Exhibit 10.4
INTERCOMPANY INDEMIFICATION AGREEMENT
This Intercompany Indemnification Agreement (this "Agreement") is being
entered into as of the __ day of June, 1999 and is entered into by and among and
Florists' Transworld Delivery, Inc., a Michigan corporation ("FTDI"), FTD
Corporation, a Delaware corporation ("FTDC") and xxx.xxx inc., a Delaware
corporation (the "Company").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. DEFINITIONS
1.1 "Dispute Period" means the period ending 30 days following receipt by
an Indemnifying Party of a Claim Notice (as hereinafter defined).
1.2 "Indemnified Party" means any party seeking indemnity under this
Agreement.
1.3 "Indemnifying Party" means the party from whom indemnification is
sought under this Agreement.
1.4 "Loss" means any and all actual costs or expenses (including, without
limitation, counsel's fees billed at standard hourly rates and expenses as and
when incurred, in connection with any action, claim or proceeding relating
thereto), judgments, amounts paid in settlement, fines, penalties, assessments
and taxes. Notwithstanding the foregoing, Loss shall be reduced to reflect any
insurance proceeds actually recovered by the Indemnified Party relating to such
claim, provided that this reduction will not be applied if to do so would excuse
any insurer from any obligation to cover any loss. If the Indemnified Party
receives insurance proceeds after it receives indemnity hereunder, then the
Indemnified Party, within 10 days of receipt of such proceeds, will pay to the
Indemnifying Party the amount by which the Indemnifying Party's payment would
have been reduced if the insurance proceeds had been received before the
indemnity payments.
1.5 "Person" means any natural person, legal entity or other organized
group of persons or entities.
1.6 "Subsidiary" with respect to any Person means any corporation,
partnership or other entity for which more than 50% of the voting securities are
directly or indirectly owned by such Person, except that the Company and its
Subsidiaries shall not be deemed to be Subsidiaries of FTDC or FTDI, as the case
may be.
1.7 "Third Party Claim" means all claims, suits, actions, proceedings,
judgments, deficiencies, damages, settlements, liabilities, and legal and other
expenses as and when incurred asserted by a Person other than the Company, FTDC
or FTDI or any of their respective affiliates in respect of which an Indemnified
Party might seek indemnity.
2. INDEMNIFICATION
2.1 Indemnification by the Company, FTDC and FTDI.
(a) The Company agrees to indemnify and hold FTDC and FTDI and their
respective officers, directors, employees, subsidiaries, affiliates and agents
harmless against and in respect of any and all Losses and Third Party Claims
arising out of or based upon (i) the negligence or willful misconduct of the
Company or any of its Subsidiaries, (ii) any breach by the Company of any
agreement between the parties hereto that is described in or filed as an exhibit
to the Company's Registration Statement on Form S-1 (No. 333-78857) as the same
may be amended (the "Form S-1"), (iii) all liabilities of the parties and their
respective Subsidiaries (whenever arising, whether prior to, at or following the
Effective Date, as hereinafter defined) arising out of or in connection with or
otherwise relating to the management or conduct before or after the Effective
Date of the business of the Company after May 19, 1999 and (iv) the failure by
the Company or any of its Subsidiaries to pay, perform or otherwise promptly
discharge any of its or its Subsidiaries' liabilities (whenever arising whether
prior to, at or following the Effective Date).
(b) FTDC agrees to indemnify and hold the Company and each of its
officers, directors, employees, subsidiaries, affiliates and agents harmless
against and in respect of any and all Losses and Third Party Claims arising out
of or based upon (A) the negligence or willful misconduct of FTDC or any of its
Subsidiaries (other than the Company), (B) any breach by FTDC of any agreement
between the parties hereto that is described in or filed as an exhibit to the
Form S-1, (C) all liabilities of the parties and their respective Subsidiaries
(whenever arising, whether prior to, at or following the Effective Date) arising
out of or in connection with or otherwise relating to the management or conduct
before or after the Effective Date of the business of FTDC, other than the
business of the Company after May 19, 1999 and (D) the failure by FTDC or any of
its Subsidiaries (other than the Company) to pay, perform or otherwise promptly
discharge any of its or its Subsidiaries' (other than the Company) liabilities
(whenever arising whether prior to, at or following the Effective Date).
