SUPPLY AND INSPECTION AGREEMENT
This Agreement, dated effective as of March 31, 1998, is by and between XXXXXXX
RADIO CORP., a Delaware corporation, having a place of business at Nine Xxxxx
Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 (hereinafter "Xxxxxxx"), and WW MEXICANA,
S.A. de C.V., a corporation duly organized under the laws of Mexico, having a
place of business at Xxxx. Xxxxxxx Xxxxxx xx. 000 - 0x. piso, Col. Jardines en
la Montana, X.X. 00000, Xxxxxx, X.X. (hereinafter "WW Mexicana").
Xxxxxxx, directly and through affiliates, distributes a variety of consumer
electronics products and microwave oven products in various countries throughout
the world. Xxxxxxx is the owner of certain valuable and well-known trademarks
throughout the world and the goodwill associated therewith;
WW Mexicana, directly and through affiliates, distributes consumer electronics
and other products in various countries throughout the world;
Xxxxxxx and WW Mexicana have entered into a License Agreement of even date
herewith (the "License Agreement") providing for the specified use by WW
Mexicana of the "Xxxxxxx and G-Clef" trademark in connection with the
distribution in the territory of Mexico ("the Territory" as defined in the
License Agreement), of televisions (color and black and white), video cassette
recorders, color television/video cassette recorder combinations, camcorders,
microwave ovens, boom boxes, shelf systems, clock radios, car radios, audio and
video products, Dolby Surround(Registered) Home Theater speaker systems
and compact refrigerators and freezers [more particularly described
in the License Agreement and referred to herein as "the Goods"].
WW Mexicana desires, and the parties have agreed that WW Mexicana
shall, as set forth herein, source through Xxxxxxx, for sale and
distribution within the Territory, certain of the Goods which are
the subject of the License Agreement, together with other products to be agreed
upon in advance by the parties in writing and replacement parts for all of the
foregoing (collectively referred to herein as "the Products");
Xxxxxxx and WW Mexicana desire to set forth their respective agreements to
provide for, among other things, the sourcing and inspection of Products by
Xxxxxxx or its affiliates, and the payment of a fee to Xxxxxxx by WW Mexicana
for these services, as set forth herein;
In consideration of the foregoing premises and mutual agreements set forth
herein, the following is agreed to:
1. DEFINITIONS
1.1 "Affiliate" will mean a person or entity who directly, or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with a specified person or entity.
1.2 "Confidential Information" will mean any and all information, data,
specifications, customer lists, products and services information, sales and
marketing information, vendor data, and proprietary information regarding
Xxxxxxx, XX Mexicana or their respective Affiliates (collectively, the
"Information") except:
(a) Information which at the time of disclosure is in the public
domain;
(b) Information which, after disclosure, through no fault of the
party receiving same, is published or otherwise becomes part of the
public domain;
(c) Information which the receiving party can document as having
been in its possession prior to the time of disclosure to it by the
other party;
(d) Information which the receiving party can document as having been
received by it on a non-confidential basis from a third party; or
(e) Data, specifications, customer lists, products and services
information and vendor data which the receiving party created on
its own or through independent third parties without use of the
Information.
1.3 "Xxxxxxx" means Xxxxxxx Radio Corp. and its Affiliates.
1.4 "Subsidiaries" will mean all direct and indirect subsidiaries of a party.
2. SUPPLY/SOURCING OF PRODUCTS BY XXXXXXX
2.1 Xxxxxxx, directly or through its Affiliates, shall source for WW Mexicana
(subject to force majeure as defined at SECTION 13 and timely payment pursuant
to SECTION 4), Products ordered by WW Mexicana, from time to time, from the date
hereof until the expiration or termination of the License Agreement executed by
the parties simultaneously herewith, or other termination as set forth herein,
in which case Xxxxxxx shall be relieved of its obligations as set forth herein.
