MANAGEMENT SERVICES AND COMMERCIAL AGREEMENT
Exhibit 99.3
Exhibit I to
the Plan
New ABI
Agreement
THIS
MANAGEMENT SERVICES AND COMMERCIAL AGREEMENT (this “Agreement”) is dated
as of
[ ],
2009, by and between American Biltrite Inc., a Delaware corporation (“ABI”), and Congoleum
Corporation, a Delaware corporation and as reorganized on and after the
Effective Date of the Plan (as defined below) (“Congoleum”). Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Joint
Plan of Reorganization under Chapter 11 of the Bankruptcy Code of the Futures
Representative, the Debtors, the Official Asbestos Claimants’ Committee and the
Official Committee of Bondholders for Congoleum Corporation, et al., dated as of
November 14, 2008, as such plan may be amended from time to time (the
“Plan”).
ARTICLE
I
Section
1.01 Provision of Services by
ABI. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall serve as Chief Executive Officer
and Director of Congoleum, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III shall serve as Chief
Financial Officer of Congoleum. Substantially all of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇’
time, approximately twenty-five percent (25%) of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇’ time and
approximately fifty percent (50%) of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III’s time, in each case,
during normal working hours on a monthly basis, shall be made available to
Congoleum. If ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall die, become disabled (as defined
below) or voluntarily terminate his services with Congoleum contemplated by this
Section 1.01 during the term of this Agreement, then Congoleum and ABI shall
negotiate in good faith to reach agreement on the appointment of a successor for
▇▇▇▇▇ ▇. ▇▇▇▇▇▇. If after a sixty (60) day period of
engaging
in
such good faith negotiations, the parties are not able to reach such agreement,
Congoleum may terminate Article I. If either ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III shall die, become disabled or voluntarily terminate his
services with Congoleum contemplated by this Section 1.01 during the term of
this Agreement, then Congoleum and ABI shall negotiate in good faith to reach
agreement on the appointment of a successor for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ III, as applicable. If after a sixty (60) day period of
engaging in such good faith negotiations, the parties are not able to reach such
agreement, Congoleum may terminate Article I solely with respect to obligations
relating to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III, as applicable, which for
purposes of Sections 1.02 and 1.03 will mean (a) a one-sixth reduction
prospectively in the amounts payable pursuant to such sections if Congoleum has
not previously so terminated Article I with respect to either ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
or ▇▇▇▇▇▇ ▇▇▇▇▇, as applicable, pursuant to this Section 1.01 or Section 4.02(c)
and (b) a one-fifth reduction prospectively in the amounts payable pursuant to
such sections if Congoleum has previously so terminated Article I with respect
to either ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇, as applicable. In the
event that Congoleum terminates Article I of this Agreement, the remaining
provisions of this Agreement shall remain in full force and effect until their
termination in accordance with Article IV. For purposes of this
Section 1.01, “disabled” means the inability of the person to perform
substantially all of his responsibilities and duties hereunder as a result of a
physical or medical impairment, which inability continues for a consecutive
period of more than one hundred eighty (180) days. Each of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III (and any successors for any of
them appointed pursuant to the third sentence of this Section 1.01) shall enter
into confidentiality agreements with Congoleum in the form attached as Exhibit
A. Congoleum acknowledges that (a) each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ will remain directors, executive officers and employees of ABI
and its affiliates and (b) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III will remain an executive officer
and employee of ABI and its affiliates, and nothing in this Agreement, the Plan
or the documents contemplated hereby or thereby shall prohibit ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III from performing their duties and
responsibilities in such capacities to ABI and its affiliates and in a manner
consistent with past performance of such duties and
responsibilities. Nothing in this Agreement shall preclude the Board
of Directors of Congoleum from appointing other officers or executives of
Congoleum as the Board of Directors of Congoleum deems appropriate.
