EXHIBIT 10.36
[LETTERHEAD]
FARBERWARE INC.
c/o Syratech Corporation
000 XxXxxxxxx Xxxxxxx
Xxxx Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
December 31, 1998
Excel Importing Corp.
d/b/a Retroneu
000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xx. Xxxxxx Xxxxx
President
Dear Sirs and Mesdames:
This will confirm and constitute the agreement between
Farberware Inc., a Delaware corporation ("Farberware"), and Excel Importing
Corp. d/b/a Retroneu, a New York corporation ("Excel"), with respect to the
several agreements set forth below, each of which is being made and entered into
for and in consideration of the other and mutual agreements hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged:
1. Effective as of 12:59 P.M. on December 31, 1998 (the
"Effective Time"), Excel shall surrender and assign, and does hereby surrender
and assign, to Farberware (which hereby consents to and accepts such surrender
and assignment) all of Excel's right, title and interest in and to that certain
Glass Gift/Serveware License Agreement, dated July 15, 1995, between Farberware
Inc.
(now known as Xxxxxxxx Manufacturing Corp. and hereinafter sometimes identified
as "Old Farberware") and Excel, which License Agreement was assigned to and
assumed by Far-B. Acquisition Corp. (now known as Farberware Inc. and
hereinafter sometimes identified as "New Farberware"); and New Farberware, in
turn, subject to Paragraph 4 below, agrees to relieve, and does hereby relieve,
Excel from its obligations under said License Agreement to achieve with respect
to the Contract Year (as defined in said License Agreement) that began on July
1, 1998 and will end on June 30, 1999 the minimum annual net sales listed in the
Schedule set forth in Appendix I to the Glass Gift/Serveware License Agreement.
Nothing herein shall be deemed to relieve Excel of its obligations to pay
royalties on sales of Glass Gift/Serveware sold on or prior to (or as provided
in Paragraph 4 below, after) the Effective Time.
2. As of the Effective Time, Excel shall surrender and assign,
and does hereby surrender and assign to New Farberware (which hereby accepts
such surrender and assignment) all of Excel's right, title and interest in and
to that certain Glass Beverageware License Agreement, dated July 15, 1995,
between Old Farberware and Excel, which License Agreement was assigned to and
assumed by New Farberware; and New Farberware in turn subject to Paragraph 4
below, agrees to relieve, and does hereby relieve, Excel from the obligation to
achieve with respect to the Contract Year (as defined in said License Agreement)
that began on July 1, 1998 and will end on June 30, 1999 the minimum annual net
sales listed in the Schedule set forth in Appendix I to the Glass Beverageware
License Agreement.
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Nothing herein shall be deemed to relieve Excel of its obligation to pay
royalties on sales of Glass Beverageware sold prior to (or as provided in
Paragraph 4 below, after) the Effective Time.
3. The License Agreements referred to in Paragraphs 1 and 2 of
this Letter Agreement are hereinafter sometimes called, collectively, the
"Surrendered Licenses," and each, individually, a "Surrendered License."
4. Excel shall be permitted for a period of up to six (6)
months following the Effective Time to dispose of the Licensee's Products
(defined as provided in each of the Surrendered Licenses) on hand at the end of
such period. During such six (6) months' period the following provisions of each
relevant Surrendered License, viz: Sections 2, (except that the grant therein
shall not be exclusive) 3, 4 (other than the exception thereto which shall be
deemed to have been deleted), 5.a (excluding the first sentence thereof), 7
(except that Licensee's rights shall not be exclusive), 8. 9, 10, 11, 129 13,
14, 15, 16 and 17 shall be applicable (and Excel shall be bound thereby) as
fully as if the Surrendered Licenses had not been surrendered and assigned.