(c) FTDI agrees to indemnify and hold the Company and each of its
officers, directors, employees, subsidiaries, affiliates and agents harmless
against and in respect of any and all Losses and Third Party Claims arising out
of or based upon (A) the negligence or willful misconduct of FTDI or any of its
Subsidiaries (other than the Company), (B) any breach by FTDI of any agreement
between the parties hereto that is described in or filed as an exhibit to the
Form S-1, (C) all liabilities of the parties and their respective Subsidiaries
(whenever arising, whether prior to, at or following the Effective Date) arising
out of or in connection with or otherwise relating to the management or conduct
before or after the Effective Date of the business of FTDI, other than the
business of the Company after May 19, 1999 and (D) the failure by FTDI or any of
its Subsidiaries (other than the Company) to pay, perform or otherwise promptly
discharge any of its or its Subsidiaries' (other than the Company) liabilities
(whenever arising whether prior to, at or following the Effective Date).
(d) FTDC agrees to indemnify and hold FTDI and the Company and each of
their respective officers, directors, employees, subsidiaries, affiliates and
agents harmless against and in respect of any and all Losses incurred by any of
them by reason of, or arising out of (i) any liability for income and franchise
taxes arising out of the inclusion of FTDI, the Company
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and any of their respective Subsidiaries in any consolidated federal income tax
return, or any consolidated, combined or unitary state or local tax return, of
FTDC, except for any such liability as is directly attributable to the
operations of FTDI, the Company and any of their respective Subsidiaries, as the
case may be, and (ii) any liability or obligations of any entity, whether or not
incorporated, which is or was part of a controlled group or under common control
with FTDI or the Company or otherwise treated as a "single employer" with FTDI
or the Company within the meaning of Section 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code") or under Section 4001 of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") (other
than FTDI, the Company or any of their respective Subsidiaries), with respect to
any "employee benefit plan" (as defined in Section 3(3) of ERISA) established,
maintained, sponsored or contributed to by such entity, including, but not
limited to (A) liabilities for complete and partial withdrawals under any
"multiemployer plan" (as defined in Section 3(37) of ERISA) pursuant to Section
4203 or 4205 of ERISA, respectively, (B) liabilities to the Pension Benefit
Guaranty corporation (including without limitation, liabilities for premiums and
terminations), (C) liabilities under Section 4980B of the code or Part 6 of
Subtitle B of Title I of ERISA, and (D) liabilities arising under Section 412 of
the Code or Section 302(a)(2) of ERISA.
(e) FTDI agrees to indemnify and hold the Company and its officers,
directors, employees, subsidiaries, affiliates and agents harmless against and
in respect of any and all Losses incurred by any of them by reason of, or
arising out of (a) any liability for income and franchise taxes arising out of
the inclusion of the Company and any Subsidiaries in any consolidated federal
income tax return, or any consolidated, combined or unitary state or local tax
return, of FTDI, except for any such liability as is directly attributable to
the operations of the Company and any Subsidiaries, and (b) any liability or
obligations of any entity, whether or not incorporated, which is or was part of
a controlled group or under common control with the Company or otherwise treated
as a "single employer" with the Company within the meaning of Section 414(b),
(c), (m) or (o) of the Internal Revenue Code of 1986, as amended (the "Code") or
under Section 4001 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") (other than the Company or any Subsidiary), with respect to
any "employee benefit plan" (as defined in Section 3(3) of ERISA) established,
maintained, sponsored or contributed to by such entity, including, but not
limited to (i) liabilities for complete and partial withdrawals under any
"multiemployer plan" (as defined in Section 3(37) of ERISA) pursuant to Section
4203 or 4205 of ERISA, respectively; (ii) liabilities to the Pension Benefit
Guaranty corporation (including without limitation, liabilities for premiums and
terminations); (iii) liabilities under Section 4980B of the code or Part 6 of
Subtitle B of Title I of ERISA; and (iv) liabilities arising under Section 412
of the Code or Section 302(a)(2) of ERISA.