WW Mexicana shall source through Xxxxxxx or its Affiliates not less than 75% of
WW Mexicana's video, audio, car stereo and microwave oven purchase requirements
under the License Agreement with Xxxxxxx or an Affiliate of Xxxxxxx. WW Mexicana
shall use its best efforts to achieve the total gross sales projections for the
Products covered by this Agreement, set forth on Appendix A hereto.
2.2 WW Mexicana shall submit to Xxxxxxx from time to time its written request
for purchase information setting forth the details of its request for Products,
including a description of the Products, the quantity of Products desired by WW
Mexicana, the delivery date desired for the Products, the delivery address and
such other terms as the parties shall agree upon.
2.3 Xxxxxxx shall then solicit from manufacturers, suppliers and vendors terms
and conditions for the purchase by and sale to WW Mexicana of such Products.
2.4 Thereafter, Xxxxxxx shall assist WW Mexicana in establishing pricing and
confirming purchase and delivery requests. Xxxxxxx shall then use its best
efforts to confirm the purchase price and delivery date to WW Mexicana.
2.5 Following confirmation of the purchase price and delivery date to WW
Mexicana by Xxxxxxx, XX Mexicana shall issue a purchase order directly to the
manufacturer, supplier or vendor, and simultaneously provide copies of each
purchase order to Xxxxxxx. Xxxxxxx shall use reasonable efforts to have such
manufacturer, supplier or vendor execute and deliver to WW Mexicana a copy of WW
Mexicana's General Specifications in the form to be supplied by WW Mexicana, and
reviewed and approved by Xxxxxxx, annexed as Appendix B. Notwithstanding
Xxxxxxx'x ability to obtain the agreement to or signature on the General
Specifications, WW Mexicana shall, notwithstanding any agreement entered into
with a manufacturer, vendor or supplier of Products, whether oral or written, be
required to make the payments to Xxxxxxx as set forth herein, and shall require
such manufacturer, supplier or vendor, in any such agreement, to indemnify WW
Mexicana and its agents, including Xxxxxxx expressly, for any claims made as a
result of the sale of the Products to WW Mexicana. Such agreement shall include
the language set forth on Appendix C. WW Mexicana shall not enter into any such
agreement with a manufacturer, supplier or vendor which conflicts with the
provisions of this Agreement.
2.6 The purchase price of all Products ordered by, for the benefit of, or at
the direction of WW Mexicana which are sourced by Xxxxxxx from the
manufacturers, vendors or suppliers, shall be paid directly by WW Mexicana to
the manufacturer, vendor or supplier, and WW Mexicana shall make payment in
accordance with the manufacturer's requirements, directly to the manufacturer,
vendor or supplier. Xxxxxxx shall assist WW Mexicana to obtain the agreement of
the manufacturer, vendor or supplier to payment by 60-day sight letter of credit
and, in the event the manufacturer, vendor or supplier agrees to such payment
terms, WW Mexicana shall provide a copy to Xxxxxxx of all such letters of
credit. Letters of credit shall be subject to interest at the rate of 9.0% per
year, or .75% per month (subject to change based upon prime rate). All other
costs related to the sourcing and supply of Products, including, but not limited
to, applicable freight, insurance and tax charges and expenses, shall be borne
solely by WW Mexicana which shall pay such costs directly to the manufacturer,
supplier or vendor. One percent (1%) free parts shall be provided with each
order placed by WW Mexicana.
2.7 Short Term and Other Product Needs; Returns and Refurbished Merchandise.
See attached Schedule 2.7 which is incorporated herein.