Section
1.02 Base Monthly
Fee. Congoleum shall pay to ABI a base monthly fee (“Base Monthly Fee”) of
sixty-six thousand six hundred sixty six dollars and sixty seven cents
($66,666.67) in cash, payable on a monthly basis, with the fee for a particular
month to be paid by Congoleum to ABI by not later than the fifteenth (15th) day
following the end of such month. The amount of the Base Monthly Fee
will be adjusted annually commencing on the first anniversary of the Effective
Date based on the metropolitan New York Consumer Price Index
factor.
Section
1.03 Annual Cash Incentive
Fee.
(a) Congoleum
shall pay ABI an annual incentive fee in cash (the “Cash Incentive Fee”),
on or before April 15 of each year, in an amount equal to:
(i) if
Congoleum’s EBITDA on a consolidated basis for the prior fiscal year is greater
than $23 million, but less than or equal to $26 million, ten percent (10%) of
the amount by which such EBITDA exceeds $23 million; or
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(ii) if
Congoleum’s EBITDA on a consolidated basis for the prior fiscal year is greater
than $26 million, but less than or equal to $28 million, $300,000 plus fifteen
percent (15%) of the amount by which such EBITDA exceeds $26 million;
or
(iii) if
Congoleum’s EBITDA on a consolidated basis for the prior fiscal year is greater
than $28 million, $600,000 plus twenty percent (20%) of the amount by which such
EBITDA exceeds $28 million.
(b) For
purposes of the Cash Incentive Fee, “EBITDA,” in each
case, shall be determined in accordance with the following
formula: net income (loss) from continuing operations (before
reduction for the expense of such Cash Incentive Fee or any prior Cash Incentive
Fee, including any incentive fees paid under the Personal Services Agreement as
in effect prior to the commencement of the Chapter 11 Case) plus interest
expense minus interest income plus depreciation plus amortization plus provision
for taxes, all calculated in accordance with United States generally accepted
accounting principles (“GAAP”) in a manner
consistently applied (except to the extent GAAP compels otherwise or as
otherwise specifically provided in this Section 1.03).
(c) The
Cash Incentive Fee will be pro-rated for any partial year occurring during the
term of this Agreement, and the April 15 annual payment date assumes a calendar
fiscal year.
Section
1.04 Incentive
Equity. Five percent (5%) of Congoleum’s total authorized
number of shares of common stock shall be reserved for issuance by Congoleum for
equity based compensation and awards to the management team of Congoleum with
the terms of such compensation and awards to be determined by the Board of
Directors of Congoleum.
Section
1.05 Observer Rights. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III may attend any and all meetings of the Board of Directors
of Congoleum as an observer.
ARTICLE
II
Section
2.01 Intercompany Purchases and
Sales.
(a) ABI
and its subsidiaries (which, for purposes of this Article II and Article III,
shall be collectively referred to as “ABI,” unless the context indicates or
implies otherwise) shall sell and Congoleum and its applicable subsidiaries
(which for purposes of this Article II and Article III, shall be collectively
referred to as “Congoleum,” unless the context indicates or implies otherwise)
shall purchase floor tile products and urethane (the “ABI Products”)
pursuant to those quantities set forth in firm purchase orders submitted by
Congoleum to ABI and reasonably acceptable to ABI and subject to ABI’s standard
terms and conditions of sale except as otherwise contemplated
herein. To the extent that ABI shall not have a sufficient amount of
ABI Products to supply all of its customers, including Congoleum, it shall
supply its customers,
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including
Congoleum, on a pro rata basis. There shall be no minimum or maximum
purchase requirements on the part of Congoleum relative to the ABI
Products. As such, Congoleum may order such quantity of ABI Products,
if any, as it shall determine, in its sole and absolute discretion, and ABI
shall be obligated to exercise commercially reasonable efforts to supply and
sell to Congoleum such quantities of ABI Products, if any, that
Congoleum orders with firm purchase orders submitted by Congoleum to
ABI.
