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EXHIBIT 10.2
PURCHASE, DISTRIBUTION AND MARKETING AGREEMENT
BY AND BETWEEN
NEW M-TECH CORPORATION
AND
KMART CORPORATION
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JANUARY 27, 1997
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PURCHASE, DISTRIBUTION AND MARKETING AGREEMENT
This Agreement ("Agreement") is entered into as of January 27, 1997 (the
"Execution Date") between New M-Tech Corporation, a Florida corporation
("NewTech"), and Kmart Corporation, a Michigan corporation ("Kmart").
PREAMBLE
WHEREAS, pursuant to License Agreements by and between White Consolidated
Industries, Inc. ("WCI") and NewTech (the "License Agreements"), NewTech has the
exclusive right and license within the United States to use the trademark
"White-Westinghouse" and all associated designs and trade dress (together, the
"Trademark") in connection with the design, manufacture, advertising, sale and
promotion of, among others, the products listed on Exhibit A hereto, each of
which will bear and include the Trademark (such products bearing the Trademark
are hereinafter referred to as the "Products");
WHEREAS, Kmart is a leading discount retailer of various consumer and other
products, including products similar to the Products; and
WHEREAS, NewTech desires to grant to Kmart certain exclusive rights and
obligations to purchase, distribute, sell, market and promote the Products in
the United States, and Kmart desires to accept and exercise these rights and
obligations, upon the terms and subject to the conditions of this Agreement.
WHEREAS, simultaneously with the execution of this Agreement, Kmart is
executing an agreement with Salton/Maxim Housewares, Inc., an Affiliate of
NewTech, as defined in Section 1.1, below (the "Salton Agreement"), for the use
of the Trademark on Kitchen Housewares, Personal Care products, fans and heaters
and electric air cleaners and humidifiers, as specifically described therein,
which agreement is critical to Kmart's overall program for use of the Trademark
on Products under this Agreement with NewTech, is a primary inducement for
Kmart's entering into, and is a continuing necessary component of and
precondition to Kmart's performance under this Agreement with NewTech.
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 hereby agree as follows:
TERMS AND CONDITIONS
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meaning
given to them below:
1.1 "Affiliate" means any Person involved in a situation where, directly
or indirectly, one Person controls, or has the power to control, the
other Person or a third party controls, or has the power to control,
both Persons.
1.2 "Discount Department Store" shall include, without limitation, the
Persons listed on Schedule 1.2 hereof as well as all department
stores which are similar to Discount Department Stores in terms of
market niche, size and product pricing which now or hereafter may
exist.
1.3 "Person" shall include any individual, corporation, partnership,
association, cooperative, joint venture, or any other form of
business entity recognized under the law.
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1.4 "sale" shall mean any action involving selling.
1.5 "sell" shall mean to, directly or indirectly, sell, distribute,
supply, solicit or accept orders for, negotiate for the sale or
distribution of, or take any other action that is in furtherance of,
any of the foregoing. "Sell" also include any other forms of that
verb, whether active or passive, or in the past, present, or future
tense.
1.6 "United States" shall mean the United States of America,
including Puerto Rico and Guam.
2. APPOINTMENT
2.1 Appointment by NewTech; Acceptance by Kmart. Subject to the
provisions of this Agreement, NewTech hereby appoints Kmart as the
sole and exclusive Discount Department Store to purchase,
distribute, sell, market and promote the Products in the United
States and Kmart hereby accepts such appointment. The rights granted
to Kmart under this Agreement shall hereinafter collectively be
referred to as the "Right." No other Discount Department Store
shall have any such Right during the Term of this Agreement and/or
any extension or renewal thereof, regardless of source (i.e.,
whether from NewTech or any other entity) subject to Sections 10.4
and 10.5 hereof. Notwithstanding the foregoing, nothing in this
Agreement shall be deemed to preclude the sale of Products (i) by
entities or stores other than Discount Department Stores including,
without limitation, retail department stores, specialty housewares,
gourmet and kitchen stores and national cable television programs or
(ii) by any Person outside the United States. Furthermore, nothing
in this Agreement shall preclude Kmart from purchasing products of
the type listed on Exhibit A hereto from any sources other than
NewTech if such products do not bear or include or are not sold
under the Trademark, and no payments shall be due to NewTech
hereunder in respect of such sales.
2.2 Territorial Limitations. NewTech covenants and agrees that, during
the term of this Agreement or until this Agreement is terminated in
accordance with the provisions of Article 10 below:
2.2.1 NewTech shall not, directly or indirectly, sell any Product to
a Discount Department Store in the United States, subject to
Sections 10.4 and 10.5 hereof.
2.2.2 Except with the prior written consent of NewTech (which
consent may be refused in the sole, absolute and arbitrary
discretion of NewTech), Kmart shall not sell any Product to any
Person outside the United States. The United States includes
Puerto Rico and Guam.
2.2.3 The parties acknowledge and agree that the relationship hereby
established between Kmart and NewTech is solely that of buyer
and seller of goods that each is an independent contractor
engaged in the operation of its own respective business, that
neither party shall be considered to be the agent of the other
party for any purpose whatsoever, except as otherwise expressly
indicated in this Agreement, and that, except as otherwise
expressly indicated in this Agreement, neither party has any
authority to enter into any contract, assume any obligations or
make any warranties or representations on behalf of the other
party. Nothing in this Agreement shall be construed to
establish a partnership or joint venture relationship between
NewTech and Kmart. Nothing in this Agreement shall be deemed in
any way to constitute a sublicense by NewTech of its rights
under the
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License Agreement, and the relationship between the parties
hereto shall at all times be as set forth in this paragraph.
3. REPRESENTATIONS AND WARRANTIES OF NEWTECH
3.1 NewTech represents and warrants to Kmart as follows:
3.1.1 Organization, Power and Authority. It is duly organized and
validly existing under the laws of the State of Florida, has
all requisite power and authority to conduct its business as
now, and as proposed to be, conducted and to execute, deliver
and perform its obligations under this Agreement. This
Agreement has been duly authorized, executed and delivered by
NewTech and represents a valid and binding obligation
enforceable against NewTech in accordance with its terms.
3.1.2 No Conflicts; Consents. Execution and delivery hereof, or
performance by NewTech hereunder, shall not (a) violate or
create a default under (i) NewTech's Certificate of
Incorporation or by-laws (true and correct copies of which have
been delivered to Kmart), (ii) any mortgage, indenture,
agreement, note or other instrument to which it is a party or
to which its assets are subject including, without limitation,
the License Agreement or (iii) any court order or decree or
other governmental directive or (b) result in the action of any
lien, charge or encumbrance on any material portion of
NewTech's assets, except as contemplated hereby.
3.1.3 Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of NewTech.
3.1.4 Trademark/Compliance with Laws. It has the contractual right
and authority to use the Trademark for all of the Products as
provided in this Agreement and to grant to Kmart all rights
which are set forth in this Agreement including but not limited
to the "Right" described in Section 2.1 herein, and also,
including but not limited to, the right to import all Products
into the United States for the full duration of this Agreement;
and NewTech shall provide U.S. Customs with sufficient proof
and documentation to enable Kmart to do so. (Notwithstanding
the foregoing, NewTech shall have up to ten (10) business days
to correct any such U.S. Customs Problems which do not affect
Kmart's ability to use the Trademark in connection with the
sale of any of the Products pursuant to this Agreement.) In
addition, no other Discount Department Store shall have the
right to use the Trademark in connection with the sale of
Products or sell Products bearing the Trademark or have any of
Kmart's rights hereunder during the Term of this Agreement and
any renewal and/or extension hereof. Furthermore, this
Agreement as well as NewTech's performance hereunder shall be
in compliance with all applicable laws, rules and regulations
other than immaterial violations. Any claim which Kmart
reasonably believes impairs or would impair Kmart's ability to
receive the benefits of this Agreement, or any failure under
this Agreement and/or under the Salton Agreement with respect
to this (or the Salton Agreement's) Section 3.1.4 and/or
Section 2.1, whether such failure relates to any or all
Products, shall entitle Kmart, in addition to all other rights
and remedies, without resort to the notice and cure
requirements under Section 10.3 herein, to immediately
terminate this Agreement and owe nothing
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to NewTech except for payment for Products accepted and sold
by Kmart through the date of termination.
3.1.5 Qualifications. Throughout the Term of this Agreement and any
renewal or extension hereof, NewTech shall comply with the
following requirements:
a. New Vendor Packet Compliance.NewTech must have executed and
delivered to Kmart all documents required by Kmart's New
Vendor Packet, including, but not limited to, Kmart's
agreement on standard purchase order terms and conditions
attached as Exhibit B (collectively, the "Related
Documents") and must currently be in full compliance with
the same except as required by this Agreement. NewTech's
execution of this Agreement shall constitute NewTech's
acceptance of and agreement to the terms and conditions
contained in all of the Related Documents to the extent not
inconsistent with the terms of this Agreement.
b. Kmart Corporation Code of Business Conduct. NewTech must be
in full compliance with the Kmart Code of Business Conduct
and all applicable laws, rules and regulations, including
but not limited to child, forced, and prison labor laws and
must not have violated the Code of Business Conduct or
applicable laws during the twelve calendar months preceding
the date of execution of this Agreement.
c. Continuing Business Conduct with Kmart Foreign Subsidiaries
and Operations.NewTech must not restrict or curtail in any
way its historical business practices and course of dealing
with Kmart's foreign subsidiaries and other foreign
operations if any existed.
d. Industry Performance.NewTech must at a minimum meet normal
industry standards for performance regarding timing and
completion levels of fill rates without substitutions.
e.Electronic Data Interchange.NewTech must accommodate and
participate in Kmart's electronic data interchange program.
4. REPRESENTATIONS AND WARRANTIES OF KMART
4.1 Kmart represents and warrants to NewTech as follows:
4.1.1 Organization, Power and Authority. It is duly organized and
validly existing under the laws of the State of
Michigan, has all requisite power and authority to conduct its
business as now, and as proposed to be, conducted and to
execute, deliver and perform its obligations under this
Agreement. This Agreement has been duly authorized, executed
and delivered by Kmart and represents a valid and binding
obligation enforceable against Kmart in accordance with its
terms.
4.1.2 No Conflicts; Consents. Execution and delivery hereof, or
performance by Kmart hereunder, shall not (a) violate
or create a default under (i) Kmart's Certificate of
Incorporation or by-laws (true and correct copies of which
have been delivered to NewTech), (ii) any mortgage,
indenture, agreement, note or other instrument to which it
is a party or to which its assets are subject or (iii) any
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court order or decree or other governmental directive or (b)
result in the action of any lien, charge or encumbrance on
any material portion of Kmart's assets.
4.1.3 Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Kmart.
5. MINIMUM ORDERS; OTHER OBLIGATIONS
5.1 Minimum Product Orders/Sales and Exclusive Remedy. Subject to Section
5.2 hereof, during the Term of this Agreement, Kmart agrees to place
orders for a minimum U.S. dollar amount of Products within each
category specified below (each, a "Category") from NewTech [**] (the
"Minimum Product Orders") at the purchase prices determined in
accordance with Sections 7.1.1 and 7.1.2 hereof during the periods
(each, a "Period," and together, the "Periods") in each case as
specified below ($ in millions). All Products ordered prior to the
date of this Agreement shall be credited against the Minimum Product
Orders for the initial Period of this Agreement.
