EXHIBIT 10.38
LICENSE AGREEMENT
This Agreement is made by and between Westinghouse Electric
Corporation, a Delaware corporation, having a principal place of business at
0000 Xxxxxxxx, Xxx Xxxx, XX 00000 (hereinafter referred to as "Westinghouse"),
and Salton, Inc., a Delaware corporation, having a principal place of business
at 0000 X. Xxxxx Xxxxx, Xxxx Xxxxxx, XX 00000 (hereinafter referred to as
"Salton").
WHEREAS, Westinghouse is the owner of certain valuable and famous
trademarks;
WHEREAS, Salton and its subsidiaries and affiliates are in the business
of sourcing the manufacture of, manufacturing, marketing, distributing and
selling, primarily to retailers certain Products as herein defined; and
WHEREAS, Salton currently is a sublicensee of the White Westinghouse
trademark from White Consolidated Industries, Inc., as a sublicensor.
WHEREAS, Salton desires to become licensed under certain Westinghouse
trademarks and Westinghouse is willing to grant such license under the following
terms and conditions.
NOW, THEREFORE, in consideration of the premises and the covenants
herein contained, the parties hereto agree as follows.
1.0 - DEFINITIONS
In this Agreement the following expressions have the following
meanings:
1.1 Categories - the categories of Products identified in Appendix A
attached hereto and made a part hereof.
1.2 Licensing Manual - The Westinghouse Corporate Identity and
Licensing Manual attached hereto and made a part hereof as Appendix B.
1.3 Marks - The trademarks "Westinghouse" and "Circle W" as shown in
Appendix C attached hereto and made a part hereof.
1.4 NS - "Net Sales" - The aggregate of the gross receipts from sales
of Products less (a) returned goods, refunds, credits and allowances actually
made or allowed to a customer with respect to those Products, (b) freight or
handling charges charged to customers or incurred on returned goods, and (c)
sales and excise taxes actually paid.
1.5 Products - The articles described and listed in Appendix A attached
hereto and made a part hereof.
1.6 Territory - North America, South America, Europe, Africa, Asia and
Australia-New Zealand (each of such areas are called "Subterritories").
1.7 White Westinghouse Agreement - The licenses agreement between White
Consolidated Industries, Inc. and Salton/Maxim Housewares Inc. dated February 6,
1996, as amended.
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2.0 - LICENSE GRANT
2.1 Unless sooner terminated, Westinghouse hereby grants Salton an
exclusive license, without the right to grant sublicenses (except as set forth
herein), to use the Marks during the Term (as defined in Section 9.2) solely on
or in connection with the Products and solely in the Territory. Westinghouse
reserves to itself all other rights in and to the Marks. Notwithstanding the
foregoing, Salton may grant sublicenses to use the Xxxx consistent with the
terms of this Agreement to a wholly-owned subsidiary provided that such
subsidiary agrees to be bound by the terms of this Agreement and that such
subsidiary remains a wholly-owned subsidiary of Salton.
2.2 Salton shall use the Marks only in the form approved in writing by
Westinghouse and with no departures in appearance or treatment. Salton shall use
its best efforts to ensure that the Marks used under this Agreement comply in
every respect with the Licensing Manual.
2.3 Salton shall not use nor authorize others to use the Marks outside
the Territory or on any other goods or merchandise of any kind other than as
specifically set forth in this Agreement or as otherwise agreed to by the
parties in writing. Salton shall have the right to source the manufacture of
Products in the Subterritory of Asia and any other Subterritory from which it
sources material amounts of Products which it markets regardless of whether
Salton has retained the right to sell Products in such Subterritory pursuant to
this Agreement. Salton may request, in writing, Westinghouse's consent solely to
manufacture in other Subterritories, which consent may not be unreasonably
denied.
2.4 Salton shall not sell any Products nor authorize others to sell any
Products outside the Territory nor to any party where they reasonably believe
Products will be sold outside the Territory.
2.5 No rights are granted for the distribution of Products as premiums,
promotions or giveaways.
2.6 The license granted is personal to Salton and is not assignable for
any reason without Westinghouse's prior written consent.
2.7 Nothing in this Agreement is to be construed as an assignment or
grant to Salton of any right, title or interest in the Marks or in any
copyright, design, trade name, trademarks, trade dress or other property right
beyond the limited license expressly granted hereby. Salton agrees not to assert
any rights in the Marks, contrary to the provisions of this Agreement.
2.8 Salton acknowledges that White Consolidated Industries, Inc. has
licensed certain parties to use the White-Westinghouse marks in Spain, Portugal,
Argentina and Mexico as identified in Appendix D to this Agreement and that such
licenses shall not constitute or be deemed a breach of the grant of the license
to Salton by Westinghouse to use the Marks as set forth in this Agreement or of
any other provision of this Agreement.
