DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (this "AGREEMENT") is made and entered into as
of May 29, 2002 by and between TOSHIBA CORPORATION, a Japanese corporation,
acting through its Mobile Communications Company ("TOSHIBA"), and AUDIOVOX
COMMUNICATIONS CORP., a Delaware corporation ("ACC"). Toshiba and ACC are
referred to herein collectively as the "PARTIES" and each individually as a
"PARTY".
RECITALS
A. The Parties and Audiovox Corporation have entered into a Securities
Purchase Agreement (the "SECURITIES PURCHASE AGREEMENT") and a Stockholders
Agreement (the "STOCKHOLDERS AGREEMENT"), each dated as of the date hereof. At
the Closing under the Securities Purchase Agreement occurring today, Toshiba is
acquiring shares of Class B Common Stock of ACC and a non-negotiable
subordinated convertible promissory note of ACC.
B. As contemplated by the Securities Purchase Agreement, the Parties desire
to enter into this Agreement with respect to ACC's distribution of Toshiba
Products in the Territory as provided hereunder.
C. Certain terms used herein have the meanings set forth for such terms in
the text of this Agreement or in Annex I hereto.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Parties hereby agree as follows:
AGREEMENT
1. DEFINITIONS.
For purposes of this Agreement:
1.1 "PRODUCTS" means mobile cellular handset systems and other wireless
communications devices that use the infrastructure of wireless communication
carriers ("CARRIERS") and are sold through the Carrier distribution channel. The
"CARRIER DISTRIBUTION CHANNEL" is comprised of:
(A) A direct channel through which ACC sells Products to
Carriers. The direct channel consists of (i) retail stores owned by
Carriers and (ii) the Carriers' sales organizations for corporate
enterprise customers; and
(B) An indirect channel through which ACC sells Products to
retailers, distributors and agents that are authorized by Carriers to
activate Products, to sell air time on behalf of Carriers, to promote
Products to end users and to perform other activities that support the
sale of Products to end users on behalf of Carriers.
Exhibit 99.4
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1.2 "TOSHIBA PRODUCTS" means all Products that are (a) marketed and
procured by the Mobile Communications Company of Toshiba, an in-house company of
Toshiba that conducts the business of mobile cellular handsets and Personal
Digital Assistants (including any successor of such Company, through internal
reorganization or otherwise) ("MCC"), (b) marketed, developed and procured by
MCC, or (c) marketed, developed and manufactured by MCC from time to time during
the term of this Agreement.
1.3 "TERRITORY" means the United States, Canada, Mexico and all countries
in Central America, the Caribbean and South America.
2. APPOINTMENT OF ACC.
Toshiba hereby appoints ACC as Toshiba's exclusive distributor for the sale
of Toshiba Products in the Territory, and ACC hereby accepts such appointment.
ACC shall use its commercially reasonable, good faith efforts to include
entities owned in part by Toshiba (including SEMP Toshiba) in the distribution
of Toshiba Products in Brazil. ACC shall not distribute any Toshiba Products
except in the Territory in accordance with this Agreement.
3. MINIMUM PURCHASE TARGETS.
3.1 GENERAL. The Parties shall establish annual minimum purchase targets
("MINIMUM PURCHASE TARGETS") for ACC's purchase of Toshiba Products for each
fiscal year during the term hereof. Separate Minimum Purchase Targets shall be
established for Toshiba Products in the CDMA, GPRS and PDA Product categories
(and in any new or replacement categories that the Parties may agree to in
connection with technology or other applicable Product developments) in the
following regions: (a) U.S. and Canada; (b) Mexico; (c) Brazil; and (d) Central
America, the Caribbean and South America other than Mexico and Brazil.
3.2 ESTABLISHMENT. The Minimum Purchase Targets shall be based upon
intended market size, the applicable roadmap and concept for Products described
in Section 7.3, and the applicable Product Plan described in Section 7.4. The
first effective Minimum Purchase Targets under this Agreement shall be for the
fiscal year ending November 30, 2003, and are contained in Exhibit 3.2 attached
hereto. The Parties shall establish Minimum Purchase Targets for each subsequent
fiscal year prior to the commencement of such fiscal year. If the Parties are
unable to agree on the Minimum Purchase Targets for any fiscal year prior to the
beginning of the fiscal year, the Parties shall submit the dispute to
arbitration pursuant to Section 18.2. Until the new Minimum Purchase Targets are
determined through arbitration, the Minimum Purchase Targets for the prior
fiscal year will apply to the subsequent fiscal year, as equitably adjusted in
case of force majeure circumstances as described in Section 18.16.
3.3 COMPETITIVE TOSHIBA PRODUCTS. The condition that ACC must satisfy the
Minimum Purchase Targets applicable to each Toshiba Product category in a region
of the Territory to maintain its exclusive distribution rights for such Toshiba
Product category in such
Exhibit 99.4
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region shall be subject to the reasonable competitiveness of the Toshiba
Products in such category with respect to feature, function, quality and price,
the approval of such Toshiba Products by the intended Carrier customers, and
Toshiba's timely supply of such Toshiba Products in sufficient quantity in
accordance with the terms hereof.