3. INSPECTION OF PRODUCTS BY XXXXXXX. In addition to the services to be
performed by Xxxxxxx as set forth above, Xxxxxxx shall perform the following
sourcing and inspection services:
- supply plans for the production of Products and availability of samples
- provide quality control services, including testing inspection and
quality assurance audits in accordance with industry standards
- provide logistical services and support for the scheduling of deliveries
and transportation of the Products
- assist in the cosmetic design of goods and packaging engineering
- identify manufacturers
- investigate manufacturer's ability to manufacture to WW Mexicana's
specifications, including adequacy of manufacturer's
facilities, equipment and knowledge
- ensure that manufacturer has suitable testing equipment and personnel
- ensure manufacturer has adequate internal quality control procedures
- obtain information pertaining to the financial stability of manufacturer
- investigate manufacturer's reputation and ability to ship on a timely
basis
- assist in production scheduling and coordinating with the manufacturer
for the expedition of shipments after order placed by WW Mexicana
- provide Xxxxxxx quality control inspectors to inspect product, including
on manufacturer's premises (Xxxxxxx'x China personnel)
- provide the assistance of Xxxxxxx quality assurance group to inspect
product to AQL levels (including samples and inspection by Xxxxxxx'x
Hong Kong and China personnel)
- perform quality control life test procedures (including the performance
by Emerson Hong Kong personnel)
The above shall be performed by Xxxxxxx with respect to Products sourced by
Xxxxxxx and to be purchased by WW Mexicana, provided, however, that in each
instance WW Mexicana shall provide Xxxxxxx with all information in its
possession necessary or desirable to accomplish the foregoing. It is expressly
understood that WW Mexicana shall be solely responsible, at its sole cost and
expense, for obtaining all governmental permits and approvals customarily
obtained for sale of the Products and such permits and approvals as are required
by the laws of the Territory.
4. COMPENSATION.
4.1 In consideration for the performance by Xxxxxxx of the services described
herein, WW Mexicana shall pay to Xxxxxxx a sourcing fee for all Products ordered
by, for the benefit of, or at the direction of, WW Mexicana, which shall be one
and one-half percent (1.5%) of the Product F.O.B. price per unit. WW Mexicana
shall also pay to Xxxxxxx an inspection fee equal to one-half percent (1/2%) per
unit of the Product F.O.B. price for all Products ordered by, for the benefit
of, or at the direction of, WW Mexicana and for which a purchase order has been
issued by WW Mexicana, from the manufacturer, supplier or vendor or any agent or
contractor thereof.
4.2 The fees set forth in Section 4.1 above shall be billed by Xxxxxxx and
shall be payable upon net 60-day terms. No deduction shall be made for late or
non-conforming shipments or returned Products and all liability shall be against
the manufacturer, vendor or supplier.
5. INSURANCE. WW Mexicana shall cause to be maintained in full force and
effect, at its own cost, insurance for the benefit of Xxxxxxx, in accordance
with the provisions of the License Agreement executed by the parties
simultaneously herewith, and furnish Emerson with certificates of insurance
evidencing the requisite insurance coverage.
6. CONFIDENTIALITY.
6.1 The parties recognize that by reason of this Agreement, a party and its
representatives (including the auditors of a party) may acquire Confidential
Information. Each party will use the Confidential Information received from the
other party solely for the purpose of carrying out this Agreement. Each party
recognizes that all such Confidential Information acquired from the other party
is the property of such other party and that the recipient and its
representatives (including auditors) shall not, during the term of this
Agreement or thereafter, directly or indirectly, use, publish, disseminate or
otherwise disclose any Confidential Information obtained in connection with this
Agreement without the express written consent of a duly authorized officer of
the other party, unless compelled by law or required by applicable securities
rules and regulations or in the written opinion of counsel is required by law to
be disclosed. In such case, each party shall inform the other party as far in
advance as possible prior to making any such disclosure. Notwithstanding the
foregoing, Xxxxxxx shall not be required to inform or obtain the consent of WW
Mexicana for the issuance of any press release which utilizes, refers to or
discloses sales information relating to this Agreement, or for the reporting or
filing of this Agreement in accordance with applicable securities regulations.
Each party shall cause each of their respective officers, directors, agents,
auditors or employees to whom a disclosure of Confidential Information is made,
or any subcontractor, including the manufacturer(s), vendor(s) or supplier(s) of
the Products, to adhere to the terms and conditions of this SECTION 6 as if, and
to the same extent as if, he or she were a party to this Agreement.
