Exhibit 10.5
INDEMNITY AGREEMENT
This INDEMNITY AGREEMENT, dated as of August 20, 1998 (this
"Agreement") by and among EVENFLO AND SPALDING HOLDINGS CORPORATION, a Delaware
corporation ("Holdings") and EVENFLO COMPANY, INC., a Delaware corporation
("Evenflo").
W I T N E S S E T H
WHEREAS, pursuant to the corporate restructuring of Holdings
(the "Restructuring") and a realignment of the ownership interests of Evenflo
Company, Inc., Holdings has agreed to indemnity Evenflo against damages relating
to certain non-Evenflo matters and Evenflo has agreed to indemnify Holdings
against certain damages relating to Evenflo matters.
NOW THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. Indemnification. (a) Holdings shall indemnify and hold
Evenflo, its directors, officers, employees and affiliates, including
successors, assigns, contractors and lenders (the "Evenflo Indemnified Parties")
harmless against and in respect of (i) any Damages (as defined below) incurred
or sustained by the Evenflo Indemnified Parties as a result of any liability or
obligation that is not related to the operations or business of Evenflo, whether
arising prior to or after the closing of the Restructuring and (ii) any Damages
incurred or sustained by Evenflo Indemnified Parties as a result of any recall
(voluntary or involuntary), safety advisory or other corrective action taken
with respect to any Evenflo products ("Recall Liabilities") manufactured prior
to the close of business on the day of the closing of the Restructuring.
(b) For purposes of this Agreement, "Damages" shall mean any
and all claims, losses, liabilities, damages, deficiencies, costs and expenses
(including without limitation as a result of the defense, settlement or
compromise of any claim), including, without limitation, reasonable attorneys',
accountants' and expert witness fees, costs and expenses of investigation, and
costs and expenses incurred by an indemnified party in connection with any
action, suit, proceeding, demand, assessment or judgment incident to any of the
matters indemnified against in this Agreement or to enforce an indemnified
party's rights under this Agreement.
(c) Evenflo shall indemnify and hold Holdings and its
directors, officers, employees and affiliates, including successors, assigns,
contractors and lenders (the "Holdings Indemnified Parties") harmless against
and in respect of any Damages incurred or sustained by the Holdings Indemnified
Parties as a result of any liability or obligation relating to the operations or
business of Evenflo, whether arising prior to or after the closing of the
Restructuring, except for Recall Liabilities which Holdings shall indemnify
Evenflo against pursuant to clause (a) above.
(d) The parties agree that any liabilities or obligations that
relate to the general corporate operations in Tampa, Florida and/or are not
attributable to either the Evenflo or Non-Evenflo operations or businesses shall
be allocated equally between Evenflo and Holdings.
2. Procedures. Promptly after receipt by an indemnified party
under this Agreement of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under this Agreement, notify the indemnifying party in
writing of the claim or the commencement of that action, provided that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to the indemnified party unless the indemnifying party is
materially prejudiced in its ability to defend such action. If any such claim
shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled at its
expense to participate therein, and to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party, and to settle and compromise
any such claim or action; provided, however, that if the indemnified party has
elected to be represented by separate counsel pursuant to the proviso to the
following sentence or if such settlement or compromise does not include an
unconditional release of the indemnified party for any liability arising out of
such claim or action, such settlement or compromise shall be effected only with
the consent of the indemnified party, which consent shall not be unreasonably
withheld. After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this Agreement for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, provided, however, that the indemnified party shall have the
right to employ counsel to represent it if, in the opinion of counsel to the
indemnified party, it is advisable for the indemnified party to be represented
by separate counsel due to actual or potential conflicts of interest, and in
that event the fees and expenses of such separate counsel shall be paid by the
indemnifying party; provided, that in no event shall the indemnifying party be
responsible for the fees of more than one counsel. The parties shall each render
to each other such assistance as may reasonably be requested in order to ensure
the proper and adequate defense of any such claim or proceeding. Each party
agrees to promptly pay any amounts required to be paid to an indemnified party
hereunder, upon the receipt of notice of such claim pursuant to the provisions
of this Agreement.