2.2 Limitations. Notwithstanding anything to the contrary contained in
this Agreement none of the Company, FTDC or FTDI will be entitled to
indemnification pursuant to Section 2 of this Agreement with respect to any
claim for indemnification unless, and only to the extent that, the aggregate of
all Losses to the Indemnified Party exceeds $100,000 whereupon the Indemnifying
Party will be obligated to pay in full the aggregate amount of the Losses
(including such first $100,000).
2.3 Indemnification Procedure. All claims for indemnification by an
Indemnified Party will be asserted and resolved as follows:
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(a) In the event any Third Party Claim in respect of which an
Indemnified Party might seek indemnity is asserted against or sought to be
collected from such Indemnified Party, the Indemnified Party shall deliver a
notice (a "Claim Notice") with reasonable promptness to the Indemnifying Party,
which Claim Notice shall include the amount of Loss claimed, to the extent
known. The Indemnifying Party shall notify the Indemnified Party as soon as
practicable within the Dispute Period whether the Indemnifying Party disputes
its liability to the Indemnified Party, and whether the Indemnifying Party
desires, at its sole cost and expense, to defend the Indemnified Party against
such Third Party Claim.
(b) If the Indemnifying Party notifies the Indemnified Party within
the Dispute Period that the Indemnifying Party desires to defend the Indemnified
Party with respect to the Third Party Claim pursuant to this Section, then the
Indemnifying Party will have the right to defend, with counsel reasonably
satisfactory to the Indemnified Party, at the sole cost and expense of the
Indemnifying Party, such Third Party Claim by all appropriate proceedings, which
proceedings must be vigorously and diligently prosecuted by the Indemnifying
Party to a final conclusion or may be settled at the discretion of the
Indemnifying Party; provided, however, that the Indemnifying Party shall not be
permitted to effect any settlement without the written consent of the
Indemnified Party unless (x) the sole relief provided in connection with such
settlement is monetary damages that are paid in full by the Indemnifying Party,
(y) such settlement involves no finding or admission of any wrongdoing,
violation or breach by any Indemnified Party of any right of any other Person or
any laws, contracts or governmental permits, and (z) such settlement has no
effect on any other claims that may be made against or liabilities of any
Indemnified Party. After giving the notice referred to in the first sentence of
this clause (b), the Indemnifying Party will have full control of such defense
and proceedings, including any compromise or settlement thereof (except as
provided in the preceding sentence); provided, however, that the Indemnified
Party may, at its sole cost and expense, at any time prior to the Indemnifying
Party's delivery of the notice referred to in the first sentence of this clause
(b), file any motion, answer or other pleadings or take any other action that
the Indemnified Party reasonably believes to be necessary or appropriate to
protect its interests; and provided further, that if requested by the
Indemnifying Party, the Indemnified Party shall, at the sole cost and expense of
the Indemnifying Party, provide reasonable cooperation to the Indemnifying Party
in contesting any Third Party Claim that the Indemnifying Party elects to
contest. The Indemnified Party may participate in, but not control, any defense
or settlement of any Third Party Claim controlled by the Indemnifying Party
pursuant to this clause (b) and except as provided in the first sentence of this
clause (b) and the preceding sentence, the Indemnified Party will bear its own
costs and expenses with respect to such participation. Notwithstanding the
foregoing, the Indemnified Party may take over the control of the defense or
settlement of a Third Party Claim at any time if it irrevocably waives its right
to indemnity with respect to such Third Party Claim.
(c) If the Indemnifying Party fails to notify the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to defend the
Third Party Claim pursuant to this Section or if the Indemnifying Party gives
such notice but fails to prosecute vigorously and diligently or settle the Third
Party Claim (in each case in accordance with clause (b) above), or if the
Indemnifying Party fails to give any notice whatsoever within the Dispute
Period, then the Indemnified Party will have the right to defend, at the sole
cost and expense of the Indemnifying Party, the Third Party Claim by all
appropriate proceedings, which proceedings will be prosecuted by the Indemnified
Party in a reasonable manner and in good faith or will be settled at the
discretion of the Indemnified Party (with the consent of the Indemnifying Party,
which
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consent will not be unreasonably withheld). Subject to the immediately
preceding sentence, the Indemnified Party will have full control of such defense
and proceedings, including any compromise or settlement thereof, provided,
however, that if requested by the Indemnified Party, the Indemnifying Party
will, at the sole cost and expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnified Party and its counsel in contesting any Third
Party Claim which the Indemnified Party is contesting. The Indemnifying Party
may participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this clause (c), and the Indemnifying Party will
bear its own costs and expenses with respect to such participation.
