EXHIBIT 10.2
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2002 JOINT VENTURE AGREEMENT
This 2002 Joint Venture Agreement (the "Agreement") is made on this 22nd day of
October 2002, by and between Universal Security Instruments, Inc. ("Universal")
of 0-X Xxxxxx Xxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxxx 00000-0000, Xxxxxx Xxxxxx of
America ("USA"), a corporation organized and existing under the laws of the
State of Maryland, USA, and Xxx Xxxx Limited ("Xxx Xxxx") of B2, 3/F., Fortune
Factory Building, 40 Xxx Xxxxx Street, Chai Wan, the Hong Kong Special
Administrative Region of the People's Republic of China ("Hong Kong"), a limited
liability company organized and existing under the laws of Hong Kong.
WHEREAS
A. The parties hereto (the "Parties") are parties to a Joint Venture
Agreement dated 23 October 1989 as supplemented by a Supplementary
Agreement dated 21 August 2001 and a memorandum letter dated 8 October
2001 (collectively referred to as the "1989-2001 Agreements") relating to
the business, management and operation of Eyston Company Limited
("Eyston"), a limited liability company organized and existing under the
laws of Hong Kong.
B. The Parties have concluded that certain provisions of the 1989-2001
Agreements are redundant, obsolete and no longer appropriate.
C. The Parties are also considering a listing of Eyston or its business on
The Stock Exchange of Hong Kong Limited or another stock exchanges of
equivalent international standing (the "Stock Exchange").
D. In view of these considerations, the Parties have agreed to enter into
this Agreement and thereby to terminate the 1989-2001 Agreements.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES, IT IS HEREBY AGREED AS
FOLLOWS:
ARTICLE ONE
ESTABLISHMENT AND OPERATION OF HOLDCO
1.1 Establishment of Holdco. The Parties shall promptly purchase one shelf
company ("Holdco"), a private company limited by shares, duly organized,
validly existing and properly registered in Hong Kong. The Parties shall
share equally all costs with regard to the purchase of the Holdco. The
initial capital of Holdco shall be the normal minimums permissible in Hong
Kong.
1.2 Holdco Memorandum and Articles of Association. It is recognized that, upon
the acquisition of Holdco, there will be inconsistencies between this
Agreement and the Memorandum and Articles of Association of Holdco. The
Parties agree promptly, with the assistance of counsel, to cause the
Memorandum and Articles of Association of Holdco to be amended so that
they will be consistent with terms and conditions of this Agreement. In
all cases, before and after the amendment of the Memorandum and Articles
of Association, in the event of conflict between the provisions of this
Agreement and the Memorandum and Articles of Association of Holdco, the
provisions of this Agreement shall prevail.
1.3 Transfer of Eyston Shares to Holdco. The Parties are the beneficial owners
of fifty percent (50%) each of the share capital of Eyston. Upon the
formation of Holdco, each of the Parties shall promptly transfer all of
their shares in Eyston to Holdco in exchange for fully paid-up shares of
Holdco. The transfer of the Eyston shares of the Parties shall be
completed simultaneously, and each Party (or its nominees) shall receive
fifty percent (50%) of the share capital of Holdco immediately upon
completion of the transaction. The Eyston shares transferred shall be free
from all encumbrances, liens and third party rights. Neither Party shall
be obligated to carry out the transfer of its interest in Eyston unless
the other Party demonstrates that it can fully comply with its obligations
with respect to this transfer.
1.4 Stamp Duty. Any stamp duty or similar excise taxes imposed in Hong Kong as
a result of the transactions stated in Paragraph 1.3 shall be shared
equally by the Parties.
1.5 Right of First Refusal. Each Holdco shareholder shall have a right of
first refusal for the purchase of any or all shares in Holdco proposed to
be transferred by the other shareholder. This right of first refusal shall
be exercised within thirty (30) days of notice to the other shareholder of
the proposed transfer of shares.