Moreover, the provisions of Sections 10, 11 and 15 thereof shall survive the
surrender and assignment of the Surrendered Licenses indefinitely, and Excel
shall continue to be bound thereby. New Farberware and its Affiliates shall have
no responsibility whatsoever for returns, discounts, allowances or other charge
backs (collectively,, "Charge Backs") authorized by Excel, or taken by customers
(whether or not so authorized) in respect of Licensee's Products sold by Excel,
whether before or after surrender and assignment of the Surrendered Licenses;
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and Excel shall exonerate, indemnify and hold New Farberware and its Affiliates
harmless therefrom and forthwith upon demand shall exonerate, reimburse and
indemnify New Farberware and/or its Affiliates for and in respect of (i) all
such Charge Backs and all costs and expenses paid, or incurred, by New
Farberware and/or its Affiliates in connection therewith, and (ii) any claims
for personal injury or property damage arising out of the manufacture, use, sale
or distribution of those Licensee's Products sold by or on behalf of Excel. In
the event Excel effectively exonerates, indemnifies and/or holds New Farberware
and/or its Affiliates harmless from any such Charge Backs so that New Farberware
and/or New Farberware's Affiliates are fully and unconditionally relieved by the
customer asserting or issuing such Charge Back from any liability or right of
recoupment or set off based thereon, Excel shall be, and be deemed to be, fully
and unconditionally subrogated to all rights' of New Farberware and/or its
Affiliates relating to such Charge Backs. New Farberware and/or its Affiliates
agree, at Excel's expense, to cooperate with Excel in pursuing any such claims
against such customers in respect of such Charge Backs including the execution,
at Excel's expense, of any documents reasonably deemed necessary by Excel for
such purpose. As used herein the terms "Affiliate" and "Affiliates" shall mean
any person or entity controlling, controlled by, or under common control with,
New Farberware.
5. All returns of products sold under either of the
Surrendered Licenses shall be directed to Excel. In the event that any products
sold under either of the Surrendered Licenses are returned to New Farberware
and/or its Affiliates by
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customers or consumers, Excel shall reimburse New Farberware and/or its
Affiliates for their actual costs of handling and shipping the same to Excel via
United Parcel Service. In the event that any products sold under either of the
Surrendered Licenses are sent to New Farberware and/or its Affiliates by
distributors, merchants or wholesalers, New Farberware and/or its Affiliates
shall decline to accept delivery thereof and cause such products to be returned
to the distributors, merchants or wholesalers from whom they were sent, together
with instructions to deal with Excel with respect to the proposed return of such
products.
6. As of the Effective Time, Farberware and Excel shall enter,
and by this Letter Agreement shall be deemed to have entered, into a new license
agreement with respect to certain plastic products referred to in the form of
the License Agreement, which is annexed hereto as Exhibit A.
7. As of the Effective Time, Farberware agrees to grant, and
does hereby grant, to Excel an irrevocable option to enter into an Omnibus
License Agreement in the form thereof annexed hereto as Exhibit B. The Omnibus
License Agreement in such form shall automatically take effect on July 1, 2004
unless not less than thirty (30) days prior to July 1, 2004 Excel gives written
notice to New Farberware (in the manner set forth in Section 9 below) that Excel
does not wish to exercise its option to enter into said Omnibus License
Agreement.
8. As partial consideration for the foregoing grant of option,
Excel shall pay to Farberware a one time option purchase fee of $2,575,000, such
payment
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to be made by wire transfer to an account designated by Farberware upon
execution of this Letter Agreement.
9. New Farberware undertakes and agrees to use commercially
reasonable efforts to grant to Excel a security interest and first priority lien
substantially consistent with the, Outline of Terms of Proposed Security
Interest and Lien annexed hereto as Exhibit C, with such changes therein as New
Farberware shall reasonably request and to which Excel shall consent, which
consent shall not be unreasonably withheld. Excel acknowledges that New
Farberware cannot as of this date grant such security interest and first
priority lien without the prior execution and delivery (i) by NationsBank N.A.,
(which, as Administrative Agent under a certain Loan and Security Agreement,
dated April 16, 1998, has a security interest and first priority lien on all of
the assets of New Farberware) of an agreement (a "Subordination Agreement")
subordinating its security interest and first priority lien in the assets of
Farberware to the extent necessary to enable New Farberware to grant to Excel
the proposed security interest and first priority lien contemplated by this
Section 9 and Exhibit C and (ii) by State Street Bank and Trust Company, as
Indenture Trustee under that certain Indenture dated as of April 16, 1996, of a
waiver or functional equivalent thereof (either thereof being hereinafter called
a "Waiver") of certain covenants set forth in such Indenture so as to enable New
Farberware to grant to Excel such security interest and first priority lien. If
the Subordination Agreement contemplated by clause (i), and/or the Waiver
contemplated by clause (ii) of this Section 9 are not obtained on or before
January 31, 1999, Excel shall have the right,
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exercisable at any time prior to 6:00 P.M. (Eastern time) on February 10, 1999,
to rescind this Letter Agreement in whole (but not in part) and to require New
Farberware forthwith to refund to Excel the amount paid to New Farberware
pursuant to Section 8 of this Letter Agreement, the payment of which refund
shall be guaranteed by Xxxxxxx Xxxxxxxx, individually. Upon the payment of such
refund, this Letter Agreement and all agreements contained herein and/or entered
into pursuant hereto as well as the separate Undertaking of Excel delivered
herewith shall be deemed null and void ab initio and be of no force or effect.
