<PAGE> 1
Exhibit 10.4 MATERIAL CONTRACTS
PRODUCTS SUPPLY AND DISTRIBUTION AGREEMENT (THE "AGREEMENT") DATED AS OF, APRIL
1, 2000, BY AND BETWEEN KYOCERA CORPORATION, A CORPORATION ORGANIZED UNDER THE
LAWS OF JAPAN, AND ITS SUBSIDIARIES ("KC"), AND AVX CORPORATION, A
DELAWARE CORPORATION, AND ITS SUBSIDIARIES, ("AVX").
WHEREAS KC is a manufacturer and supplier of certain KC Products, as defined
below, and desires that the KC Products be sold to customers located within the
AVX Territory, as defined below, and that AVX act as its non-exclusive
distributor for the KC Products within the AVX Territory;
WHEREAS AVX is a manufacturer and supplier of certain AVX Products, as defined
below, and desires that the AVX Products be sold to customers located within the
KC Territory, as defined below, and desires that KC act as its nonexclusive
distributor for the AVX Products within the KC Territory; and
WHEREAS KC desires to purchase the AVX Products for resale to customers within
the KC Territory and AVX desires to purchase the KC Products for resale to
customers within the AVX Territory.
NOW, THEREFORE, in consideration of the foregoing premises and in consideration
of the mutual covenants and conditions contained in the Agreement, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used herein, the following terms shall have the
meanings as set forth below:
"AVX PRODUCTS" shall mean the Products manufactured and supplied under AVX's
trademark and brand names listed in Schedule II attached hereto.
"AVX TERRITORY" shall mean the countries listed in Schedule I attached hereto,
in which AVX shall act as a distributor of the KC Products on the terms and
conditions herein described.
"DISTRIBUTOR" shall mean AVX, acting as a distributor of the KC Products in the
AVX Territory, or KC, acting as a distributor of the AVX Products in the KC
Territory, as the context so requires, on the terms and conditions herein
described.
"KC PRODUCTS" shall mean the Products manufactured and supplied under KC's
trademark and brand names listed in Schedule II attached hereto.
"KC TERRITORY" shall mean the countries listed in Schedule I attached hereto, in
which KC shall act as a distributor of the AVX Products on the terms and
conditions herein described.
"PRODUCTS" shall mean the AVX Products or the KC Products, as the context so
requires.
"PURCHASE PRICE" shall be determined from time to time by mutual agreement of
Supplier and Distributor.
"SUPPLIER" shall mean AVX, acting as manufacturer and supplier of the AVX
Products, or KC, acting as manufacturer and supplier of the KC Products, as the
context so requires, on the terms and conditions herein described.
"TERRITORY" shall mean the AVX Territory or the KC Territory, as the context so
requires.
<PAGE> 2
ARTICLE II
APPOINTMENT; ACCEPTANCE
SECTION 2.01. Supplier hereby appoints Distributor as its nonexclusive
distributor (with the right to appoint representatives and subdistributors) for
the Products within the Territory; provided, however, Supplier shall not appoint
any other person, business entity, distributor, or sales representative in the
Territory, or license any other party to manufacture or sell in the Territory,
without giving Distributor one year's advance written notice, unless a shorter
period is otherwise mutually agreed in writing.
SECTION 2.02. A manufacturing subsidiary developed outside the Territory by
Supplier may sell its manufactured products from that facility directly to
agreed customers within a limited territory, agreed to by both parties, outside
the Territory agreed by Distributor.
SECTION 2.03. Distributor hereby accepts the appointment made by Section 2.01
and agrees to use its best efforts to develop a market for the Products within
the Territory. The Distributor shall furnish to Supplier such reports and
information relating to this Agreement (including, but not limited to,
activities and products of competitors, possible new products, and future
customer requirements) which may be requested from time to time by Supplier or
which the Distributor shall become aware of during the term of this Agreement.
The Distributor shall keep Supplier informed about technological innovations or
improvements related to the manufacture or use of the Products. The Distributor
shall make available to Supplier annual and quarterly marketing reports of
Distributor regarding the Products.
SECTION 2.04. In the event two or more resellers/distributors contribute sales
activities in the same product sale transaction involving drop shipments or
order transfers, the Distributor who receives customer orders shall pay a
commission to the other reseller(s)/distributor(s) as its compensation under the
Split Commission Agreement.
SECTION 2.05. It is understood that Distributor is an independent contractor and
shall not have the right to assume or create any obligation of any kind, express
or implied, on behalf of Supplier, except as expressly provided for in this
Agreement. Nothing herein shall be deemed to establish or otherwise create a
relationship of principal and agent between Supplier and Distributor.