CATEGORY UP TO AND
(IN INCLUDING 7/1/98- 7/1/99- 7/1/00- 7/1/01- 7/1/02- 7/1/03-
MILLIONS) 6/30/98 6/30/99 6/30/00 6/30/01 6/30/02 6/30/03 6/30/04
--------- ------- ------- ------- ------- ------- ------- -------
Video: $ 55.0 $ 57.2 $ 59.5 $ 61.9 $ 64.3 $ 66.9 $ 69.6
Audio: 60.0 62.4 64.9 67.5 70.2 73.0 75.9
Telephones
and
Telephone $ 20.0 $ 20.8 $ 21.6 $ 22.5 $ 23.4 $ 24.3 $ 25.3
Answering ------ ------ ------ ------ ------ ------ ------
Machines:
Total $135.0 $140.4 $146.0 $151.9 $157.9 $164.2 $170.8
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Specific purchase orders shall be issued by Kmart from time to time
for the Products being purchased ("Specific Purchase Orders"). The
Specific Purchase Orders shall be in the form and substance of the
form of purchase order annexed hereto as Exhibit C for domestic orders
and Exhibit D for import orders, both of which are incorporated herein
by this reference ("Purchase Order Forms") and shall govern and
control the terms of each purchase by Kmart of Products hereunder;
provided, that in the event of a conflict between the terms set forth
in a Specific Purchase Order and in this Agreement, the terms set
forth in this Agreement shall be determinative of such conflict. Each
Specific Purchase Order may be accepted or rejected by NewTech,
provided that: (i) NewTech's failure to provide Kmart with written
notice of rejection of any Specific Purchase Order within five (5)
days of Kmart's issuance thereof shall constitute NewTech's acceptance
of such Specific Purchase Order; and (ii) NewTech is required to
accept all Specific Purchase Orders for which [**] and all such Orders
shall automatically qualify as accepted by NewTech; and (iii) NewTech
is required to accept all Specific Purchase Orders which NewTech is to
fill [**] ("Direct NewTech Orders"), provided (a) they are issued at
prices negotiated by Kmart and NewTech or; (b) are consistent with
prices quoted by NewTech to Kmart; and (c) are issued within ninety
(90) days of the required delivery date and; (d) are in an order
quantity which is not inconsistent with the average order quantity on
Specific Purchase Orders issued by Kmart to NewTech [**] over the
preceding one hundred twenty (120) days, and all such Orders placed
shall automatically qualify as accepted by NewTech. Notwithstanding
the foregoing, NewTech shall use its best efforts
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confidential filing of such document.
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to fill all Specific Purchase Orders placed by Kmart in less than
ninety (90) days from the required delivery date. For purposes of this
Agreement, in the event that Kmart issues a Specific Purchase Order
which is accepted by NewTech as set forth above and NewTech [**] fails
through no fault of Kmart to timely deliver conforming Products to or
on behalf of Kmart by the required delivery date specified therein, or
if for any reason, but through no fault of Kmart, NewTech is unable to
procure Products [**] then [**] the Minimum Product Orders in the
applicable Category shall be reduced by the dollar amount set forth in
the Specific Purchase Order(s) related thereto, whether or not such
Products are ultimately purchased by Kmart. Kmart's deductions for
documented claims whether under the Specific Purchase Orders or
otherwise, shall not reduce Kmart's fulfillment of the Minimum Product
Orders, and for purposes of determining if Kmart has issued the
Minimum Product Orders, Kmart shall be deemed to have purchased all
Products covered by a remittance regardless of offsets/deductions for
claims. If, however, Kmart issues a Specific Purchaser Order which is
accepted by NewTech as set forth above and NewTech [**] timely
delivers conforming Products to or on behalf of Kmart by the required
delivery date specified therein, and Kmart fails to remit payment for
such conforming Products so delivered, then such Products shall not be
counted for purposes of determining if Kmart has issued the Minimum
Product Orders, unless and until such Products are ultimately paid for
by Kmart. Notwithstanding the foregoing, Kmart shall not be relieved
of any obligation to pay for conforming Products timely delivered to
or on behalf of Kmart in accordance with any Specific Purchase Order.
Subject to Sections 5.1 above and 5.2 below, in the event that Kmart
fails to place the Minimum Product Orders in any of the Categories
specified above within any of the periods specified above, then Kmart
shall be required to pay NewTech within thirty (30) days following the
end of any such period, as NewTech's sole and exclusive remedy
hereunder and upon receipt of an invoice from NewTech therefor, an
amount equal to (i) (A) the Minimum Product Orders in such Category
less (B) the Actual Order Amount in such Category multiplied by (ii)
four percent (4%) in the Video Category and five percent (5%) in all
other Categories (the "Fee(s)"). The "Actual Order Amount" for
purposes of this Section 5.1 shall mean, subject to Section 5.1 above
and Section 5.2 below, the positive amount, if any, obtained by adding
(i) the actual amount of Products ordered by Kmart in the applicable
Category during the applicable Period (adjusted upwards pursuant to
Section 5.1 above and 5.2 below) and (ii) the excess, if any, of (A)
the actual amount of Products ordered by Kmart in the applicable
Category during the Period (adjusted upwards pursuant to Section 5.1
above and 5.2 below) immediately prior to the applicable Period (the
"Prior Period") less (B) the Minimum Product Orders in the applicable
Category for the Prior Period. In no event, however, shall NewTech's
Fees (for both ordered and unordered Products) ever exceed the amount
NewTech would have received in any Category under Section 5.1 herein
if Kmart had met all Minimum Product Order commitments stated therein,
and NewTech shall reconcile and refund all Fees received in excess
thereof subject to Section 7.1.2 hereof. For example, assuming all
Specific Purchase Orders are performed by Kmart and NewTech in
accordance with their respective terms, if during the Period from the
execution date of this Agreement through June 30, 1998, Kmart's
Product Orders in the Video Category are equal to an aggregate of
$60.0 million and if during the period from July 1, 1998 through June
30, 1999, Kmart's Product Orders in the Video Category are equal to an
aggregate of $50.0 million, then Kmart shall pay NewTech an amount
equal to $88,000 on or before July 30, 1999 ([$57.2 million - $50.0
million] - [$60.0 million - $55.0 million]) x (.04). Kmart shall not
have the right to offset the amount of Product orders in a particular
Category against Product Orders in any other Category.
5.2 Reduction of Minimum Product Orders. In the event that during any
Period aggregate retail sales of Products in the United States for a
particular Category have decreased from the Prior Period (the amount
of such reduction of sales in the United States of
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confidential filing of such document.
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Products in any particular Category is hereinafter expressed as a
percentage, and the amount by which such percentage exceeds 10% is
hereinafter referred to as the "Reduction Percentage"), then the
Minimum Product Orders for that Category for the Period following the
Prior Period (the "Adjustment Period") shall be reduced. This
reduction shall be in an amount (the "Reduction Amount") equal to (i)
the higher of (A) the Minimum Product Order commitment for the
applicable Category for the Adjustment Period or (B) the actual
Product Orders by Kmart of the Products in the applicable Category
during the Prior Period (the "Actual Prior Period Orders") multiplied
by (ii) the Reduction Percentage. The Reduction Amount will then be
subtracted from the higher of (i) the Minimum Product Order commitment
for the applicable Category for the Adjustment Period or (ii) the
Actual Prior Period Orders, to determine the new Minimum Product Order
commitment for the applicable Category for the Adjustment Period;
provided, however, that if this computation yields an amount greater
than the Minimum Product Order commitment for such Period, then no
adjustment shall be made. In addition, an adjustment may only be made
to the extent that it would not reduce the Minimum Product Order
commitment for the Adjustment Period below 80% of the amount specified
for such Period for the applicable Category under Section 5.1. All
computations will be based on prices that do not include any internal
Kmart charges. By way of example only, if sales of products in the
Video Category in the United States decrease by 30% during the Period
from July 1, 1999 to June 30, 2000 and Kmart orders from New Tech
$67.5 million of Products in the Video Category during the Period from
July 1, 1999 to June 30, 2000, then Kmart may reduce the Minimum
Product Orders for Products in the Video Category for the Period from
July 1, 2000 to June 30, 2001 from $61.9 million to $54.0 million
([30%-10%] x $67.5=$13.5 million; $13.5 million subtracted from $67.5
million = $54.0 million; however, the Minimum Product Orders can never
be reduced under this Section 5.2 by more than 80% of $61.9 million
(which equals $49.52 million). For purposes of this Section 5.2, Sales
of Products in the United States within a particular Category shall be
determined by reference to applicable information published in the
most widely-circulated trade publication containing such information;
provided, that if Kmart and NewTech are unable to agree upon the
publication from which such information is to be derived, then the
applicable information shall be derived by reference to a trade
publication selected by Kmart and a trade publication selected by
NewTech, and the applicable sales information shall be determined on
the basis of the average of the data contained in the two
publications.
5.3 Retail Sales Price. Kmart shall have sole discretion in
setting the sales price for the sale of the Products to its
customers.
6. DELIVERY
6.1 Availability of Products. Products shall be shipped in accordance
with the Specific Purchase Orders. NewTech shall use its reasonable
best efforts to make available to Kmart sufficient quantities of the
Products to satisfy Kmart's Product Orders.
6.2 Product Forecasts. To assist NewTech in production scheduling for the
manufacture of the Products, Kmart shall provide to NewTech, monthly,
a six month rolling forecast of its requirements for Products. The
first forecast shall be provided by Kmart to NewTech within thirty
(30) business days of the Execution Date of this Agreement (to
forecast the requirements for the six months ended June 30, 1997 and
for the next five succeeding calendar months) and thereafter shall be
provided to NewTech on or before the 20th day of each month (to
forecast the requirements for the next six succeeding calendar
months). It is understood and agreed that all forecasts are estimates
only and Kmart shall only be bound to purchase the Products pursuant
to Specific Purchase Orders
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issued by it to NewTech, subject to the satisfaction of the Minimum
Product Order commitment set forth in Section 5.1 hereof; and the Fee
on any shortfall in the Minimum Product Order for any Category and
Kmart's payment for conforming Products ordered and timely delivered
through the date of Termination shall be NewTech's sole and exclusive
remedy hereunder.
6.3 Shipping Arrangements; Risk of Loss. The shipping arrangements,
insurance and risk of loss relating to Products purchased hereunder
shall be specified in each Specific Purchase Order.
7. MANUFACTURE OF PRODUCTS; PRICE AND PAYMENT TERMS
7.1 Manufacture of Products. All Products for which Specific Purchase
Orders have been issued (subject to Section 5.1 of this Agreement)
may be manufactured by or on behalf of NewTech [**] NewTech
acknowledges and Kmart acknowledges (based upon NewTech's
representation) that under the License Agreement WCI has the right
before the initial order of a new Product within ten (10) days of
submission by NewTech, to approve or reject the Product specimen,
related artwork and packaging, which consent shall not be
unreasonably withheld and shall be automatic unless rejection is
communicated in writing to Kmart within the ten (10) day period. In
each such case, NewTech shall be solely responsible for making timely
submission to WCI and timely written communication to Kmart of any
rejection; and Kmart shall have no liability, whatsoever, for any
claim or failure relating to or arising from this Section 7.1
7.1.1 Direct NewTech Orders. In the event that Kmart elects in its
sole and absolute discretion to procure the manufacture of
Products directly by or on behalf of NewTech, then Kmart shall
enter into an agreement with NewTech for such Products as
Kmart desires to purchase and NewTech is willing to
manufacture pursuant to a purchase order identical in all
respects to the Purchase Order Form annexed hereto as Exhibit
C for domestic orders and Exhibit D for import orders (the
"Direct Purchase Order"). The price to Kmart of Products under
a Direct Purchase Order, and all other terms and conditions
not specified in this Agreement or in the Purchase Order
Form,, shall be determined by mutual agreement acceptable to
each of Kmart and NewTech in its sole discretion at or prior
to the time the applicable Direct Purchase Order is issued by
Kmart and accepted by NewTech.