1.6 Transferee to Accept This Agreement. In addition to the requirements of
Paragraph 1.5, in the event either Holdco shareholder proposes to transfer
any of its shares in Holdco to a third party, such transferring Party
shall not transfer such shares until it has secured the written agreement
of the proposed transferee to assume all the rights and obligations of a
Party to this Agreement.
1.7 No Pledge. Neither Holdco shareholder may pledge or encumber its shares in
Holdco without prior written consent of the other Holdco shareholder.
1.8 Holdco Board. The board of directors of Holdco (the "Holdco Board") shall
consist of four (4) members, two (2) to be nominated by Universal and two
(2) to be nominated by Xxx Xxxx. The Parties shall vote their shares for
the nominees. The nominating Party shall have the right to remove and
replace its directors. The quorum required for a meeting of the Holdco
Board shall be two (2) members, provided that at least one director
nominated by Xxx Xxxx and at least one director nominated by Universal is
present.
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1.9 Holdco Chairman. The chairman of the Holdco Board (the "Holdco Chairman")
shall be nominated by Xxx Xxxx. The Holdco Board shall appoint such Holdco
Board member nominated by Xxx Xxxx as the Holdco Chairman. For as long as
Xxx Xxxx provides operations and management services to Holdco, the Holdco
Chairman shall have a casting vote on all matters, except for the matters
specifically set out in Paragraph 1.11, presented to the Holdco Board.
1.10 Management of Holdco. Day-to-day operations and management of Holdco,
Eyston and its subsidiaries, if any, and companies controlled directly or
indirectly by Holdco shall be under the control of Xxx Xxxx, save as
specifically set out in Paragraph 1.11 below.
1.11 Holdco Major Decisions. The following matters shall require approval of
the Holdco Board: (i) approval of annual financial statements/reports of
Holdco; (ii) determination on remuneration of Xxx Xxxx for providing
operations and management services to Holdco; (iii) declaration of
dividends of Holdco; (iv) the merger of Holdco with any other entity or
the acquisition of any other entity by Holdco; (v) the sale, lease or
disposal of the whole or a substantial part of the business or assets of
Holdco; (vi) any capital increase or any request for shareholder
contribution to provide additional funding to Holdco, including additional
capital or shareholder loans; (vii) capital investment of Holdco in excess
of One Million Hong Kong Dollars (HKD1,000,000); (viii) any amendment to
the Memorandum and Articles of Association of Holdco; (ix) any mortgage of
the assets of Holdco; (x) change of the company auditor; and (xi) any
business transaction, excluding the sales transactions of the products of
Holdco which are the subject of Appendix I and II hereof, between Holdco
and any company owned or controlled, directly or indirectly, by one of the
shareholders of Holdco.
1.12 Xxx Xxxx'x Management Obligations. Xxx Xxxx shall not be obligated to
provide operations and management services to Holdco and its subsidiaries
specified in Paragraph 1.10 above, in the event that Xxx Xxxx ceases to be
a shareholder of Holdco or the composition or procedures of the Holdco
Board as set forth in this Agreement are changed so as to be less
favorable to Xxx Xxxx.
1.13 Fiscal Year. Holdco shall have a fiscal year ending March 31.
1.14 Financial Statements. Holdco shall, at its expense, have its financial
statements audited once a year by an independent auditor. Until otherwise
determined by the Holdco Board, Ernst and Young shall remain the company
auditor of Holdco. Holdco shall also produce unaudited monthly financial
statements to be promptly distributed to the shareholders.
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ARTICLE TWO
PRODUCT DISTRIBUTION AGREEMENTS
Immediately upon the signing of this Agreement, Universal and Eyston shall enter
into a product distribution agreement with terms and conditions identical to
Appendix I of this Agreement, and Xxx Xxxx and Eyston shall enter into a product
distribution agreement with terms and conditions identical to Appendix II of
this Agreement.