6.2 Upon expiration or termination of this Agreement, each party shall return
to the other party all copies of Confidential Information provided by the other
party then in its possession or control and destroy memoranda or other documents
created using Confidential Information and confirm such destruction to the other
party upon such party's written request. Notwithstanding the above, Xxxxxxx
shall not be required to return or destroy financial or other information
relating to the sales and royalties pertaining to this Agreement or the License
Agreement entered into simultaneously herewith, which has become or becomes a
part of Xxxxxxx'x books and records.
7. INDEPENDENT CONTRACTOR. Xxxxxxx will be considered, for all purposes,
an independent contractor and it will not, directly or indirectly, act as an
agent, servant or employee of WW Mexicana or make any commitments or incur any
liabilities on behalf of WW Mexicana without its prior written consent other
than in accordance with the terms of this Agreement. All personnel assigned by
Xxxxxxx to perform the services hereunder will be employees of Xxxxxxx, which
shall pay all salaries and expenses of, and all applicable payroll, withholding
or other taxes relating to such employees.
8. NON-SOLICITATION. So long as Xxxxxxx is acting as supply agent under the
terms hereof and for a period of two (2) years following the termination of this
Agreement, WW Mexicana shall not, unless it pays to Xxxxxxx all fees described
herein as if Xxxxxxx were performing as supply agent, solicit any manufacturers,
suppliers or vendors which sold, manufactured or otherwise distributed the
Products to, for the benefit of, or at the direction of WW Mexicana and as to
which Xxxxxxx has acted as supply agent, provided such manufacturers, suppliers
and vendors have not, prior to the effective date of this Agreement, done
business in any way with WW Mexicana concerning the Products.
9. TERM. Subject to the provisions of Section 10, the term of this
Agreement shall continue for a period of 3 years and 3 months from the effective
date of this Agreement, unless otherwise renewed or terminated by Xxxxxxx in
conjunction with the renewal or termination by Xxxxxxx of the License Agreement
executed by the parties simultaneously herewith.
10. TERMINATION. If either party defaults in performing its material
obligations under this Agreement and fails to cure that default within thirty
(30) days after receiving from the first party a written notice specifying the
default, the first party may terminate this Agreement upon written notice to the
other. Upon termination of this Agreement WW Mexicana shall be liable for all
payments due to Xxxxxxx through the date of termination in accordance with this
Agreement. Notwithstanding any termination of this Agreement, WW Mexicana shall
be required to fulfill its obligations pursuant to the License Agreement
executed by the parties simultaneously herewith, unless such License Agreement
is otherwise terminated by Xxxxxxx as set forth therein.
11. NO WARRANTY. XXXXXXX MAKES NO WARRANTY OF ANY KIND, EXPRESS OR IMPLIED,
CONCERNING THE PRODUCTS, OR THE MERCHANTABILITY OR FITNESS THEREOF FOR ANY
PURPOSE OR USE. IN THE EVENT OF AN EPIDEMIC FAILURE OR THE PRODUCTS FAIL TO
CONFORM TO WW MEXICANA'S SPECIFICATIONS, XXXXXXX SHALL USE ITS BEST EFFORTS TO
ASSIST WW MEXICANA IN ITS EFFORTS TO RECOVER FROM THE MANUFACTURER ANY
ADDITIONAL COSTS INCURRED BY WW MEXICANA AS A RESULT OF SUCH FAILURE. XXXXXXX
SHALL ALSO PROVIDE REASONABLE ASSISTANCE IN ENFORCING THE MANUFACTURER'S
WARRANTY AND WW MEXICANA'S GENERAL SPECIFICATIONS.
In no event shall Xxxxxxx be liable for any incidental, consequential, special
or indirect damages of any nature or kind whatsoever, or for lost profits, in
connection with the transport, storage, sale or use of the Products and for any
claim originating from the sale, marketing, distribution or use of the Products
WW Mexicana shall go directly to the manufacturer, supplier or vendor of
Products. WW Mexicana is not authorized to issue any warranty binding on
Xxxxxxx. Xxxxxxx shall not be liable for any canceled orders, delayed or non-
conforming shipments or any claims or damages flowing therefrom. Xxxxxxx shall
have no liability for products ordered directly by WW Mexicana.