(b) Congoleum
shall sell and ABI shall purchase floor tile products (the “Congoleum Products”)
pursuant to those quantities set forth in firm purchase orders submitted by ABI
to Congoleum and reasonably acceptable to Congoleum and subject to Congoleum’s
standard terms and conditions of sale except as otherwise contemplated
herein. To the extent that Congoleum shall not have a sufficient
amount of Congoleum Products to supply all of its customers, including ABI, it
shall supply its customers, including ABI, on a pro rata basis. There
shall be no minimum or maximum purchase requirements on the part of ABI relative
to the Congoleum Products. Subject to its obligations set forth in
Article III, ABI may order such quantity of Congoleum Products as it shall
determine, in its sole and absolute discretion, and Congoleum shall be obligated
to exercise commercially reasonable efforts to supply and sell to ABI such
quantities of Congoleum Products, if any, that ABI orders with firm purchase
orders submitted by ABI to Congoleum.
Section
2.02 Purchase
Price.
(a) The
purchase price payable by ABI to Congoleum for Congoleum Products purchased from
Congoleum shall be the one-hundred and twenty percent (120%) of the fully
absorbed manufacturing cost of such Congoleum Products, calculated in accordance
with GAAP and past practices. A price lower than one-hundred and
twenty percent (120%) of cost may be set from time to time by mutual
agreement. Shipping costs shall be paid on the same basis then
currently paid by ABI. The purchase price shall be exclusive of any
national, state or local sales, use, value-added or other taxes, customs duties,
or similar tariffs and fees, all of which shall be the responsibility of
ABI. In the event that Congoleum is required to pay any such taxes,
duties or fees, such items shall be added to the invoice to be paid by
ABI. Congoleum shall invoice ABI upon shipment of the Congoleum
Products that it has purchased and ABI shall make payment to Congoleum of the
amount due, owing and payable under such invoice within ten (10) days after the
date such invoice was rendered.
(b) The
purchase price payable by Congoleum to ABI for ABI Products purchased from ABI
shall be one-hundred and twenty percent (120%) of the fully absorbed
manufacturing cost of such ABI Products, calculated in accordance with GAAP and
past practices. A price lower than one-hundred and twenty percent
(120%) of cost may be set from time to time by mutual
agreement. Shipping costs shall be paid on the same basis then
currently paid by Congoleum or its subsidiaries, as applicable. The
purchase price shall be exclusive of any national, state or local sales, use,
value-added or other taxes, customs duties, or similar tariffs and fees, all of
which shall be the responsibility of Congoleum. In the event that ABI
is required to pay any such taxes, duties or fees, such items shall be added to
the invoice to be paid by Congoleum. ABI shall invoice Congoleum upon
shipment of the ABI Products that it has purchased and Congoleum shall make
payment to ABI of the amount due, owing and payable under such invoice within
ten (10) days after the date such invoice was rendered.
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Section
2.03 Delivery by
ABI. ABI shall exercise commercially reasonable efforts to
deliver ABI Products F.O.B. ABI’s plant either within ten (10) days following
ABI’s receipt of a firm purchase order from Congoleum in accordance with Section
2.01(a), or if such purchase order specifies later delivery date(s), in
accordance with such later date(s). Unless otherwise agreed to by ABI
and Congoleum, ABI shall deliver the ABI Products to the common carrier
designated by Congoleum, which shall then be shipped to Congoleum’s place of
business or such other destination, as specified by Congoleum.
Section
2.04 Delivery by
Congoleum. Congoleum shall exercise commercially reasonable
efforts to deliver Congoleum Products F.O.B. Congoleum’s plant either within ten
(10) days following Congoleum’s receipt of a firm purchase order from ABI in
accordance with Section 2.01(b), or if such purchase order specifies later
delivery date(s), in accordance with such later date(s). Congoleum
shall deliver the Congoleum Products to the common carrier designated by ABI,
which shall then be shipped to ABI’s place of business or such other
destination, as specified by ABI.
Section
2.05 Risk of
Loss. Title to the ABI Products sold by ABI to Congoleum and
the risk of loss, damage or destruction of such ABI Products shall remain with
and be borne by ABI until such ABI Products are delivered to the common carrier,
after which title and the risk of loss shall be held and borne by
Congoleum. Title to the Congoleum Products sold by Congoleum to ABI
and the risk of loss, damage or destruction of such Congoleum Products shall be
borne by Congoleum until such Congoleum Products are delivered to the common
carrier, after which title and the risk of loss shall be borne by
ABI.