3.4 CONVERSION TO NON-EXCLUSIVE DISTRIBUTORSHIP. If ACC fails to meet the
applicable Minimum Purchase Target for a category of Toshiba Products in a
geographical territory, Toshiba shall have the right (which right is to be
exercised within thirty (30) days after the end of the fiscal year for which
such Minimum Purchase Target has not been met) to convert ACC's exclusive
distributorship for such category of Toshiba Product in such geographical
territory to a non-exclusive distributorship for the remaining term of this
Agreement.
4. MOST PREFERRED SUPPLIER.
Toshiba shall be the most preferred supplier of Products to ACC. ACC shall
use Toshiba Products in preference to the Products of all other suppliers,
subject to Toshiba's ability to reasonably meet ACC's Product requirements with
respect to feature, function, cost, quality, quantity of supply and availability
on reasonably competitive terms.
5. BRANDING.
All Toshiba Products supplied by Toshiba hereunder shall be Toshiba-branded
Products; provided that, at Toshiba's direction and subject to Toshiba's
consent, certain Toshiba Products may bear the brands of Carrier customers
and/or ACC, and certain Toshiba Products may not bear the Toshiba brand. ACC
shall have the right to utilize other brands on non-Toshiba Products.
6. MEETINGS; TOSHIBA'S OFFICER DESIGNEES.
6.1 TOSHIBA'S OFFICER DESIGNEES. Toshiba shall have the right to designate
individuals as officers of ACC in the following capacities: Executive Vice
President (the "EVP"); Chief Technology Officer for Toshiba Products; and Vice
President for Merchandizing -- Toshiba Products. Toshiba shall also have the
right to remove and replace its designees at any time in its sole discretion
upon written notice to ACC. Such officers designated by Toshiba shall have the
duties set forth on Schedule 6.1. ACC's board of directors shall appoint
Toshiba's officer designees to their positions, subject to the following: such
officers shall be (a) qualified and competent in their positions in terms of
experience, expertise, moral character, ability to interface with other ACC
officers and employees and other relevant attributes, (b) unaffiliated with a
competitor of ACC, (c) not impose an unreasonable expense on ACC, and (d) have
the approval of ACC's Chief Executive Officer (who may not withhold or withdraw
his approval without reasonable cause).
6.2 EXECUTIVE MEETINGS. The CEO, the EVP and the Chief Financial Officer of
ACC shall hold executive meetings to review, discuss and reach conclusions on
significant matters
Exhibit 99.4
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relating to ACC's supply relationship with Toshiba, which shall generally
include the matters identified on Schedule 6.2. Such executive meetings shall be
held at least monthly and at such other times as may be requested by the CEO,
the EVP or the Chief Financial Officer, upon reasonable prior notice to the
other two executives.
6.3 PURCHASE, SALE AND INVENTORY MEETINGS. To enhance supply chain
management and other operational matters relating to the Parties' supply
relationship hereunder, ACC shall hold meetings to discuss purchase, sale,
inventory (including inventory held by Carriers) and related matters and
activities. The meetings shall generally cover past performance and projected
future performance over the succeeding six-month period, and ACC's projected
need for Products during such period. The meetings shall occur at least monthly
and at such other times as may be requested by the CEO or the EVP. The EVP and
other staff members designated by Toshiba shall be entitled to attend and
participate in such meetings.
6.4 PERFORMANCE AND FORECAST MEETINGS. ACC shall hold meetings to review
and confirm the business, operational and financial performance (including
profit and loss performance) of ACC, and ACC's forecasted future performance in
these areas. Such meetings shall occur at least monthly and at such other times
as may be specified by ACC's CEO, EVP or Chief Financial Officer. The EVP and
other staff members designated by Toshiba shall be entitled to attend and
participate in such meetings.
7. PRODUCT PLANNING.
7.1 PRODUCT MEETINGS. The Parties shall hold meetings to review and address
the matters discussed below in this Section 7 and other relevant matters
concerning the Toshiba Products to be supplied by Toshiba for distribution by
ACC hereunder. Such meetings shall occur at least quarterly and at such other
times as may be specified by the Parties. Such meetings shall be attended by the
CEO, the EVP and other appropriate representatives of the Parties.
7.2 CARRIERS. The Parties recognize that ACC's relationships and close
coordination with Carriers are critical to meeting the Carriers' Product needs
and increasing the sales of Toshiba Products to Carriers. The Parties shall
jointly cooperate in working with Carriers to develop Toshiba Product plans
(including plans for next generation Toshiba Products), effective distribution
practices and other activities to enhance the success of the Parties' supply
relationship and the sale of Toshiba Products to Carriers.
7.3 TOSHIBA PRODUCT ROADMAP AND CONCEPT. The Parties shall jointly develop
a roadmap and concept for the Toshiba Products to be distributed by ACC, taking
into account ACC's overall Product roadmap and concept in order to give effect
to Toshiba's most preferred supplier rights set forth in Section 4. The roadmap
and concept shall cover the introduction schedule for Toshiba Products
distributed by ACC; target pricing; product features; performance
specifications; product quantity; and other important aspects of Toshiba Product
development. The roadmap and concept shall be reviewed and updated quarterly,
and shall generally cover a
Exhibit 99.4
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rolling three-year period following the quarter during which the review occurs.