7.1.2 Orders from [**] pursuant to a purchase order identical in all
respects to the Purchase Order Form annexed hereto as Exhibit
C for domestic orders and Exhibit D for import orders (the
[**] "Purchase Order"). Kmart shall make direct payments to
[**] of the amounts owed under such [**] Purchase Order for
conforming Products timely delivered (the [**] "Payments").
NewTech shall remain liable for the [**] Payments in the event
Kmart fails to make such [**] Payments. Kmart shall indemnify
and hold harmless NewTech and its officers, directors,
employees and agents from and against any claim, liability or
damages, including related costs and attorneys' fees, of which
it is timely advised in writing resulting from the failure by
Kmart to make [**] Payments, or otherwise perform, in
accordance with the terms of the [**] Purchase Orders unless
such failure is caused or contributed to by NewTech, Windmere
or WCI. Kmart shall control the defense and settlement of any
claims for which such indemnify is provided. Nothing in this
Agreement shall be construed to limit or restrict Kmart in any
fashion from dealing directly with [**]. NewTech shall not be
liable for the failure to perform, including warranties, [**]
unless and except to the
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confidential filing of such document.
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extent that such failure is caused or contributed to by
NewTech, Windmere or WCI.
7.1.3 Purchase Orders from Kmart to NewTech Relating to [**]. Kmart
agrees that delivery [**] of the Products in conformity with
the applicable [**] Purchase Order shall be deemed, without
any further agreement or instrument, the agreement of Kmart to
purchase such Products from NewTech in the manner set forth in
Section 7.1.2 above and in this Section 7.1.3 on exactly the
same terms and conditions provided [**] under the Purchase
Order issued by Kmart at a price equal to the sum of (i) the
[**] Payment for such Products plus (ii) four percent (4%) in
the Video Category and five percent (5%) in all other
Categories of the "first cost" of such [**] Payment (the
"first cost" being the price up to the f.o.b. point of
shipment, net of any taxes, freight costs, customs fees,
duties, etc.). (The amounts set forth in (i) and (ii) are
collectively referred to herein as the "NewTech Payment").
Upon delivery [**] of the conforming Products identified in
the [**] Purchase Order to Kmart, together with the related
invoice, Kmart shall at its sole and exclusive option either
(i) pay the NewTech Payment to NewTech whereupon NewTech shall
pay the [**] Payment to [**] or (ii) pay the [**] Payment
directly to [**] and remit the difference between the NewTech
Payment and the [**] Payment directly to NewTech. Kmart's
exercise of either of the preceding options shall extinguish
any and all rights of NewTech to such payments.
7.1.4 Aggregate Sales Reports.Within ten (10) days after the end of
each calendar month during the term of this Agreement, Kmart
shall provide NewTech with a written statement (the "Kmart
Statement") indicating, with respect to the preceding month,
(i) the aggregate dollar amount of all purchases of Products
[**] under this Agreement and the quantity and types of
Products so purchased, (ii) the aggregate dollar amount of
[**] Payments made directly to [**] upon delivery of the
Products, (iii) the aggregate dollar amount of the NewTech
Payments made directly to NewTech upon delivery of conforming
Products. NewTech shall have the right, upon reasonable notice
and at reasonable times, within six (6) months following its
receipt of the Kmart Statement to review the books and records
of Kmart with respect only to (i), (ii) and (iii) above for
the period covered by such Kmart Statement, to confirm the
accuracy of the payments made hereunder provided that such
right of review shall not be exercisable more than once per
year and provided further that if such review reveals an
underpayment of more than one percent (1%) of the amount to
which NewTech is entitled hereunder, then NewTech may conduct
such review twice per year. The cost and expenses of such
examination shall be paid solely by NewTech; provided, that if
such examination reveals an underpayment to either NewTech of
more than one percent (1%) of the amount to which NewTech is
entitled hereunder, then the reasonable out of pocket costs
and expenses of such examination shall be paid by Kmart upon
receipt of an invoice therefor with support documentation
attached. Notwithstanding the foregoing, the first Aggregate
Sales Report will not be issued until after February 15, 1997.
7.1.5 Examination by Independent Auditors. The independent auditors
for each of NewTech and Windmere-Durable Holdings, Inc.
("Windmere") presently Ernst and Young and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
L.L.P., shall have the right during the term of this Agreement
at any time that either NewTech or Windmere requires audited
financial statements (e.g. in connection with the preparation
of their respective annual reports, bank loans or certain
acquisitions) to review the books and records of Kmart, but in
no event more than twice per year. Any additional audits shall
be conducted only with Kmart's express prior written consent,
which
-------------------------------
[**] Text from this document has been redacted in connection with the Company's
confidential filing of such document.
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shall not be unreasonably withheld, and shall be only
for the purpose of confirming the accuracy of, and relating
only to, the financial information required to be provided to
NewTech hereunder as set forth in Section 7.1.4 herein,
including, all [**] Purchase Orders. All information obtained
by such auditors in the course of such review shall be
maintained by such auditors as confidential and shall not be
disclosed to any party, including Windmere and/or NewTech,
without the express prior written consent of Kmart. The cost
and expenses of such examination shall be paid solely by
NewTech and/or Windmere, as the case may be; provided, that if
such examination reveals an underpayment of more than one
percent (1%) of the amount to which NewTech is entitled
hereunder, then the reasonable out of pocket costs and
expenses of such examination shall be paid by Kmart upon
receipt of an invoice therefor with support documentation
attached.
7.1.6 Assignment of Rights. In consideration of Kmart entering into
this Agreement and agreeing to pay [**] directly subject to
and in accordance with the terms hereof, this Agreement shall
constitute the automatic assignment to Kmart of all rights of
NewTech against [**] with respect to Products purchased from
[**] pursuant to this Agreement, which rights may not be
enforced by NewTech. NewTech shall have no liability with
respect to any non-performance of [**] unless NewTech,
Windmere or WCI causes or contributes to such non-performance.
This Agreement shall also constitute the automatic and
irrevocable assignment of the [**] Payment portion of the
NewTech Payment to [**] and such payment is not assignable to
any other party, including NewTech.
7.1.7 Sole and Exclusive Remedy of NewTech. NewTech's sole and
exclusive remedy relating to any [**] Purchase Order or any
failure under this entire Section 7 shall be against Kmart for
its payment of the difference between the NewTech Payment and
the [**] Payment or for enforcement of Kmart's indemnification
obligation under Section 7.1.2 hereunder. NewTech shall have
no right to enforce against Kmart, Kmart's payment of the [**]
Payment portion of the NewTech Payment unless Kmart shall have
wrongfully failed to pay such amount to [**] upon timely
delivery of conforming Products under a [**] Purchase Order.
NewTech shall have no right to enforce performance or seek any
other remedy against [**] hereunder or under any [**] Purchase
Order.
7.1.8 Invoicing Requirements/Payment Terms.
A. NewTech will follow the invoicing
requirements provided by Kmart from time to time.
B Payment for all Direct NewTech Orders of Products f.o.b.
Asia ("Import Products") and purchased hereunder shall
be as follows: (i) Direct NewTech Orders shall be made
by wire transfer within five (5) business days
following the receipt of goods ("ROG") provided the
International Department has received (i) the original
invoice, (ii) an original signed ▇▇▇▇ of lading and
(iii) the customary signed Kmart inspection certificate
for goods manufactured overseas.
C. Payment for all domestic Direct NewTech Orders purchased
hereunder shall be made by check issued within ten (10)
business days of receipt of goods ("ROG") provided Kmart
has received the applicable invoice.
D. Payment for all domestic and import [**]
Orders purchased hereunder shall be made pursuant to
Section 7.1.3 herein. If Kmart, in its sole and
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[**] Text from this document has been redacted in connection with the Company's
confidential filing of such document.
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exclusive discretion exercises the payment option set forth
in (ii) under Section 7.1.3, NewTech shall invoice Kmart for
the difference between the NewTech Payment and the [**]
Payment after NewTech receives each Aggregate Sales Report
described in Section 7.1.4 herein. NewTech shall prepare and
submit 2 invoices covering each Aggregate Sales Report: one
for import orders and one for domestic orders. The invoices
shall be directed to:
FOR DOMESTIC ORDERS: FOR IMPORT ORDERS:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Manager, Accounting Operations Director, International Administration
Kmart Corporation Kmart Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Kmart shall pay all such invoices within ten (10) business days of
receipt.
7.1.9 Stand-by Letter of Credit. Kmart shall open, within ten (10)
business days of the Execution Date, a transferable and
assignable stand-by irrevocable letter of credit in the sum of
$10,000,000 in favor of NewTech from a financial institution
reasonably acceptable to NewTech ("Letter of Credit") which
can only be drawn upon for Kmart's failure to pay for Direct
NewTech Orders of conforming Products which are timely shipped
f.o.b. Asia as further described in this Section and for no
other reason (including, but not limited to, any NewTech
Payment) NewTech shall have as its sole and exclusive remedy
for Kmart's failure to pay for such Products, notwithstanding
Section 10.3 herein, the right to draw on the Letter of Credit
at any time and from time to time provided all of the
following procedures are followed by NewTech and all of the
following conditions are met: (i) Kmart has failed to pay for
such Products as provided herein (ii) NewTech has provided
Kmart with the required written notice and opportunity to cure
pursuant to Section 10.3 herein and has submitted an affidavit
signed by the Chief Financial Officer of NewTech as follows:
"NewTech has timely delivered conforming Products f.o.b. Asia
to Kmart, Kmart has taken deliveries of such Products and
NewTech has invoiced Kmart therefor. Kmart Corporation owes
NewTech $_______ pursuant to invoices [invoice numbers to be
inserted] (iii) A copy of such invoices and the corresponding
inspection certificates indicating that the Products have
passed inspection and corresponding original bills of lading
duly signed by an authorized officer of Kmart are annexed to
the affidavit; (iv);Kmart has failed to pay the amount owing
when due after receipt of an invoice therefor and a notice
specifying such amount and describing the obligation including
respective purchase order number(s),(v). Kmart has received
such notice on __________, sixty (60) days have elapsed (for
individual obligations of up to $2 million) or thirty (30)
days have elapsed (for individual obligations of more than $2
million), and Kmart has failed to pay the amount owing or
provide proof that the amount is not owing.
NewTech shall provide Kmart with ten (10) days prior written
notice of its intent to submit such affidavit to draw on the
Letter of Credit and shall not be entitled to submit such
affidavit if Kmart can prove payment of the amount claimed
owing or that the goods were not conforming or timely
delivered or otherwise resolve the dispute within such ten
(10) day period. The Letter of Credit shall be in form and
substance reasonably satisfactory to NewTech and shall
terminate on December 15, 1997.
7.1.10 Currency Exchange. Prices charged Kmart and payments made by
Kmart to NewTech for the Products shall be in U.S. dollars.
-------------------------------
[**] Text from this document has been redacted in connection with the Company's
confidential filing of such document.
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8. RETURNS, ALLOWANCES AND WARRANTIES
8.1 Terms of Specific Purchase Order to Control. The terms and conditions
of this Agreement, including the Purchase Order Forms, as well as the
terms and conditions set forth in each Specific Purchase Order shall
determine the rights and obligations of the parties with respect to
returns, allowances and warranties relating to Products ordered
thereunder.
9. DAMAGES, INDEMNIFICATION AND INSURANCE
9.1 Indemnification. To the fullest extent permitted by law, NewTech
shall reimburse, indemnify, defend and hold harmless, Kmart, its
directors, officers and employees and subsidiaries and affiliates
and each of their respective directors, officers and employees from
and against any damage, loss, expense or penalty, or any claim or
action therefor, by or on behalf of any person or entity, arising out
of the performance or failure of performance of this Agreement
including but not limited, to any claim or failure with respect to
Sections 2 or 3 hereof.
