation, the recovery of damages from Stockholder.
7. ASSIGNMENT. This Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective successors and assigns,
including any person or entity that acquires all or a substantial portion of the
business, stock or assets of any of the parties, whether by merger, purchase of
assets or stock or otherwise. Parent and the Company shall have the right to
assign their rights hereunder to any entity which at any time may be a direct or
indirect subsidiary of (a) Parent, (b) the Company or (c) any successor in
interest of any of them, whether by merger, consolidation, purchase of assets or
otherwise, or any other person or entity which controls, is controlled by or is
under common control with Parent, the Company or any of their respective
subsidiaries or successors. This Agreement is personal to Stockholder and may
not be assigned by Stockholder under any circumstances, and any such attempted
assignment shall be deemed a breach hereof and shall be null and void ab initio.
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8. SEPARATE COVENANTS. This Agreement shall be deemed to consist of a
series of separate covenants of Stockholder, one for each line of business
carried on by the Business. The parties expressly agree that the character,
duration and geographical scope of this Agreement are reasonable in light of the
circumstances as they exist on the date upon which this Agreement has been
executed. However, should a determination nonetheless be made by a court of
competent jurisdiction at a later date that the character, duration or
geographical scope of this Agreement is unreasonable in light of the
circumstances as they then exist, then it is the intention and the agreement of
the Stockholder that this Agreement shall be construed by the court in such a
manner as to impose only those restrictions on the conduct of Stockholder which
are reasonable in light of the circumstances as they then exist and as are
necessary to assure Parent and the Company of the intended benefit of this
Agreement to the maximum extent permitted by applicable law. If, in any judicial
proceeding, a court shall refuse to enforce all of the separate covenants deemed
included herein because, taken together they are more extensive than necessary
to assure Parent and the Company of the intended benefit of this Agreement, it
is expressly understood and agreed between the parties hereto that those of such
covenants (or portions thereof) which, if eliminated, would permit the remaining
separate covenants (or portions thereof) to be enforced in such proceeding
shall, for the purpose of such proceeding, be deemed eliminated from the
provisions hereof.
9. SEVERABILITY. Without limiting the applicability of the preceding
SECTION 8 to the several covenants of Stockholder hereunder, if any of the
provisions of this Agreement (or portions thereof) shall otherwise contravene or
be invalid under the laws of any state or other jurisdiction where it is
applicable but for such contravention or invalidity, such contravention or
invalidity shall not invalidate all of the provisions of this Agreement, but
rather it shall be construed, insofar as the laws of that state or jurisdiction
are concerned, as not containing the provision or provisions (or portions
thereof) contravening or invalid under the laws of that state or jurisdiction,
and the rights and obligations created hereby shall be construed and enforced
accordingly.
10. AMENDMENTS AND WAIVERS. This Agreement may be modified only by a
written instrument duly executed by each party hereto. No breach of any
covenant, agreement, warranty or representation shall be deemed waived unless
expressly waived in writing by the party who might assert such breach. No waiver
of any right hereunder shall operate as a waiver of any other right or of the
same or a similar right on another occasion.
11. ATTORNEYS' FEES. Should any litigation or other action be
commenced between the parties concerning this Agreement, or the rights and
duties of the parties in relation to this Agreement, the party prevailing shall
be entitled, in addition to such other relief as may be granted, to a reasonable
attorneys' fees and expenses of preparation and investigation in connection with
such litigation and in seeking enforcement of any resulting judgment or award.
12. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof, supersedes all prior
agreements and understandings relating to the subject matter hereof and shall
not be amended except by a written instrument hereafter signed by all of the
parties hereto.
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13. COUNTERPARTS; FACSIMILE. This Agreement may be executed by the
parties in separate counterparts and by facsimile, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
14. SECTION HEADINGS. The headings of each Section, subsection or
other subdivision of this Agreement are for reference only and shall not limit
or control the meaning thereof.
15. REMEDIES; EXERCISE OF RIGHTS. Any and all remedies herein
expressly conferred upon a party will be deemed cumulative with, and not
exclusive of, any other remedy available to such party hereunder or at law or in
equity, and the exercise by any party of any one remedy at any time will not
preclude the exercise of any other remedy at the same time, at another time, or
in different circumstances. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof shall preclude any other, further or
xxxxxx exercise thereof or the exercise of any other right, power or privilege.
16. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
its conflicts or choice of law principles.
17. JURISDICTION AND VENUE. In respect of any action, suit or other
proceeding relating to the enforcement this Agreement, each party hereby
irrevocably submits to the non-exclusive jurisdiction of any state or federal
court located in the State of Delaware. Each party hereby waives any right each
may have to assert the doctrine of forum non conveniens, to assert that it is
not subject to the jurisdiction of the aforesaid courts, or to object to venue
to the extent that any action, suit or other proceeding is brought in accordance
with this SECTION 17.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
STOCKHOLDER
CHARTER OAK CAPITAL PARTNERS, LP
a Connecticut limited partnership
By:
-----------------------------------------
Name:
Title:
PARENT
K2 INC., a Delaware corporation
By:
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Name:
Title:
COMPANY
BRASS EAGLE INC., a Delaware corporation
By:
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Name:
Title:
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