7.4 PRODUCT PLAN. The Parties shall jointly develop a plan for the supply
of Toshiba Products hereunder (the "PRODUCT PLAN"). The Product Plan shall
include a one-year rolling forecast of Toshiba's expected supply of Toshiba
Products hereunder, setting forth the anticipated price, quantity and other
material information relating to the applicable Toshiba Products. The Product
Plan will be reviewed and updated by the Parties at least on a quarterly basis.
8. PRICING AND PAYMENT.
8.1 PRICING. The Parties anticipate that pricing for Toshiba Products
supplied hereunder shall be based upon market conditions existing at the time
that the Parties enter into binding purchase orders for the applicable Toshiba
Products. Final pricing shall be as set forth in the binding purchase orders for
Toshiba Products; provided that the Parties shall discuss in good faith on a
case by case basis any pricing revisions that may be appropriate based on a
significant change in market conditions.
8.2 PAYMENT. Toshiba shall issue invoices to ACC for all Toshiba Products
supplied hereunder. ACC shall make payment of such invoices within thirty (30)
days of documents against acceptance for the applicable Toshiba Products.
8.3 DUTIES AND CHARGES. ACC shall be responsible, at its sole expense, for
all import duties and custom charges with respect to its importation of Toshiba
Products in the Territory.
9. ADDITIONAL AGREEMENTS.
9.1 CARRIER ACCEPTANCE OF TOSHIBA PRODUCTS. In order to accelerate the time
to market of Toshiba Products, ACC and Toshiba shall consult, cooperate and
jointly participate in all activities relating to Carrier testing and acceptance
of Toshiba Products.
9.2 QUALITY CONTROL FOR NON-TOSHIBA PRODUCTS. ACC shall give consideration
in good faith to any reasonable standards of quality control that Toshiba may
recommend for non- Toshiba Products. Toshiba acknowledges and agrees, however,
that it shall have no other involvement in this aspect of ACC's business.
9.3 PRODUCT LIABILITY INSURANCE. Toshiba shall maintain at all times a
policy of product liability insurance covering the Toshiba Products supplied
hereunder with coverage amounts and other terms and conditions no less favorable
to ACC than those applicable to Toshiba's products liability insurance policy in
effect on the date hereof.
10. INTELLECTUAL PROPERTY RIGHTS.
Each Party agrees to acknowledge at all times the other Party's exclusive
right, title and interest in and to any existing and future patents, patent
applications, trademarks, trade secrets,
Exhibit 99.4
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copyrights and other intellectual property which the other Party has claimed
and/or registered with respect to Products (the "INTELLECTUAL PROPERTY RIGHTS").
Each Party agrees to promptly bring to the other Party's attention any
activities in the Territory that a Party becomes aware of and believes may
constitute an infringement of the other Party's Intellectual Property Rights.
11. PURCHASE ORDERS AND FORECASTS.
11.1 PURCHASE ORDERS. ACC shall order Toshiba Products by issuing firm
purchase orders to Toshiba as contemplated by Section 11.2. Each purchase order
shall be binding upon the Parties upon acceptance by Toshiba. Each purchase
order shall be in the form of Exhibit 11.1 or another form reasonably acceptable
to the Parties. Toshiba's acceptance shall be evidenced by Toshiba issuing to
ACC an acknowledgement within seven (7) Business Days after Toshiba's receipt of
the applicable purchase order; provided that Toshiba shall be deemed to have
accepted any purchase order that it has not rejected in writing within such
seven (7) Business Day period after receipt. Each purchase order shall specify
the Toshiba Product, price, quantity, sale amount, delivery schedule and any
other information reasonably requested by Toshiba, and shall be delivered to
Toshiba in accordance with Section 18.3. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions
of a purchase order, the terms and conditions of this Agreement shall prevail.
11.2 EXPECTED TIMING OF PURCHASE ORDERS AND FORECASTS. The Parties
generally contemplate that within five (5) Business Days following the beginning
of each month during the term hereof (each, a "BASE MONTH"), ACC shall issue to
Toshiba (1) one or more purchase orders for Toshiba Products to be delivered to
ACC during the third month following the Base Month, subject in each case to
Toshiba's acceptance of the purchase order(s) in accordance with Section 11.1,
and (2) a rolling, non-binding forecast for ACC's expected demand for Toshiba
Products for the fourth, fifth and sixth months following the Base Month. As an
example, within five (5) Business Days following January 1, 2003, ACC will
deliver firm purchase orders for Toshiba Products to be delivered during April
2003, and a non-binding forecast for Toshiba Products to be delivered during
May, June and July 2003.
12. DELIVERY AND RISK OF LOSS.
Delivery of all Toshiba Products purchased by ACC shall be made F.O.B. at a
location agreed upon by the Parties, in accordance with the terms and conditions
of INCOTERMS in the version effective as of the date of this Agreement. In case
INCOTERMS is revised following the date hereof, at the request of either Party,
the Parties shall discuss in good faith whether to incorporate any applicable
revised provisions of INCOTERMS as part of this Section 12.
Exhibit 99.4
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13. PRODUCT MATTERS AND EPIDEMIC FAILURE.
13.1 PRODUCT MATTERS.
(A) Toshiba shall warrant and be responsible for the Toshiba
Products as to testing, quality, design, performance and workmanship.
