BUSINESS RELATIONS AGREEMENT
Exhibit
10 (52)
BUSINESS
RELATIONS AGREEMENT dated as of March 11, 1993 by and between American Biltrite
Inc., a Delaware corporation (“ABI”), and Congoleum
Corporation, a Delaware corporation (“Congoleum”), pursuant to the
Joint Venture Agreement dated as of December 16, 1992 (the “Agreement”) by and among ABI,
Congoleum and the other corporations in the Hillside Group (as defined in the
Agreement). Capitalized terms not otherwise defined herein have the
meaning assigned such terms in the Agreement.
The
Agreement provides for, among other things, the sale, assignment and transfer by
ABI to Newco of all of ABI’s right, title and interest in and to all of the
Division Assets and the subsequent contribution of the Division Assets by Newco
to Congoleum (as more fully described in the Agreement) at the Closing Date (the
“Asset Transfer”).
This
Business Relations Agreement is made, executed and delivered pursuant to Section
76.01(g) of the Agreement.
In
consideration of the Asset Transfer and the other agreements and provisions of
the Agreement and this Business Relations Agreement and for other good and
valuable consideration, ABI and Congoleum hereby agree as follows:
1. Distribution
Rights.
(a) Exclusive
Right and License. Congoleum hereby grants to ABI, and ABI hereby
accepts, the exclusive right and license to distribute Congoleum’s vinyl and vinyl composition floor tile
(“Congoleum Tile”) in Canada (the “License”). This License includes (i)
all rights attendant to distribution of Congoleum Tile in Canada and (ii) the
right to assign or sublicense any of the foregoing rights to affiliates of ABI,
provided that (A) the assignee or sublicensee agrees in writing to be bound by all of
the terms and conditions of this Section 1, (B) Congoleum is given reasonable
advance notice of such assignment or sublicensing with a
copy of the executed agreement by which the assignee or sublicense agrees to be so bound and (C) any such
assignment shall not relieve ABI of any of its obligations under this
Section 1. For purposes of this
Business Relations Agreement, “Affiliates” shall mean any person or entity
controlling, controlled by or under common control with ABI.
(b) Purchase
Price. The purchase price payable by ABI for
Congoleum Tile shall be the
lesser of (i) 120% of the
fully absorbed manufacturing cost, calculated in accordance with generally
accepted accounting
principles (“GAAP”), or (ii) the lowest price charged by
Congoleum to any of its
other customers. Shipping costs shall be paid on the same basis
currently paid at ABI.
(c) Other Terms
and Conditions. Transactions under this Section
1 shall be conducted in accordance with
ordinary and customary commercial terms. The initial
term of the License granted in Section 1(a) above shall terminate on the
fifth
anniversary of the date hereof and may
be renewed for successive one year periods by the approval of both parties
hereto prior to the end of
the initial term or any renewal term. Notwithstanding the foregoing,
the License granted in Section 1(a) above may be terminated at any time after notice by
Congoleum if (i) ABI fails to pay for the Congoleum Tile on a timely basis or (ii)
ABI ceases to own any shares of Newco Class A Common Stock.
2. Purchase
Rights.
(a) Floor
Tile. ABI hereby
grants to Congoleum the nonexclusive right to purchase floor tile from
ABI.
(b) Urethane. ABI hereby grants
to Congoleum the
nonexclusive right to purchase urethane from ABI.
(c) Purchase
Price. The
purchase price payable by Congoleum for floor tile purchased under Section
2(a) above and for urethane purchased under
Section 2(b) above shall be the lesser of (i) 120%
of the fully absorbed manufacturing cost, calculated in accordance with GAAP, or
(ii) the lowest price charged by ABI to any of its other
customers. Shipping costs shall be paid on the same basis currently paid at
ABI.
(d) Other Terms
and Conditions. Transactions under this
Section 2 shall be conducted in
accordance with ordinary
and customary commercial terms. The initial term of the purchase rights granted
in Sections 2(a)and 2(b)above (the “Purchase Rights”) shall terminate on the fifth anniversary of the date hereof and
may be renewed for
successive one year periods by the approval of both parties
hereto prior to the end of
the initial term or any renewal term. Notwithstanding the foregoing, the
Purchase Rights may be
terminated at any time after notice by ABI if (i) Congoleum fails to pay for the
floor tile purchased under Section 2(a) 2(b)above or the urethane purchased under
Section 2(b) above on a timely basis or (ii)
Congoleum ceases to own any shares of Newco Class B Common
Stock.
3. Data
Processing. During the period of 18 months following the date
hereof, Congoleum hereby agrees to provide to ABI data processing services
substantially equivalent to those utilized by ABI in its business (other than
that of the flooring division in the United States) immediately prior to the
date hereof at a cost comparable to that allocated by ABI to consolidated
Affiliates of ABI in connection with the provision of data processing services
by ABI prior to the date hereof or such other data processing service as may be
mutually agreed upon at a cost to be determined by the
parties. Section 3 will be
made by ABI promptly upon presentation by Congoleum to ABI of an itemized
monthly xxxx therefor. The agreement set forth in this Section 3 may be terminated at any time after
notice by Congoleum if (a) ABI fails to pay for the data processing services on
a timely basis or (b) ABI ceases to own any shares of Newco Class A Common
Stock.
4. Insurance.
(a) Retro
Premiums. Congoleum hereby agrees to reimburse ABI for any
insurance premiums retroactively imposed on ABI (the “Retro Premiums”) relating
to claims made against ABI or its
Affiliates in connection with the business or operations of the flooring
division of ABI (other than
those claims listed in Section 4(b) hereof). Congoleum shall
make such reimbursement promptly after receipt of written notice from ABI of the
imposition of any Retro Premium, which notice shall include (i) the dollar
amount of the Retro Premium
being imposed and (ii) a statement as to the reasons (together with related
documentation, if available) for the imposition of the Retro
Premium.
(b) Proceeds. Congoleum hereby agrees to
pay over to ABI promptly any insurance proceeds received by Congoleum paid in connection
with the following claims filed by ABI relating to the business and operations of ABI’s flooring division (“Flooring Claims”): (i) March 1992 claim
involving the Farrel Unidrive #1 (broken gears); (ii) Lufkin Unidrive case (June 1992); and (iii)
July 1992 claim involving
the Xxxxxxx Unidrive #2
(broken gear teeth). Congoleum further agrees that ABI may retain any
insurance proceeds it
receives in connection with Flooring Claims. Notwithstanding anything
in the Agreement to the
contrary, insurance proceeds paid in connection with Flooring Claims shall not
be deemed to be Division Assets.
5. Paper
Slitting. Congoleum hereby agrees to assume from the Division,
and Congoleum and ABI hereby agree to continue in effect until termination by
the Board of Directors of Congoleum or ABI, the existing arrangement between
ABI’s tape division and the Division pursuant to which the tape division
supplies paper slitting services to the Division. Congoleum agrees to
pay ABI for the provision of these services at a cost equal to that allocated by
ABI to the Division in connection with the provision of these services to the
Division prior to the date hereof, which cost shall be renegotiated on the first
anniversary of the date hereof.
6. Notices. All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as of the date
delivered or mailed if delivered personally or mailed by registered or certified
mail (postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address shall be effective upon receipt):
(a) If to ABI:
00 Xxxxx Xxxxxx
Xxxxxxxxx Xxxxx,
XX 00000
Attention: Xxxxxxx X.
Xxxxxx
With a copy to:
Skadden, Arps, Slate, Xxxxxxx &
Xxxx, LLP
Xxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx,
XX 00000
Attention: Xxxxx X. Xxxxxxx,
Esq.
(b) If to Congoleum:
Congoleum
Corporation
000 Xxxxx Xxxxxx
Xxxxxxx,
XX 00000
Attention: Xxxxxx X.
Xxxxx
With a copy to:
Patterson, Belknap, Xxxx &
Xxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx,
XX 00000
Attention: Xxxxxxx X.
Xxxxxxx, Esq.
7. Headings. The
headings contained in this Business Relations Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Business Relations Agreement.
8. Severability. If
any term of other provision of this Business Relations Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Business Relations Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereby
shall negotiate in good faith to modify this Business Relations 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.
9. Entire
Agreement. This Business Relations Agreement constitutes the
entire agreement and supersedes all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
10. Parties in
Interest. This Business Relations Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Business Relations Agreement, express or implied, is intended to or shall confer
upon any other person any right, benefit or remedy of any nature whatsoever
under or by reason of this Business Relations Agreement.
11. Governing
Law. This Business Relations Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
IN WITNESS WHEREOF, the
parties hereto have caused this Business Relations Agreement to be duly executed
and delivered by their respective officers thereunto duly authorized as of the
date first above written.
By: /s/ Xxxxxxx X.
Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title President
CONGOLEUM
CORPORATION
By: /s/ Xxxxxx X. Xxxxx
III
Name: Xxxxxx X. Xxxxx
III
Title: Vice
President-Finance