3.0 - RESPONSIBILITY OF SALTON
3.1 Prior to any use of any Marks, Salton shall, at Salton's expense,
submit to Westinghouse, for Westinghouse's written approval, the following: (a)
two (2) specimens of each design of Product on which said Marks are to appear
(the "Specimens"); (b) clearance from Underwriters Laboratories, Inc. or a
similar recognized independent consumer product safety testing company for each
Specimen ("Test Reports"); (c) all artwork which Salton intends to use in
connection with the Marks; and (d) all packaging, advertising and promotional
literature which Salton intends to use in the marketing or merchandising of the
Products. Westinghouse shall give Salton written notice of approval or
disapproval
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within ten (10) business days from its receipt of the Specimens, and should
Westinghouse disapprove, its written notice shall explain in detail the reasons
for disapproval so that Salton may prepare and submit new Specimens. After
Westinghouse has given its written approval of said Specimens, then the approved
product, quality, packaging, advertising and promotional literature shall be the
standard for the relevant design of Product produced thereafter (the "Approved
Quality"). Thereafter, consecutively at twelve (12) month intervals, Salton
shall, at Salton's expense, submit to Westinghouse not less than two (2)
randomly selected production run samples ("Sample") of each design of the
Products and Test Reports (if any) respecting such Products that are prepared
during the previous 12 month period. Notwithstanding the foregoing, Westinghouse
understands and agrees that once a design of Product is approved by
Westinghouse, Salton shall not be required by this provision to obtain
additional testing of such Product design. Salton shall obtain Westinghouse's
prior approval on any new design of Product on which the Marks will be used.
Without the prior written approval of Westinghouse, Salton shall not sell or
distribute any design of Product which deviates from the Approved Quality.
Products or any component thereof not meeting the Approved Quality, including
"second and irregulars," are not to be sold or distributed under any
circumstances without Westinghouse's prior written consent. Notwithstanding the
foregoing, provided Salton gives Westinghouse prior notice, Salton may from time
to time revise packaging for the Products solely to include or change statements
or other information which may be required by the rules of the Underwriters'
Laboratories, Inc. or laws or regulations of any jurisdiction where the Products
are sold.
3.2 Westinghouse, at its own expense, has the right at reasonable times
on notice to Salton to: (i) inspect Salton's manufacturing facilities,
warehouses and other facilities directly related to the Products and (ii)
request and cause Salton to arrange for Westinghouse's inspection of
manufacturing facilities from which Salton sources the manufacture of Products.
Salton agrees to cooperate with Westinghouse in carrying out such inspections.
3.3 Salton shall design, manufacture, source the manufacture of,
advertise, promote (through dealers co-op funding or otherwise), sell and ship
the Products, in a diligent and professional manner. Salton shall procure and
maintain facilities and trained personnel sufficient and adequate to accomplish
the foregoing. Salton shall design, cause the manufacture of, advertise and
promote the Products so that each of the Products fulfills the following
criteria: (i) they are not designed, manufactured or marketed as lowest price
point products; (ii) they are priced to customers as above the lowest price
points for such products and are so called mid level products; (iii) they have
manufacturing, design, quality, and additional features that are similar to the
products marketed by others that are commonly perceived in the small kitchen
electrics or houseware product business as mid level products (but not, except
as agreed to by Salton, highest quality or most expensive)and, for example, are
approximately equivalent in quality to and expected to be approximately as
expensive in the consumer market as other branded Products in the same product
category that might compete with the Products marketed under the Marks. Salton
shall not create a retail exclusive arrangement respecting Products bearing the
Marks without the prior written consent of Westinghouse.
3.4 Salton agrees to inform Westinghouse of the details of the use of
the Marks, including graphics, position, size, color, script and the like, and
Westinghouse reserves the right to inspect and to approve the use of the Marks.
3.5 Salton shall refrain from and shall not authorize others to use or
misuse the Marks so as to bring discredit to Westinghouse.
3.6 Salton agrees that all use of the Marks by Salton under this
Agreement inures to the benefit of Westinghouse. Salton agrees that at the
termination or expiration of this Agreement, Salton will be deemed to have
assigned, transferred and conveyed to Westinghouse any rights, equities, good
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will, titles or other rights in and to the Marks which may have been obtained by
Salton or which may have vested in Salton in pursuance of endeavors covered
hereby, and that Salton will execute any instrument requested by Westinghouse to
accomplish or confirm the foregoing. Any such assignment, transfer or conveyance
shall be without other consideration than the mutual covenants and
considerations of this Agreement.
3.7 Salton shall comply with any laws, rules and/or regulations,
including, but not limited to, any county, state and/or federal law, with regard
to the use of the Marks and the design, manufacture, and, to the extent
controlled by Salton, the advertisement, promotion, sale and shipment of the
Products.
3.8 Salton shall not apply for the registration of, or cause the filing
of an application for the registration of, a trade name, trademark or service
xxxx which is identical to or confusingly similar to the Marks; provided that
Salton shall have the right to continue the use of the "White Westinghouse"
trademark as set forth in this Agreement.