(B) After the Carrier customer has approved the applicable
Toshiba Products for purchase and the Toshiba Products have been
distributed to end users, ACC shall be responsible for warranty
repairs and Toshiba shall provide support in the form of training,
manuals, spare parts lists and related matters.
13.2 EPIDEMIC FAILURE.
(A) In addition to the Parties' respective obligations under
Section 13.1, and provided that ACC notifies Toshiba in writing of an
Epidemic Failure promptly after becoming aware of the Epidemic Failure
and also provides Toshiba with the evidence or information that ACC
has on the subject, Toshiba shall promptly investigate the situation
so that if an Epidemic Failure has occurred, the Parties can consult
as soon as possible on the best way to resolve the situation to the
customer's satisfaction while minimizing the damages that might
result. If an Epidemic Failure occurs, Toshiba shall, in consultation
with ACC and at Toshiba's election:
(i) repair the defective Toshiba Products at Toshiba's cost; or
(ii) replace the defective Toshiba Products at Toshiba's cost.
Subject to Section 13.2(c), Toshiba shall also reimburse ACC for its
reasonable expenses actually incurred in addressing the Epidemic Failure.
(B) An "EPIDEMIC FAILURE" shall occur if one percent (1%) or more
of the total units of any Toshiba Products (such units to be
identified by lot number, manufacturer product date code or other
reasonable method) delivered by Toshiba to ACC reveal identical
defects in material, design or workmanship.
(C) In case of an Epidemic Failure, ACC shall be responsible for
the first one percent (1%) of the units that are the subject of the
Epidemic Failure, and Toshiba shall be responsible for the remaining
defective units in accordance with this Section 13.2.
(D) Except for any additional actions that a Party may agree to
take in resolving a particular Epidemic Failure, each Party's
responsibility for an Epidemic Failure shall be limited to its
obligations set forth in this Section 13.2.
13.3 EXCLUSIONS. Toshiba's obligations pursuant to this Section 13 shall
not apply if the applicable Toshiba Product(s) fail to properly perform because
of any of the following:
Exhibit 99.4
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(A) The Toshiba Products are subjected to abnormal use or
conditions, accident, mishandling, neglect, unauthorized alteration,
misuse, or improper installation, repair or storage;
(B) The mechanical serial numbers or electronic serial numbers of
the Toshiba Products have been removed, altered or defaced;
(C) Damage from exposure to moisture, humidity, excessive
temperatures or extreme environmental conditions;
(D) Damage resulting from connection to or use of any accessory
or other product not approved or authorized by Toshiba; or
(E) Damage resulting from external causes such as fire, flooding,
dirt, sand, weather conditions, battery leakage, blown fuse, theft or
improper use of any electrical source.
13.4 GENERAL DISCLAIMER OF WARRANTY. THE WARRANTIES AND OBLIGATIONS OF TOSHIBA
SET FORTH IN THIS SECTION 13 AND SECTION 15 CONSTITUTE TOSHIBA'S SOLE
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCTS SUPPLIED BY TOSHIBA
HEREUNDER. THE WARRANTIES AND OBLIGATIONS CONTAINED IN THIS SECTION 13 AND
SECTION 15 ARE IN LIEU OF, AND TOSHIBA EXPRESSLY DISCLAIMS AND WAIVES, ALL OTHER
REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR ARISING BY COURSE
OF DEALING OR PERFORMANCE, CUSTOM, USAGE IN THE TRADE OR OTHERWISE, INCLUDING
WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE,
NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR USE.
14. GOOD FAITH EFFORTS.
14.1 TOSHIBA. During the term of this Agreement, Toshiba shall use its
commercially reasonable, good faith efforts to supply competitive Toshiba
Products to ACC and to obtain approval of such Toshiba Products by applicable
Carriers. Toshiba's obligations under this Section 14.1 shall not apply to any
Toshiba Products and/or territories as to which ACC does not have exclusive
distribution rights hereunder.
14.2 ACC. During the term of this Agreement, ACC shall use its commercially
reasonable, good faith efforts to market and promote the sale of Toshiba
Products to Carriers and to obtain approval of such Toshiba Products by
applicable Carriers.
15. TRADEMARKS AND OTHER RIGHTS.
15.1 USE OF TOSHIBA NAME. Toshiba hereby permits ACC to use the trademark
Exhibit 99.4
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"Toshiba" on a non-exclusive and nontransferable basis solely in connection with
the sale, distribution and service of Toshiba Products in the Territory during
the term of this Agreement. Such use shall be made in accordance with the
guidelines furnished by Toshiba, such as "Visual Corporate Identity Manual" and
"Advertising Manual". ACC shall use its commercially reasonably, good faith
efforts to further the goodwill and reputation of Toshiba Products and the
Toshiba brand. Upon the expiration or termination of this Agreement for any
reason whatsoever, ACC shall immediately discontinue the use of such trademark.
15.2 OTHER USE OF TOSHIBA NAME. Any use of the trademark "Toshiba" by ACC
other than that in accordance with Section 15.1 shall be permitted only upon
Toshiba's prior written consent and in accordance with Toshiba's directions.