ARTICLE THREE
LISTING
3.1 Potential Listing. It is the intention of the Parties that, provided both
Parties agree the prevailing conditions are suitable and confirm this
agreement in writing, Eyston will seek the listing of Eyston's shares or,
where appropriate, a listing of a special purpose vehicle formed to become
the holding company of Eyston or its business on the Stock Exchange (the
"Listing").
3.2 Listco. Eyston, or a specially formed holding company of Eyston or its
business, is referred to herein as "Listco." Listco and its subsidiaries
are collectively referred to herein as the "Group." Listco shall be set up
as a subsidiary of Holdco. The rules applicable to the Listing of Listco
on the Stock Exchange are herein referred to as the "Listing Rules."
3.3 Listco Board. Prior to the Listing, Listco shall be structured or its
structure amended so that the board of directors of Listco (the "Listco
Board") shall consist of three types of directors: Executive Directors,
Non-Executive Directors, and Independent (Non-Executive) Directors. Two
(2) Non-executive Directors and one (1) Independent (Non-Executive)
Director shall be nominated by Universal. Subject to the ability of the
post-Listing public shareholders to elect one or more directors, all the
remaining directors shall be nominated by Xxx Xxxx so that Xxx Xxxx shall
be able at all times to nominate one more director than Universal. The
number of directors shall be determined by the Parties according to the
need of operations from time to time, and the agreements set forth in this
Paragraph 3.3. Holdco shall vote its shares for the nominees determined in
accordance with this Paragraph 3.3. The nominating Party shall have the
right to remove and replace its directors subject to any applicable laws
and Listing Rules.
3.4 Listco Major Decisions. Prior to a Listing, no board resolution on the
following matters shall be passed by the Listco Board unless approved by
at least one Non-executive Director of the Listco Board nominated by
Universal and at least one Executive Director of the Listco Board
nominated by Xxx Xxxx: (i) approval of annual financial statements/reports
of Listco; (ii) determination on remuneration of Xxx Xxxx for providing
operations and management services to Listco; (iii) declaration of
dividends of Listco; (iv) the merger of Listco with any other entity or
the acquisition of any other entity by Listco; (v) the sale, lease or
disposal of the whole or a substantial part of the business or assets of
Listco; (vi) any capital increase or any request for shareholder
contribution to provide additional funding to Listco, including additional
capital or shareholder loans; (vii) capital investment of Listco in excess
of One Million Hong Kong Dollars (HKD1,000,000); (viii) any amendment to
the Memorandum and Articles of Association of Listco; (ix) any mortgage of
the assets of Listco; (x) appointment or change of the company auditor;
and (xi) any business transaction, excluding the sales transactions of the
products of Listco, which are the subject of Appendix I and II hereof,
between Listco and any company owned or controlled, directly or
indirectly, by one of the shareholders of Holdco.
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3.5 Listco Dividends. Listco shall, to the extent permissible under applicable
law, pay quarterly dividends to Holdco with a total amount equal to at
least fifty percent (50%) of the quarterly after-tax net profit determined
after the quarterly review of the unaudited quarterly financial statements
by the Listco Board.
3.6 Holdco Dividends. Holdco shall, to the extent permissible under applicable
law, pay as quarterly dividends to its shareholders all of the dividends
received from Listco less any normal and customary deductions necessary to
cover the operational expenses of Holdco.
3.7 Management of the Listing. The Listing shall be managed by Xxx Xxxx, which
shall be responsible for all negotiations and determinations, including,
without limitation determining the overall policy, structure, manner and
arrangements of the Listing and in carrying out the application for the
Listing, including, but not limited, to:
(a) the appointment of sponsor(s), legal advisers, reporting
accountants, valuers and other professional advisers of Eyston
and/or Listco incidental to the Listing;
(b) all liaison with the Stock Exchange;
(c) allowing for the disclosure of all relevant information about the
Group to the public and the Stock Exchange as required by the
applicable laws, regulations and rules incidental to the Listing,
and to all professional parties to facilitate their provision of
advice and service to Eyston and/or Listco for the purpose of the
Listing, including without limitation, its corporate and
shareholders information, financial, business and customers
information and material contracts;
(d) amending and/or restructuring the Group's and/or Listco's
memorandum, article of association, corporate structure and business
arrangements to comply with the applicable Listing Rules or
otherwise to facilitate the Listing and/or public issue and/or
placing of shares of Listco incidental to the Listing as the
sponsor(s) and/or other professional advisers appointed under
sub-clause (a) above may advise to be necessary or desirable.
