SUPPLY AND INSPECTION AGREEMENT
This Agreement, dated effective as of December 31, 1996, is by and between
EMERSON RADIO CORP., a Delaware corporation, having a place of business at Nine
Entin Road, Parsippany, New Jersey 07054 (hereinafter "Emerson"), and Cargil
International Corp., a Florida corporation, having a place of business at 6812
N.W. 77th Court, Miami, Florida 33166 (hereinafter "Cargil").
Emerson, directly and through affiliates, distributes a variety of consumer
electronics products and microwave oven products in various countries throughout
the world. Emerson is the owner of certain valuable and well-known trademarks
throughout the world and the goodwill associated therewith;
Cargil, directly and through affiliates, distributes consumer electronics
and other products in various countries throughout the world;
Emerson and Cargil have entered into a License and Exclusive Distribution
Agreement of even date herewith (the "License Agreement") providing for the
specified use by Cargil of the "Emerson and G-Clef" trademark in connection with
the distribution in the territories of Central America, South America and the
Caribbean ("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, telephones, business equipment and
accessories for telephone (including cellular), computer, audio and video
products [more particularly described in the License Agreement and referred to
herein as "the Goods"]. Cargil desires, and the parties have agreed that Cargil
shall, as set forth herein, source through Emerson, 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");
Emerson and Cargil desire to set forth their respective agreements to
provide for, among other things, the sourcing and inspection of Products for
Cargil by Emerson or its affiliates, and the payment of a fee to Emerson by
Cargil 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
Emerson, Cargil 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 "Emerson" means Emerson Radio Corp. and its Affiliates.
1.4 "Subsidiaries" will mean all direct and indirect subsidiaries of a
party.
2. SUPPLY/SOURCING OF PRODUCTS BY EMERSON
2.1 Emerson, directly or through its Affiliates, shall source for Cargil
(subject to force majeure as defined at Section 13 and timely payment pursuant
to Section 4), Products ordered by Cargil, 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 Emerson shall be relieved of its obligations as set forth herein.
Cargil shall source through Emerson or its Affiliates not less than 75% of
Cargil's purchase requirements under the License Agreement with Emerson or an
Affiliate of Emerson. Cargil shall use its best efforts to achieve the total
gross sales projections set forth on Appendix A hereto.
2.2 In furtherance of this Agreement and the License Agreement, Cargil
shall submit to Emerson 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 Cargil, the
delivery date desired for the Products, the delivery address and such other
terms as the parties shall agree upon.
2.3 Emerson shall then solicit from manufacturers, suppliers and vendors
terms and conditions for the purchase by and sale to Cargil of such Products.
2.4 Thereafter, Emerson shall, in addition to other services set forth
herein, assist Cargil in establishing pricing and confirming purchase and
delivery requests. Emerson shall then use its best efforts to confirm the
purchase price and delivery date to Cargil.
2.5 Following confirmation of the purchase price and delivery date to
Cargil by Emerson, Cargil shall issue a purchase order to the manufacturer,
supplier or vendor. Simultaneously with the provision of a purchase order to the
manufacturer, supplier or vendor, Cargil shall provide copies of each purchase
order to Emerson and Emerson shall use reasonable efforts to have such
manufacturer, supplier or vendor execute and deliver to Cargil a copy of
Cargil's General Buying Conditions Agreement in the form [to be supplied by
Cargil, and reviewed and approved by Emerson] annexed as Appendix B.
Notwithstanding Emerson's ability to obtain the agreement to or signature on the
General Buying Conditions Agreement, Cargil 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 Emerson as set forth herein, and
shall require such manufacturer, supplier or vendor, in any such agreement, to
indemnify Cargil and its agents, including Emerson expressly, for any claims
made as a result of the sale of the Products to Cargil. Such agreement shall
include the language set forth on Appendix C. Cargil 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 Cargil which are sourced by Emerson from the manufacturers,
vendors or suppliers, shall be paid directly by Cargil to the manufacturer,
vendor or supplier. 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 Cargil which shall pay such costs
directly to the manufacturer, supplier or vendor.
2.7 Short Term Product Needs. See Schedule 2.7.
3. INSPECTION OF PRODUCTS BY EMERSON. In addition to the services to be
performed by Emerson as set forth above, Emerson 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 Cargil'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 Cargil
- provide Emerson quality control inspectors to inspect product,
including on manufacturer's premises (Emerson's China
personnel)
- provide the assistance of Emerson quality assurance group to
inspect product to AQL levels (including samples and inspection by
Emerson's 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 Emerson with respect to Products sourced by
Emerson and to be purchased by Cargil, provided, however, that in each instance
Cargil shall provide Emerson with all information in the possession of Cargil
necessary or desirable to accomplish the foregoing.
4. COMPENSATION.
4.1 [redacted]
4.2 [redacted]
5. INSURANCE. Cargil shall cause to be maintained in full force and
effect, at its own cost, insurance for the benefit of Emerson, in accordance
with Schedule 17 of the License Agreement executed by the parties simultaneously
herewith, and furnish Emerson with certificates of insurance evidencing the
requisite insurance coverage. Cargil shall defend, indemnify and hold harmless
Emerson, its Affiliates and the employees, agents, officers and directors of
each of Emerson 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.
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.
6.2 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.
6.3 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,
Emerson 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 Emerson's books and records.
7. INDEPENDENT CONTRACTOR. Emerson will be considered, for all
purposes, an independent contractor and it will not, directly or indirectly, act
as an agent, servant or employee of Cargil or make any commitments or incur any
liabilities on behalf of Cargil without its prior written consent other than in
accordance with the terms of this Agreement.