3.9 Salton shall promptly notify Westinghouse of any infringement or
potential infringement of the Marks that come to its attention. Salton will
cooperate with Westinghouse, at Westinghouse's request, in taking steps to
terminate such infringement. However, Salton shall not take any legal action to
protect against any infringement of the Marks without Westinghouse's permission.
Westinghouse will take action against infringers to defend the Marks but shall
not be required to bring or prosecute actions or suits. Any and all damages
recovered in any action or proceeding commenced by Westinghouse shall belong
solely and exclusively to Westinghouse. To the extent that Salton incurs
reasonable out of pocket legal fees and other costs in connection with
Westinghouse requests under this Section 3.9, Westinghouse shall reimburse
Salton within forty-five (45) days following a request therefor accompanied by
reasonable documentation.
3.10 Salton acknowledges and agrees that any unauthorized use or misuse
of the Marks by or for Salton will result in irreparable harm to Westinghouse
and that Westinghouse, in addition to any other rights or remedies specified in
this Agreement, shall be entitled to any remedy, legal or equitable, including
without limitation preliminary injunctive relief, to correct any harm which
results from such violation.
3.11 Salton shall use its best efforts to maximize use of the Marks
consistent with reasonable marketing plans.
3.12 Salton agrees to meet with Westinghouse at least once per year to
review and discuss advertising and promotion plans for the Products.
3.13 Salton shall adopt a mechanism by which it will respond to
inquiries from customers and other third parties respecting the operation and
repair of the Products.
3.1.4 During the Term of this Agreement, Licensee shall not (i) enter
into an agreement with a third party for products or (ii) design, manufacture,
source the manufacture, advertise, sell or ship products, that would compete
with those Products in the Category identified as "Vacuum Cleaners," except that
this Section 3.1.4 shall not apply to the retailer-owned house brands, such as
Kenmore, marketed by Sears Xxxxxxx & Company.
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4.0 - COMPENSATION
4.1 Salton agrees to pay Westinghouse a royalty at the rate of *% of
the NS of all sales of Products through television response sales and
infomercials and a royalty at the rate of *% of all the NS of all other sales of
Products. If a NS is not available for such Products, a commercially equivalent
amount shall apply.
4.2 Commencing with the third twelve (12) month period of this
Agreement ("Contract Year") and for each Contract Year thereafter, subject to
adjustment as set forth in Section 4.3, below, Salton agrees to pay Westinghouse
the minimum royalty payments for each Category ("Category Minimum Annual
Royalty") as set forth below:
Category Category Minimum Annual Royalty ($US)
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Kitchen Electronics $*
Fans/Heaters $*
Personal Care $*
Table Top Cleaners $*
Clocks $*
Vacuums $*
Each twelve month period shall correspond to the fiscal year of Salton. Salton
uses a 52/53 week fiscal year; each fiscal year of Salton ends at the close of
business on the Saturday of the last calendar week that begins in June,
regardless of whether the Saturday of such week falls in June or July. The first
day of the next fiscal year will begin on a Sunday. Consequently, the first
Contract Year of this Agreement begins on Sunday, June 30, 2002. The second
Contract Year and all succeeding Contract Years shall begin on the next day
following the end of the next preceding Contract Year.
4.3 Commencing with the fourth Contract Year and for each Contract Year
thereafter during the Term, the Category Minimum Annual Royalty for each
Category of Products shall be increased by *%.
4.4 All Category Minimum Annual Royalties shall be payable in equal
quarterly installments commencing with the initial quarter of the third (3rd)
Contract Year; however, amounts paid by Salton to Westinghouse pursuant to
Section 4.1 for each Category shall be credited against the applicable Category
Minimum Annual Royalty for the quarter in which it accrued.
4.5 Salton shall keep full, true and accurate books of account
containing all particulars which may be necessary for the purpose of determining
the amount payable to Westinghouse under this Agreement. Said books and the
supporting data shall be open at all reasonable times, for three (3) years
following the end of the calendar year to which they pertain, to an inspection,
on a confidential basis, by an independent certified public accountant retained
by Westinghouse, at Westinghouse's expense, for the purposes of verifying
Salton's payments, and Salton's compliance in other respects with this
Agreement; provided however, that Westinghouse shall not have the right to audit
the books and records of Salton during a period beginning six (6) full calendar
weeks before the end of Salton's fiscal year and ending at the end of the sixth
(6th) full calendar week after such fiscal year. If such inspection and
resulting report indicate an underpayment by Salton which extends beyond the
forty-fifth (45th) day next following the end of the last quarter of each fiscal
year of Salton, Salton shall immediately pay such amount to Westinghouse with
interest at prime rate as established by Mellon Bank, N.A. or any successor, at
the time of the inspection, and should such under-payment be in excess of $5,000
Salton shall also bear all costs of the inspection.
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* Confidential Treatment Requested
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4.6 By the forty-fifth (45th) day next following the end of each
quarter of each fiscal year of Salton, Salton shall deliver to Westinghouse a
true and accurate report certified by an officer or the Controller of Salton,
giving such particulars of the business conducted by Salton hereunder, during
the preceding calendar quarter under this Agreement as are pertinent to an
accounting under this Agreement. These shall include at least the following:
(1) the number and type of Products sold by country;
(2) minimum annual payments due; and
(3) total payments due.