15.3 NO REGISTRATION. ACC shall not apply for the registration of any
trademark, other identifying mark, emblem or design appearing in or on the
Toshiba Products or any imitation thereof. In addition, ACC shall not apply for
the registration of any trade name or corporate name including the word
"Toshiba".
15.4 ALLEGED INFRINGEMENT BY TOSHIBA PRODUCT. In the event ACC receives a
claim from any third party alleging infringement by the Toshiba Products of any
trademark, other identifying mark, design, utility model, copyright, patent or
other intellectual property right, ACC shall promptly notify Toshiba thereof
and, at Toshiba's request, direction and expense, reasonably cooperate in the
resolution of the claim.
15.5 PATENT PROTECTION.
(A) Toshiba shall indemnify and hold ACC harmless from any cost,
expense or liability arising out of any claim or action based on
actual or alleged direct infringement by a Toshiba Product alone and
furnished hereunder of any patent of any third party enforceable in
the Territory, provided that (i) ACC shall notify Toshiba promptly in
writing of such claim or action, (ii) Toshiba shall have sole control
of the defense and settlement of such claim or action, and (iii) ACC
shall give all reasonably necessary authority, information and
assistance to Toshiba and its counsel, at Toshiba's expense, for the
defense from such claim or action.
(B) Notwithstanding the provisions of Section 15.5(a), Toshiba
shall not be obligated to indemnify and hold ACC harmless in case the
alleged infringement is based upon:
(i) use of the Toshiba Product in combination with another
Person's circuits, components, devices, information, designs,
specifications, software, data, material or products; or
(ii) modification of the Toshiba Product by a Person other
than Toshiba after delivery by Toshiba.
Exhibit 99.4
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15.6 INFRINGEMENT BY THIRD PARTIES. In the event ACC becomes aware that any
third party infringes or is likely to infringe any trademark, other identifying
mark, design, utility model, copyright, patent or other intellectual property
right appearing in or on the Toshiba Products, ACC shall promptly notify Toshiba
thereof, assist Toshiba (at Toshiba's expense) in proceeding with appropriate
measures, including legal measures, against such infringement and comply with
Toshiba's instructions.
16. CONFIDENTIALITY; PUBLICITY.
16.1 CONFIDENTIAL INFORMATION. The Parties recognize that, in connection
with the performance of the transactions contemplated hereby, each Party (in
such capacity, the "DISCLOSING PARTY") may disclose Confidential Information to
the other Party (each in such capacity, the "RECEIVING PARTY"). For purposes of
this Agreement, "CONFIDENTIAL INFORMATION" means any and all information
(whether owned by the Disclosing Party or any Person to whom the Disclosing
Party owes a non-disclosure obligation) regarding the Disclosing Party and its
business which is (i) in written or other tangible form and marked with a legend
which identifies the information as confidential, or (ii) in oral or visual
form, identified as being confidential at the time of disclosure and thereafter
summarized in a writing which identifies the information as confidential and is
transmitted to the Receiving Party within thirty (30) days after such oral or
visual disclosure.
16.2 CONFIDENTIALITY OBLIGATION. Each Receiving Party agrees for a period
of two (2) years after the receipt of any Confidential Information (i) to
protect the Confidential Information and not to disclose the Confidential
Information to any Person, utilizing the same degree of care the Receiving Party
utilizes to protect its own confidential information of a similar nature, and
(ii) not to utilize the Confidential Information for any purpose other than in
connection with the transactions contemplated hereby. The Parties agree to
restrict distribution of the Confidential Information to those Persons involved
in the subject of the discussions who have a "need to know" such information in
connection with the discussions.
16.3 EXCEPTIONS. Notwithstanding the provisions of Section 16.2, each
Receiving Party shall have no obligation to maintain the confidentiality of any
information, and the Confidential Information shall not include any information,
that (i) is or becomes generally available in the public domain other than
through unauthorized or improper disclosure by the Receiving Party, (ii) was
validly in the Receiving Party's possession prior to disclosure by a Disclosing
Party, (iii) was independently developed by the Receiving Party, or (iv) was
received by the Receiving Party from another Person without violation of any
confidentiality obligations.
16.4 DISPOSAL OF CONFIDENTIAL INFORMATION. Within thirty (30) days of the
termination of this Agreement, upon the applicable Disclosing Party's request,
each Receiving Party shall return to the Disclosing Party or destroy all
Confidential Information (including copies and electronic records thereof).
Exhibit 99.4
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16.5 PUBLICITY. Subject to applicable Law and the applicable rules or
regulations of any stock exchange on which the securities of any Party are then
traded, no Party shall issue any press release, publicity statement,
communication with stockholders, public notice or other public disclosure
relating directly to this Agreement or the transactions contemplated hereby
without prior notice to, consultation with, and the consent of the other Party.
Notwithstanding the foregoing, so long as the disclosing Party reasonably
attempts to consult with and obtain the consent of the other Party, limits the
applicable disclosure to the extent practicable and provides a copy of the
disclosure to the non-disclosing Party concurrently with or in advance of its
public release, such consultation and consent shall not be required if a Party
must make a public disclosure on an emergency basis in order to comply with
applicable securities Laws.