NewTech shall reimburse, indemnify, defend and hold harmless Kmart ,
its directors, officers and employees and subsidiaries and affiliates
and each of their respective directors, officers and employees from
and against all third-party claims alleging that any Products and or
any Right furnished under this Agreement infringe any patent,
copyright, trademark or other proprietary right or constitute a misuse
of any trade secret information and shall pay all costs, attorneys
fees, settlement payments and damages arising in connection with any
such claims. Kmart agrees to timely advise NewTech of any such suit,
claim or proceeding, and to extend reasonable cooperation to NewTech
in the defense or settlement of such suit, claim or proceeding, but
NewTech shall have sole control thereof. In the event that an
injunction is obtained against Kmart's use, purchase, distribution,
sale, marketing and/or promotion of any Products and/or any Right in
whole or in part, NewTech shall promptly, at its option either: (a)
procure for Kmart the right to continue using, purchasing,
distributing, selling, marketing and/or promoting such Products
enjoined from use, or (b) replace or modify the same so that Kmart's
use, sale or possession is not subject to any such injunction, or (c)
at Kmart's option refund to Kmart all amounts paid to NewTech for such
Products and such Right, including but not limited to all NewTech
Payments.
9.2 Insurance. NewTech shall, during the Term of this Agreement, maintain
the following insurance coverages as indicated or as required by law,
whichever shall be greater, with insurers in good standing and
authorized to do business under the laws of the State(s) where
performance hereunder shall occur:
(a) Comprehensive General Liability, naming Kmart as an additional
insured including, but not limited to, Contractual Liability and
Products Liability, with broad form property damage and bodily
injury (including Personal Injury) coverage. The minimum limits
for each shall be $2,000,000 per occurrence.
(b) All insurance required in Exhibits B and C hereto, as well as
that required under each Purchase Order.
(c) Employee fidelity insurance, workers compensation insurance and
employer's liability insurance as required by all applicable
federal, state or other laws, rules or regulations.
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Prior to execution of this Agreement, NewTech shall tender to
Kmart certificates of insurance evidencing the coverage required
to be maintained by NewTech hereunder. The certificates must
provide that no change or cancellation of insurance shall be made
without thirty (30) days prior written notice to Kmart.
9.3 Survival. The provisions of this Section 9 shall survive the
termination or expiration of this Agreement.
10. TERM AND TERMINATION
10.1 Term. The Term of this Agreement shall be a period commencing on the
Execution Date and terminating on June 30, 2004, unless earlier
terminated in accordance with this Section 10 of this Agreement.
10.2 Extension of Terms. If neither Kmart nor NewTech terminate this
Agreement pursuant to Section 10.3, 10.4 or 10.5, as applicable,
Kmart shall have the right to extend the term of this Agreement for
successive one-year periods through June 30, 2011, by delivering
written notice to NewTech of its desire to so extend this Agreement
on or before May 30 of any year during the Term or any extension
period, as applicable. Upon any such extension, the Minimum Product
Orders for each Category shall be increased at an annual rate of no
more than four percent (4%) from the amount of Minimum Product Orders
in the immediately preceding year during each year in which the Term
has been so extended. Kmart may terminate this Agreement without
cause on sixty (60) days prior written notice at any time during any
extension period without cost or penalty.
10.3 Termination by Either Party. The occurrence of one or more of
the following events shall constitute a default of the party
responsible for the occurrence of such event ("Default"):
(a) Material breach of the Agreement, including, without limitation,
(i) the failure of NewTech to supply Products and/or provide
services as provided for herein with such diligence as will
insure compliance with all delivery, installation, completion and
other dates specified herein, (ii) the failure of Kmart to pay or
reimburse any material amounts which are due to be paid or
reimbursed hereunder; (iii) any failure relating to Section 2.1,
Section 3.1.4 and/or Section 9 herein; or (iv) Salton's breach of
the Salton Agreement;
(b) Failure or material breach of any material condition, obligation,
covenant, representation or warranty set forth herein; or
(c) Insolvency, or the institution of proceedings by or against a
party under any federal or state bankruptcy or insolvency law or
an assignment for the benefit of all or substantially all
creditors which proceeding is not stayed within sixty (60) days
of filing; or the cessation of operations or doing business for
any reason.
Upon the occurrence of a Default, the non-defaulting party shall
provide written notice (the "Notice") to the defaulting party
specifying the nature of the Default and the conduct required to
cure such Default. The defaulting party shall have 60 days following
the date the Notice is received by the non-defaulting party to cure
the Default (30 days for non-payment by Kmart under a Specific
Purchase Order where the amount involved exceeds $2,000,000). If the
Default is not cured by the defaulting party within such period, the
non-defaulting party may elect to either specifically enforce
performance hereof or terminate this Agreement If, however, Kmart
Defaults, NewTech's remedies shall not exceed the amount NewTech
would have received as its sole and exclusive remedy
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under Section 5 herein with respect to Minimum Product Orders which
have not been placed as of the effective date of the Default or
Termination. In the event of NewTech's Default or wrongful
termination of this Agreement, Kmart shall not owe NewTech any
damages under Section 5 of this Agreement.
A party's failure to demand cure of or terminate this Agreement as a
result of a prior Default shall not be deemed a waiver by the party
of the right to demand cure of or to terminate this Agreement as a
result of a subsequent Default. Unless otherwise indicated to the
contrary in this Agreement, the rights set forth hereinabove are
cumulative and in addition to those otherwise provided by law.
10.4 Termination at Option of Kmart. (a) Kmart shall have the right to
terminate this Agreement without cause in its sole discretion
effective on June 30, 2002, by giving NewTech written notice at any
time up to June 30, 2000. Following delivery of such notice to
NewTech, the parties shall continue to be bound by all of the terms
and conditions of this Agreement through June 30, 2002; provided,
that the Minimum Product Purchase commitment, for the period of July
1, 2001 through June 30, 2002, as set forth in Section 5.1 hereof,
shall be reduced to 25% of the amounts set forth in said Section 5.1;
and provided further, that after June 30, 2000, NewTech may commence
marketing plans for the sale of Products to any other Person,
including other Discount Department Stores, and, after July 31, 2001
NewTech may market and sell Products to any other Person, including
Discount Department Stores, notwithstanding Section 2.1 hereof. If
Kmart does not elect to terminate this Agreement in accordance with
the foregoing sentences of this Section 10.4, then Kmart shall have
the right to terminate this Agreement without cause in its sole
discretion effective June 30, 2003 and on each June 30 thereafter
during the term of this Agreement by giving written notice to NewTech
of its desire to so terminate this Agreement. Upon any such
termination, Kmart shall owe nothing to NewTech beyond payment for
Products accepted by Kmart as of the effective date of termination.
Kmart shall be required to perform all Specific Purchase Orders
issued prior to the effective date of such termination, and Kmart
shall have no further obligation following such termination.
(b) Notwithstanding the foregoing, it is specifically agreed by the
parties hereto that in the event Kmart terminates the Agreement at
any time and such termination is not in accordance with this Section
10.4(a), or is otherwise in violation or breach of this Agreement,
Kmart's liability hereunder shall not exceed an amount equal to the
Fees specified in Section 5 herein for the Minimum Product Orders
which have not been placed as of the effective date of such
termination and for payment for Orders of conforming Products timely
delivered through the date of such termination, Kmart shall be
required to perform all Specific Purchase Orders issued prior to the
effective date of such termination, and Kmart shall have no further
obligation following such termination.
10.5 Termination at Option of NewTech. NewTech shall have the right to
terminate this Agreement effective on June 30, 2002, by giving Kmart
written notice at any time up to June 30, 2000. Following delivery of
such notice to Kmart, the parties shall continue to be bound by all
of the terms and conditions of this Agreement through June 30, 2002;
provided, that the Minimum Product Purchase commitment, for the
period of July 1, 2001 through June 30, 2002, as set forth in Section
5.1 hereof, shall be reduced to 25% of the amounts set forth in said
Section 5.1; and provided further, that after June 30, 2000, NewTech
may commence marketing plans for the sale of Products to any other
Person, including other Discount Department Stores, and, after July
31, 2001 NewTech may market and sell Products to any other Person,
including Discount Department Stores, notwithstanding Section 2.1
hereof. In the event that NewTech does not elect to terminate this
Agreement in accordance with the foregoing sentences of this Section
10.5, then NewTech shall have the right to terminate this Agreement
without cause in its
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sole discretion effective June 30, 2003 and on each June 30
thereafter during the term of this Agreement by giving at least 12
months prior written notice to Kmart of its desire to so terminate
this Agreement. Upon any such termination, Kmart shall owe nothing to
NewTech beyond payment for Products accepted by Kmart as of the
effective date of such termination.
10.6 Duties Following Termination. Upon Termination of this Agreement,
neither party shall have any obligation to the other party except as
hereinafter set forth in this Section 10.6. Notwithstanding the
termination or expiration of this Agreement pursuant to this Article
10 or any other provision of this Agreement, unless otherwise
indicated in this Agreement, all rights and obligations which were
incurred or which matured under specific Purchase Orders issued prior
to the effective date of termination or expiration shall survive
termination and be subject to enforcement under the terms of this
Agreement. Termination of this Agreement shall not affect any duty of
Kmart or NewTech under Sections 9.1, 11.1, 11.2, 11.3, 12.1, 12.4,
12.6, 12.11, 12.13 or 12.14 existing prior to the effective date of
termination or expiration , all of which are intended to survive
termination. Kmart shall have the right to distribute, sell, market
and promote all existing inventory of Products ordered pursuant to
Specific Purchase Orders prior to the termination of this Agreement,
and to use all packaging materials, labels, tags, signage,
advertising and promotional materials to effectuate the sale of such
Products.
10.7 Non-interference. Except for negotiations involving NewTech or with a
Third Party Manufacturer, , Kmart agrees that, except with NewTech,
it will not, during the Term of this Agreement or any extension or
renewal thereof negotiate, obtain information or discuss with or
enter into any agreement with any person or entity covering the
licensing, purchase, sale, marketing or distribution of the Trademark
for any of the Categories of Product purchased by Kmart from NewTech.
10.8 Termination of Salton Agreement. If the Salton Agreement is
terminated at any time for any reason, Kmart may, in its sole option,
elect to terminate this Agreement, and upon such termination, owe
nothing further under this Agreement beyond payment for Products
accepted and sold by Kmart through the date of termination.
11. CONFIDENTIALITY/PRESS RELEASES
11.1 Confidentiality and Non-Disclosure. NewTech agrees that any and all
information in any form that is provided to NewTech or any of its
representatives as part of this Agreement is provided and received in
confidence, and NewTech, shall at all times preserve and protect the
confidentiality of such information, and of any other proprietary or
non-public information of or relating to Kmart or any of its related
companies of which it or any of its representatives becomes aware or
acquires during the performance of this Agreement (such information
is hereinafter referred to as "Confidential Information"). NewTech
also agrees that it shall take all reasonable steps to ensure that
such Confidential Information will not be disclosed to, or used by
any person, association or entity except its own employees, and then
only to the extent necessary to permit it to perform this Agreement.
Each of NewTech and Kmart agrees to keep the Minimum Product Orders,
pricing, and Term of this Agreement (including rights of extension
and termination) strictly confidential, except that each of NewTech
and Kmart shall be permitted to disclose any and all information
concerning the transactions contemplated hereby to the extent it is
legally required to do so, whether under applicable securities laws
or otherwise, provided, that NewTech will use its reasonable best
efforts to file with the Securities and Exchange Commission or any
other applicable regulator or court a request for
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confidential treatment of the pricing and other business terms set
forth in this Agreement.