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The Parties hereby acknowledge that the restructuring of the Group in
preparation for the Listing may involve inter-company transfer of assets,
merger and acquisition of new intermediary holding vehicle(s).
3.8 Final Approval. Notwithstanding the provisions of Paragraph 3.7, the
arrangements for the offering and the timing of the Listing application
shall be subject to the prior written approval of each of the Parties.
ARTICLE FOUR
SHAREHOLDER SALES
4.1 Request for Sale. After the expiration of any lock-up period required by
the Listing Rules or agreed with the Stock Exchange, Holdco shall, at any
time after the Listing, upon written request from either of the Parties,
use its reasonable endeavors to dispose of such number of shares in Listco
as the requesting Party may request, provided that:
(a) Holdco shall not dispose more than five percent (5%) of the issued
share capital of Listco under any request at any time;
(b) Holdco shall not made any disposal if it has disposed of any
interest in shares in Listco in the ten (10) weeks immediately
preceding the date of the request;
(c) Holdco shall not dispose any shares if, immediately following the
disposal, Holdco would cease to hold at least fifty point one
percent (50.1%) of the issued share capital of Listco;
(d) Holdco shall not make any disposal to the extent and at any time
where it is prohibited or restricted by law or applicable rules and
regulations from making such disposal and shall comply with all
applicable laws, rules and regulations in making such disposal;
(e) Holdco shall dispose of such shares in the manner set out in
Paragraph 4.2 below; and
(f) Holdco shall exercise its best endeavors to make such disposal in a
manner so as to maintain an orderly market for the shares of Listco.
4.2 First Offer. Provided that it raises no issues under the Takeover Code of
Hong Kong, Holdco shall dispose of shares in Listco under Paragraph 4.1
above by:
(a) first offering (the "First Offer") such shares to the Party which
did not request the sale pursuant to Clause 4.1 above (the
"Non-Requesting Party");
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(b) the First Offer shall be made to the Non-Requesting Party at a price
equivalent to the average closing price less five percent (5%) for
such shares on the Stock Exchange on which they are primarily listed
for the ten (10) consecutive trading days ending on the trading day
immediately preceding the date of the request and on which there was
trading in the shares (the "Sale Price"). Such offer shall remain
open for a minimum of three (3) working days for acceptance (the
"Offer Period") and can be accepted in whole or in part;
(c) Holdco shall only offer to sell and make arrangements for the
disposal of such shares to third parties (the "Open Offer") if and
to the extent the Non-Requesting Party does not accept or reply to
the First Offer made in subparagraph (b) above prior to the expiry
of the Offer Period;
(d) the Open Offer shall be made at a price no less than the Sale Price;
and
(e) the Open Offer shall remain open for a period of fifteen (15)
trading days (the "Open Offer Period"). If Holdco fails to conclude
any definite agreement for the sale or placing of all or any part of
such shares during the Open Offer Period, the request in the above
Paragraph 4.1 and the Open Offer in respect of all or such part of
the shares, as the case may be, shall both be deemed to have lapsed.
4.3 Sales Proceeds. The net proceeds arising from the disposal of shares
in Listco under Paragraphs 4.1 and 4.2 above shall, to the extent distributable
under applicable law, be distributed to the shareholders of Holdco as dividends
as soon as practicable.
ARTICLE FIVE
1989-2001 AGREEMENTS SUPERSEDED
Upon being duly signed by both Parties, this Agreement shall supersede the
1989-2001 Agreements and the 1989-2001 Agreements shall cease to have legal
effect. The Parties hereby waive and release against each other and forever
discharge any claims arising out of or in connection with the 1989-2001
Agreements.