17. TERM AND TERMINATION.
17.1 TERM. The term of this Agreement shall initially be five (5) years
from the date hereof, subject to earlier termination pursuant to Section 17.2
and extension as provided in the next sentence. The term of this Agreement shall
be automatically extended for successive one (1)- year periods unless either
Party gives termination notice to the other Party not earlier than 180 days and
not later than 120 days prior to the then current end of the term.
17.2 TERMINATION. This Agreement may be terminated as follows:
(A) Upon the mutual written agreement of the Parties.
(B) At the election of Toshiba, in case ACC fails to (i) comply with
its obligations to appoint Toshiba's officer designees in accordance with
Section 6.1, or (ii) make payment in accordance with Section 8.2 with
respect to an invoice for Toshiba Products accepted by ACC and which ACC is
not disputing in good faith, and in case of clause (i) or clause (ii), such
failure is not remedied within sixty (60) days after ACC receives written
notice from Toshiba, indicating that it is a notice of default and
describing the default in reasonable detail.
(C) At the election of either Party, if the other Party commences a
voluntary case or other proceeding seeking liquidation, reorganization, or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or taking possession by any such official in any involuntary
case or other proceeding commenced against it, or makes a general
assignment for the benefit of creditors, or fails generally to pay its
debts as they become due, or take any corporate action to authorize any of
the foregoing.
(D) At the election of either Party, if an involuntary case or other
proceeding is commenced against the other Party seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official for such Party or any substantial part of its
property, and such involuntary case or other
Exhibit 99.4
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proceeding remains undismissed and unstayed for a period of one
hundred twenty (120) days.
(E) At the election of Toshiba, if a Strategic Person (other than
Toshiba or any of its Affiliates) acquires a direct or indirect equity
ownership interest in excess of twenty percent (20%) in Audiovox
Corporation, a Delaware corporation ("AUDIOVOX").
(F) At the election of either Party in accordance with the second
sentence of Section 17.1.
17.3 EFFECT. In the event of the termination of this Agreement pursuant to
Section 17.2, this Agreement shall cease to have further force or effect and no
Party shall have any liability to any other Party in respect to this Agreement,
provided that:
(A) Termination of this Agreement for any reason shall not release any
Party from any liability which has already accrued as of the effective date
of such termination, and shall not constitute a waiver or release of, or
otherwise be deemed to prejudice or adversely affect, any rights, remedies
or claims, whether for damages or otherwise, which a Party may have
hereunder, at law, equity or otherwise or which may arise out of or in
connection with such termination.
(B) ACC shall remain liable for and shall pay Toshiba for any purchase
orders hereunder that have been accepted by Toshiba, and Toshiba shall
fulfill such purchase orders.
(C) Section 16, Section 18 and the first sentence of Section 10 shall
survive such termination and remain in full force and effect.
18. GENERAL PROVISIONS.
18.1 GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with and governed by the Laws of the State of New York, U.S.A.,
including, without limitation, Section 5-1401 of the General Obligations Law of
the State of New York (without regard to the choice of law provisions thereof).
Judgement upon an award rendered by the arbitrators pursuant to Section 18.2
shall be entered in the courts of the State of New York, and the Parties hereby
submit to the exclusive jurisdiction of such courts for the purpose of any such
entry. The Parties agree and consent that services of process may be made upon
the Parties in any legal proceedings relating hereto by any means allowed under
applicable Law.
18.2 DISPUTE RESOLUTION.
(A) The Parties intend that all disputes between the Parties arising
out of this Agreement that do not involve claims by or against third
parties shall be settled by the Parties amicably through good faith
discussions upon the written request of either Party. In the event that any
such dispute cannot be resolved thereby within a period of sixty (60)
calendar days after such notice has been given, such dispute shall be
finally settled by binding arbitration at the request of
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any Party.
(B) Each arbitration hereunder shall be conducted in the English
language in New York, New York, and shall be administered by the American
Arbitration Association under its Commercial Arbitration Rules then in
effect, before three (3) independent arbitrators to be appointed as
follows. Each Party shall appoint one (1) arbitrator, and the two (2)
arbitrators appointed by the Parties shall appoint a third arbitrator in
accordance with paragraph (c) of AAA Rule R-15 (Appointment of Neutral
Arbitrator by Party-Appointed Arbitrators or Parties) currently in effect.
However, in all events, these arbitration provisions shall govern over any
conflicting rules which may now or hereafter be contained in the applicable
rules.
(C) Each Party may demand arbitration by filing a written demand with
the other Party within one hundred eighty (180) calendar days after the
expiration of the sixty (60) day period described above. The arbitrators
shall have the authority to grant any equitable and legal remedies that
would be available in any judicial proceeding intended to resolve a
dispute, including (notwithstanding Section 17) the termination of this
Agreement. Notwithstanding the foregoing, either Party shall be entitled to
seek preliminary injunctive relief from any court of competent
jurisdiction, pending the final decision or award of the arbitrators. The
award rendered in an arbitration hereunder shall be final and
non-appealable.