In the course of performance of this Agreement, NewTech may disclose
certain information to Kmart which NewTech considers proprietary and
confidential. In order to be considered as proprietary and
confidential and, thus, subject to the following restrictions,
NewTech must comply with both of the following requirements prior to
disclosure of the information: (i) the information must be clearly
and conspicuously identified in writing as "PROPRIETARY AND
CONFIDENTIAL INFORMATION OF NEWTECH'; and (ii) NewTech must limit its
dissemination of the information to an authorized representative of
Kmart (i.e., one listed on attached Exhibit E) with a need to know
such information in furtherance of the performance of this Agreement
(the "Authorized Recipient") Provided NewTech has complied with (i)
and (ii) above, the Authorized Recipient shall maintain the
confidentiality of such information to the same extent Kmart protects
its own proprietary information and shall not disclose it to anyone
other than Kmart employees, agents and/or consultants with a need to
know who shall also be subject to this restriction.
Confidential Information shall not include information that a party
can demonstrate by written evidence:
(i) is in the public domain (provided that information in the
public domain has not and does not come into the public domain
as a result of the disclosure by the receiving party or any of
its Affiliates);
(ii) is known to the receiving party or any of its Affiliates prior
to the disclosure by the other party; or
(iii) becomes available to the party on a non-confidential basis from
a source other than an Affiliate of that party or the
disclosing party.
11.2 Press Releases. NewTech shall not issue any press releases relating
to this Agreement or its relationship with Kmart without the prior
written approval by an authorized representative of either the
Corporate Affairs Department or Investor Relations Department at
Kmart as to the contents hereof.
11.3 The press release, confidentiality and non-disclosure obligations
contained herein shall survive and continue after termination of this
Agreement or any related agreements the parties may execute, and
shall bind each of NewTech's and Kmart's legal representatives,
successors and assigns.
12. GENERAL TERMS AND CONDITIONS
12.1 Dispute Resolution. All disputes arising out of, or in relation to,
this Agreement (other than disputes arising out of any claim by a
third party in an action commenced against a party) shall be referred
for decision forthwith to a senior executive of each party who is not
personally involved in the dispute. If no agreement can be reached
through this process within thirty (30) days of request by one party
to the other to nominate a senior executive for dispute resolution,
then either party shall be entitled to pursue any and all available
legal remedies.
12.2 No Assignment. Other than as specifically set forth in this
Agreement, this Agreement may not be assigned nor may the performance
of any duties hereunder be delegated by
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either party without the prior written consent of the other party;
provided, that any such attempted assignment shall be void and shall
not relieve the assignor from any of its obligations hereunder or
under any other document or agreement delivered by such party
pursuant to, or delivered (or acknowledged to have been
delivered) contemporaneously with or in connection with the
execution of, this Agreement, which shall continue to be binding
upon such party notwithstanding any such attempted assignment.
12.3 Notices. Any notice required or permitted to be given under
this Agreement shall be sufficiently given if in writing and
delivered by registered or certified mail (return receipt
requested), facsimile (with confirmation of transmittal), overnight
courier (with confirmation of delivery), or hand delivered to the
appropriate party at the address set forth below, or at such other
address as such party may from time to time specify for that purpose
in a notice similarly given:
If to NewTech: New M-Tech Corporation
▇▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (other than regularly Greenberg, Traurig, Hoffman, Lipoff,
prepared notices, reports, etc. ▇▇▇▇▇ & Quentel, P.A.
required to be delivered hereunder): ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Kmart: Kmart Corporation
▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Divisional Vice President
Home Electronics/Home Appliances
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (other than regularly Kmart Corporation
prepared notices, reports, etc. Legal Department
required to be delivered hereunder): ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Any such notice shall be effective (i) if sent by mail, as
aforesaid, three (3) business days after mailing, (ii) if sent by
facsimile, as aforesaid, when sent, and (iii) if sent by courier or
hand delivered, as aforesaid, when received. Provided, that if any
such notice shall have been sent by mail and if on the date of
mailing thereof or during the period prior to the expiry of the
third business day following the date of mailing there shall be a
general postal disruption (whether as a result of rotating strikes
or otherwise) in the United States, then such notice shall not
become effective until the third business day following the date of
resumption of normal mail service.
12.4 Governing Law and Consent to Jurisdiction. THIS AGREEMENT
SHALL BE DEEMED TO HAVE BEEN EXECUTED AND DELIVERED IN TROY,
MICHIGAN, AND SHALL BE CONSTRUED, INTERPRETED AND ENFORCED UNDER AND
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MICHIGAN.
NEWTECH AGREES TO EXERCISE ANY RIGHT OR REMEDY IN CONNECTION WITH
THIS AGREEMENT
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EXCLUSIVELY IN, AND HEREBY SUBMITS TO THE JURISDICTION OF, THE STATE
OF MICHIGAN COURTS OF OAKLAND COUNTY, MICHIGAN OR THE UNITED STATES
DISTRICT COURT IN DETROIT, MICHIGAN.
12.5 Binding Agreement. This Agreement shall be binding upon the
parties hereto, and their respective successors and permitted
assigns, whether by operation of law or otherwise.
12.6 Entire Agreement. This Agreement and all other documents and
instruments specifically incorporated by reference herein contain
the entire agreement and understanding of the parties with respect
to the subject matter hereof and thereof and supersedes all
negotiations, prior discussions and agreements relating to the
subject of this Agreement. Any terms or conditions in any forms of
NewTech used in the performance of this Agreement which are in
conflict with or in addition to the terms and conditions of this
Agreement shall be void. This Agreement may not be amended or
modified except by a written instrument signed by all of the parties
hereto.
12.7 Headings. The headings to the various articles and paragraphs of
this Agreement have been inserted for convenience only and shall
not affect the meaning of the language contained in this Agreement.
12.8 Waiver. The waiver by any party of any breach by another party of
any term or condition of this Agreement shall not constitute a
waiver of any subsequent breach or nullify the effectiveness of
that term or condition.
12.9 Counterparts. This Agreement may be executed in identical
duplicate copies exchanged by facsimile transmission. The parties
agree to execute two identical original copies of the Agreement
after exchanging signed facsimile versions. Each identical
counterpart shall be deemed an original, but all of which together
shall constitute one and the same instrument.
12.10 Severability of Provisions. If, for any reason whatsoever,
any term, covenant or condition of this Agreement or the application
thereof to any party or circumstance is to any extent held or
rendered invalid, unenforceable or illegal, then such term, covenant
or condition:
(i) is deemed to be independent of the remainder of
such document and to be severable and divisible therefrom and
its validity, unenforceability or illegality does not affect,
impair or invalidate the remainder of such document or any
part thereof; and
(ii) continue to be applicable and enforceable to the
fullest extent permitted by law against any party and
circumstances other than those as to which it has been held or
rendered invalid, unenforceable or illegal.
12.11 Limitation on Damages. Except with respect to NewTech's
liability under Section 9 of this Agreement, neither party shall be
liable to the other party for incidental, consequential, punitive or
exemplary damages arising in connection with this Agreement or the
performance, omission of performance or termination hereof, even if
said party has been advised of the possibility of such damages and
without regard to the nature of the claim or the underlying theory
or cause of action (whether in contract, tort or otherwise). In
addition, in no event shall Kmart be liable for direct or any other
damages in excess of the amount to which NewTech is entitled to
under Section 5 herein for Minimum Product Orders which have not
been placed as of the effective date of the
18
20
Default or Termination plus payment due for Products accepted by
Kmart as of such date, nor shall Kmart's aggregate liability
under this Agreement exceed such amount.
12.12 Force Majeure. Time is of the essence in the performance of
all parts of this Agreement; provided, however, performance by
either party shall be excused during the period in which such
performance is made reasonably impossible because of a strike, act
of God or change in laws ("Force Majeure"). NewTech, however, shall
use reasonable diligence to procure substitute performance. If the
period during which performance is excused due to Force Majeure
exceeds ten (10) days, then either party may terminate its
obligations under any Specific Purchase Orders without liability,
and such cancelled Order(s) shall continue to count towards
fulfillment of the commitments set forth in Section 5 herein. If
the period of Force Majeure excusing NewTech's performance exceeds
120 days and such non-performance relates to more than 20% of the
Minimum Product Orders during any Period, then Kmart may terminate
this entire Agreement without further obligation to NewTech. Upon
any such termination, nothing shall be due from Kmart beyond payment
for Products accepted by Kmart as of the effective date of
termination.
12.13 Kmart Marks. NewTech acknowledges Kmart Properties Inc.'s
("KPI") exclusive right, title and interest in and to all
trademarks, trade names, service marks, logos, assignees, program
and event names, identifications and other proprietary rights and
privileges which it licenses to Kmart with the right to sublicense
(the "Kmart Marks"). This Agreement and its various provisions are
not a license or assignment of any right, title or interest in the
Kmart Marks by KPI or Kmart to NewTech. NewTech shall not in any
manner represent that it has any ownership in the Kmart Marks and
shall not do or cause to be done anything impairing Kmart's
exclusive license in the Kmart Marks. NewTech shall not use, print
or duplicate the Kmart Marks except and only if NewTech has obtained
prior approval as provided herein. NewTech's use of the Kmart Marks
is limited to the Term of this Agreement; upon termination hereof,
NewTech shall immediately cease all use of the Kmart Marks. NewTech
shall not assign or attempt to assign any rights with regard to the
Kmart Marks which arise hereunder; any such attempted assignment
shall be void.
12.14 White Westinghouse Marks. Kmart acknowledges WCI's exclusive right,
title and interest in and to the Trademarks. This Agreement and
its various provisions are not a license or assignment of any
right, title or interest in the Trademark or the License Agreement
by NewTech or WCI to Kmart. Kmart shall not do or cause to be done
anything impairing NewTech's exclusive license in the Trademark.
Kmart's use of the Trademark is limited to the terms and conditions
contained in this Agreement; upon termination hereof, Kmart shall
immediately cease all use of the Trademark other than in connection
with the sale, advertising or merchandising of Product inventory
and order commitments (if any) existing at the time of such
termination. Kmart shall not assign or attempt to assign any
rights with regard to the Trademark which arise hereunder; any such
attempted assignment shall be void.
12.15 No Third Party Beneficiaries. The parties hereto expressly
agree that there shall be no third party beneficiaries to this
Agreement.
19
21
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the Execution Date.
NEW M-TECH CORPORATION KMART CORPORATION
By: By:
----------------------------- -------------------------------
(Signature) (Signature)
Name: Name:
-------------------------- -----------------------------
Title: Title:
------------------------- ----------------------------
20
22
EXHIBIT A
DESCRIPTION OF PRODUCTS
Audio: radios, phonographs, tape decks and tapes, CD players, compact home
stereo systems and home theater systems and audio accessories.
Video: televisions, videocassette recorders and TV/VCR combinations and video
accessories.
Telephones
Telephone answering machines
Telephone accessories
23
SCHEDULE 1.2
DISCOUNT DEPARTMENT STORES
▇▇▇▇ Dept. Stores
Baby Superstore
Best Buy
Best Products Co.
Bradlees
Caldor Corp.
Circuit City Stores
Comp USA
Consolidated Stores
▇▇▇▇▇▇ ▇▇▇▇▇▇/Target
Dollar General
Dollar Tree Stores
▇▇▇▇▇▇▇▇-ALCO Stores
Farmily Bargain
Family Dollar
50-Off Stores
Fred's
Good Guys
Hills
Home Shopping Network
▇. ▇▇▇▇▇ & Son
Lechters
▇▇▇▇▇▇▇▇'▇ Inc.
MacFrugal's Bargains
Melville Corp.