ARTICLE III
TERM AND TERMINATION
SECTION 3.01. The term of this Agreement shall be one year. Subject to Section
3.02 below, this Agreement shall be automatically renewed at the end of the
first year, and each succeeding year, for an additional year.
SECTION 3.02. This Agreement may be terminated by either party by written notice
to the other party given not less than three months prior to the expiration date
of the current term.
SECTION 3.03. Either party shall have the right to terminate this Agreement if:
(a) a judgment or decree is entered against the other party approving a petition
for an arrangement, liquidation, dissolution or similar relief relating to
bankruptcy or insolvency and such judgment or decree remains unvacated for 30
days; or (b) the other party shall file a voluntary petition relating to
bankruptcy, insolvency or other relief from debtors or shall seek to consent or
acquiesce in the appointment of any trustee, receiver or the liquidation of any
of such party's property.
2
<PAGE> 3
ARTICLE IV
DISTRIBUTOR'S RESPONSIBILITIES
SECTION 4.01. During the term of this Agreement, Distributor shall:
(a) use its best efforts to market, advertise and otherwise promote the sale and
distribution of Products to purchasers throughout the Territory;
(b) take all reasonable and necessary action to satisfy the demand for the
Products and applicable accessories throughout the Territory and attempt to
increase the demand for the Products by, among other things, servicing all
customer accounts with reasonable frequency and soliciting new customer
accounts;
(c) maintain adequate sales, warehouse and service facilities for the effective
distribution of Products;
(d) maintain an inventory of Products sufficient to meet the reasonably
anticipated purchase requirements of its customers;
(e) maintain an adequate staff of sales personnel who are trained in and capable
of the effective demonstration, use and sales of Products;
(f) make prompt payment of all Supplier invoices for Products in accordance with
Section 7.05;
(g) comply with all policies and programs of Supplier issued at any time in
connection with the Products;
(h) immediately forward to Supplier any information concerning all charges,
complaints or claims of damage relating to the performance or function of any of
the Products that may come to Distributor's attention; and
(i) assume all market, credit (i.e., bad debt) and inventory risks for Products
which are merchantable (i.e., suitable for sale).
SECTION 4.02. Distributor shall bear the cost of any taxes, levies, duties or
fees of any kind, nature or description whatsoever levied within the Territory
applicable to the purchase or resale of the products sold by Supplier to
Distributor.
SECTION 4.03. Distributor agrees and warrants that it has obtained and will
hereafter maintain in full force and effect all necessary business licenses,
sales permits and other authorizations required by law.
SECTION 4.04. The Distributor shall be authorized, from time to time and upon
terms and conditions mutually agreed upon by Distributor and Supplier, to accept
orders from customers in the Territory which provide for direct shipment of the
Products by Supplier to such customers.
ARTICLE V
SUPPLIER'S RESPONSIBILITIES
SECTION 5.01. Supplier shall be obligated to Distributor as follows:
(a) to provide, without charge, sales and technical information regarding
Products as Supplier deems reasonably necessary;
(b) to provide such samples of Products as Supplier deems reasonably necessary
and appropriate; and
3
<PAGE> 4
(c) to use best efforts to perfect the right to export into and sell Products
within the Territory, including export licenses, government approvals, and all
such other legal requirements related to product design, specifications and
safety standards.
SECTION 5.02. Except as provided in Section 4.04 of this Agreement, Distributor
shall buy and resell Products for its own account, and shall have complete
discretion and freedom to determine the prices, terms and conditions, and
customers for all resales of Products within the Territory.
SECTION 5.03. Neither party shall possess, nor shall either party hold itself
out to third persons as possessing, any power or authority to bind the other
party in any way.
SECTION 5.04. This Agreement is not intended to create, and should not be
construed as creating, any agency, joint venture, partnership, or
employer/employee relationship between Supplier and Distributor.
SECTION 5.05. Supplier shall bear the cost of any taxes, levies, duties or fees
of any kind, nature or description levied within the country of origin for
shipments of the Products by Supplier to Distributor.
SECTION 5.06. Should Supplier discontinue a Product or a product line, or cease
doing business, Supplier shall, at Distributor's option, repurchase all unsold
Product from the Distributor at a mutually agreed price. Distributor shall have
the right to cancel any unfilled purchase order backlog for such Products
without incurring any liability to Supplier.
SECTION 5.07. Supplier authorizes the use by the Distributor of its company
names, including, without limitation, brand names, trade names, trademarks, and
service marks, in connection with the transactions contemplated under this
Agreement.