18.3 NOTICES AND OTHER COMMUNICATIONS. Any and all notices, requests,
demands and other communications required or otherwise contemplated to be made
under this Agreement shall be in writing and in English and shall be provided by
one or more of the following means and shall be deemed to have been duly given
(a) if delivered personally, when received, (b) if transmitted by facsimile, on
the first (1st) Business Day following receipt of a transmittal confirmation, or
(c) if by international courier service, on the third (3rd) Business Day
following the date of deposit with such courier service, or such earlier
delivery date as may be confirmed in writing to the sender by such courier
service. All such notices, requests, demands and other communications shall be
addressed as follows:
If to Toshiba:
Toshiba Corporation
Mobile Communications Company
1-1, Shibaura 1-chome, Minato-ku
Tokyo 105-8001
Japan
Attention: General Manager, International Operations
Telephone: -81-3-3457-3241
Facsimile: -81-3-3457-8194
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If to ACC:
Audiovox Communications Corp.
555 Wireless Boulevard
Hauppauge, New York 11788
U.S.A.
Attention: Philip Christopher
Telephone: (631) 233-3300
Facsimile: (631) 951-0784
With a copy to:
Levy & Stopol, LLP
East Tower, 14th Floor
190 EAB Plaza
Uniondale, New York 11556-0190
USA
Telephone: (516) 802-7007
Facsimile: (516) 802-7008
or to such other address or facsimile number as a Party may have specified to
the other Parties in writing delivered in accordance with this Section 18.3.
18.4 SEVERABILITY. If any provisions of this Agreement shall be held to be
illegal, invalid or unenforceable, the Parties agree that such provisions will
be enforced to the maximum extent permissible so as to effect the intent of the
Parties, and the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby. If necessary to effect the intent of the Parties, the Parties will
negotiate in good faith to amend this Agreement to replace the unenforceable
language with enforceable language which as closely as possible reflects such
intent.
18.5 AMENDMENTS. This Agreement may be amended or modified only by a
written instrument signed by each Party.
18.6 WAIVER. Any waiver by a Party of an instance of the other Party's
noncompliance with any obligation or responsibility herein contained shall be in
writing and signed by the waiving Party and shall not be deemed a waiver of
other instances of the other Party's noncompliance hereunder.
18.7 NO ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and permitted assigns
of the Parties. Nothing in this Agreement shall confer any rights upon any
Person other than the Parties and their respective successors and permitted
assigns. Neither Party may assign this Agreement or
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its rights hereunder to any Person without the written consent of the other
Party. No assignment by any Person of this Agreement or of any of such Person's
rights hereunder shall release such Person from any of its obligations
hereunder. Any attempted assignment of this Agreement in violation of this
Section 18.7 shall be void and of no effect.
18.8 CONSTRUCTION. This Agreement has been negotiated by the Parties and
their respective counsel and shall be fairly interpreted in accordance with its
terms and without any strict construction in favor of or against either of the
Parties.
18.9 INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT. Unless the context
shall otherwise require, any pronoun shall include the corresponding masculine,
feminine and neuter forms, and words using the singular or plural number shall
also include the plural or singular number, respectively. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". All references herein to Articles, Sections, Annexes, Exhibits and
Schedules shall be deemed to be references to Articles and Sections of, and
Annexes, Exhibits and Schedules to, this Agreement unless the context shall
otherwise require. The headings of the Articles and Sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretations of this Agreement. Unless the context shall
otherwise require, any reference to any agreement or other instrument or statute
or regulation is to such agreement, instrument, statute or regulation as amended
and supplemented from time to time (and, in the case of a statute or regulation,
to any successor provision). Any reference in this Agreement to a "day" or a
number of "days" (without the explicit qualification of "Business") shall be
interpreted as a reference to a calendar day or number of calendar days. If any
action or notice is to be taken or given on or by a particular calendar day, and
such calendar day is not a Business Day, then such action or notice shall be
deferred until, or may be taken or given, on the next Business Day.
18.10 DISCLAIMER OF AGENCY. This Agreement shall not constitute any Party
as a legal representative or agent of any other Party, nor shall a Party have
the right or authority to assume, create or incur any Liability of any kind,
expressed or implied, against or in the name or on behalf of the other Party or
any of its Affiliates.
18.11 LANGUAGE. The Parties have negotiated this Agreement in the English
language, which shall be the governing language of this Agreement.
18.12 RELATIONSHIP OF THE PARTIES. Nothing contained in this Agreement is
intended to, or shall be deemed to, create a partnership or joint venture
relationship among the Parties or any of their Affiliates for any purpose,
including tax purposes. Neither of the Parties nor any of its Affiliates will
take a position contrary to the foregoing.
18.13 SPECIFIC PERFORMANCE. Each Party agrees that each other Party shall
be entitled to obtain an injunction or injunctions in accordance with the
dispute resolution
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procedures contained in Section 18.2 to prevent breaches of the provisions of
this Agreement, or any agreement contemplated hereunder and to enforce
specifically the terms and provisions hereof, in each instance without being
required to post bond or other security, without being required to prove
irreparable harm, and in addition to, and without having to prove the adequacy
of, other remedies at Law.
18.14 CONSEQUENTIAL AND OTHER DAMAGES. Neither Party shall be liable to the
other Party under any contract, negligence, strict liability or other theory for
any indirect, incidental, consequential, punitive or other special damages
(including without limitation lost profits) asserted by the other Party.