▇▇▇▇▇ (▇▇▇▇)
▇▇▇▇▇▇▇▇▇▇ Wards
99 Cents Only
Office Depot
OfficeMax
Pamida
Phar-Mor
Price Costco
▇▇▇▇▇▇▇
▇▇▇▇ Stores
S & K Famous Brands
Sears
Service Merchandise
ShopKo Stores
Staples
Tops Appliance City
Toys "R" Us
Tuesday Morning
Value City Dept. Stores
Venture
Waban
Wal-Mart Stores
Woolworth
24
EXHIBIT B
PURCHASE ORDER TERMS AND CONDITIONS
Vendor and Kmart Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, ("Buyer") agree, to the fullest extent permitted by law, to be bound
by all terms and conditions contained or incorporated herein, all of which are a
part of each Purchase Order issued to Vendor by Buyer ("Order") and should be
carefully read. Any provisions in Vendor's invoices, billing statements,
acknowledgment forms or similar documents which are inconsistent with the
provision of an Order shall be of no force or effect. The cost price set forth
in each Order includes the cost of manufacturing, packaging, labeling and
shipping unless otherwise specified in the Order.
1. Vendor's Acceptance. Vendor's commencement of or promise of shipment of
the Merchandise shall constitute Vendor's agreement that it shall deliver
the merchandise in accordance with the terms and conditions of the
applicable Order. Vendor agrees to follow the shipping and invoicing
instructions issued by Buyer's stores, warehouses, buying offices and
Transportation and Accounting Department, which instructions are
incorporated by referenced into the applicable Order.
2. Vendor's Representations and Warranties. Vendor represents and warrants
to buyer, in addition to all warranties implied by law, that each item of
merchandise described on the face of an Order (or in an EDI or telephone
Order), together with all related packaging and labeling and other material
furnished by Vendor ("Merchandise"), shall: (a) be free from defects in
design, workmanship and/or materials including, without limitation, such
defects as could create a hazard to life or property; (b) conform in all
respects with all applicable federal, state and local laws, orders and
regulations, including, without limitation, those regarding (i) safety,
(ii) content, (iii) flammability, (iv) weights, measurers and sizes, (v)
special use, care, handling, cleaning or laundering instructions or
warnings, (vi) processing, manufacturing, labeling, advertising, selling,
shipping and invoicing, (vii) registration and declaration of
responsibility, and (viii) occupational safety and health; (c) not infringe
or encroach upon Buyer's or any third party's personal, contractual or
proprietary rights, including, without limitation, patents, trademarks,
copyrights, rights of privacy or trade secrets; and (d) conform to all of
Buyer's specifications and to all articles shown to buyer as Merchandise
samples.
3. Vendor's Indemnification of Buyer. Vendor agrees to reimburse,
indemnify, hold harmless and to defend at its expense (or to pay any
attorney's fees incurred by Buyer) Buyer and its subsidiary and affiliate
companies against all damage, loss, expense, claim, liability or penalty,
including, without limitation, claims of infringement of patents,
copyrights, trademarks, unfair competition, bodily injury, property or
other damage, arising out of any use, possession, consumption or sale of
said Merchandise and from any failure of Vendor to properly perform an
Order. Vendor shall not be relieved of the foregoing indemnity and related
obligations by allegations or any claim of negligence on the part of buyer;
provided, however, Vendor shall not remain or be liable hereunder to the
extent any injury or damage is finally judicially determined to have been
proximately caused by the sole negligence of Buyer. Vendor shall obtain
adequate insurance to cover such liability under each Order and shall
provide copies of the applicable certificate(s) of insurance annually to
Buyer's Vendor Database Department at the above address.
4. Defective or Non-Conforming Merchandise. If any Merchandise is
defective, unsuitable, does not conform to all terms hereof and of the
Order and all warranties implied by law, Buyer may at its option return it
to Vendor for full credit or refund of the purchase price or repair it at
Vendor's expense, and may change Vendor such price or expenses and the cost
of any incurred inbound and outbound freight and a handling, storage and
inspection charge of 71/2% of the returned Merchandise invoice price. Buyer
shall be under no duty to inspect any Merchandise before resale thereof,
and resale, or repackaging or repackaging for the purpose of resale, shall
25
not constitute a waiver of, or otherwise limit, any of Buyer's
rights resulting from defective or non-conforming Merchandise.
5. Buyer's Right to Cancel. Buyer may without notice cancel, terminate
and/or rescinding all or part of an Order in the event Vendor breaches or
fails to perform any of its obligations in any material respect, or in the
event Vendor becomes insolvent or proceedings are instituted by or against
Vendor under any provision of any federal or state bankruptcy or insolvency
laws or Vendor ceases its operation. Time is of the essence to each Order,
and Vendor's failure to meet any delivery date shall constitute a material
breach of the Order. Vendor agrees to inform Buyer immediately in writing
or any failure to timely ship all or any part of an Order, and Buyer's
acceptance of any merchandise after the applicable delivery date shall not
constitute a waiver of, or otherwise limit, any of Buyer's rights resulting
from the late delivery nor obligate Buyer to accept delivery of additional
Merchandise under the order.
6. Special Features. All Merchandise designs, patents and trade names which
are supplied by Buyer to Vendor or which are distinctive of Buyer's private
label merchandise ("Special Features") shall by the property of Buyer and
shall be used by Vendor only for buyer. Buyer may use the Special Features
on or with respect to goods manufactured by others and obtain legal
protection for the Special Features including, without limitation, patents,
patent designs, copyrights and trademarks. Merchandise with Special
Features which is not delivered to Buyer for any reason shall not be sold
or transferred to any third party without written authorization of Buyer
and unless and until all labels, tags, packaging and markings identifying
the Merchandise to Buyer have been removed.
7. Deductions and Set Off. Any sums payable to Vendor shall be subject to
all claims and defenses of Buyer, whether arising from this or any other
transaction, and Buyer may set off and deduct against any such sums all
present and future indebtedness of Vendor to Buyer. Buyer shall provide a
copy of the deduction voucher(s) for debits taken by Buyer against Vendor's
account as a result of any returns or adjustments. Vendor shall be deemed
to have accepted each such deduction unless Vendor, within 90 days
following receipt of the deduction voucher, notifies Buyer in writing as to
why a deduction should not be made and provides documentation of the
reason(s) given. Such written notice shall be directed to Buyer's Vendor
Audit Department at the above address. Buyer shall not be liable to Vendor
for any interest or late charges.
8. Michigan Contract and Jurisdiction. EACH ORDER, AND ALL OTHER ASPECTS OF
THE BUSINESS RELATIONSHIP BETWEEN BUYER AND VENDOR, SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MICHIGAN.
VENDOR AGREES, WITH RESPECT TO ANY LITIGATION WHICH RELATES TO ANY ▇▇▇▇▇ OR
WHICH OTHERWISE ARISES DIRECTLY OR INDIRECTLY OUT OF OR IN CONNECTION WITH
SAID BUSINESS RELATIONSHIP RO ANY TRANSACTION OF ANY NATURE BETWEEN BUYER
AND VENDOR, TO COMMENCE SAME: (I) EXCLUSIVELY IN (AND VENDOR HEREBY
CONSENTS TO THE JURISDICTION OF) THE STATE OF MICHIGAN COURTS OF OAKLAND
COUNTY, MICHIGAN OR THE UNITED STATES DISTRICT COURT IN DETROIT, MICHIGAN,
AND (II) WITHIN 18 MONTHS FROM THE DATE OF BUYER'S LAST ORDER TO VENDOR OR
THE PERIOD PRESCRIBED BY THE APPLICABLE STATUTE OF LIMITATIONS, WHICHEVER
IS SOONER.
9. Miscellaneous, (a) All rights granted to Buyer hereunder shall be in
addition to and not in lieu of Buyer's rights arising by operation of law.
(b) Any provisions of a hard copy Order which are typewritten or
handwritten by Buyer shall supersede any contrary or inconsistent printed
provisions therein. (c) No modification of terms of an Order shall be valid
without the written authorization of Buyer. (d) Should any of the
provisions of an Order be declared by a court of
26
competent jurisdiction to be invalid, such decision shall not affect the
validity of any remaining provisions.
10. Direct to Store and Distribution Center Invoice & Shipping Instructions.
(a) Each invoice shall include Buyer's Order number, Vendor's
stock/style number, and Buyer's code number for each item on the invoice.
No substitutions of Merchandise shall be made without the written
authorization of Buyer. (b) Each Order must be invoiced separately. (c) An
Order may not be filed at a price higher than that shown on its face or
transmitted without the written authorization of Buyer. (d) If freight
costs are to be paid by buyer, Vendor shall ship via the method and/or
route specified in the instructions provided by Buyer's Transportation
Department, shall make ONE COMPLETE shipment of the Merchandise and shall
NOT make PARTIAL shipments without the written authorization of Buyer. (e)
Vendor shall make NO PACKAGE QUANTITY CHANGE on an Order without the
written authorization of Buyer.
11. Additional Distribution Center Shipping Instructions. (a) The
applicable ▇▇▇▇ of lading must be delivered to the Distribution Center at
time of Merchandise delivery. (b) Vendor shall ▇▇▇▇ the contents of each
Distribution Center carton clearly on the outside of the carton, case, or
package. (c) Merchandise not packaged or shipped in quantities ordered by
Buyer shall at Buyer's option be returned to Vendor at Vendor's expense.
Vendor shall be charged a handling charge of 7 1/2% of the Merchandise
invoice price on all Merchandise not packaged or shipped as ordered.
12. Merchandise Testing. Merchandise shall, at buyer's option, be subject
to domestic or overseas testing. Vendor agrees to pay for all fees and
costs associated with such testing (which fees and costs are set forth in
Buyer's current Quality Assurance Manual or other documentation provided to
Vendor). The testing of Vendor's Merchandise by or on behalf of Kmart is
not a substitute for Vendor's own testing and other quality assurance
related obligations in connection with its sale of Merchandise to Buyer,
and such testing shall not limit Buyer's rights, or diminish or remove any
of Vendor's responsibilities, hereunder including, without limitation,
those relating to warranty and indemnification under Paragraphs 2 and 3
above.
13. Buyer Information/Orders. Buyer may at its discretion provide Vendor
with certain confidential or proprietary information relating to Buyer's
purchase and/or sale of Vendor's merchandise. Vendor acknowledges that such
information, together with any other information of or pertaining to Buyer
provided to Vendor by Buyer or learned by Vendor as a consequence of the
business relationship between Buyer and Vendor (the "Buyer Information"),
is provided and received in confidence, and Vendor shall at all times
preserve and protect the confidentiality thereof. Vendor agrees to take all
necessary steps to ensure that the Buyer Information shall not be disclosed
to, or used by, any person, association or entity except Vendor's own
employees having a need to know. BUYER MAKES NO WARRANTY WITH RESPECT TO
THE BUYER INFORMATION OR THE ACCURACY OR COMPLETENESS THEREOF, ANDIS
PROVIDING SAME ON AN "AS IS" BASIS; ALL IMPLIED WARRANTIES WITH RESPECT TO
THE BUYER INFORMATION, INCLUDING THOSE OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE EXCLUDED. Vendor acknowledges and agrees that any
sales forecasts, quantity purchase estimates or similar projections
received from Buyer are not purchase commitments of Buyer, but rather
represent estimates for planning purposes only, and that the Buyer shall
have no obligation to purchase or otherwise compensate Vendor for any of
Vendor's finished products, or unfinished raw materials, not covered by an
Order.