Concurrently with the delivery of each such report, Salton shall pay to
Westinghouse the amounts due for the period covered by such report. If no
payments are due, it shall be so reported. In addition, within thirty (30) days
of execution of this Agreement, Salton shall report and pay over to Westinghouse
all amounts due under this Agreement from the Effective Date.
4.7 Sales of Products in currencies other than United States dollars
shall be converted to United States dollars at the conversion rate stated in the
Wall Street Journal for the day prior to the date payment is made by Salton.
4.8 All payments made hereunder by Salton shall be made payable to
"Westinghouse Electric Corporation" by check or by immediately available United
States funds and delivered to:
President
Westinghouse Electric Corporation
c/o Viacom Inc.
Controller's Office - 53rd Floor
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
with a copy of the notice of payment to:
Jo Xxx Xxxxxx
Assistant General Counsel
Westinghouse Electric Corporation
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
and to:
Xxxxx Xxxxxxx, President
Leveraged Marketing Corporation of America
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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5.0 - OWNERSHIP OF THE LICENSED MARKS
5.1 Salton acknowledges that the Marks, worldwide, are the property of
Westinghouse and that Westinghouse has substantial and valuable goodwill in the
Marks. Salton shall take all reasonable measures to maintain and protect
Westinghouse's proprietary rights including placing any reasonable notice of
such ownership that Westinghouse shall reasonably require. Salton shall
cooperate fully and in good faith with Westinghouse for the purpose of securing
and preserving Westinghouse's rights in and to the Marks. Salton shall execute
any documents reasonably required by Westinghouse to protect the Marks. To the
extent that Licensee incurs any out of pocket expense, including legal fees and
costs, Westinghouse shall reimburse Salton within forty-five (45) days after
Salton submits a statement for such fees and costs accompanied by reasonable
documentation. Salton shall not take any action, or by its knowing inaction
allow any event to occur, which would injure or impair Westinghouse's
proprietary rights in and to the Marks. Salton shall not contest the validity of
the Marks or any rights of Westinghouse therein, nor shall Salton willingly
become an adverse party in litigation in which others shall contest the Marks or
Westinghouse's said rights. In addition thereto, Salton shall not in any way
seek to avoid its obligations hereunder because of the assertion or allegation
by any persons, entities or government agencies, bureaus, or instrumentalities
that the Marks, or any of them, are invalid or ineffective or by reason of any
contest concerning the rights of Westinghouse therein; provided however, that,
if there is a final determination by a court or arbitration panel that a third
party owns the Marks and/or the rights granted under this Agreement to Salton,
Licensee shall have no obligations under this Agreement if its use of the Marks
under this Agreement is impaired or Salton is required to make additional
royalty payments to such third party for continued use of the Marks.
5.2 Salton shall indicate on all Product packaging and related
advertising materials intended to be delivered to consumers that the Products
are manufactured and distributed by or for Salton.
5.3 Salton shall comply with proper use instructions as Westinghouse
may issue from time to time with respect to the Marks; provided that, to the
extent that there is packaging, advertising or other materials or Product
Inventory already in inventory which has been approved by Westinghouse, Salton
shall have the right to use up such inventory before making changes in such
packaging, advertising or other materials or Product Inventory.
6.0 REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1 Salton represents warrants and covenants to Westinghouse as
follows:
6.1.1 Salton will not use the Marks and has not and will not
grant any right or license to use the Marks other than as authorized under this
Agreement.
6.1.2 Salton is a corporation duly organized, validly existing
and in good standing under the laws of Delaware. Salton has all corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder.
6.1.3 The execution, delivery and performance by Salton of
this Agreement and the consummation of the transaction contemplated hereby has
been duly and validly authorized by all requisite corporate action, and no other
corporate act or proceeding on the part of Salton is necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transaction contemplated hereby.
6.1.4 Salton is not subject to nor obligated under its
certificate of incorporation or bylaws, any applicable law, rule or regulation
of any governmental authority, or any agreement (except as
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set forth in Schedule 6.1.4), instrument, license or permit, or subject to any
order, writ, injunction or decree, which would be breached or violated by its
execution, delivery or performance of this Agreement.
6.1.5 Salton's execution and delivery of this Agreement and
performance of its obligations hereunder, including the obligation of payments
hereunder, do not and will not conflict with, violate, or result in any default
under any agreement, instrument or other contract to which Salton is a party or
by which it is bound except as set forth in Schedule 6.1.4.
6.1.6 There are no claims, actions, suits, or other
proceedings pending, or to the knowledge of Salton, threatened, which, if
adversely determined, would adversely affect the ability of Salton to consummate
the transactions contemplated by this Agreement or perform its obligations
hereunder.