Section
2.06 Congoleum’s Limited Product
Warranty.
(a) This
product warranty applies to all Congoleum Products purchased by ABI and shall
not be available or passed through to ABI’s customers. Nothing in
this limited product warranty is intended to create any right in any
third-party.
(b) With
respect to Congoleum Products that are raw materials purchased by ABI, Congoleum
warrants only that such products shall be in accordance with the specifications
for such products agreed to by Congoleum and ABI, or if no such specification
exists, Congoleum’s standard specification.
(c) With
respect to Congoleum Products that are finished goods, Congoleum warrants that
the Congoleum Products sold to ABI will be substantially free from significant
defects in material and workmanship for normal use for six (6) months from the
date of delivery to ABI.
(d) The
sole responsibility of Congoleum under the foregoing warranty shall be limited
to the repair or replacement (at Congoleum’s option) of defective Congoleum
Products returned prepaid by ABI. Any returned Congoleum Products
that are replaced by Congoleum shall become Congoleum’s property.
(e) THE
FOREGOING WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED (INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE).
5
(a) This
product warranty applies to all ABI Products purchased by Congoleum and shall
not be available or passed through to Congoleum’s customers. Nothing
in this product limited product warranty is intended to create any right in any
third-party.
(b) With
respect to ABI Products that are raw materials purchased by Congoleum, ABI
warrants only that such products shall be in accordance with the specifications
for such products agreed to by ABI and Congoluem, or if no such specification
exists, ABI’s standard specification.
(c) With
respect to ABI Products that are finished goods, ABI warrants that the ABI
Products sold to Congoleum will be substantially free from significant defects
in material and workmanship for normal use for six (6) months from the date of
delivery to Congoleum.
(d) The
sole responsibility of ABI under the foregoing warranty shall be limited to the
repair or replacement (at ABI’s option) of defective ABI Products returned
prepaid by Congoleum. Any returned ABI Products that are replaced by
ABI shall become ABI’s property.
(e) THE
FOREGOING WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED (INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE).
6
(a)
ABI shall defend all claims, suits, or proceedings brought against Congoleum to
the extent that such claims, suits, or proceedings are based upon allegations
that (i) the use or sale of ABI Products by Congoleum or (ii) the manufacture,
use, or sale of products manufactured by Congoleum on behalf of ABI in
accordance with specifications provided by ABI to Congoleum constitutes an
infringement of any United States, Canadian or other governmental issued patent,
copyright, or trademark, so long as ABI is notified promptly in writing by
Congoleum of any such claims, suits, or proceedings and Congoleum provides ABI
with full authority, information, and assistance at ABI’s expense, for the
defense of all such claims, suits, or proceedings. ABI shall not
settle any claim for which Congoleum is entitled to indemnification hereunder
without Congoleum’s prior written consent; provided that no such consent shall
be required if (1) the settlement contains a complete and unconditional release
by the person asserting the claim against Congoleum with respect to the claim,
(2) the settlement does not contain any finding of responsibility or liability
on the part of Congoleum (other than the payment of money for which ABI pays in
full simultaneously with the effectiveness of the settlement and upon payment of
which Congoleum waives any right to seek reimbursement from ABI), and (3) the
settlement does not contain any sanction or restriction upon the conduct of any
business by Congoleum. ABI shall pay all damages and costs awarded
against Congoleum as part of any final judgment to the extent attributable to
any claim, suit, or proceeding for which ABI has indemnified Congoleum pursuant
to this Section 2.11(a), but ABI shall not be responsible for any settlement
made without its consent. ABI may, at any time and at its sole option
and at its expense, obtain the right for Congoleum to continue to use and sell
any such product, replace or modify such specifications so that such products
are no longer infringing, or instruct Congoleum to cease making all such
products.