ARTICLE SIX
GENERAL PROVISIONS
6.1 Term. This Agreement shall be of unlimited duration unless terminated by
mutual agreement. Termination does not release either Party from liability
already accrued.
6.2 Breach. This Agreement may be terminated for breach. In the event of
termination for breach, the non-breaching Party shall have all rights and
remedies available at law.
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6.3 Disputes. Any dispute or difference arising out of or in connection with
this Agreement shall be referred to and determined by arbitration in Hong
Kong in accordance with the UNCITRAL Arbitration Rules in force at the
date of this Agreement. In the event of arbitration, the appointing
authority shall be the Hong Kong International Arbitration Centre (the
"HKIAC"). The place of arbitration shall be in Hong Kong at the HKIAC. The
language to be used in the arbitral proceedings shall be English. Any such
arbitration shall be administered by HKIAC in accordance with HKIAC
Procedures for Arbitration. The Parties agree to exclude any right of
application or appeal to any courts in connection with any question of law
arising in the course of the arbitration or with respect to any award
made.
6.4 Entire Agreement; Amendment; Waiver. This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, representations, and
understandings of the Parties. No supplement, modification, or amendment
of this Agreement shall be binding unless executed by both Parties in
writing. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provisions, whether or
not similar, nor shall any waiver constitute a continuing waiver. No
waiver shall be binding unless executed in writing by the Party making the
waiver.
6.5 Assignment. This Agreement may not be assigned or transferred without the
prior written approval of the other Party and shall be binding on, and
shall inure to the benefit of, the Parties and their respective heirs,
legal representatives, successors, and assigns.
6.6 Assignment. All notices, request, demands, and other communications under
this Agreement shall be in writing, in English, and shall be deemed to
have been duly given to a Party when received, addressed as below. A Party
may change its address for purposes of this Paragraph by giving the other
Party its written notice of the new address in the manner set forth above.
To Universal:
Universal Security Instruments, Inc.
0-X Xxxxxx Xxxx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000, X.X.X.
Telephone: 0 000 000 0000
Facsimile: 1 410 363 2218
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To Xxx Xxxx:
Xxx Xxxx Limited
B2, 3/F., Fortune Factory Xxxxxxxx
00 Xxx Xxxxx Xxxxxx, Xxxx Xxx
Xxxx Xxxx
Telephone: 000 0000 0000
Facsimile: 852 2897 0249
6.7 Savings. Should any provision of this Agreement be judicially declared
invalid, unenforceable, or void, in whole or in part, such decision shall
not have the effect of invalidating or voiding the remainder of this
Agreement, and the Parties agree that the provision of this Agreement so
held to be invalid, unenforceable, or void shall be deemed to have been
stricken herefrom, and the remainder shall have the same force and effect
as if such provision had never been included herein. With respect to any
provision of this Agreement declared invalid, unenforceable or void, the
Parties agree to negotiate in good faith for the purpose of replacing such
clause, sentence or paragraph with a provision which is as near in
substance as possible to that declared invalid, unenforceable or void
without itself being so declared.
6.8 Time of the Essence. Time is of the essence with respect to all matters
related to this Agreement.
6.9 Counterparts This Agreement may be executed by the Parties in any number
of counterparts, each of which when so executed and delivered shall be an
original but all counterparts together shall constitute one and the same
instrument.
6.10 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of Hong Kong.
6.11 Headings. The titles and headings used in this Agreement are for the
convenience of the Parties only and shall not be used in interpreting or
construing this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly entered into by the Parties the
day and year first above written.