12. INDEMNIFICATION. WW Mexicana shall defend, indemnify and hold harmless
Xxxxxxx, its Affiliates and the employees, agents, officers and directors of
each of Xxxxxxx and its Affiliates from and against any and all claims, demands,
judgments, liability, damages, losses, costs and expenses of any nature
(including attorneys' fees and expenses), including, without limitation, death,
personal injury, property damage or product liability arising from the
manufacture, assembly, packaging and transportation of the Products sold under
the terms hereof, which operations shall be performed by the manufacturer,
supplier or vendor. WW Mexicana hereby represents and warrants to Xxxxxxx that
the Products will not infringe upon or otherwise conflict with the intellectual
property rights of any person. WW Mexicana shall, at its own expense, defend
Xxxxxxx in any and all actions or suits alleging that any Product infringes
another person's intellectual property rights and shall indemnify and hold
Xxxxxxx harmless from all loss, damage, liability and cost and expense incurred
by Xxxxxxx on account of the sale, marketing, distribution or use of the
Products including any alleged infringement. WW Mexicana shall require, in its
General Specifications Agreement, that the manufacturer provide such defense and
indemnification to WW Mexicana and its agents, including Xxxxxxx expressly.
Xxxxxxx may, at its option, elect to participate in any defense of any action in
which it may be a named party. In the event WW Mexicana refuses or cannot defend
any such action or suit, whether following receipt of notice from Xxxxxxx or a
third party, Xxxxxxx may defend such action or suit and WW Mexicana shall
indemnify Xxxxxxx for all costs and expenses related thereto.
Xxxxxxx shall notify WW Mexicana promptly in writing upon receipt by Xxxxxxx of
any notice of any oral or written claim or demand, or any suit, alleging
infringement of any person's intellectual property right or any claim in
connection with the Products and shall permit WW Mexicana to defend, and shall
cooperate fully with WW Mexicana in the defense of, any such action, provided
that WW Mexicana shall reimburse Xxxxxxx for its expenses of such cooperation.
13. FORCE MAJEURE. If any party is rendered wholly or partially unable by
Force Majeure (other than financial) to carry out its obligations under this
Agreement, and if that party gives prompt written notice and details of such
Force Majeure to the other party, the notifying party shall be excused from
performance of its obligations under this Agreement during the continuance of
any inability so caused and for a period thereafter that is reasonably
necessary, taking into account all relevant circumstances, to permit that party
to recommence performance of its obligations. Such cause shall be remedied by
the notifying party as far as possible with reasonable speed and effort, but
neither party shall have any obligation to settle any labor dispute. For the
purposes of this Agreement, "Force Majeure" shall mean acts of God, industrial
disputes, acts of public enemies or terrorists, war, other military conflicts,
blockades, insurrections, riots, epidemics, quarantine restrictions, landslides,
lightning, earthquake, fires, storms, floods, washouts, arrests, civil
disturbances, restraints by or actions of any governmental authority (including
export or security restrictions on information, material, personnel, equipment
or otherwise), national economic crisis (which restricts credit or makes it
inaccessible with a resulting currency devaluation in excess of 20%), breakdowns
of plant or machinery, inability to obtain transport or supplies, and any other
acts or events whatsoever, whether or not similar to the foregoing, not within
the reasonable control of the party claiming excuse from performance, which by
the exercise of due diligence and best reasonable efforts said party shall not
have been able to overcome or avoid without unreasonable expense. The provisions
of this paragraph shall not apply to payment obligations under this Agreement.
In any event, either party may cancel this Agreement, upon written notice, if
the Force Majeure continues for a period of 120 consecutive days.
14. MISCELLANEOUS.
14.1 NO ASSIGNMENT. This Agreement may not be assigned by either party without
the prior written consent of the other party.