Reference in this Section 9 to NationsBank, N.A. shall be deemed to include any
entity that has succeeded to its business.
10. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
courier or registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
if to the Licensor, at:
Farberware Inc.
c/o Syratech Corporation
000 XxXxxxxxx Xxxxxxx
Xxxx Xxxxxx, XX 00000-0000
Attn: Xx. Xxxxxxx Xxxxxxxx,
Chairman of the Board,
President and Chief Executive Officer
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with a copy to:
Xxxx X. Xxxxxxxx, Esq.
Vice President and General Counsel
Syratech Corporation
000 XxXxxxxxx Xxxxxxx
Xxxx Xxxxxx, XX 00000-0000
if to Excel, at:
Excel Importing Corp.
d/b/a Retroneu.
000 Xxxxxx Xxxx
Xxxxxxxxxx, X.X. 00000
Attn: Xx. Xxxxxx Xxxxx, President
with a copy to
Cohen, Pontani, Xxxxxxxxx & Pavane
000 Xxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attn: Xxxxxx X. Pavane, Esq.
11. This License Agreement shall be governed by the laws of
the State of New York applicable to agreements made and intended to be performed
entirely within such state.
12. Neither party to this Letter Agreement shall issue any
press release with respect to the terms hereof or the terms of any agreement or
proposed agreement referenced herein without the prior written consent of the
other.
If the foregoing correctly states the agreement between us
with respect to the subject matter of this Letter Agreement, please so indicate
by endorsing the
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extra copy of this Letter Agreement and completing the wire transfer of
$2,575,000 to
Farberware as hereinabove provided.
Very truly yours,
FARBERWARE INC.
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------
Xxxxxxx Xxxxxxxx,
Chairman and President
ACCEPTED AND AGREED AS OF
THE DAY AND YEAR FIRST ABOVE WRITTEN.
EXCEL IMPORTING CORP.
d/b/a Retroneu.
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Xxxxxx Xxxxx
President and Chief Executive Officer
GUARANTY
The undersigned, Xxxxxxx Xxxxxxxx, individually, guarantees
the repayment of the amount paid by Excel Importing Corp. ("Excel") to
Farberware Inc. pursuant to Section 8 of the foregoing Agreement in the event
that Excel exercises its right of rescission, if any, under Section 9 thereof
and in the event that Farberware Inc. does not refund the full amount of
$2,575,000 by February 12, 1999. In the event that Farberware Inc. refunds none
or only part of said $2,575,000 by February 12, 1999, Xxxxxxx Xxxxxxxx shall
remain a guarantor as to the deficiency and shall pay such deficiency to Excel
by February 15, 1999. If it becomes necessary for Excel to commence litigation
against Farberware Inc., Xxxxxxx Xxxxxxxx, or both, to collect said $2,575,000,
or any part thereof, Excel will also be entitled to its reasonable attorneys'
fees, costs and disbursements related to such litigation. Until said amount of
$2,575,000 is paid in full to Excel together with any attorneys' fees, costs and
disbursements to which Excel may be entitled hereunder, Farberware and
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Xxxxxxx Xxxxxxxx shall remain jointly and severably liable for all payments due
hereunder.
December 31, 1998
/s/ Xxxxxxx Xxxxxxxx
-------------------------------
Xxxxxxx Xxxxxxxx
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