(b)
Congoleum shall defend all claims, suits, or proceedings brought against ABI to
the extent that such claims, suits, or proceedings are based upon allegations
that (i) the use or sale of Congoleum Products by ABI or (ii) the manufacture,
use, or sale of products manufactured by ABI on behalf of Congoleum in
accordance with specifications provided by Congoleum to ABI constitutes an
infringement of any United States, Canadian or other governmental issued patent,
copyright, or trademark, so long as Congoleum is notified promptly in writing by
ABI of any such claims, suits, or proceedings and ABI provides Congoleum with
full authority, information, and assistance at Congoleum’s expense, for the
defense of all such claims,
7
suits,
or proceedings. Congoleum shall not settle any claim for which ABI is
entitled to indemnification hereunder without ABI’s prior written consent;
provided that no such consent shall be required if (1) the settlement contains a
complete and unconditional release by the person asserting the claim against ABI
with respect to the claim, (2) the settlement does not contain any finding of
responsibility or liability on the part of ABI (other than the payment of money
for which Congoleum pays in full simultaneously with the effectiveness of the
settlement and upon payment of which ABI waives any right to seek reimbursement
from Congoleum), and (3) the settlement does not contain any sanction or
restriction upon the conduct of any business by ABI. Congoleum shall
pay all damages and costs awarded against ABI as part of any final judgment to
the extent attributable to any claim, suit, or proceeding for which Congoleum
has indemnified ABI pursuant to this Section 2.11(b), but Congoleum shall not be
responsible for any settlement made without its consent. Congoleum
may, at any time and at its sole option and at its expense, obtain the right for
ABI to continue to use and sell any such product, replace or modify such
specifications so that such products are no longer infringing, or instruct ABI
to cease making all such products.
ARTICLE
III
Section
3.01 License
Agreement. Pursuant to Section 1.02(a)(vi) of the Joint
Venture Agreement, dated as of December 16, 1992, by and among ABI, Congoleum
and the other parties thereto (the “Joint Venture
Agreement”), Congoleum was granted certain intellectual property rights
used by the Division (as defined in the Joint Venture Agreement) prior to the
date of the Joint Venture Agreement and in existence on the Closing Date (as
defined by the Joint Venture Agreement, as amended by the Closing Agreement,
dated as of March 11, 1993, by and among ABI, Congoleum and the other parties
thereto), including a perpetual, royalty-free license of all of ABI’s rights in,
to and under the urethane technology used by ABI in its operations (the “Urethane License
Agreement”). Congoleum and ABI hereby agree to execute the
license agreement attached as Exhibit B and to do
all things necessary to ensure that Congoleum obtains and becomes fully vested
in the intellectual property rights as so described in the preceding
sentence. Nothing herein shall impair such license and such license
shall survive any termination of this Agreement. Nothing herein,
including this Section 3.01, or in the license agreement referred to in the
preceding sentence, shall limit in any way ABI’s ownership of, or right to use
or license, its urethane technology and know-how.
Section
3.02 Canadian Tile
Distribution Exclusivity.
(a)
Subject to all terms and conditions of this Agreement and the limitations set
forth below, Congoleum hereby grants and ABI hereby accepts a non-transferable,
exclusive, except as to Congoleum and its wholly-owned subsidiaries, right to
purchase and resell Congoleum’s vinyl, vinyl composition or other floor tile
(“Congoleum
Tile”) in Canada, including its territories and possessions (the “Authorized
Territory”) only. Congoleum shall not appoint any other entity
or representative to sell Congoleum Tile in the Authorized
Territory.
(b)
In the event that Congoleum or its wholly-owned subsidiaries should make any
sales directly to customers in the Authorized Territory, Congoleum shall remit
quarterly to ABI fifty percent (50%) of the standard gross margin on such direct
sales, with the payment for a particular quarter to be paid by Congoleum to ABI
by not later than the forty-fifth (45th) day
following the end of such calendar quarter.