3. TERM
The term of this Agreement shall begin on May 19, 1999 (the "Effective
Date") and shall continue for an indefinite period in full force and effect.
4. DISPUTE RESOLUTION
4.1 In the event that any party to this Agreement has any claim, right or
cause of action against any other party to this Agreement, which the parties
shall be unable to settle by agreement between themselves, such claim, right or
cause of action, to the extent that the relief sought by such party is for
monetary damages or awards, shall be determined by arbitration in accordance
with the provisions of this Section 4.
4.2 The party or parties requesting arbitration shall serve upon the other
or others a demand therefor, in writing, specifying the matter to be submitted
to arbitration, and nominating a competent disinterested person to act as an
arbitrator. Within 30 days after receipt of such written demand and nomination,
the other party or parties shall, in writing, nominate a competent disinterested
person, and the two (2) arbitrators so designated shall, within 15 days
thereafter, select a third arbitrator. The three (3) arbitrators shall give
immediate written notice of such selection to the parties and shall fix in said
notice a time and place of the meeting of the arbitrators which shall be as soon
as conveniently possible (but in no event later than 30 days after the
appointment of the third arbitrator), at which time and place the parties to the
controversy shall appear and be heard with respect to the right, claim or cause
of action.
4.3 In case the notified party or parties shall fail to make a selection
upon notice within the time period specified, the party asserting such claim
shall appoint an arbitrator on behalf of the notified party. In the event that
the first two (2) arbitrators selected shall fail to agree upon a third
arbitrator within 15 days after their selection, then such arbitrator may, upon
application made by either of the parties to the controversy, be appointed by
any judge of any United States court of record having jurisdiction in the State
of Illinois.
4.4 Each party shall present such testimony, examinations and
investigations in accordance with such procedures and regulations as may be
determined by the arbitrators and shall also recommend to the arbitrators a
monetary award to be adopted by the arbitrators as the complete disposition of
such claim, right or cause of action. After hearing the parties in regard to
the matter in dispute, the arbitrators shall adopt as their determination with
respect to such claim, right or cause of action, within 45 days of the
completion of the examination, by majority decision signed in writing (together
with a brief written statement of the reasons for adopting
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such recommendation), one of the recommendations submitted by the parties to the
dispute and shall grant no other relief or remedy. The decision of said
arbitrators, absent fraud, duress or manifest error, shall be final and binding
upon the parties to such controversy and may be enforced in any court of
competent jurisdiction.
4.5 The expense and cost of such arbitration shall be borne by the party
or parties whose recommendation was not adopted by the arbitrators. Each party
shall pay the fees and expenses of its own counsel.
4.6 Notwithstanding any other provisions of this Section 4, in the event
that a party against whom any claim, right or cause of action is asserted
commences, or has commenced against it, bankruptcy, insolvency or similar
proceedings, the party or parties asserting such claim, right or cause of action
shall have no obligations under this Section 4 and may assert such claim, right
or cause of action in the manner and forum it deems appropriate, subject to
applicable laws. No determination or decision by the arbitrators pursuant to
this Section 9 shall limit or restrict the ability of any party hereto to obtain
or seek in any appropriate forum, any relief or remedy that is not a monetary
award or money damages.
5. GENERAL
5.1 No party may assign this Agreement, or its respective rights and
obligations hereunder, in whole or in part without the other party's prior
written consent. Any attempt to assign this Agreement without such consent shall
be void and of no effect ab initio. Notwithstanding the immediately preceding
sentence, any party may assign this Agreement or all, but not less than all, of
its rights and obligations hereunder to any entity controlled by it or to any
entity that acquires it by purchase of stock or by merger or otherwise, or by
obtaining all or substantially all of its assets (a "Permitted Assignee"),
provided that any such Permitted Assignee, or any division thereof, thereafter
succeeds to all of the rights and is subject to all of the obligations of the
assignor under this Agreement.