6.1.7 Salton: (i) has received no notice from any governmental
authority to the effect that it is not in compliance with and is now in
compliance with and (ii) shall comply with all applicable laws and regulations
relating to the manufacture (to the extent, if any, that it is a manufacturer),
sale and distribution of the Products and shall require its subcontractors to
comply with applicable laws and regulations relating to the manufacture of the
Products.
6.1.8 Without cost to Westinghouse, Salton shall maintain
insurance that protects Westinghouse, its officers, directors, employees,
agents, and its parent, affiliates and their officers, employees and agents
against any and all liability regardless of the basis, including punitive or
exemplary damages in connection with (a) Salton's use of the Marks in violation
of this Agreement, (b) any alleged defect(s) in the Products, and (c) the
design, use, manufacture (to the extent, if any, that Salton is a manufacturer),
distribution, marketing, sale or servicing of the Products including but not
limited to product liability and any alleged contractual liability of
Westinghouse in connection with such actions concerning the Products. The kinds
and amounts of insurance shall be as Salton and Westinghouse from time to time
agree, and at a minimum shall include the following:
6.1.8.1 Salton shall maintain in effect for at least the life
of all the Products manufactured, distributed or serviced by or for Salton,
liability insurance, written on an occurrence basis, with limits of at least
Five Million U.S. Dollars ($5,000,000) per occurrence, or in years 2004 and
later, such higher amount as may be reasonable considering legal or economic
changes as well as deteriorating loss experience. The insurance will cover at
least the liabilities typically insured by commercial general liability policies
(including products/completed operations, advertising liability) issued in the
year this Agreement is signed. Westinghouse shall be an additional insured on
such policies, which shall contain severability of interest or cross liability
clauses.
6.1.8.2 All insurance shall be provided by insurance
companies, on policy forms, and with deductibles and retentions acceptable to
Westinghouse, such acceptance not to be unreasonably withheld. Any such
deductible or retention shall be the responsibility of Salton.
6.1.8.3 Such insurance or risk financing arrangements shall be
primary with no rights of contribution equitable or otherwise, with any other
insurance afforded Westinghouse.
6.1.8.4 Salton shall furnish Westinghouse with certificates of
insurance within thirty (30) days after execution of this Agreement, and
annually thereafter. Such certificates will stipulate that coverage will not be
canceled, reduced, or modified without thirty (30) days prior written notice to
Westinghouse. Any cancellation, reduction or modification, without the prior
written consent of Westinghouse, which results in there not being in force
insurance coverage which satisfies all the requirements of Section 6.1.8,
including all its subsections, shall be deemed a material breach of this
Agreement.
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6.1.8.5 At reasonable times on advance written notice to
Salton, Westinghouse may review the insurance policies at Salton's offices.
6.1.8.6 The requirements of this clause will survive this
Agreement, and will remain in effect for at least the life of the Products
manufactured, distributed, or serviced by or for Salton.
6.2 Westinghouse represents, warrants and covenants to Salton as
follows:
6.2.1 Westinghouse is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Westinghouse has all corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
6.2.2 The execution, delivery and performance by Westinghouse
of this Agreement and the consummation of the transaction contemplated hereby
has been duly and validly authorized by all requisite corporate action, and no
other corporate act or proceeding on the part of Westinghouse is necessary to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transaction contemplated hereby.
6.2.3 Westinghouse is not subject to nor obligated under its
certificate of incorporation or bylaws, any applicable law, rule or regulation
of any governmental authority, or any agreement, instrument, license or permit,
or subject to any order, writ, injunction or decree, which would be breached or
violated by its execution, delivery or performance of this Agreement.
6.2.4 Westinghouse is the owner of the Marks and, to
Westinghouse's knowledge, the use of the Marks in the manufacture, advertising,
sale and promotion of any of the Products will not infringe any intellectual
property or any other rights of any third party.
6.2.5 Westinghouse has the full right, power and authority to
grant the license as set forth in Article 2.0 hereof.
6.2.6 Licensor is not subject to nor obligated under its
certificate of incorporation or bylaws, any applicable law, rule or regulation
of any governmental authority, or any agreement, instrument, license or permit,
or subject to any order, writ, injunction or decree, which would be breached or
violated by its execution, delivery or performance of this Agreement except as
set forth in Schedule 6.1.4.
6.2.7 Licensor's execution and delivery of this Agreement and
performance of its obligations hereunder, including the obligation of payments
hereunder, do not and will not conflict with, violate, or result in any default
under any agreement, instrument or other contract to which Licensor is a party
or by which it is bound except as set forth in Schedule 6.1.4.
6.2.8 There are no claims, actions, suits, or other
proceedings pending, or to the knowledge of Licensor, threatened, which, if
adversely determined, would adversely affect the ability of Licensor to
consummate the transactions contemplated by this Agreement or perform its
obligations hereunder.