14. Food Vendors. The following amendments to the above terms and
conditions shall apply to any food products purchased from Vendor by Buyer
(any other Merchandise purchased from Vendor by Buyer shall be governed by
the foregoing, without amendment): (i) Paragraph 4 - delete "or repair it
at Vendor's expense" in line 3 and delete "and a handling, storage and
inspection charge of 7 1/2% of the returned Merchandise invoice price'
starting in line 3 (ii) Paragraph 10 - delete
27
the remainder of (d) starting with ", shall make ONE COMPLETE..." starting
in line 6; and (iii) Paragraph 12 - delete in its entirety.
28
EXHIBIT C
PURCHASE ORDER TERMS AND CONDITIONS
Vendor and Kmart Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, ("Buyer") agree, to the fullest extent permitted by law, to be bound
by all terms and conditions contained or incorporated herein, all of which are a
part of each Purchase Order issued to Vendor by Buyer ("Order") and should be
carefully read. Any provisions in Vendor's invoices, billing statements,
acknowledgment forms or similar documents which are inconsistent with the
provision of an Order shall be of no force or effect. The cost price set forth
in each Order includes the cost of manufacturing, packaging, labeling and
shipping unless otherwise specified in the Order.
1. Vendor's Acceptance. Vendor's commencement of or promise of shipment of
the Merchandise shall constitute Vendor's agreement that it shall deliver
the merchandise in accordance with the terms and conditions of the
applicable Order. Vendor agrees to follow the shipping and invoicing
instructions issued by Buyer's stores, warehouses, buying offices and
Transportation and Accounting Department, which instructions are
incorporated by referenced into the applicable Order.
2. Vendor's Representations and Warranties. Vendor represents and warrants
to buyer, in addition to all warranties implied by law, that each item of
merchandise described on the face of an Order (or in an EDI or telephone
Order), together with all related packaging and labeling and other material
furnished by Vendor ("Merchandise"), shall: (a) be free from defects in
design, workmanship and/or materials including, without limitation, such
defects as could create a hazard to life or property; (b) conform in all
respects with all applicable federal, state and local laws, orders and
regulations, including, without limitation, those regarding (i) safety,
(ii) content, (iii) flammability, (iv) weights, measurers and sizes, (v)
special use, care, handling, cleaning or laundering instructions or
warnings, (vi) processing, manufacturing, labeling, advertising, selling,
shipping and invoicing, (vii) registration and declaration of
responsibility, and (viii) occupational safety and health; (c) not infringe
or encroach upon Buyer's or any third party's personal, contractual or
proprietary rights, including, without limitation, patents, trademarks,
copyrights, rights of privacy or trade secrets; and (d) conform to all of
Buyer's specifications and to all articles shown to buyer as Merchandise
samples.
3. Vendor's Indemnification of Buyer. Vendor agrees to reimburse,
indemnify, hold harmless and to defend at its expense (or to pay any
attorney's fees incurred by Buyer) Buyer and its subsidiary and affiliate
companies against all damage, loss, expense, claim, liability or penalty,
including, without limitation, claims of infringement of patents,
copyrights, trademarks, unfair competition, bodily injury, property or
other damage, arising out of any use, possession, consumption or sale of
said Merchandise and from any failure of Vendor to properly perform an
Order. Vendor shall not be relieved of the foregoing indemnity and related
obligations by allegations or any claim of negligence on the part of buyer;
provided, however, Vendor shall not remain or be liable hereunder to the
extent any injury or damage is finally judicially determined to have been
proximately caused by the sole negligence of Buyer. Vendor shall obtain
adequate insurance to cover such liability under each Order and shall
provide copies of the applicable certificate(s) of insurance annually to
Buyer's Vendor Database Department at the above address.
4. Defective or Non-Conforming Merchandise. If any Merchandise is defective,
unsuitable, does not conform to all terms hereof and of the Order and
all warranties implied by law, Buyer may at its option return it to Vendor
for full credit or refund of the purchase price or repair it at Vendor's
expense, and may change Vendor such price or expenses and the cost of any
incurred inbound and outbound freight and a handling, storage and
inspection charge of 71/2% of the returned Merchandise invoice price.
Buyer shall be under no duty to inspect any Merchandise before resale
thereof, and resale, or repackaging or repackaging for the purpose of
resale, shall
29
not constitute a waiver of, or otherwise limit, any of Buyer's rights
resulting from defective or non-conforming Merchandise.
5. Buyer's Right to Cancel. Buyer may without notice cancel, terminate
and/or rescinding all or part of an Order in the event Vendor breaches or
fails to perform any of its obligations in any material respect, or in the
event Vendor becomes insolvent or proceedings are instituted by or against
Vendor under any provision of any federal or state bankruptcy or insolvency
laws or Vendor ceases its operation. Time is of the essence to each Order,
and Vendor's failure to meet any delivery date shall constitute a material
breach of the Order. Vendor agrees to inform Buyer immediately in writing
or any failure to timely ship all or any part of an Order, and Buyer's
acceptance of any merchandise after the applicable delivery date shall not
constitute a waiver of, or otherwise limit, any of Buyer's rights resulting
from the late delivery nor obligate Buyer to accept delivery of additional
Merchandise under the order.
6. Special Features. All Merchandise designs, patents and trade names which
are supplied by Buyer to Vendor or which are distinctive of Buyer's private
label merchandise ("Special Features") shall by the property of Buyer and
shall be used by Vendor only for buyer. Buyer may use the Special Features
on or with respect to goods manufactured by others and obtain legal
protection for the Special Features including, without limitation, patents,
patent designs, copyrights and trademarks. Merchandise with Special
Features which is not delivered to Buyer for any reason shall not be sold
or transferred to any third party without written authorization of Buyer
and unless and until all labels, tags, packaging and markings identifying
the Merchandise to Buyer have been removed.
7. Deductions and Set Off. Any sums payable to Vendor shall be subject to
all claims and defenses of Buyer, whether arising from this or any other
transaction, and Buyer may set off and deduct against any such sums all
present and future indebtedness of Vendor to Buyer. Buyer shall provide a
copy of the deduction voucher(s) for debits taken by Buyer against Vendor's
account as a result of any returns or adjustments. Vendor shall be deemed
to have accepted each such deduction unless Vendor, within 90 days
following receipt of the deduction voucher, notifies Buyer in writing as to
why a deduction should not be made and provides documentation of the
reason(s) given. Such written notice shall be directed to Buyer's Vendor
Audit Department at the above address. Buyer shall not be liable to Vendor
for any interest or late charges.
8. Michigan Contract and Jurisdiction. EACH ORDER, AND ALL OTHER ASPECTS OF
THE BUSINESS RELATIONSHIP BETWEEN BUYER AND VENDOR, SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MICHIGAN.
VENDOR AGREES, WITH RESPECT TO ANY LITIGATION WHICH RELATES TO ANY ▇▇▇▇▇ OR
WHICH OTHERWISE ARISES DIRECTLY OR INDIRECTLY OUT OF OR IN CONNECTION WITH
SAID BUSINESS RELATIONSHIP RO ANY TRANSACTION OF ANY NATURE BETWEEN BUYER
AND VENDOR, TO COMMENCE SAME: (I) EXCLUSIVELY IN (AND VENDOR HEREBY
CONSENTS TO THE JURISDICTION OF) THE STATE OF MICHIGAN COURTS OF OAKLAND
COUNTY, MICHIGAN OR THE UNITED STATES DISTRICT COURT IN DETROIT, MICHIGAN,
AND (II) WITHIN 18 MONTHS FROM THE DATE OF BUYER'S LAST ORDER TO VENDOR OR
THE PERIOD PRESCRIBED BY THE APPLICABLE STATUTE OF LIMITATIONS, WHICHEVER
IS SOONER.
9. Miscellaneous, (a) All rights granted to Buyer hereunder shall be in
addition to and not in lieu of Buyer's rights arising by operation of law.
(b) Any provisions of a hard copy Order which are typewritten or
handwritten by Buyer shall supersede any contrary or inconsistent printed
provisions therein. (c) No modification of terms of an Order shall be valid
without the written authorization of Buyer. (d) Should any of the
provisions of an Order be declared by a court of
30
competent jurisdiction to be invalid, such decision shall not affect the
validity of any remaining provisions.
10. Direct to Store and Distribution Center Invoice & Shipping
Instructions. (a) Each invoice shall include Buyer's Order number, Vendor's
stock/style number, and Buyer's code number for each item on the invoice.
No substitutions of Merchandise shall be made without the written
authorization of Buyer. (b) Each Order must be invoiced separately. (c) An
Order may not be filed at a price higher than that shown on its face or
transmitted without the written authorization of Buyer. (d) If freight
costs are to be paid by buyer, Vendor shall ship via the method and/or
route specified in the instructions provided by Buyer's Transportation
Department, shall make ONE COMPLETE shipment of the Merchandise and shall
NOT make PARTIAL shipments without the written authorization of Buyer. (e)
Vendor shall make NO PACKAGE QUANTITY CHANGE on an Order without the
written authorization of Buyer.
11. Additional Distribution Center Shipping Instructions. (a) The
applicable ▇▇▇▇ of lading must be delivered to the Distribution Center at
time of Merchandise delivery. (b) Vendor shall ▇▇▇▇ the contents of each
Distribution Center carton clearly on the outside of the carton, case, or
package. (c) Merchandise not packaged or shipped in quantities ordered by
Buyer shall at Buyer's option be returned to Vendor at Vendor's expense.
Vendor shall be charged a handling charge of 7 1/2% of the Merchandise
invoice price on all Merchandise not packaged or shipped as ordered.
12. Merchandise Testing. Merchandise shall, at buyer's option, be subject
to domestic or overseas testing. Vendor agrees to pay for all fees and
costs associated with such testing (which fees and costs are set forth in
Buyer's current Quality Assurance Manual or other documentation provided to
Vendor). The testing of Vendor's Merchandise by or on behalf of Kmart is
not a substitute for Vendor's own testing and other quality assurance
related obligations in connection with its sale of Merchandise to Buyer,
and such testing shall not limit Buyer's rights, or diminish or remove any
of Vendor's responsibilities, hereunder including, without limitation,
those relating to warranty and indemnification under Paragraphs 2 and 3
above.
13. Buyer Information/Orders. Buyer may at its discretion provide Vendor
with certain confidential or proprietary information relating to Buyer's
purchase and/or sale of Vendor's merchandise. Vendor acknowledges that such
information, together with any other information of or pertaining to Buyer
provided to Vendor by Buyer or learned by Vendor as a consequence of the
business relationship between Buyer and Vendor (the "Buyer Information"),
is provided and received in confidence, and Vendor shall at all times
preserve and protect the confidentiality thereof. Vendor agrees to take all
necessary steps to ensure that the Buyer Information shall not be disclosed
to, or used by, any person, association or entity except Vendor's own
employees having a need to know. BUYER MAKES NO WARRANTY WITH RESPECT TO
THE BUYER INFORMATION OR THE ACCURACY OR COMPLETENESS THEREOF, ANDIS
PROVIDING SAME ON AN "AS IS" BASIS; ALL IMPLIED WARRANTIES WITH RESPECT TO
THE BUYER INFORMATION, INCLUDING THOSE OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE EXCLUDED. Vendor acknowledges and agrees that any
sales forecasts, quantity purchase estimates or similar projections
received from Buyer are not purchase commitments of Buyer, but rather
represent estimates for planning purposes only, and that the Buyer shall
have no obligation to purchase or otherwise compensate Vendor for any of
Vendor's finished products, or unfinished raw materials, not covered by an
Order.
14. Food Vendors. The following amendments to the above terms and
conditions shall apply to any food products purchased from Vendor by Buyer
(any other Merchandise purchased from Vendor by Buyer shall be governed by
the foregoing, without amendment): (i) Paragraph 4 - delete "or repair it
at Vendor's expense" in line 3 and delete "and a handling, storage and
inspection charge of 7 1/2% of the returned Merchandise invoice price'
starting in line 3 (ii) Paragraph 10 - delete
31
the remainder of (d) starting with ", shall make ONE COMPLETE..." starting
in line 6; and (iii) Paragraph 12 - delete in its entirety.