5.2 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Illinois applicable to agreements made and to
be performed entirely within such State, without regard to the conflicts of law
principles of such State. Each party shall comply in all respects with all laws
and regulations applicable to its activities under this Agreement.
5.3 Notwithstanding the provisions of Section 4, each party hereto
irrevocably submits to the exclusive jurisdiction of (a) the courts of the State
of Illinois, DuPage County, or (b) the United States District Court for the
Northern District of Illinois, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby
or thereby. Each party agrees to commence any such action, suit or proceeding
either in the United States District Court for the Northern District of Illinois
or if such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the courts of the State of Illinois, DuPage County.
Each party further agrees that service of any process, summons, notice or
documents by U.S. registered mail to such party's respective address set forth
below shall be effective service of process for any action, suit or proceeding
in Illinois with respect to any matters to which it has submitted to
jurisdiction in this Section 5.3. Each party irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
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arising out of this Agreement or the transactions contemplated hereby and
thereby in (i) the courts of the State of Illinois, DuPage County, or (ii) the
United States District Court for the Northern District of Illinois, and hereby
and thereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
5.4 If any provision of this Agreement (or any portion thereof) or the
application of any such provision (or any portion thereof) to any Person or
circumstance shall be held invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision hereof (or the remaining portion thereof)
or the application of such provision to any other Persons or circumstances.
5.5 All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or sent, postage
prepaid, by registered, certified or express mail or reputable overnight courier
service and shall be deemed given when so delivered by hand, or if mailed, three
days after mailing (one business day in the case of express mail or overnight
courier service), as follows:
(1) if to the Company,
xxx.xxx inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: President
(2) if to FTDI,
Florists' Transworld Delivery, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: President
(3) if to FTDC,
FTD Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: President
5.6 The provisions of Sections 4 and 5 shall survive any termination of
this Agreement.
5.7 The parties to this Agreement are independent contractors. There is no
relationship of partnership, joint venture, employment, franchise or agency
among the parties. No party shall have the power to bind any other or incur
obligations on any other's behalf without the other's prior written consent.
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5.8 No failure of any party to exercise or enforce any of its rights under
this Agreement shall act as a waiver of such right.
5.9 This Agreement, along with the Exhibits hereto, contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter. No party shall be liable or bound to any other party in any
manner by any representations, warranties or covenants relating to such subject
matter except as specifically set forth herein.
5.10 This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more such counterparts have been signed by each of the parties and
delivered to each of the other parties.
5.11 This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto; provided, however, that as long
as (1) FTDC beneficially owns 25% or more of the voting power represented by the
voting securities of the Company, and no other Person directly or beneficially
owns a greater percentage of such voting power, or (2) directors, officers or
affiliates of FTDC or its subsidiaries constitute a majority of the members of
the Company's board of directors, no amendment of this Agreement will be valid
unless it has been approved by at least a majority of the members of the
Company's board of directors, which majority must include at least one-half of
the members of the Company's board of directors who are "independent" directors
pursuant to the applicable rules of Nasdaq or any national stock exchange on
which the Company's equity securities are then traded or listed.
5.12 This Agreement is for the sole benefit of the parties hereto and
nothing herein expressed or implied shall give or be construed to give to any
person, other than the parties hereto any legal or equitable rights hereunder.
5.13 The headings contained in this Agreement or in any Exhibit hereto are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All Exhibits annexed hereto or referred to
herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein. Any capitalized terms used in any Exhibit but not
otherwise defined therein, shall have the meaning as defined in this Agreement.
When a reference is made in this Agreement to a Section or an Exhibit, such
reference shall be to a Section of, or an Exhibit to, this Agreement unless
otherwise indicated.
5.14 The parties hereto agree that if any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached, irreparable damage would occur, no adequate remedy at law
would exist and damages would be difficult to determine, and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.
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IN WITNESS WHEREOF, the parties have signed or caused this Agreement
to be signed and delivered as of the date first written above.
xxx.xxx inc.
By:
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Name:
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Title:
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Florists' Transworld Delivery, Inc.
By:
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Name:
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Title:
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FTD Corporation
By:
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Name:
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Title:
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