SECTION 5.08. Supplier shall obtain from a reputable insurance carrier and
maintain in force during the term of this Agreement, and for a reasonable period
thereafter, commercially reasonably levels of product liability insurance in
connection with the manufacture and subsequent sale, distribution and use of the
Products in the Territory.
ARTICLE VI
DISCONTINUATION OF SALE OF PRODUCTS
SECTION 6.01. Supplier shall have the right at any time to effect changes in, or
discontinue the sale of, any of its Products without incurring any liability to
Distributor except as provided in Section 5.06; provided, however, that Supplier
shall use best efforts to provide Distributor with at least 90 days' prior
written notice of Product discontinuation. Distributor will make its best
efforts to sell or otherwise liquidate remaining inventory of Products.
ARTICLE VII
PURCHASE ORDER AND SHIPMENT
SECTION 7.01. Supplier shall have the right, in its sole and absolute
discretion, to reject any purchase order, in whole or in part, placed by
Distributor, and no purchase order shall be binding upon Supplier unless
accepted by Supplier in writing or by the delivery of Products in whole or in
partial fulfillment thereof. All purchase orders shall be governed by the
provisions of this Agreement.
SECTION 7.02. In the event that Supplier ships more than 14 days in advance of a
required shipping date, Distributor may postpone payment until the due date
applicable to the original shipping date. Any refusal of the customer to take
product due to late delivery is the responsibility of the Supplier, as long as
the customer's claim is according to the customer agreement which the Supplier
agrees with.
4
<PAGE> 5
SECTION 7.03. Supplier warrants that all Products shall conform to the
applicable specifications, drawings, samples, and descriptions set forth in this
Agreement and purchase orders issued hereunder.
SECTION 7.04 Payment terms shall be forty-nine days from the Bill of Exchange
date, interest free, provided, however, Supplier may agree to extend the payment
terms subject to Distributor's agreement to pay interest, at a rate to be
mutually determined by the-parties prior to the extension, for the payment
period exceeding 49 days. All Supplier invoices shall be paid in full without
any deductions or credits of any kind. Any requests for credit or deductions by
Distributor (e.g., for a shortage in shipment quantity, quality defects, or for
goods damaged in transit) shall be provided in the form of a separate invoice to
Supplier.
SECTION 7.05. Unless otherwise mutually agreed, all purchase transactions
between Supplier and Distributor shall be denominated in U.S. dollars.
SECTION 7.06. The parties acknowledge that the terms of any purchase order and
the transactions contemplated under this Agreement shall be equivalent to those
terms which an independent unrelated party would agree to at arm's-length and
are subject to the approval of the AVX Board of Directors (or the Special
Advisory Committee thereof).
ARTICLE VIII
SECTION 8.01. Supplier warrants that all Products sold hereunder shall meet
specifications mutually agreed upon between both parties. Supplier further
warrants that it has the right to transfer full-unencumbered title to all
Products sold hereunder. Distributor may extend to its customer only those
warranties set forth above. Supplier will take responsibility for all customer
warranty claims properly honored by Distributor under those warranties set forth
above. Distributor shall consult Supplier before honoring any customer warranty
claim.
SECTION 8.02. Distributor agrees that it will not make any representations,
warranties or guarantees in connection with the Products other than as
authorized by Supplier in Section 8.01 above.
SECTION 8.03. Distributor shall immediately advise Supplier of any claim for
damages or breach of warranty with respect to the Products asserted by a
customer of Distributor and shall cooperate with Supplier in the defense or
handling of such claims.
SECTION 8.04. Distributor shall promptly furnish Supplier with product samples
and any related information when a warranty claim is made by a customer of
Distributor.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Supplier shall save, hold harmless and defend Distributor and its
affiliated companies from any costs, attorneys' fees, damages or penalties of
any kind on account of, or resulting from, any claim or action for infringement
of any existing or future patent, copyright, or trademark in the Territory or
any foreign country mutually agreed upon by both parties, or misappropriation of
any trade secret or other intellectual property right with respect to the
Products sold under this Agreement, where the infringement or misappropriation
arises from Supplier's Products. Supplier shall defend any such claim or action
at its own expense provided that Distributor promptly notifies Supplier upon
learning of any such claim or action. Notwithstanding the foregoing, it shall be
Distributor's obligation to save, hold harmless and defend Supplier where the
above claims or actions arise from or are attributable to, Distributor's
nonstandard specifications.
