EXHIBIT 10.10
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated January 23, 1997, by and among White
Consolidated Industries, Inc., a Delaware corporation ("WCI"), Kmart
Corporation, a Michigan corporation ("Kmart"), and Windmere-Durable Holdings,
Inc., a Florida corporation ("Windmere").
BACKGROUND
Pursuant to (i) License Agreements dated as of February 1, 1996 and May
21, 1996 by and between WCI and Salton Maxim Housewares, Inc., a Delaware
corporation which is 50% owned by Windmere ("Salton") and (ii) a License
Agreement entered into on May 1, 1996 by and between WCI and New M-Tech
Corporation, a Florida corporation which is 50% owned by Windmere ("NewTech"),
WCI granted to each of Salton and NewTech the exclusive right and license to use
the trademark "White-Westinghouse" and associated designs and trade dress
(together, the "Trademark") in connection with the manufacture, distribution and
sale of the products in the territory specified in the respective License
Agreements (collectively, the "Products").
Pursuant to the License Agreements, WCI agreed to indemnify and hold
harmless each of Salton and NewTech and their respective officers, directors,
employees and agents, from and against the cost and expenses (including, without
limitation, reasonable attorneys fees and costs) of any and all claims, suits,
losses, damages, costs, demands, obligations, investigations, causes of action,
and judgments based on or arising out of any assertion or allegation by any
persons, entities or government agencies that the Trademark infringes any
trademark, trade name or any other personal or property right of a third party.
WCI and Westinghouse Electric Corporation ("Westinghouse") are
currently involved in litigation (the "Trademark Dispute") with respect to the
Trademark rights purchased by WCI from Westinghouse under that certain Purchase
and Sale Agreement and a Trademark Agreement entered into between WCI and
Westinghouse on December 31, 1974 and March 1, 1975, respectively. In connection
with the Trademark Dispute, on November 14, 1996, WCI filed a Complaint against
Westinghouse and Catalina Lighting, Inc. ("Catalina") in the United States
District Court, Northern District of Ohio, and on December 18, 1996,
Westinghouse and Catalina filed a Complaint in the United States District Court,
Western District of Pennsylvania, against WCI, AB Electrolux, Steel City Vacuum
Co., Inc., Salton, NewTech and Windmere.
Each of Salton and NewTech expect to enter into a Purchase,
Distribution and Marketing Agreement with Kmart which will be guaranteed by
Windmere (collectively, and including the Windmere Guarantees, the "Kmart
Agreements"), pursuant to which Salton and NewTech will each grant Kmart the
exclusive right throughout the United States to purchase, market and distribute
Products bearing the Trademark. The Kmart Agreements also contain
representations, warranties, indemnification, insurance, termination and other
provisions relating to the subject matter of this Agreement, all of which remain
in full force and effect, unmodified by and in addition to this Agreement.
If the Kmart Agreements are executed, and the parties perform in
accordance therewith, WCI will derive substantial revenues under the License
Agreements. However, as a result of the Trademark Dispute, in order to induce
Kmart, Salton, NewTech and Windmere to enter into the Kmart Agreements, WCI has
agreed to indemnify and hold harmless Kmart and Windmere as provided in this
Indemnification Agreement and to reaffirm its indemnification obligations to
Salton and NewTech under the License Agreements.
Accordingly, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. INDEMNIFICATION
(a) In addition to and not in any way in limitation of any
indemnifications provided to Kmart by Salton, NewTech and/or Windmere under the
Kmart Agreements, to the fullest extent permitted by law, WCI will reimburse,
indemnify, defend and hold harmless Kmart and Windmere and
each of their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties"), from and against any and all cost and
expenses (including, without limitation, reasonable attorneys' fees and costs)
of and from any and all claims (including but not limited to claims of Third
Party Manufacturers as that term is defined in the Kmart Agreements), suits,
losses, damages, costs, demands, obligations, penalties, investigations, causes
of action and judgments arising directly or indirectly out of any assertion or
allegation by any persons, entities, or government agencies that the use of the
Trademark in connection with the manufacture, sale, importation, or distribution
of Products, whether pursuant to the Kmart Agreements or otherwise, infringes or
violates any trademark, trade name or any other personal, proprietary or
property right of a third party or constitutes a misuse of any trade secret
including, without limitation, any actual or alleged rights of Westinghouse or
Catalina. This indemnity agreement will be in addition to any liability that WCI
might otherwise have to the Indemnified Parties, Salton or New Tech. WCI also
expressly reaffirms to Salton and NewTech and their respective officers,
directors, employees and agents the agreement of WCI to indemnify the
Indemnified Parties as set forth herein, as if such agreement had been set forth
in full in the License Agreements.