UNIVERSAL SECURITY INSTRUMENTS, INC. XXX XXXX LIMITED
By:/s/ Xxxxxxx Xxxxxxx By: /s/ Xxx Xxxx Xxxxxx Xxx
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Xxxxxxx Xxxxxxx Xxx Xxxx Xxxxxxx Xxx
Chairman and Chief Executive Officer Director
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APPENDIX I
PRODUCT DISTRIBUTION AGREEMENT
This Product Distribution Agreement is made on this _____ day of October 2002,
by and between Universal Security Instruments, Inc. ("Universal") of 0-X Xxxxxx
Xxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxxx 00000-0000, Xxxxxx Xxxxxx of America ("USA"),
a corporation organized and existing under the laws of the State of Maryland,
USA, and Eyston Company Limited ("Eyston") of B2, 3/F., Fortune Factory
Building, 40 Xxx Xxxxx Street, Chai Wan, Hong Kong, a limited liability company
organized and existing under the laws of the Hong Kong Special Administrative
Region of the People's Republic of China ("Hong Kong").
WHEREAS, Universal is experienced in the distribution of electronic, electrical
and consumer products in North America; and
WHEREAS, Eyston is experienced in the design, technique, development, and
manufacturing of electronic, electrical and consumer products; and
NOW, THEREFORE, THE PARTIES HERETO MUTUALLY AGREE AS FOLLOW:
1. Universal and its subsidiaries and affiliated companies and any companies
controlled directly or indirectly by Universal (hereafter collectively
referred to as the "Universal Group") shall purchase all of their demand
of Smoke Alarms/ Detectors and Carbon Monoxide Alarms/Detectors from
Eyston provided that the most favorable prices as defined in Paragraph 3
are offered and those prices and other terms are reasonably competitive
with other sources.
2. The Universal Group will buy products from Eyston at the most favorable
prices.
3. The most favorable price of a specific product shall mean the lower of (i)
the lowest price that Eyston sells to other customers for the product
having substantially the same make and materials and (ii) the indicative
price for each of the product as stated herein.
4. The following are the indicative unit prices (F.O.B. Hong Kong, at sight)
for existing smoke alarms and carbon monoxide alarms: (i) DC battery
operated ionization smoke alarm with a 9V carbon-zinc UL approved battery
in gift-box packaging: USD2.00; (ii) DC battery operated photoelectric
smoke alarm with a 9V carbon-zinc UL approved battery in gift-box
packaging: USD3.50; (iii) AC hardwired ionization smoke alarm with a 9V
carbon-zinc UL approved battery in gift-box packaging: USD3.826; (iv) DC
battery operated carbon monoxide alarm using QUANTUM chemical sensor with
a 9V Energizer 522 alkaline battery in gift-box packaging: USD12.00. The
indicative prices are subject to change as agreed by both Parties from
time to time.
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5. The indicative prices for all other products and models are subject to
negotiation.
6. Subject to actual material and production costs variation, the indicative
prices shall be adjusted to reflect such costs changes.
7. The sales from Eyston to the markets in the USA, Canada, Mexico, U.S.
Territories, U.S. overseas possessions and other North American countries
and regions, as illustrated in Exhibit A, shall be to or through
Universal, or a party designated by Universal from time to time, on an
exclusive basis.
8. In the event of referrals of new customers by Eyston to Universal,
Universal shall pay a commission of five percent (5%) of the F.O.B. sales
values on such customers to Eyston provided that the referred customers
and Universal have never engaged in any business contacts prior to the
referral by Eyston. Commissions shall be payable within thirty (30) days
after shipment.
9. In the event of referrals of new customers by Universal to Eyston, Eyston
shall pay a commission of five percent (5%) of the F.O.B. sales values on
such customers to Universal provided that the referred customers and
Eyston have never engaged in any business contacts prior to the referral
by Universal. Commissions shall be payable within thirty (30) days after
shipment.
10. The three agreements signed by both Parties, one dated April 23, 2002
regarding Sunbeam Corp./First Alert, Inc./BRK Brands, Inc., one dated
January 15, 2002 regarding Salesmakers Inc./Salesmakers Asia Limited, and
the one dated June 21, 2002 regarding Wal-Mart Stores, Inc., shall remain
in full effect and shall not be affected by this Agreement.