All personnel assigned by Emerson to perform the services hereunder will be
employees of Emerson, 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 Emerson is acting as supply agent under
the terms hereof and for a period of two (2) years following the termination of
this Agreement, Cargil shall not, unless it pays to Emerson all fees described
herein as if Emerson 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 Cargil and as to which
Emerson 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 Cargil concerning the Products.
9. TERM. Subject to the provisions of Section 10, the term of this
Agreement shall continue for a period of 5 years from the effective date of this
Agreement, unless otherwise renewed or terminated by Emerson in conjunction with
the renewal or termination by Emerson 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 Cargil shall be liable for all
payments due to Emerson through the date of termination in accordance with this
Agreement. Notwithstanding any termination of this Agreement, Cargil 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 Emerson as set forth therein.
11. NO WARRANTY. EXCEPT THAT EMERSON WARRANTS THAT ANY COSMETIC DESIGN
CREATED FOR THE PRODUCTS BY EMERSON AND USE BY CARGIL OF THE EMERSON TRADEMARKS
ON THE PRODUCTS (IN ACCORDANCE WITH, AND AS IS MORE SPECIFICALLY SET FORTH IN,
THE TERMS OF THE LICENSE AND EXCLUSIVE DISTRIBUTION AGREEMENT EXECUTED
SIMULTANEOUSLY HEREWITH BY THE PARTIES HERETO), SHALL NOT INFRINGE ON THE
INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY, EMERSON MAKES NO WARRANTY OF ANY
KIND, EXPRESS OR IMPLIED, CONCERNING THE PRODUCTS, OR THE MERCHANTABILITY OR
FITNESS THEREOF FOR ANY PURPOSE OR USE. THE LIMITED WARRANTY PROVIDED FOR HEREIN
IS FOR THE SOLE BENEFIT OF CARGIL AND CARGIL SHALL NOT EXTEND SUCH WARRANTY.
In no event shall Emerson 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 Cargil shall go directly to the manufacturer, supplier or vendor of
Products. Cargil is not authorized to issue any warranty binding on Emerson.
Emerson shall not be liable for any canceled orders, delayed or non-conforming
shipments or any claims or damages flowing therefrom. Emerson shall have no
liability for products ordered directly by Cargil. In the event that the
Products fail to conform to Cargil's specifications, Emerson shall use its best
efforts to assist Cargil in Cargil's efforts to recover from the manufacturer
any additional costs incurred by Cargil as a result of such failure. Emerson
shall also provide reasonable assistance in enforcing the manufacturer's
warranty.
12. INDEMNIFICATION. With the exclusion of any claim arising solely
from the cosmetic design of Emerson-designed products, Cargil hereby represents
and warrants to Emerson that the Products will not infringe upon or otherwise
conflict with the intellectual property rights of any person. Except as
otherwise set forth herein, Cargil shall, at its own expense, defend Emerson in
any and all actions or suits alleging that any Product infringes another
person's intellectual property rights and shall indemnify and hold Emerson
harmless from all loss, damage, liability and cost and expense incurred by
Emerson on account of the sale, marketing, distribution or use of the Products
including any alleged infringement. Emerson may, at its option, elect to
participate in any defense of any action in which it may be a named party.
Emerson shall have the right, with respect to infringement of cosmetic designs
only, to cure any such infringement with respect to a Product by substituting
parts in, or otherwise modifying, such Product or by paying a royalty to the
person claiming such infringement. In the event Cargil refuses or cannot defend
any such action or suit, whether following receipt of notice from Emerson or a
third party, Emerson may defend such action or suit and Cargil shall indemnify
Emerson for all costs and expenses related thereto.
Emerson shall notify Cargil promptly in writing upon receipt by Emerson 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 Cargil to defend, and shall
cooperate fully with Cargil in the defense of, any such action, provided that
Cargil shall reimburse Emerson for its expenses of such cooperation. Emerson
shall not take any action or make any statement which acknowledges infringement
of any intellectual property rights not owned or licensed by Cargil without
Cargil's prior written consent.
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), 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 New Jersey and Cargil irrevocably
submits to the exclusive jurisdiction of the courts of New Jersey, and venue
shall lie exclusively in Morris County, New Jersey. However, it is expressly
understood that this Section shall not preclude Emerson's right to make
application for, and seek enforcement of, 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 Emerson:
Emerson Radio Corp.
Nine Entin Road, P.O. Box 430
Parsippany, New Jersey 07054-0430
Attn: Eugene I. Davis, President
[Facsimile No. (201) 428-2019]
With a copy to:
Wolff & Samson, P.A.
5 Becker Farm Road
Roseland, NJ 07068
Attn.: Jeffrey M. Davis, Esq.
[Facsimile No. (201) 740-1407]
(B) If to Cargil:
Cargil International Corp.
6812 N.W. 77th Court
Miami, FL 33166
Attn.: Giraldo Leyva
[Facsimile No. (305) 718-0707]
With a copy to:
Baker & McKenzie
701 Brickell Avenue
Suite 16
Miami, Florida 33131
Attention: Charles Lea Hume, Esq.
[Facsimile No. (305) 789-8953]
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. Cargil shall not disseminate any press
release or other announcement relating to the transactions contemplated by this
Agreement without Emerson's 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 Cargil to Emerson, or a designated
affiliate of Emerson, 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.
EMERSON RADIO CORP. CARGIL INTERNATIONAL CORP.
By: /s/ Eugene I. Davis By: /s/ Giraldo Leyva
Name: Eugene I. Davis Name: Giraldo Leyva
Title: President Title: President