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EXHIBIT 10.25
NON-COMPETITION AGREEMENT
G & O SALES COMPANY
&
XXXXXX XXXXXX
Agreement (this "Agreement") dated as of this 12 day of March, 1996 by and
between Xxxxxx X. Xxxxxx ("Xx. Xxxxxx"), G & O Sales Company (the "Company")
and Xxxxxxx'x Fleet Service Co., Inc. ("DFS") is being entered into in
connection with that certain Stock Purchase Agreement (the "Purchase
Agreement") between Xx. Xxxxxx and DFS, and that certain Employment Agreement
(the "Employment Agreement") between Xx. Xxxxxx and the Company, all of even
date herewith, and is made on the terms and conditions set forth below.
BACKGROUND
Contemporaneously with the execution of this Agreement, Xx. Xxxxxx is selling
all of the outstanding capital stock of the Company to DFS, and DFS is
providing to Xx. Xxxxxx and his counsel certain confidential financial
information concerning DFS. In that connection, the parties wish to provide
that Xx. Xxxxxx will not disclose and confidential information of the Company
or DFS and will not compete with the business that he is selling or with the
business of DFS.
THEREFORE, for and in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, it is hereby agreed as follows:
1. COVENANT NOT TO COMPETE AND NOT TO SOLICIT EMPLOYEES. For a period
commencing with the date hereof and ending on the later to occur of (i)
the tenth anniversary of the date hereof or (ii) the fifth anniversary of
the date that Xx. Xxxxxx'x employment by the Company ceases, for whatever
reason --
(a) Xx. Xxxxxx shall not engage directly or indirectly in any of the
businesses carried on by the Company or DFS in the Market Area (as
defined below).
(i) Notwithstanding the foregoing, ownership of less than 1% of the
outstanding stock of any publicly traded corporation shall not be
deemed to be engagement solely by reason thereof in any of its
businesses.
(ii) The "Market Area" shall mean the Counties (as defined in
Annex A) as well as the area comprised within a circle having a
one-hundred-fifty (150) mile radius with a center located at any
facility then operated or in the future operated by the Company,
by any subsidiary of the Company or by DFS.
(b) Xx. Xxxxxx shall not directly or indirectly solicit any employee of
the Company or DFS to leave their employment with such companies or
solicit any of them to become employees of any business or entity with
which Xx. Xxxxxx is involved.
(c) Xx. Xxxxxx shall not cause or attempt to cause any licensor, customer,
or supplier, of the Company from maintaining the same business
relationships with the Company after the date hereof as it maintained
with the Company prior to the date hereof. Xx. Xxxxxx will use
reasonable efforts to refer all customer inquiries relating to the
business of the Company to the Company or to DFS from and after the
date hereof.
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2. COMPENSATION. As compensation for his agreement not to compete contained
herein, the Company shall pay to Xx. Xxxxxx the following amounts:
(a) Three hundred fifteen thousand dollars ($315,000) in monthly
installments as follows:
(i) four thousand three hundred seventy five dollars ($4,375)
shall be paid on the Closing Date;
(ii) eight thousand seven hundred fifty dollars ($8,750) shall be
paid on the first business day of each month for thirty-five
consecutive months commencing April 1, 1996; and
(iii) four thousand three hundred seventy five dollars ($4,375)
shall be paid on the first business day of the month
immediately following such thirty-fifth month; and
(b) Seven and one-half percent (7.5%) of the Defined Profits (as defined
below) of the Business (as defined in Annex A) for each of the four
(4) fiscal years of DFS commencing with its fiscal year that begins
March 1, 1996 (each a "Fiscal Year"). Payment of any amount due for a
Fiscal Year shall be made within ninety (90) days after the end of
such Fiscal Year. Each payment (or if no payment is due, a statement
to that effect) shall be sent to Xx. Xxxxxx accompanied by an
accounting in the name of DFS that shows the calculation of Defined
Profits (or lack thereof) for the Fiscal Year in question.
(c) "Defined Profits" of the Business shall mean the pre-tax operating
profits of the Business prepared on a consistent basis plus any salary
and car allowance payments made to Xx. Xxxxxx and plus any charge
against operating profits of the Company resulting from the payments
provided for in Section 2.1, above. DFS shall maintain such records
and books of account as are reasonably necessary to calculate Defined
Profits on a Fiscal Year basis.