18.15 EXPORT CONTROL. Each Party shall comply with the Japanese Foreign
Exchange and Foreign Trade Laws, the U.S. Export Administration Regulations and
any other applicable export regulations with respect to Toshiba Products
supplied hereunder, and each Party shall not, directly or indirectly, export or
re-export Toshiba Products or any part thereof, any information, technical data,
or products received from the other Party, or any direct product thereof, to any
destination or country prohibited by such Laws and regulations, unless properly
authorized by the applicable Governmental Authorities.
18.16 FORCE MAJEURE. Neither Party shall be responsible for any defaults,
failures to assist, or delays in delivery which are due to causes beyond its
control, including, but without limitation, acts of God or of a public enemy,
acts or any order of a government, or any preference, priority, or any order of
such government, currency restrictions, fires, floods, epidemics, quarantine
restrictions, strikes, embargoes, unduly severe weather, or incidents of war.
18.17 ENTIRE AGREEMENT. The provisions of this Agreement and the other
Transaction Agreements set forth the entire agreement and understanding between
the Parties as to the subject matter hereof and supersede all prior agreements,
oral or written, and all other prior communications between the Parties relating
to the subject matter hereof; provided that this Agreement shall not apply to
Toshiba Products covered by purchase orders effective prior to the date hereof.
18.18 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be binding as of the date first written above,
and all of which shall constitute one and the same instrument. Each such
counterpart shall be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
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IN WITNESS WHEREOF, the Parties have caused their respective duly
authorized representatives to execute this Distribution Agreement as of the date
first above written.
TOSHIBA CORPORATION,
a Japanese corporation, acting through its
Mobile Communications Company
By: s/ Tetsuya Mizoguchi
Name: Tetsuya Mizoguchi
Title: President and CEO,
Mobile Communications
Company
AUDIOVOX COMMUNICATIONS
CORP.,
a Delaware corporation
By: s/ Philip Christopher
-------------------------------
Name: Philip Christopher
Title: Chief Executive Officer
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ANNEX I
CERTAIN DEFINITIONS
"AFFILIATE" of a specified Person means any Person that controls, is
controlled by or is under common control with such specified Person. For
purposes of this definition, "CONTROL" shall mean the possession, directly or
indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of securities or other ownership interests, by
contract or otherwise).
"BUSINESS" means the research, development, design, manufacture, marketing,
sale and/or service of Products.
"BUSINESS DAY" means a day on which commercial banks in New York City are
generally open to conduct their regular banking business.
"GOVERNMENTAL AUTHORITY" means any federation, nation, state, sovereign or
government, any federal, supranational, regional, state, local or municipal
political subdivision, any governmental or administrative body, instrumentality,
department or agency, or any court, administrative hearing body, arbitrator,
commission or other similar dispute resolving panel or body, and any other
entity exercising executive, legislative, judicial, regulatory or administrative
functions of a government.
"LAWS" means all applicable provisions of all (i) constitutions, treaties,
statutes, laws (including common law), rules, regulations, ordinances or codes
of any Governmental Authority, and (ii) orders, decisions, injunctions,
judgments, awards and decrees of any Governmental Authority.
"PERSON" means a natural individual, Governmental Authority, partnership,
firm, corporation or other entity.
"STRATEGIC PERSON" means any of Motorola, Nokia, Ericsson, Kyocera, Sanyo,
Sharp or other similar companies that compete with a Party in the Business.
"TRANSACTION AGREEMENTS" means this Agreement; the Securities Purchase
Agreement; the Stockholders Agreement; the Employment Agreement dated as of the
date hereof between ACC and Philip Christopher; the Trademark License Agreement
dated as of the date hereof between Audiovox and ACC; the Shared Services
Agreement dated as of the date hereof between Audiovox and ACC; the
Non-Negotiable Subordinated Convertible Promissory Note by ACC to Toshiba; and
the Non-Negotiable Demand Note by ACC to Audiovox dated the date hereof.
Exhibit 99.4
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EXHIBIT 6.1
DUTIES OF TOSHIBA'S OFFICER DESIGNEES
Executive Vice President
Supervises the Chief Technology Officer for Toshiba Products and the Vice
President for Merchandizing -- Toshiba Products.
Participates in the decision making of ACC, including through executive
meetings.
Chief Technology Officer for Toshiba Products
Responsible for technology matters for Toshiba Products.
Represents ACC on matters relating to Toshiba technology in coordination with
Hino Works and other applicable Toshiba facilities.
Vice President for Merchandizing -- Toshiba Products
Coordinates and participates in the production, sale and inventory of Toshiba
Products.
Coordinates and participates in product planning for Toshiba Products, including
concept proposals for Toshiba Products.
Supports sales promotion of Toshiba Products.
Exhibit 99.4
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SCHEDULE 6.2 EXECUTIVE MEETINGS
Material change in organizational structure
Human resource planning and incentives
The launch plan for individual Toshiba Products (including specification,
cost and other factors) based on the product roadmap and concept made
by mutual cooperation between ACC and Toshiba
Service and maintenance operations
Major sales strategy for each Carrier in North America
Major regional sales channel strategy
Major general sales strategy and policy
Sales policy in the Territory (by country) in South America
Sales policy in the Territory (by country) outside North and South America
Sales promotion and advertisement policy
Pricing
Budget and Mid-Term Business Plan of ACC
Any other matters which are reasonably acceptable to the CEO
Exhibit 99.4
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