(b) If any claim, action, suit or other proceeding shall be
instituted or threatened against any of the Indemnified Parties with respect to
any matter as to which WCI shall have any indemnity obligation under
subparagraph (a) of this paragraph 1, the Indemnified Parties shall promptly
notify WCI of the institution or threat of such action, suit or proceeding (if
WCI is not aware of such action, suit or proceeding) and, WCI shall conduct the
defense of any such action, suit or proceeding by counsel reasonably
satisfactory to the Indemnified Parties and WCI shall timely commence and
diligently continue such defense at the sole expense of WCI; provided, however,
that if defendants in any such action include both Indemnified Party and
Indemnifying Party and the Indemnified Party shall have reasonably concluded
that there may be one or more significant claims or defenses available to it
and/or other Indemnified Parties which are different from or additional to those
available to the Indemnifying Party, or if in any action any Indemnified Party
shall reasonably conclude that there may be one or more significant claims or
defenses available to it which are different from or in addition to those
available to another Indemnified Party, the Indemnifying Party shall not have
the right to direct the defense of such action on behalf of such Indemnified
Party or parties and such Indemnified Party or parties shall have the right,
after written notice to WCI specifying such claim or defense, to select separate
counsel to defend such action on behalf of such Indemnified Party or parties at
the expense of WCI, to the extent reasonable (which agrees to pay such expense
on a monthly basis). The Indemnified Parties shall also have the mutual right
absent any potential conflict, but not the obligation, to select their own
separate counsel and take all other action as shall be deemed necessary and
appropriate; provided, however, that the costs and expenses of such separate
counsel absent the conflict described above shall be borne by the Indemnified
Parties, and further provided that WCI shall not settle or compromise any such
action, suit or proceeding without the prior written consent of the Indemnified
Parties which shall not be unreasonably withheld. Should any adverse judgment
become final and nonappealable, WCI shall promptly pay the same. In the event
WCI fails to defend diligently any such action, suit or proceeding, the
Indemnified Parties shall have the sole right to defend themselves at the
expense of WCI, to the extent reasonable, and the obligations otherwise imposed
on WCI by this paragraph (b) shall continue in full force and effect and WCI
will reimburse the Indemnified Parties at the end of each month the full amount
of costs and expenses required to be paid by WCI to the Indemnified Parties
hereunder.
(c) In addition to and without limitation of all rights and remedies at
law and equity as well as all of the foregoing indemnification obligations of
WCI to the Indemnified Parties hereunder, in the event that Kmart is enjoined or
otherwise prohibited for a period of more than twenty days from purchasing,
distributing, importing and/or selling any or all of the Products under any of
the Kmart Agreements, WCI shall purchase such Products freight collect from
Kmart within three business days of Kmart's written request to do so at a price
equal to the total cost of such Products, which costs shall include, but are not
limited to, the ex-factory price, freight, commission, duties, insurance,
brokers fee and inland freight, plus a handling charge of ten percent (10%). In
addition and without limiting any other right, in the event that Kmart is
enjoined or otherwise prohibited from ordering, purchasing, distributing,
importing and/or selling any or all of the Products under any or all of the
Kmart Agreements, and regardless of whether such prohibition continues for the
full twenty (20) days, WCI shall compensate Kmart for all costs, damage, loss,
expense or penalty or any claim or action therefor, arising directly or
indirectly from such prohibition, including but not limited to Kmart's lost
profits for each day of such prohibition (not to exceed twenty (20) days
provided WCI has fulfilled its purchase obligation stated
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above), based upon Kmart's records for the immediately preceding twenty five
(25) days for the affected Products.