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7.0 - INDEMNIFICATION
7.1 Salton shall indemnify and hold Westinghouse and its affiliates, as
well as their respective officers, directors, agents, employees, successors and
assigns, harmless from and against any and all claims, suits, damages,
liabilities, costs and expenses including, but not limited to, court costs and
reasonable attorneys fees, arising out of, based on or in any other manner
related to:
7.1.1 the breach of any representation, warranty, covenant or
obligation of Salton under this Agreement;
7.1.2 any use by Salton of the Marks which is not permitted by
or not in accordance with the terms of this Agreement;
7.1.3 any defect or alleged defect in the Products including,
without limitation, any injuries to persons or property arising therefrom; or
7.1.4 the design, manufacture, distribution, promotion or sale
of the Products including, without limitation, infringement of patents or
misappropriation of trade secrets;
7.1.5 any claims by third parties against Westinghouse arising
out of this Agreement, except to the extent such claims directly result from
Westinghouse's breach of its warranties in Section 6.2.
7.2 Westinghouse shall indemnify and hold harmless Salton from and
against the cost and expenses (including, without limitation, reasonable
attorneys fees and costs) of any and all claims, suits, losses, damages, costs,
demands, obligations, investigations, causes of action, and judgments arising
out of any assertion or allegation by any persons, entities or government
agencies that the Marks used by Salton under this Agreement infringe any
trademark, trade name or any other personal property right of a third party.
7.3 A party (the "Notifying Party") shall promptly notify the other
party (the "Indemnifying Party") of the existence of any claim, demand or other
action giving rise to a claim for indemnification under this Agreement which
involves a third party (a "Third Party Claim") and shall give the Indemnifying
Party a reasonable opportunity to defend the same at its own expense and with
its own counsel, provided that the Notifying Party shall at all times have the
right to participate in such defense at its own expense.
7.4 Each party shall make available to the other, at the other's
expense, such information and assistance as the other shall reasonably request
in connection with the defense of a Third Party Claim threatened or filed in
connection with any activities conducted hereunder.
8.0 - DISCLAIMERS
8.1 Nothing contained in this Agreement shall be constructed as:
8.1.1 (Except as provided in Section 3.1 and Article 6.0) A
WARRANTY WHETHER STATUTORY, EXPRESSED OR IMPLIED, A WARRANTY OF MERCHANTABILITY,
A WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, OR A WARRANTY ARISING FROM
COURSE OF DEALING OR USAGE OF TRADE;
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8.1.2 an agreement to bring or prosecute actions or suits
against third parties or conferring any right to bring or prosecute actions or
suits against third parties; and
8.1.3 conferring any right to use in advertising, publicity,
or otherwise, any trademarks, service marks, trade name or name of Westinghouse,
or any contraction, abbreviation or simulation thereof, except as specifically
permitted in this Agreement.
9.0 - TERM, TERMINATION AND EXPIRATION
9.1 The Base Term of this Agreement shall be for six (6) year(s)
commencing March 31, 2002 and ending on March 31, 2008 at midnight Eastern
Standard Time, unless sooner terminated.
9.2 This Agreement shall automatically renew for five (5) 5-year
increments (each an "Extension Term"). In the event Salton chooses not to extend
the term of the Agreement, Salton shall so notify Westinghouse in writing no
later than 120 days prior to the end of the Base Term or then-current Extension
Term, as applicable and in such case, this Agreement shall terminate effective
the last day of such Base Term or Extension Term. The Base Term and any
exercised Extension Term are referred to as the Term of the Agreement.
9.3 Westinghouse may elect to terminate this Agreement upon thirty (30)
days' prior written notice to Salton if:
9.3.1 Salton does not meet the quality standards for the
Products as established pursuant to the terms of this Agreement;
9.3.2 Salton's use or misuse of the Marks in violation of this
Agreement may bring discredit to Westinghouse;
9.3.3 Salton fails to make payments due Westinghouse when due
under this Agreement;
9.3.4 any proceeding is instituted by or for Salton for
bankruptcy, reorganization or other relief for debtors; or
9.3.5 any proceeding is instituted by or for Salton to
dissolve its corporate structure or for winding-up.
9.3.6 Salton directly or indirectly, merges or otherwise comes
under the shared or sole control or direction of any other party contrary to the
terms of Section 14.1.
9.4 In the event of an alleged material breach by either party of any
of the terms of this Agreement, the party suffering such breach shall give
notice to the other, in writing, thereof, specifying the type and circumstances
pertaining to such breach in form sufficient to enable opportunity for
correction thereof by the party allegedly in breach. If such breach shall not
have been remedied during a ninety (90) day period immediately following the
receipt of such notice, the party giving said notice shall have the right to
notify the other in writing of its decision to terminate this Agreement. In the
event that the breach is remedied within such ninety (90) day period, this
Agreement shall continue in full force and effect the same as if no notice had
been given. Waiver by any party of its right to terminate because of any one
breach shall not constitute a waiver of any subsequent breach of the same or of
a different nature. No termination of this Agreement by expiration or otherwise
shall relieve or release any party from any of its obligations hereunder with
respect to royalties due or acts committed under this Agreement.
