EXHIBIT 10.8
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 (1) 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 Of 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 Agreementbased 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.
UP TO AND
CATEGORY INCLUDING 7/1/98- 7/1/99- 7/1/00- 7/1/01- 7/1/02- 7/1/03-
(IN 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
ANSWERING
MACHINES: $ 20.0 $ 20.8 $ 21.6 $ 22.5 $ 23.4 $ 24.3 $ 25.3
------ ------ ------ ------ ------ ------ ------
TOTAL $135.0 $140.4 $146.0 $151.9 $157.9 $164.2 $170.8
====== ====== ====== ====== ====== ====== ======
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: ~
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 [*****]
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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 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 from a Third Party
Manufacturer of Kmart's choosing, then (provided such Third Party
Manufacturer is a reputable company or one with which Kmart has done
business in the past), 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
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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 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 NewTech
$87.5 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 30% 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
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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 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 [*****] 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
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import orders (the "[*****] PURCHASE ORDER"). Kmart shall make
direct payments to the [*****] 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 construed 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, by any Third Party Manufacturer, unless and except to
the 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
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CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERICKS DENOTE SUCH OMMISSIONS.
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 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
10
CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERICKS DENOTE SUCH OMMISSIONS.
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 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
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇ Troy, Ml 48084
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
11
CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERICKS DENOTE SUCH OMMISSIONS.
[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.
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, attoreys 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
12
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 0
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.
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
13
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 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.
14
(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 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
15
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 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
16
(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 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: (▇▇▇) ▇▇▇-▇▇▇▇
17
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
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
18
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, ton 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 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 ("KPl")
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 fight, 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
19
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 fight,
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.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the Execution Date.
NEW-M-TECH CORPORATION KMART CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------- --------------------------
(Signature) (Signature)
Name: ▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President Title: President
20
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
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
Family Bargain
Family Dollar
5-0ff 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
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,
acknowledgement forms or similar documents which are inconsistent with the
provisions of an Order shall be of no force or effect. The cost price set forth
in such 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 Departments, which instructions are
incorporated by reference 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, measures 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 charge Vendor such price or expense and the cost of any
incurred inbound and outbound freight and a handling, storage and
inspection charge of 7-1/2% of the returned Merchandise invoice price.
Buyer shall be under no duty to inspect any Merchandise before resale
thereof, and resale, or repackaging or repacking for the purpose of resale,
shall 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
rescind 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 Vender 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
of 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 be 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 and 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 ORDER OR
WHICH OTHERWISE ARISES DIRECTLY OR INDIRECTLY OUT OF OR IN CONNECTION WITH
SAID BUSINESS RELATIONSHIP OR 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 competent jurisdiction to
be invalid, such decision shall not effect 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 of 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 filled 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, 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 expenses.
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,
AND IS 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 4; (ii) Paragraph 10 -- delete the remainder of (d)
starting with ", shall make ONE COMPLETE . . ." staring in line 6; and
(iii) Paragraph 12 -- delete in its entirety.
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,
acknowledgement forms or similar documents which are inconsistent with the
provisions of an Order shall be of no force or effect. The cost price set forth
in such 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 Departments, which instructions are
incorporated by reference 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, measures 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 charge Vendor such price or expense and the cost of any
incurred inbound and outbound freight and a handling, storage and
inspection charge of 7-1/2% of the returned Merchandise invoice price.
Buyer shall be under no duty to inspect any Merchandise before resale
thereof, and resale, or repackaging or repacking for the purpose of resale,
shall 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
rescind 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 Vender 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
of 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 be 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 and 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 ORDER OR
WHICH OTHERWISE ARISES DIRECTLY OR INDIRECTLY OUT OF OR IN CONNECTION WITH
SAID BUSINESS RELATIONSHIP OR 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 competent jurisdiction to
be invalid, such decision shall not effect 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 of 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 filled 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, 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 expenses.
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,
AND IS 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 4; (ii) Paragraph 10 -- delete the remainder of (d)
starting with ", shall make ONE COMPLETE . . ." staring in line 6; and
(iii) Paragraph 12 -- delete in its entirety.
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
returing one original of this letter (WITH NO CHANGES OF ANY KIND) to the adress
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
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City State Zip
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Vendor Officer Signature
(Chairman, President or Vice President only)
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Print Name
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Title
RETURN TO:
ATTN
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KMART CORPORATION
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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, acknowledgement
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 proprietary 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 damages, 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 only 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.
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. THIS ORDER CONTRACT SHALL BE CONSTRUED AND ENFORCED UNDER AND IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MICHIGAN. ANY UNSETTLED
DISPUTE HEREUNDER WHERE THE AMOUNT IN CONTROVERSY IS LESS THAN OR EQUALS
$50,000 (U.S.) SHALL BE FINALLY SETTLED BY ARBITRATION, HELD IN THE UNITED
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 NOT SATISFIED WITHIN NINETY (90) DAYS, MAY
BE ENTERED IN ANY COURT HAVING JURISDICTION, OR APPLICATION MAY BE MADE TO
ANY SUCH 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 MUTUALLY
AGREED THAT SELLER SHALL EXERCISE ANY RIGHT OR REMEDY EXCLUSIVELY IN, AND
HEREBY CONSENTS TO THE JURISDICTION OF, 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 provisions
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 U.S. currency figures.
8. Neither this Order Contract nor any right, duty or obligation hereunder is
assignable without 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 cost of the Merchandise plus all freight, 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 by 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
returing one original of this letter (WITH NO CHANGES OF ANY KIND) to the adress
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
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KMART CORPORATION
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EXHIBIT E
AUTHORIZED REPRESENTATIVES OF KMART
Senior Vice President General Merchandise Manager, Hardlines
Divisional Vice President, Merchandising Hardlines
Buyer, Appliances, Music, Etectronics