14.2 GOVERNING LAW AND JURISDICTION. This Agreement will be governed by and
construed in accordance with the laws of the State New York, U.S.A.,
notwithstanding any choice of laws rules thereof, and WW Mexicana irrevocably
submits to the exclusive jurisdiction of the courts of the State of New York,
and venue shall lie exclusively in New York County, New York. However, it is
expressly understood that this Section shall not preclude Xxxxxxx'x right to
make application for, and seek enforcement of, any judgment or injunctive relief
in any court having jurisdiction.
14.3 NO AMENDMENT. This Agreement may not be changed, amended or modified
except by an instrument in writing executed by each of the parties.
14.4 NO WAIVER. Any waiver on the part of any party of any right or interest
hereunder shall not imply the waiver of any subsequent breach or the waiver of
any other rights. No waiver by either party of a breach hereof or a default
hereunder shall be deemed a waiver by such party of a subsequent breach or
default of like or similar nature.
14.5 SEVERABILITY. Should any provision of this Agreement prove to be invalid
or unenforceable under existing or future law, the remaining provisions of the
Agreement will remain in force in all other respects.
14.6 SURVIVAL. All obligations of the parties set forth in paragraphs 5, 6, 7,
8, 11, 12 and 14 of this Agreement shall survive the expiration or termination
of this Agreement.
14.7 NOTICE. All notices will be in writing and in English and will be served
personally or by registered or certified mail, return receipt requested, or by
overnight courier or by facsimile transmission to each party at its address
herein set forth, or at such other address as each party may provide to all
parties hereto in writing from time to time:
(A) If to Xxxxxxx:
Xxxxxxx Radio Corp.
Nine Xxxxx Xxxx, X.X. Xxx 000
Xxxxxxxxxx, Xxx Xxxxxx 07054-0430
Attn: Legal Department
[Facsimile No. (000) 000-0000]
(B) If to WW Mexicana:
WW Mexicana, S.A. de X.X.
Xxxx. Xxxxxxx Xxxxxx Xx. 000 - 0x. piso
Col. Jardines en la Montana, X.X. 00000
Xxxxxx, D.F.
Attn.: Xxxxxxxx Xxxxxxx-Xxxxxxx M., President
[Facsimile No. (52)(0) 000-0000]
Any such notice will be effective upon actual receipt or three (3) days after it
is deposited with the United States Postal Service, postage prepaid, properly
addressed and certified, whichever occurs first.
14.8 ENTIRE AGREEMENT. Together with the License Agreement executed by the
parties simultaneously herewith, all documents referenced therein, and all
documents annexed thereto, this Agreement and exhibits hereto shall constitute
the entire and sole agreement and understanding of all parties hereto and
supersede all other agreements, understandings, and communications, whether oral
or written, regarding the subject matter hereof and of the License Agreement.
14.9 EXECUTION. This Agreement may be executed in any number of
counterparts, and by facsimile, but all counterparts and facsimiles hereof will
together constitute but one agreement. In proving this Agreement, it will not
be necessary to produce or account for more than one counterpart executed by all
of the parties.
14.10 PRESS RELEASES. WW Mexicana shall not disseminate any press release
or other announcement relating to the transactions contemplated by this
Agreement without Xxxxxxx'x prior written consent as to the contents thereof.
14.11 PAYMENTS. All payments to be made pursuant to the terms of this
Agreement shall be made directly by WW Mexicana to Xxxxxxx, or a designated
affiliate of Xxxxxxx, and shall be made in U.S. dollars.
14.12 ENGLISH LANGUAGE. The parties have requested that this Agreement be
drawn up and interpreted in the English language.
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
representative of each party effective as of the date set forth above.
XXXXXXX RADIO CORP. WW MEXICANA, S.A. DE C.V.
By: /s/ Xxxx X. Xxxx By: /s/ Xxxxxxxx Xxxxxxx-Xxxxxxx M.
Xxxx X. Xxxx Xxxxxxxx Xxxxxxx-Xxxxxxx M.
Senior Vice President- President
International