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9.5 Upon any expiration or termination of this Agreement:
9.5.1 all rights granted to Salton hereunder terminate at such
expiration or termination;
9.5.2 Salton shall immediately discontinue any and all use of
the Marks but shall be permitted to sell remaining stock within six (6) months.
Salton shall continue to abide by the terms of this Agreement respecting the
Products during the six (6) month period. Westinghouse shall be entitled to
receive royalties on the sale of such stock in accordance with Article 4.0.
After the expiration of the aforesaid six (6) month period, Salton shall destroy
all Product and packaging and promotional material remaining in Salton's
possession which are identified in any manner by or with the Marks.
Notwithstanding the above, Westinghouse shall have the right to purchase such
excess stock of Licensed Items, in whole or in part, prior to any sale or offer
of sale by Salton to any third party, for an amount equal to the wholesale cost
of such Licensed Items. It is specifically understood and agreed that the
Salton's right to dispose of stock shall be conditioned upon the absence of harm
to the Marks and/or the reputation of Westinghouse arising from the Salton's use
of the Marks, as determined by Westinghouse in its sole discretion.
9.5.3 the expiry or withdrawal of Salton's right to use the
Marks shall not entitle Salton to compensation or damages of any description
other than as provided in Section 9.4;
9.5.4 all accrued payments to Westinghouse shall be paid to
Westinghouse within thirty (30) days of such expiration or termination;
9.5.5 all monies previously paid to Westinghouse pursuant to
this Agreement will be retained by Westinghouse; and
9.5.6 the provisions of Article 7.0 and 9.0 shall survive.
10.0 - MINIMUM SALES
10.1 Beginning in the fifth Contract Year, Westinghouse, upon ninety
days written notice to Salton, may elect to amend the definition of Territory to
delete therefrom the following jurisdictions should the NS of all Products sold
by or for Salton not exceed the respective minimums indicated below for the
preceding calendar year.
Jurisdiction NS ($US)
------------ --------
North America $*
South America $*
Europe $*
Africa $*
Asia $*
Australia - New Zealand $*
From and after such deletion from the definition of Territory, Salton's license
under this Agreement for those jurisdictions shall be terminated.
10.2 Beginning in the third Contract Year, Westinghouse, upon ninety
days written notice to Salton, may elect to amend the definition of Products to
delete therefrom a Category should the NS of Products sold by or for Salton
within such Category not exceed the respective minimums indicated below
--------
* Confidential Treatment Requested
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for the immediately preceding calendar year:
Category NS ($US)
-------- --------
Kitchen Electronics $*
Fans/Heaters $*
Personal Care $*
Table Top Cleaners $*
Clocks $*
Vacuums $*
11.0 - EFFECTIVE DATE
11.1 Upon execution by both parties, the Effective Date of this
Agreement shall be March 31, 2002.
12.0 - CHOICE OF LAW
12.1 This Agreement shall be construed, interpreted and governed in
accordance with the laws of the State of New York.
13.0 - NOTICE
13.1 Any notice, request or statement hereunder shall be deemed to be
sufficiently given or rendered when sent by certified mail, telex, or telegram,
and if given or rendered to Salton addressed to:
Xxxxx Xxxxx
Chairman
Salton, Inc.
0000 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
with a copy to:
Xxxx Xxxxxxxxxx
Senior Vice President and General Counsel
Salton, Inc.
0000 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
or, if given or rendered to Westinghouse addressed to:
President
Westinghouse Electric Corporation
c/o Viacom Inc.
Controller's Office - 53rd Floor
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
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with a copy to:
Jo Xxx Xxxxxx
Assistant General Counsel
Westinghouse Electric Corporation
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
and a copy to:
Xxxxx Xxxxxxx, President
Leveraged Marketing Corporation of America
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
or, in any case, to such changed address or person as Westinghouse or Salton
shall have specified by written notice pursuant hereto.
14.0 - ASSIGNMENT/SUBCONTRACTING
14.1 Salton shall not assign this Agreement in whole or in part without
the prior written consent of Westinghouse, except that Salton shall have the
right to assign this Agreement as in connection with (1) the merger of Salton
into or the consolidation of Salton with another company that becomes the
surviving entity or (2) the acquisition of all or substantially all of the
assets and business of Salton by another company (each an "Acquisition" for
purposes of this Section 14.1), provided that: a. the business of Salton is
continued and b. the net worth of the surviving entity immediately following any
such Acquisition is not less than the net worth of Salton immediately prior to
any such transaction. Notwithstanding the right granted to Salton in this
Section 14.1 to assign this Agreement in the case of an Acquisition of Salton,
Salton shall not have such right unless Salton first receives the advance
written consent of Westinghouse if the assignee is a person, company or other
entity that, at the time of such Acquisition of Salton, owns or controls through
a subsidiary or is owned or controlled by a person, company or other entity that
owns or controls, a "Significant Rival Trademark". As used in this Section 14.1,
a Significant Rival Trademark is a trademark that is nationally known in both
the United States and the large countries of Western Europe; (ii) is used to
market a variety of small kitchen electric products and other home use and non
home use products both in the United States and in the large countries of
Western Europe and (iii) also refers to the name of a well known company. Salton
and Westinghouse agree that: (x) two current examples of a Significant Rival
Trademark are the trademarks "General Electric" and "GE" and (y) current
examples of trademarks that are not, at the date hereof, Significant Rival
Trademarks are Cuisinart and Moulinex.