2. AGREEMENT NOT CONCESSION OR ADMISSION. This Indemnification
Agreement is not and shall not be construed as evidence of or an admission by
any party hereto that any claim or fact alleged by any person or entity making a
claim which is subject to any indemnification right under this Agreement is true
and correct. Neither this Indemnification Agreement nor any of its terms are
intended to create any rights in any persons who are not parties to this
Agreement, other than Salton, NewTech, Third Party Manufacturers and their
respective officers, directors, employees and agents.
3. MODIFICATION. This Indemnification Agreement may be modified only by
a writing duly signed by all parties hereto.
4. ENTIRE AGREEMENT. Except as specifically stated to the contrary in
this Agreement, this Indemnification Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof, and supersedes all
previous agreements (other than the Kmart Agreements), promises,
representations, warranties, understandings and negotiations, whether written or
oral, among the parties hereto respecting the matter of indemnification covered
by paragraph 1 hereof. It is further understood and agreed that no agreements,
promises, representations, warranties and understandings have been made or
reached by or among any of the parties hereto respecting the subject matter
hereof other than those which are expressly contained herein. Except as
expressly modified hereby, the License Agreements shall remain in full force and
effect.
5. PARTIES BOUND. This Indemnification Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; except that no party hereby may assign or transfer its
rights or obligations hereunder without the prior written consent of the other
parties hereto.
6. SEVERABILITY. It is intended that each provision of this
Indemnification Agreement shall be viewed as severable, and if any provision
shall be held to be invalid or unenforceable, the remaining provisions shall
remain in full force and effect.
7. HEADINGS. The headings of sections and paragraphs are for
convenience only, and shall not affect the interpretation thereof.
8. COUNTERPARTS. This Indemnification Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9. CHOICE OF LAW. The validity of this Indemnification Agreement, the
construction and enforcement of its terms and the interpretation of the rights
and duties of the parties hereunder shall be governed by and construed in
accordance with the laws of the State of Michigan, without regard to any
conflict of law rule or principle that would give effect to the laws of another
jurisdiction.
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10. NOTICES
If to WCI: White Consolidated Industries, Inc.
00000 Xxxxx Xxxx
Xxxxxxxxx, Xxxx 00000
Attn: Legal Department
If to Kmart: Kmart Corporation
0000 Xxx Xxxxxx Xxxx
Xxxx Xxxxxxxx 00000
Attn: General Counsel, Legal Department
If to Windmere: Windmere-Durable Holdings, Inc.
0000 Xxxxx Xxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Chairman
11. ATTORNEYS' FEES. In the event any of the parties hereto shall
institute any action or proceeding against any other party or parties hereto
relating to this Indemnification Agreement, the unsuccessful party in such
action or proceeding shall reimburse the successful party or parties for his
reasonable expenses incurred in connection therewith, including his reasonable
attorneys' fees.
12. THIRD PARTY BENEFICIARIES. Salton, NewTech and the Third Party
Manufacturers are intended third party beneficiaries of this Indemnification
Agreement, and shall be entitled to enforce all of the rights and benefits
referred to in this Agreement as if they were parties hereto on the same basis
as any party to this Agreement. The foregoing shall not abrogate or modify
Kmart's rights hereunder; and any rights of Salton, NewTech and the Third Party
Manufacturers are in addition to any rights of Kmart hereunder.
13. CONFIDENTIALITY. WCI agrees to keep the terms of this Agreement and
any information it knows or learns about any of the Kmart Agreements strictly
confidential, except to the extent obligated by law.
* * *
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
WHITE CONSOLIDATED INDUSTRIES, INC.
By: /S/ [ILLEGIBLE]
-------------------------------------
Name:
Title:
KMART CORPORATION
By: /S/ [ILLEGIBLE]
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Name:
Title:
WINDMERE-DURABLE HOLDINGS, INC.
By: /S/ XXXXX X. XXXXXXXX
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Name: Chairman & CEO
Title: