EXHIBIT (e)(5)
NON-SOLICITATION AGREEMENT
NON-SOLICITATION AGREEMENT (this "Agreement"), dated as of March 16,
2002, by and between Associated Materials Incorporated, a Delaware corporation
(the "Company"), and Xxxxxx X. Xxxxxxxx, an individual resident in the State of
Texas ("Executive").
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, Executive is the Vice President and Chief Financial Officer of
the Company, and since 1993 has had significant managerial responsibility for
the financial operations of the Company in such capacity;
WHEREAS, as a result of his position with the Company, Executive has
access to confidential and proprietary information concerning the business and
operations of the Company; and
WHEREAS, the Company and Executive 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
Executive does not use such nonpublic, confidential, and proprietary information
for the Restricted Period (as hereinafter defined).
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 Executive 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) "Key Employee" means those employees of the Company that are
parties to an employment or severance agreement with the Company on the date of
this Agreement.
(c) "Lines of Business" shall mean (i) the building products/siding and
windows business and (ii) the electrical cable manufacturing business.
(d) "Person" shall mean any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other legal entity.
(e) "Restricted Period" shall mean the period commencing on the
Commencement Date and ending on the date that is two (2) years following the
Commencement Date.
(f) "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. No Solicitation. During the Restricted Period, the Executive shall
not directly or indirectly through another Person (i) induce or attempt to
induce any Key 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
a Key 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.
4. Confidentiality. (a) All information about the business and affairs of the
Company or any of its Subsidiaries acquired by Executive 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 Executive 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 Executive has obtained,
or which has been disclosed to him as a result of his duties performed in his
capacity as an executive officer of the Company, constitute "Company
Confidential Information." Executive acknowledges that he has had and while he
remains an 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 Executive, whether during or after the expiration of his term as an
executive officer of the Company, could cause serious harm to the business of
the Company or any of its Subsidiaries. Accordingly, Executive 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
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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 4 shall not be violated by
Executive 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 Executive, (ii) is disclosed pursuant to
a court order or as otherwise required by law and to the extent permitted by
applicable law, Executive will make reasonable efforts to give the Company
notice of the requirement for such disclosure prior to Executive making any such
disclosure and that Executive 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 an
executive officer of the Company. Executive 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) Executive 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,
Executive acquired special knowledge and/or skill that he could effectively use
in competition with the Company. Executive further acknowledges that the
provisions of this Section 4 are essential to the future goodwill and
profitability of the Company and its Subsidiaries 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 Executive 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
with the Company or any of its Subsidiaries, shall be promptly returned to the
Company and not retained by the Executive (including, without limitation, any
copies thereof) upon termination of employment with the Company and its
Subsidiaries for any reason whatsoever.
5. Remedies. Executive 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
Executive of Sections 3 and 4 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.
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6. 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
Executive 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.
7. Assignment. The rights and obligations of the Company hereunder
shall inure to the benefit of, and be binding upon, its successors and assigns.
Executive may not assign his obligations hereunder, provided that the Company
may, at any time, and without the prior consent of Executive, 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.
8. 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 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):
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If to Executive, to:
Xxxxxx X. Xxxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxx, XX 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:
Harvest/AMI 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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9. 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 9(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.
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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
XXXXXX X. XXXXXXXX
/s/ XXXXXX X. XXXXXXXX
-----------------------------------------
Xxxxxx X. Xxxxxxxx, Executive
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