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(i) standard
gross margin of Congoleum Tile sold by Congoleum or its wholly-owned
subsidiaries means the difference between (a) the invoice price after deduction
of regular trade and quantity discounts, freight allowances, cash discounts, and
agents’ commissions and (b) the costs of goods sold at fully absorbed standard
manufacturing costs.
(ii) Congoleum
will make written reports to ABI quarterly within forty-five (45) days after the
first day of each of January, April, July, and October, stating in each such
report the number, description, and aggregate standard gross margin of Congoleum
Tile sold by Congoleum and its wholly-owned subsidiaries in the Authorized
Territory during the preceding three (3) calendar months and on which a fee is
payable as provided in this Section 3.02. A terminal report shall be
prepared within forty-five (45) days of expiration or termination of this
Agreement. Concurrently with the making of each report, Congoleum
will pay to ABI fees at the rate specified in this Section
3.02(b). Congoleum Tile shall be considered to be sold when shipped
to the customer.
(iii) Congoleum
will keep records showing the Congoleum Tile sold by it in the Authorized
Territory, such records to be in sufficient detail to enable the fees payable to
ABI to be determined.
(c)
Congoleum hereby agrees to render periodic assistance to ABI on technical and
sales problems at Congoleum’s sole expense.
(d)
ABI agrees that it will, at its sole expense and solely within the Authorized
Territory:
(i) Pay
for Congoleum Tile purchased by ABI from Congoleum in accordance with the
provisions set forth in Article II of this Agreement;
(ii) use
its commercially reasonable efforts to promote Congoleum Tile in the Authorized
Territory and re-sell Congoleum Tile to customers within the Authorized
Territory;
(iii) market
the price/performance qualities of Congoleum Tile; and
(iv) furnish
to Congoleum copies of ABI’s annual financial statements and any updates which
Congoleum credit personnel may reasonably request from time to
time.
(e)
ABI shall have the right to assign or sublicense any of the foregoing rights to
affiliates of ABI, provided that: (i) the assignee or sublicensee agrees in
writing to be bound by all of the foregoing terms and conditions of the license,
(ii) Congoleum is given reasonable advance notice of such assignment or
sublicensing with a copy of the executed agreement by which the assignee or
sublicensee agrees to be so bound and (iii) any such assignment shall
not relieve ABI of any of its obligations under this Section 3.02.
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Section
3.03 Information
Technology Services. Congoleum will provide ABI certain
specified information technology support and oversight services set forth on
Exhibit C for a monthly fee set forth on Exhibit C, which monthly fee is
intended to approximate Congoleum’s internal cost for providing such
services. The scope of services and cost set forth on Exhibit C shall
be consistent with past practices unless changed by mutual
agreement. Any outside costs incurred by Congoleum for hardware and
consulting in providing such services to ABI will not be included in the monthly
fee and will be billed separately, at Congoleum’s internal cost, to
ABI.
ARTICLE
IV
Section
4.01 Term. This
Agreement shall be effective as of the Effective Date and shall continue in full
force and effect for a term ending on the second (2nd) anniversary of the
Effective Date, subject to its earlier termination (in whole or in part) in
accordance with Section 1.01 and 4.02.
Section
4.02 Termination.
(a) The
parties may terminate this Agreement by mutual written agreement executed and
delivered by both parties.
(b) A
party may terminate this Agreement if the other party materially
breaches any provision of this Agreement and such breach remains uncured ten
(10) days after delivery of notice of such breach by the non-breaching party to
the breaching party (it being understood that Congoleum may not terminate this
entire Agreement pursuant to this Section 4.02(b) for reason of any death,
disability or voluntary termination of services of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III as provided in Article I and that Article I shall
solely govern the termination of any rights or obligations under this Agreement
due to any such death, disability or voluntary termination of
services).