5
<PAGE> 6
ARTICLE X
MISCELLANEOUS
SECTION 10.01. ARBITRATION. All disputes, controversies, or differences which
may arise between the parties, out of or in relation to or in connection with
this Agreement, or breach thereof, shall be finally settled by arbitration
pursuant to the Japan-America Trade Arbitration Agreement of September 16, 1952,
by which each party hereto is bound. Such Arbitration shall be held in Osaka,
Japan if initiated by AVX and shall be held in South Carolina if initiated by
Kyocera.
SECTION 10.02. WAIVER. The failure of either party to enforce at any time any
provision of this Agreement or to require at any time performance by the other
party of any provision hereof will not be construed to be a present or future
waiver of such provisions or in any way affect the validity of this Agreement or
any provision hereof or the right of the other party thereafter to enforce each
and every such provision. One or more express waivers by either party of any
provision, condition or requirement of this Agreement will not constitute a
waiver of any future obligation to comply with such provision, condition or
requirement, unless so provided in a writing signed by the parties hereto.
SECTION 10.03. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the
complete and full understanding between the parties hereto with respect to the
subject matter hereof, and this Agreement supersedes all. prior and
contemporaneous agreements or understandings between the parties hereto relating
to the subject matter thereof. This Agreement may not be modified or amended
except with the written consent of both parties.
SECTION 10.04. ASSIGNMENT. This Agreement and the rights and obligations of a
party under this Agreement may not be assigned or transferred without the prior
written consent of the other party hereto.
SECTION 10.05. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will constitute an original but all of which when
taken together will constitute but one instrument. Counterparts may be delivered
by facsimile.
SECTION 10.06. SEVERABILITY. If any provision or provisions hereof shall, to any
extent, be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby and will be valid and enforceable to the fullest
extent permitted by law.
SECTION 10.07. CAPTIONS. Captions contained in this Agreement are inserted as a
matter of convenience and do not define, limit, extend or describe the scope of
this Agreement or the intent of any provision.
SECTION 10.08. NOTICES. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by prepaid telex, cable or telecopy, or sent, postage prepaid, by
registered, certified or express mail (return receipt requested) or reputable
overnight courier service, and shall be deemed given when so delivered by hand,
telexed cabled or telecopied, or if mailed, ten days after mailing (two business
days in the case of express mail or overnight courier service), as follows (or
at such other address for a party as may be specified by like notice):
KYOCERA CORPORATION
6 Takeda Tobadono-cho,
Fushimi-ku, Kyoto 612-8501, Japan
Attention: President
6
<PAGE> 7
AVX CORPORATION
17th Avenue South
Myrtle Beach, South Carolina 29577
U.S.A.
Attention: Chief Financial Officer
SECTION 10.09. NO THIRD PARTY BENEFICIARIES. AVX and KC agree that the
execution, delivery and performance of this Agreement are not intended to create
any contractual rights benefiting any third parties and that in the event of
breach or failure to perform by either party of its covenants or agreements
contained in this Agreement such party shall be liable only to the other party
hereto.
SECTION 10.10. GOVERNING LAW. This Agreement shall be governed and interpreted
in accordance with the internal laws of South Carolina applicable to agreements
made and to be performed entirely within such State, without regard to conflicts
of law principles.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date first written above.
KYOCERA CORPORATION, AVX CORPORATION,
by by
/s/ YASUO NISHIGUCHI /s/ BENEDICT P. ROSEN
------------------------ ----------------------------
Name: Yasuo Nishiguchi Name: Benedict P. Rosen
Title: President Title: Chief Executive Officer
7
<PAGE> 8
SCHEDULE I
TERRITORY
"AVX Territory" for purposes of this Agreement shall be:
All territories (excluding Japan)(1)
"KC Territory" for purposes of this Agreement shall be:
Japan
--------------------------
(1) In the case of electrical connectors, the AVX Territory shall mean all
territories, excluding Japan and all worldwide affiliates of certain
Japanese companies identified by KC.
8
<PAGE> 9
SCHEDULE II
PRODUCTS SUPPLY AND DISTRIBUTOR AGREEMENT
PRODUCT LIST
AVX PRODUCTS
Tantalum Capacitors
Ceramic Capacitors
Thin Films
Connectors
Ferrites
Films
Power Capacitors
Advanced Products
Any other products mutually agreed upon by AVX and KC.
KC PRODUCTS
Chip Capacitors
Timing Devices
Ceramic Piezo Products
Resistive Components
Hybrids
Print and Fire Substrate
Connectors
Any other products mutually agreed upon by KC and AVX.
9