(d) In calculating pre-tax operating profits --
(i) all sales made by the Business shall be credited, less
applicable costs of sale, commissions and other operating
expenses;
(ii) the Business shall not be charged any overhead expenses by
DFS except the appropriate portion of the costs of any field
salesman or field manager of DFS that has immediate
responsibility for the Business;
(iii) a charge will be made for interest costs related to net
working capital borrowings of the Business if borrowed from
DFS at the interest rate paid by DFS for such funds; and
(iv) operating expenses of the Company shall be apportioned in
the same ratio as sales made by the Business bear to all
sales made by the Company, with appropriate adjustment in
the event that this Section 2.4.4 creates unintended
inequities for either Xx. Xxxxxx or the Company.
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(e) Audit of Amounts Payable.
(i) Xx. Xxxxxx may at his own expense not more frequently than once
in each Fiscal Year and once with in the Fiscal Year immediately
following the last Fiscal Year with respect to which payments are
to be made to Xx. Xxxxxx under Section 2.2, above, perform or
cause to be performed an audit of the books and records of the
Company relating to the computation of Defined Profits (or lack
thereof) during the prior Fiscal Year. For such purpose, G&O
shall provide to Xx. Xxxxxx or his representative performing such
audit reasonable access during normal business hours to such
books and records, with the right to make copies thereof at his
expense.
(ii) Notwithstanding the foregoing however, if the payment made
by the Company with respect to an audited Fiscal Year was more
than five percent (5%) below the amount that should have been
paid for such Fiscal Year, the Company shall pay Xx. Xxxxxx'x
actual out-of-pocket expenses incurred in auditing such Fiscal
Year.
3. BREACH BY THE COMPANY.
(a) In the event that the Company fails to pay when due any amount that is
due and owing under this Agreement, and such failure continues for
more than five (5) days after written notice of such failure has been
given to the Company as provided herein, then the entire unpaid
balance required to be paid during the term of this Agreement, other
than amounts payable under Section 2.2, above, shall thereupon become
due and payable in full.
(b) In the event that the Company or DFS breaches any of its payment
obligations or breaches any other material term or condition under the
Purchase Agreement or the Employment Agreement, and such breach
continues beyond the expiration of any cure periods applicable to such
breach, then all amounts that are payable to Xx. Xxxxxx during the
term of this Agreement, other than amounts payable under Section 2.2,
above, shall become immediately due and payable in full upon written
demand by Xx. Xxxxxx given to the Company.
(c) In the event that Xx. Xxxxxx is required to commence legal proceedings
in order to collect any amount due him under this Agreement, the
Company shall reimburse to him the reasonable costs thereof, including
the reasonable fees and disbursements of his counsel in connection
therewith.
4. CONFIDENTIALITY.
(a) During the period set forth in Section 1, above, Xx. Xxxxxx shall use
reasonable efforts to maintain the confidentiality of, and shall not
disclose to any person, firm or corporation or use for his own benefit
or the benefit of any other person Confidential Information (as
defined below).
(b) In the event that Xx. Xxxxxx is requested or required (by oral
question or request for
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information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose
any Confidential Information, he will notify DFS promptly of the
request or requirement so that DFS may seek, at its own expense, an
appropriate protective order in its own or in Xx. Xxxxxx'x name, or
so that it may waive compliance with the provisions of this Section.
(c) If, in the absence of a protective order or the receipt of a waiver
hereunder, Xx. Xxxxxx is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand
liable for contempt, he may disclose the Confidential Information to
the tribunal; provided, however, that he shall use commercially
reasonable efforts to obtain, at the request of DFS, an order or other
assurance that confidential treatment will be accorded to such portion
of the Confidential Information required to be disclosed as DFS shall
designate.
(d) For purposes of this Agreement, "Confidential Information" means any
information concerning the businesses and/or affairs of the Company,
DFS or any of their affiliates however acquired by Xx. Xxxxxx that is
not generally available to the public, including, but without
limitation thereto, trade secrets, customer lists, vendor lists,
business plans, marketing plans, non-public financial data, product
specifications and designs, the existence, nature, substance, progress
and results of research and development projects, concepts,
inventions, discoveries, formulae, processes, drawings, documents,
records, or software.
5. SEVERABILITY. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Agreement is invalid or
unenforceable, the parties agree that the court making the determination
of invalidity or un-enforceability shall have the power to reduce the
scope, duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified
after the expiration of the time within which the judgment may be
appealed.
6. NOTICES. All notices required or permitted under this Agreement shall be
in writing and shall be deemed given either (a) when hand delivered to a
party; (b) when deposited with a courier service with instructions to
provide next-business-day delivery and proof of delivery; or (c) (in the
case of notice to the Company or DFS) when sent by facsimile transmission
as follows:
If to Xx. Xxxxxx at: With a copy to:
x/x Xxx Xxxxxxxx Xxxxx X. Xxxxxxx, Xxx.