11. This Agreement shall be governed by and construed in accordance with the
laws of Hong Kong.
IN WITNESS WHEREOF, the Parties to this Agreement have duly executed it on the
date and year first above written.
UNIVERSAL SECURITY INSTRUMENTS, INC. EYSTON COMPANY LIMITED
By: By:
---------------------------------- ------------------------------------
Xxxxxxx Xxxxxxx Xxx Xxxx Xxxxxxx Xxx
Chairman & Chief Executive Officer Co-Chief Executive
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APPENDIX II
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PRODUCT DISTRIBUTION AGREEMENT
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This Product Distribution Agreement is made on this ______ day of October 2002,
by and between Xxx Xxxx Limited ("Xxx Xxxx") of B2, 3/F., Fortune Factory
Building, 40 Xxx Xxxxx Street, Chai Wan, Hong Kong, a company organized and
existing under the laws of the Hong Kong Special Administrative Region of the
People's Republic of China ("Hong Kong"), and Eyston Company Limited ("Eyston")
of B2, 3/F., Fortune Factory Building, 40 Xxx Xxxxx Street, Chai Wan, Hong Kong,
a company organized and existing under the laws of Hong Kong.
WHEREAS, Xxx Xxxx is experienced in managing manufacturing and distribution of
electronic, electrical and consumer products in the People's Republic of China;
and
WHEREAS, Eyston is experienced in the design, technique, development, and
manufacturing of electronic, electrical and consumer products; and
NOW, THEREFORE, THE PARTIES HERETO MUTUALLY AGREE AS FOLLOW:
1. Xxx Xxxx and its subsidiaries and affiliated companies and any companies
controlled directly or indirectly by Xxx Xxxx (hereafter collectively
referred to as the "Xxx Xxxx Group") shall purchase all of their demand of
Smoke Alarms/ Detectors and Carbon Monoxide Alarms/Detectors from Eyston
provided that the most favorable prices as defined in Paragraph 3 are
offered and those prices and other terms are reasonably competitive with
other sources.
2. The Xxx Xxxx Group will buy products from Eyston at the most favorable
prices.
3. The most favorable price of a specific product shall mean the lower of (i)
the lowest price that Eyston sells to other customers for the product
having substantially the same make and materials and (ii) the indicative
price for each of the product as stated herein.
4. The following are the indicative unit prices (F.O.B. Hong Kong, at sight)
for existing smoke alarms and carbon monoxide alarms: (i) DC battery
operated ionization smoke alarm with a 9V carbon-zinc UL approved battery
in gift-box packaging: USD2.00; (ii) DC battery operated photoelectric
smoke alarm with a 9V carbon-zinc UL approved battery in gift-box
packaging: USD3.50; (iii) AC hardwired ionization smoke alarm with a 9V
carbon-zinc UL approved battery in gift-box packaging: USD3.826; (iv) DC
battery operated carbon monoxide alarm using QUANTUM chemical sensor with
a 9V Energizer 522 alkaline battery in gift-box packaging: USD12.00. The
indicative prices are subject to change as agreed by both Parties from
time to time.
5. The indicative prices for all other products and models are subject to
negotiation.
6. Subject to actual material and production costs variation, the indicative
prices shall be adjusted to reflect such costs changes.
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7. The sales from Eyston to the markets in the People's Republic of China
shall be to or through Xxx Xxxx, or a party designated by Xxx Xxxx from
time to time, on an exclusive basis.
8. This Agreement shall be governed by and construed in accordance with the
laws of Hong Kong.
IN WITNESS WHEREOF, the Parties to this Agreement have duly executed it on the
date and year first above written.
XXX XXXX LIMITED EYSTON COMPANY LIMITED
By: By:
------------------------------------ ------------------------------------
Xxx Xxxxx Xxxxxx Xxx Xxx Xxxx Xxxxxxx Xxx
Director Co-Chief Executive
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