32
KMART CORPORATION
International Headquarters
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_________________ 19____
Dear Sir/Madam:
This letter will confirm that the Purchase Order Terms and Conditions on the
reverse side hereof (the "Terms") shall apply to all purchase orders issued to
Vendor by Kmart, whether by telephone, hard copy, electronically or otherwise.
Please note that the instructions in item 11 of the Terms are applicable to
Distribution Center.
Receipt of this confirmation is REQUIRED before Vendor will be authorized to
receive purchase orders from Kmart Corporation.
Please have the chairman, president or a vice president of Vendor confirm that
the Terms will apply to all Kmart orders issued to Vendor by signing and
returning one original of this letter (WITH NO CHANGES OF ANY KIND) to the
address below no later than 7 business days from the above date. Retain the
other original or a copy for your files. This letter must be signed by the
Company which is paid by Kmart.
Very truly yours,
Kmart Corporation
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Signature Registered Legal Name of Vendor
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Title Address
-------------------------------------------
City State Zip
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Vendor Officer Signature
(Chairman, President or Vice President only)
-------------------------------------------
Print Name
-------------------------------------------
Title
RETURN TO:
ATTN
-----------------------------
KMART CORPORATION
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33
EXHIBIT D
THIS ORDER CONTRACT IS UPON THE FOLLOWING TERMS AND CONDITIONS:
1. Seller's commencement of or promise of shipment of the Merchandise shall
constitute Seller's agreement that it will deliver the Merchandise in
accordance with the terms and conditions contained or incorporated herein,
all of which are a part of the Order Contract and should be carefully read.
Any provisions in Seller's invoices, billing statements, acknowledgment
forms or other documents which are inconsistent with the provisions of this
Order Contract shall be of no force or effect.
2. Seller represents and warrants to Kmart Corporation ("Buyer"), in
addition to all warranties implied by law, that each item of Merchandise
described on the face hereof, together with all retail packaging, labeling
and other material furnished by Seller ("Merchandise"), shall (a) be free
from defects in design, workmanship or materials, including, without
limitation, such defects as could create a hazard to life or property; (b)
conform in all respects with all applicable federal, state and local laws,
orders and regulations, including, without limitation, those concerning the
marking of the country of origin, fiber content, care labeling and
shrinkage, as Merchandise not in compliance and not properly marked is
subject to heavy penalty; (c) not infringe or encroach upon Buyer's or any
third party's personal, contractual or propriety rights, including, without
limitation, patents, trademarks, trade names, copyrights, rights of privacy
or trade secrets; and (d) conform to all of Buyer's specifications and to
all articles shown to Buyer as Merchandise samples. Seller further
represents and warrants that it has ascertained that no child, forced or
prison labor is utilized in the manufacture of Merchandise.
3. Seller agrees to reimburse, indemnify, hold harmless and defend at
Seller's expense (or pay any attorney's fees incurred by Buyer) Buyer and
its subsidiary and affiliate companies against all damage, loss, expense,
claim, liability, fine, settlement or penalty, including, without
limitation, claims of infringement of patents, copyrights and trademarks,
unfair competition, bodily injury, or property or other damage arising out
of any use, possession, consumption or sale of the Merchandise or failure
to provide complete, accurate and acceptable (to U.S. Customs) information
and documentation relating to, without limitation, the country of origin,
or failure of Seller to perform promptly this Order Contract. Seller shall
obtain adequate insurance to cover its liability under this Order Contract
and shall provide copies of the applicable certificate(s) of insurance to
Buyer.
4. Acceptance of Merchandise by Buyer after inspection does not release or
discharge Seller from any liability for damages or from any other remedy of
Buyer for Seller's breach of any promise or warranty, expressed or implied.
This Order Contract may at Buyer's option be deemed cancelled if the
Merchandise ordered herein is not covered by a full set of "Clean" "On
Board" Ocean Bills of Lading and Buyer's Inspection Certificate dated on or
before the shipping date specified on the face hereof. Any such
cancellation shall be without prejudice to all other rights and remedies
accruing to Buyer by reason of Seller's breach, unless a written extension
of shipping date(s) was previously granted in writing to Seller by Buyer.
If any of the terms, conditions or warranties of or underlying this Order
Contract, express or implied, are not strictly complied with by Seller with
respect to any shipment or installment shipment of the Merchandise ordered
herein. Buyer has the right, in addition to all other rights and remedies
accruing to Buyer by reason of Seller's breach, to refuse to accept any or
all deliveries of Merchandise ordered herein, but any acceptance by Buyer
of any such singular shipment or installment shipment shall not be deemed
(whether or not buyer notifies Seller of its demand for strict compliance
with respect to future shipment installments) a waiver by Buyer of any of
its rights to refuse any future shipments hereunder or of any other rights
or remedies.
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5. All merchandise design, patents and trademarks which are supplied by
Buyer to Seller or which are distinctive of Buyer's private label
merchandise ("Special Features") shall be the property of Buyer and shall
be used by seller only for buyer. Buyer may use the Special Features on or
with respect to goods manufactured by others and obtain legal protection
for the Special Features including, without limitation, patents, design
patents, copyrights and trademarks. Merchandise which is not delivered to
Buyer for any reason shall not be sold or transferred to any third party
without written authorization of Buyer and unless all labels, tags,
packaging and markings identifying the merchandise to Buyer have been
removed.
6. THIR ORDER CONTRACT SHALL BE CONSTRUED AND ENFORCED UNDER AND IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MICHIGAN, ANYUNSETTLED
DISPUTE HEREUNDER WHERE THE AMOUNT IN CONTROVERSY IS LESS THAN OR EQUALS
$50,000 (U.S.) SHALL BE FINALLY SETTLED BY ARBITRATION, HELD IN THEUNTID
STATES OF AMERICA AT DETROIT, MICHIGAN AND CONDUCTED IN ACCORDANCE WITH THE
RULES OF THE AMERICAN ARBITRATION ASSOCIATION. JUDGMENT UPON ANY
ARBITRATION AWARD RENDERED, IF NO SATISFIED WITHIN NINETY (90) DAYS, MAY
BE, ENTERED IN ANY COURT HAVING JURISDICTION, OR APPLICATION MAY BE MADE TO
ANYSUCH COURT FOR A JUDICIAL RECOGNITION, ACCEPTANCE AND ORDER OF
ENFORCEMENT, AS THE CASE MAY BE, IN ANY UNSETTLED DISPUTE HEREUNDER WHERE
THE AMOUNT IN CONTROVERSY EXCEEDS $50,000 (U.S.), IT IS HEREBY MUTALLY
AGREED THAT SELLER SHALL EXERCISE ANY RIGHT OR REMEDY EXCLUSIVELY IN, AND
HEREBY CONSENTS TO THE JURISDICTIONOF, THE UNITED STATES DISTRICT COURT IN
DETROIT, MICHIGAN.
7. (a) All rights granted to Buyer hereunder shall be in addition to and
not in lieu of buyer's rights arising by operation of law; (b) any
provision of this Order Contract which are typewritten or handwritten by
Buyer shall supersede any contrary or inconsistent printed provisions; (c)
no modification of terms of this Order Contract shall be valid, including,
without limitation, price increase, unless in writing and signed by Buyer;
(d) should any of the provisions of this Order Contract be declared by a
court of competent jurisdiction to be invalid, such decision shall not
affect the validity of any remaining provisions; (e) all of the terms
herein shall apply to additional quantities of merchandise ordered by Buyer
except to the extent covered by a new written agreement; and (f) all
documents prepared in connection with this Order Contract must be written
in the English language and in the U.S. currency figures.
8. Neither this Order Contract nor any right, duty or obligation hereunder
is assignable without the prior written consent of Buyer, nor shall Buyer
be under any obligation to recognize any assignment of monies payable
hereunder.
9. Seller agrees to prepare and produce all documents which are necessary
for the Merchandise to clear U.S. Customs and which are otherwise required
by applicable laws or regulations, the Letter of Credit or instructions set
forth on the face hereof.
10. All shipping cartons are to be marked and packed in accordance with
Buyer's International Department Standard Instructions To Foreign Shippers,
which Standard Instructions are part of and are incorporated in this Order
Contract by this reference, in addition, Seller agrees to follow any
shipping instructions issued directly to Seller by Buyer's International
Department.
11. Without in any way limiting buyer's other rights and remedies arising
under paragraph 2 above, Seller agrees that any Merchandise, packaging or
component that (1) mis-states the true country of origin, or (2) is made in
whole or in part by child or prison labor, will be a material breach of
this Order Contract resulting in cancellation of this Order contract and
liability of Seller to Buyer for liquidated damages equal to the total FOB
Factory costs of the Merchandise plus all freight,
35
import/export charges and other costs incurred for the shipment or return
(or destruction at Buyer's election) of seized or re-delivered Merchandise.
12. Except for the right to receive payment, Seller hereby assigns all of
its rights (expressed and implied) under any purchase order Seller issues
to a manufacturer for merchandise or any component thereof covered by this
Order Contract including, without limitation, rights of warranty and
indemnification, and Seller shall cooperate fully with Buyer in pursuing
such rights. Buyer is not assuming, nor shall this purchase order be
construed to impose, any obligation on the part of Buyer to a manufacturer
in connection with the Merchandise. This partial assignment shall not act
to limit Buyer's rights and remedies elsewhere under this Order Contract.
13. Merchandise shall, at Buyer's option, be subject to domestic or
overseas testing. Seller agrees to pay for all fees and costs associated
with such testing (which fees and costs are set forth in Buyer's current
Quality Assurance Manual or other documentation provided to Seller). The
testing of Seller's Merchandise by, or on behalf of, Kmart is not a
substitute for Seller's own testing and other quality assurance related
obligations in connection with its sale of Merchandise to buyer, and such
testing shall not limit Buyer's rights, or diminish or remove any of
Seller's responsibilities, hereunder including, without limitation, those
relating to warranty and indemnification under Paragraphs 2 and 3 above.
Address All Correspondence
Regarding This order Contract to: Kmart Corporation
International Department
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KMART CORPORATION
International Headquarters
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_________________ 19____
Dear Sir/Madam:
This letter will confirm that the Purchase Order Terms and Conditions on the
reverse side hereof (the "Terms") shall apply to all purchase orders issued to
Vendor by Kmart, whether by telephone, hard copy, electronically or otherwise.
Please note that the instructions in item 11 of the Terms are applicable to
Distribution Center.
Receipt of this confirmation is REQUIRED before Vendor will be authorized to
receive purchase orders from Kmart Corporation.
Please have the chairman, president or a vice president of Vendor confirm that
the Terms will apply to all Kmart orders issued to Vendor by signing and
returning one original of this letter (WITH NO CHANGES OF ANY KIND) to the
address below no later than 7 business days from the above date. Retain the
other original or a copy for your files. This letter must be signed by the
Company which is paid by Kmart.
Very truly yours,
Kmart Corporation
---------------------------------- -------------------------------------------
Signature Registered Legal Name of Vendor
---------------------------------- -------------------------------------------
Title Address
-------------------------------------------
City State Zip
-------------------------------------------
Vendor Officer Signature
(Chairman, President or Vice President only)
-------------------------------------------
Print Name
-------------------------------------------
Title
RETURN TO:
ATTN
------------------------------
KMART CORPORATION
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37
EXHIBIT E
AUTHORIZED REPRESENTATIVES OF KMART
Senior Vice President General Merchandise Manager, Hardlines
Divisional Vice President, Merchandising Hardlines
Buyer, Appliances, Music, Electronics