(c) Congoleum
may terminate its obligations under Article I if it terminates ▇▇▇▇▇ ▇. ▇▇▇▇▇▇’
services with Congoleum for Cause (as defined below) or pursuant to Section
1.01. If Congoleum terminates either ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ III for Cause, Congoleum may terminate Article I solely with respect to
obligations relating to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III, as applicable,
which for purposes of Sections 1.02 and 1.03 will mean (x) a one-sixth reduction
prospectively in the amounts payable pursuant to such sections if Congoleum has
not previously so terminated Article I with respect to either ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
or ▇▇▇▇▇▇ ▇▇▇▇▇, as applicable, pursuant to this Section 4.02(c) or Section 1.01
and (y) a one-fifth reduction prospectively in the amounts payable pursuant to
such sections if Congoleum has previously so terminated Article I with respect
to either ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇, as applicable. For
purposes of this Section 4.02(c), “Cause” means (i) the willful and continued
failure by such person (other than any such failure resulting from such person’s
incapacity due to physical or mental illness) to perform substantially the
duties and responsibilities of such person’s position with Congoleum reflected
in Section 1.01 after a written notice thereof and a ten (10) business day
period to cure; (ii) the willful engaging by such person in fraud or dishonesty
which is
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demonstrably
and materially injurious to Congoleum or its reputation, monetarily or
otherwise; (iii) indictment (or equivalent under applicable law) with respect
to, the conviction of, or a plea of guilty or no contest to, a felony or any
other crime involving moral turpitude, fraud, theft or embezzlement; or (iv)
habitual illegal drug or alcohol abuse, or (v) material breach by such person of
any confidentiality agreement between such person and Congoleum.
(d) ABI
may terminate this Agreement if Congoleum terminates its obligations under
Article I pursuant to Section 1.01 or Section 4.02(c) due to the termination of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇’ services with Congoleum.
Section
4.03 Effect of
Termination. Upon termination hereby by either
party:
(a) all
sums due to either party from the other shall be promptly paid;
(b) all
property belonging to one party but in the custody of the other shall be
returned;
(c) Congoleum
shall have the option to repurchase any or all current and resalable Congoleum
Tile in ABI’s inventory at ABI’s original net purchase price;
(d) each
party will cease all use of the other party’s trademarks pursuant to Sections
2.08 and 2.09, as the case may be, and in furtherance thereof, as soon as
practicable but in no event later than thirty days following the termination
date, remove, strike over or otherwise obliterate all of the other party’s marks
from all assets and other materials, including, any packaging materials,
displays, signs, promotional materials, and websites; and
(e) Neither
party shall be liable to the other for loss or damage arising from termination
of this Agreement.
Section
4.05 Survival. The
provisions of Section 2.06, 2.07, 2.11, 4.03, 4.04, 4.05, and Articles V and VI
shall survive any termination of this Agreement. In no event shall
any termination of this Agreement or any part thereof affect the terms of any
equity based compensation or award referred to in Section 1.04 then outstanding
or theretofore previously granted, which compensation and awards will continue
to be governed by the terms of any separate award or other agreement applicable
thereto.
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ARTICLE
V
ABI
and Congoleum shall keep confidential any and all proprietary and confidential
information about the other (the “Confidential Information”) and not use or
disclose the Confidential Information for any purpose outside the scope of this
Agreement, except as may be expressly permitted in writing by the other
party. The term “Confidential Information” does not include
information that (a) was known by a party or its affiliates prior to its
disclosure pursuant to this Agreement, provided that such information was not
furnished to such party by a source known by it to be prohibited from disclosing
such information by a contractual, legal or fiduciary obligation, (b) was or
becomes available to the public other than as a result of a breach of the terms
of this Agreement, or (c) is independently developed by such party not in
violation of this Agreement. Notwithstanding the foregoing, a party
shall not be restricted from disclosing Confidential Information of the other
party where such disclosing party is required to disclose such Confidential
Information pursuant to (a) law or court order, but only after notifying the
nondisclosing party and allowing such nondisclosing party an opportunity to
obtain a protective or other order or (b) the rules or regulations of a
nationally recognized stock exchange on which such party’s securities are listed
for trading.
ARTICLE
VI
If
to Congoleum, at:
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:
[ ]
Facsimile:
[ ]
If
to ABI, at:
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:
[ ]
Facsimile:
[ ]
Either
party may, by like notice to the other party, change the address, facsimile
number or the party to which any notice or other communication is to be
delivered.
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Section
6.02 Entire
Agreement. This Agreement, the Confidentiality Agreements, the
Urethane License Agreement and the Plan, including Section 5.15 of the Plan,
contains the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written, including the Intercompany Agreements (as
defined in the Plan. To the extent this Agreement conflicts with any
provision of the Intercompany Term Sheet (as defined in the Plan), this
Agreement shall control such conflict.Amendment; Waivers. The parties
may amend this Agreement only by written agreement executed and delivered by
both parties. Any term or provision of this Agreement may be waived,
or the time for performance extended, by the party entitled to the benefit
thereof. The failure of any party to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.
Section
6.04 Assignment. Except
as otherwise expressly provided in this Agreement, neither party may assign this
Agreement or any of its rights hereunder nor may either party delegate any of
its obligations hereunder, in each case, without the prior written consent of
the other party.
Section
6.05 No Third Party
Beneficiaries. Nothing in this Agreement, express or implied,
is intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this
Agreement.
Section
6.06 Force
Majeure. Neither party shall be liable for any delay in
discharging any obligation or in performing any duty imposed upon it by this
Agreement if such delay arises from circumstances beyond its control and not
resulting from the fault or negligence of such party (including such party’s
affiliates and any of its or their employees, directors, officers, agents and
contractors) including, but not limited to, acts of God, riot or civil
commotion, industrial dispute, fire, flood, drought, act of government, public
enemy, war, terrorism or sabotage, provided that the party seeking to be excused
shall make every commercially reasonable effort to minimize the delay resulting
therefrom, and shall give prompt and written notice of the force majeure event
to the other party. The obligations of the party giving notice, so
far as they are affected by the force majeure event, will be suspended during,
but not longer than, the continuance of the force majeure event. The
affected party must act with commercially reasonable diligence to resume
performance and notify the other party when the force majeure event no longer
affects its ability to perform under this Agreement.
Section
6.07 Governing
Law. This Agreement shall be governed by and be construed in
accordance with the laws of the State of Delaware without giving effect to the
principles of conflicts of laws thereof that would require the application of
any law of another jurisdiction.
Section
6.08 Waiver of Jury
Trial. EACH PARTY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT.
13
Section
6.09 Independent
Contractors. Each party is an independent contractor of the
other party. Nothing in this Agreement will constitute a partnership
between or joint venture by the parties, or constitute either party the agent of
the other.
Section
6.10 Counterparts. This
Agreement may be executed in separate counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
Agreement.
Section
6.11 Severability. If
any term, provision, covenant, or restriction of this Agreement is held by a
court of competent jurisdiction (or an arbitrator or arbitration panel) to be
invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants, and restrictions set forth herein shall remain in full force and
effect, and shall in no way be affected, impaired, or invalidated. In
the event that any such term, provision, covenant or restriction is held to be
invalid, void or unenforceable, the parties hereto shall use commercially
reasonable efforts to find and employ an alternate means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant, or restriction.
Section
6.12 Interpretations. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement. Whenever the words “includes” or “including” are used in
this Agreement they shall be deemed to be followed by the words “without
limitation.” The words “hereof” and “herein” and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and section
references are to the sections of this Agreement unless otherwise
specified. The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties, and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
[Remainder
of page intentionally left blank.]
14
IN
WITNESS WHEREOF, each of the parties hereto has caused this Management Services
and Commercial Agreement to be executed by a duly authorized officer as of the
date first above written.
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By:
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Name:
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Title:
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CONGOLEUM
CORPORATION
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By:
________________________________
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Name:
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Title:
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EXHIBIT
A
FORM
OF CONFIDENTIALITY AGREEMENT
EXHIBIT
B
FORM
OF URETHANE LICENSE AGREEMENT
EXHIBIT
C
IT
SERVICES AND FEES