14.2 Westinghouse may assign this Agreement in whole or in part.
14.3 Salton is responsible for the work of any of its contractors or
subcontractor and for any debts, obligations or liabilities incurred by any such
contractors or subcontractor in connection with the Products. Salton shall
discontinue using any contractor or subcontractor who shall fail to comply with
quality standards and/or delivery schedules required by Salton or Westinghouse
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15.0 - SEVERABILITY
15.1 The provisions of this Agreement are severable, and in the event
that any provision of this Agreement is determined to be invalid or
unenforceable under any controlling body of law, such invalidity or
unenforceability shall not in any way affect the validity or enforceability of
the remaining provisions hereof.
16.0 - MERGER
16.1 This instrument sets forth the entire and only agreement between
the parties hereto as to the subject matter hereof; reflects and merges all
pertinent prior discussions and correspondence pertaining thereto, and
supersedes and cancels all pre-existing agreements pertaining thereto between
them. Any representation, promise, definition, warranty or condition pertaining
thereto and not incorporated herein, shall not be binding upon either party.
This instrument shall not become effective unless and until dated and signed
below on behalf of each of the parties by their duly authorized officers or
representatives. This instrument and its appendices may not be modified,
enlarged, or changed in any way hereafter except by an instrument signed by each
of the parties hereto.
17.0 - REPORTING OF ADVERSE EVENTS
17.1 Salton shall report to Westinghouse, within forty-eight [48] hours
from receipt of the information, any materially adverse event that is reported
to occur as a result of use of any of the Products. Such events must be reported
in as much detail as possible, whether or not there is proof of a causal
connection between the events and use of the Products. A materially adverse
event includes any experience relating to the Products which is reasonably
regarded to be seriously detrimental to person or property in any manner.
18.0 - FINANCIAL STANDARDS
18.1 Salton shall provide its annual financial statements to
Westinghouse annually or its quarterly financial statements as requested by
Westinghouse. So long as Salton remains a publicly held company, Westinghouse
shall be entitled only to such statements as are required to be filed with the
U.S. Securities and Exchange Commission under the Securities Act of 1933, as
amended, and the Securities and Exchange Act of 1934, as amended. Such financial
statements shall be prepared in accordance with U.S. GAAP. Salton must promptly
notify Westinghouse of a termination of any significant line of credit of or
guarantee of indebtedness by personal guarantor. Should Salton's net worth fall
below $25,000,000 in the aggregate, Westinghouse may terminate this Agreement.
Likewise, Licensor may terminate this Agreement immediately if any of the
following occur: (1) Salton is in default under the provisions of any line of
credit or debt agreement with financing institutions; (2) a sale or transfer of
Salton's assets which, in Westinghouse's opinion, may affect the ability of
Salton to operate its business pursuant to this Agreement; or (3) Salton incurs
net operating losses in the aggregate for two or more consecutive years.
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19.0 - RELATIONSHIP OF PARTIES
19.1 The relationship hereby established between Salton and
Westinghouse is solely that of independent contractors. This Agreement shall not
create an agency, partnership, joint venture or employer/employee relationship,
and nothing hereunder shall be deemed to authorize either party to act for,
represent or bind the other except as expressly provided in this Agreement.
20.0 - AGENTS, FINDERS AND BROKERS
20.1 Each of the parties to this Agreement shall be responsible for the
payment of any and all agent, brokerage and/or finder commissions, fees and
related expenses incurred by it in connection with this Agreement or the
transactions contemplated hereby and agrees to indemnify the other and hold it
harmless from any and all liability (including, without limitation, reasonable
attorney's fees and disbursements paid or incurred in connection with any such
liability) for any agent, brokerage and/or finder commissions, fees and related
expenses claimed by its agent, broker or finder, if any, in connection with this
Agreement or the transactions contemplated hereby. Westinghouse's sole
agent/finder/broker in connection with this Agreement is Leveraged Marketing
Corporation of America ("LMCA") with offices at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000. As between Westinghouse and Salton, any and all commissions,
fees and/or other monies due LMCA in connection with this Agreement shall the
responsibility of Westinghouse.
IN WITNESS WHEREOF and intending to be legally bound, the parties
hereto have caused these presents to be signed by their proper officers
thereunto duly authorized.
SALTON INC. WITNESS:
BY: /s/ Xxxxx Xxxxx
------------------ --------------------------
Xxxxx Xxxxx
Chairman
DATE:
----------------
WESTINGHOUSE ELECTRIC CORPORATION WITNESS:
BY: /s/ Xxxxx X. Xxxxx --------------------------
------------------
Xxxxx X. Xxxxx
Vice President
DATE:
----------------