00 Xxxxxxxxxxxx Xxxxx Xxxx Xxxxxx, Xxxxxxxx & Xxxxxxx
Xxxx Xxxxxx, Xxxxxxxxxxxx 00000 0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
If to DFS at: With a copy to:
Xxxxxxx'x Fleet Service Co., Inc. Maarten X. Xxxxxxx
000 Xxxx Xxxxx Xxxxxx 00 Xxxxxx Xxxxx Xxxxxx
Xx. Xxxxxx, XX 00000 Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President Fax No.: (000) 000-0000
Fax No.: (000) 000-0000 Tel. No.: (000) 000-0000
Tel. No.: (000) 000-0000
and to
Xxxxx X. Xxxxxx
00 Xxxxxxx Xxxxxx X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxxxxx 00000
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
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or to such other address of a party as such party may by notice hereunder
designate to the other parties.
7. MISCELLANEOUS.
(a) This Agreement together with Annex A contains the entire understanding
of the parties on the subject matter hereof except as otherwise
expressly contemplated herein; shall not be amended except by written
agreement of the parties signed by each of them; shall be binding upon
and inure to the benefit of the parties and their successors, personal
representatives and permitted assigns; may be executed in one or more
counterparts each of which shall be deemed an original hereof, but all
of which shall constitute but one and the same agreement; and shall
not be assignable by a party without the prior written consent of the
other parties.
(b) The words "herein", "hereof", "hereunder", "hereby", "herewith" and
words of similar import when used in this Agreement shall be construed
to refer to this Agreement as a whole.
(c) Each party and his or its counsel has reviewed this Agreement.
Accordingly, the normal rule of construction that any ambiguities and
uncertainties are to be resolved against the party preparing an
agreement will not be employed in the interpretation of this
Agreement; rather the Agreement shall be construed as if all parties
had jointly prepared it.
(d) No representation, affirmation of fact, course of prior dealings,
promise or condition in connection herewith or usage of the trade not
expressly incorporated herein shall be binding on the parties.
(e) The failure to insist upon strict compliance with any term, covenant
or condition contained herein shall not be deemed a waiver of such
term, nor shall any waiver or relinquishment of any right at any one
or more times be deemed a waiver or relinquishment of such right at
any other time or times.
(f) The captions of the paragraphs herein are for convenience only and
shall not be used to construe or interpret this Agreement.
(g) The recitals set forth in "Background", above, are incorporated herein
and made a part hereof as the agreements of the parties as fully and
with the same force and effect as if reiterated herein in full.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
G & O SALES COMPANY
By: /s/ Xxxxxx X. Xxxxx /s/ Xxxxxx F, Xxxxxx
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Xxxxxx X. Xxxxx XXXXXX X. XXXXXX
President
XXXXXXX'X FLEET SERVICE CO., INC.
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
President
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ANNEX A
TO THE
NON-COMPETITION AGREEMENT BETWEEN
G & O SALES COMPANY, XXXXXXX'X FLEET SERVICE CO., INC. & XXXXXX XXXXXX
1. The "Business" shall mean the sale of automotive heat exchange equipment
and other products used in connection therewith (including but not
limited to radiators, heaters and air conditioning parts) (the
"Products") as follows:
(a) by the Company or DFS (i) to those customers in the Counties
that were being serviced by the Company immediately prior to
September 30, 1995 (the "Counties"); and (ii) to those
customers in the Counties that are first serviced by the
Company or DFS after September 30, 1995; and
(b) by the Company to customers that are not in the Counties but
that were being serviced by the Company immediately prior to
September 30, 1995;
2. The term Business, however, shall not include sales of Products by the
Company or DFS to those customers in the Counties that were being
serviced by DFS immediately prior to September 30, 1995.
3. In computing the amount of the sales of the Products for any period, the
aggregate of actual sale prices of all Products whether for wholesale,
retail, cash or credit or otherwise shall be included, but the following
shall be excluded: (i) full or partial credits for returns; (ii) cash or
credit refunds to customers on transactions (but not in excess of the
actual selling price of the Product); (iii) amounts collected and paid to
any governmental authority for any sales or excise tax; (iv) freight
and/or insurance to the extent either of them is invoiced separately to a
customer; and (v) the amount of any discount on sales to employees.
4. The Counties:
Pennsylvania Counties New Jersey Counties
--------------------- -------------------
Philadelphia Bucks Camden Burlington
Xxxxxxxxxx Delaware Salem Gloucester
Xxxxxxx Xxxxxxxxx Cape May Atlantic
Berks Lehigh Xxxxxx Hunterdon
Carbon Schuykill Cumberland
Northampton Lebanon
York Delaware Counties
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New Xxxxxx
Xxxx