3. Miscellaneous. (a) The indemnities provided in this
Agreement shall survive indefinitely. The indemnity provided in this Agreement
shall be the sole and exclusive contractual remedy of the indemnified party
against the indemnifying party at law or equity for any matter covered by
Paragraphs 1(a) and (c), except for matters relating to fraud.
(b) Each party and their affiliates shall be obligated in
connection with any claim for indemnification under this Agreement to use all
commercially reasonable efforts to obtain any insurance proceeds available to
such indemnitee with regard to the applicable claims. The amount which the
indemnifying party is or may be required to pay to any indemnified party
pursuant to this Agreement shall be reduced (retroactively, if necessary) by
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any insurance proceeds or other amounts actually recovered by or on behalf of
such indemnified party in reduction of the related Damage. If an indemnified
party shall have received the payment required by this Agreement from an
indemnifying party in respect of Damages and shall subsequently receive
insurance proceeds or other amounts in respect of such Damages, then such
indemnified party shall promptly repay to the indemnifying party a sum equal to
the amount of such insurance proceeds or other amounts actually received.
(c) Each indemnified party shall be obligated in connection
with any claim for indemnification under this Agreement to use all commercially
reasonable efforts to mitigate Damages upon and after becoming aware of any
event which could reasonably be expected to give rise to such Damages.
(d) All notices and other communications hereunder shall be in
writing and shall be deemed given upon receipt if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) or overnight delivery service to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) if to Evenflo, to:
Evenflo Company, Inc.
Northwoods Business Center II
000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxxxxx Xxxxx
with a copy to:
Kohlberg Kravis Xxxxxxx & Co.
0 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx Xxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxxxxx, Esq.
and
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(ii) if to Holdings, to:
c/o Spalding & Evenflo Companies, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000-0000
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Attention: General Counsel
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
(e) This Agreement and all the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that neither this Agreement
nor any right, interest, or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other party, except that either
party may assign its rights but not its obligations to any affiliate or in
connection with any sale or transfer of the assets or equity securities of such
party or its affiliates or any recapitalization, reorganization or business
combination transaction involving a party hereto.
(f) This Agreement may be executed in two or more
counterparts, all of which will be considered one and the same agreement and
each of which will be deemed an original.
(g) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF NEW YORK
(REGARDLESS OF THE LAWS THAT MIGHT BE APPLICABLE UNDER PRINCIPLES OF CONFLICTS
OF LAW) AS TO ALL MATTERS, INCLUDING BUT NOT LIMITED TO MATTERS OF VALIDITY,
CONSTRUCTION, EFFECT AND PERFORMANCE.
(h) Each of the parties hereto irrevocably and unconditionally
submits to the non-exclusive jurisdiction of The United States District Court
for the Southern District of New York or New York Supreme Court for New York
County. In any action, suit or other proceeding, each of the parties hereto
irrevocably and unconditionally waives and agrees not to assert by way of
motion, as a defense or otherwise any claims that it is not subject to the
jurisdiction of the above courts, that such action or suit is brought in an
inconvenient forum or that the venue of such action, suit or other proceeding is
improper. Each of the parties hereto also agrees that any final and unappealable
judgment against a party hereto in connection with any action, suit or other
proceeding shall be conclusive and binding on such party and that such award or
judgment may be enforced in any court of competent jurisdiction, either within
or outside of the United States. A certified or exemplified copy of such award
or judgment shall be conclusive evidence of the fact and amount of such award or
judgment. THE PARTIES HERETO, HAVING CAREFULLY CONSIDERED THE ISSUE, AND HAVING
SOUGHT AND OBTAINED THE ADVICE OF COUNSEL, KNOWINGLY, INTENTIONALLY AND
IRREVOCABLY WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR
PROCEEDING RELATED
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TO OR ARISING OUT OF THIS AGREEMENT AND ANY OTHER AGREEMENT
DELIVERED IN CONNECTION HEREWITH.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of August 20, 1998.
EVENFLO AND SPALDING HOLDINGS
CORPORATION
By:
-----------------------------
Name:
Title:
EVENFLO COMPANY, INC.
By:
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Name:
Title:
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