Exhibit 10.1
DISTRIBUTION AGREEMENT
PARTIES:
1. The "grantor": HBL Limited, a company incorporated in Hong Kong, whose
registered office is at 0xx Xxxxx, Xxxxx Insurance Building, 48 Cameron Road,
T.S.T., Hong Kong.
2. The "distributor" LEP Products Inc, a company incorporated in Delaware,
United States of America.
WHEREAS, the GRANTOR has obtained the right to distribute the PRODUCTS, AND
WHEREAS, the DISTRIBUTOR wishes to ditribute the PRODUCTS in the TERRITORY,
the PARTIES have agreed to as follows,
DEFINITIONS:
1. The PRODUCTS means the goods as specified in Schedule I hereto.
2. The TERRITORY means the territory (ies) as specified in Schedule II
hereto.
3. The Minimum Guarantee as specified in Schedule III
DURATION OF AGREEMENT:
This AGREEMENT shall commence on 1st August 1997 and shall last for a period
of 2 years unless earlier terminated.
DISTRIBUTOR'S OBLIGATION
1. The DISTRIBUTOR shall purchase all of its supply of the PRODUCTS from
the GRANTOR at prices and conditions to be fixed by the GRANTOR. The prices
will be fixed by the Grantor for a one year period.
2. The DISTRIBUTOR shall use its best endeavors to promote the sale of the
PRODUCTS at the TERRITORY specified. The DISTRIBUTOR will follow the
guidelines set in this AGREEMENT and as established by GRANTOR from time to
time, pertaining to the marketing of PRODUCTS. At all times the GRANTOR
reserves the right to visit, verify and cancel any POS (Points Of Sale)
developed by the DISTRIBUTOR, which is deemed unsuitable by the GRANTOR.
3. The DISTRIBUTOR will supply the GRANTOR with updated list of POS for
the TERRITORY and will provide the GRANTOR with a photograph of the POS
(Street view, floor view, actual display of PRODUCTS). Such photographs will
be the base for verification and confirmation of the POS and marketing of
PRODUCTS by the DISTRIBUTOR in the TERRITORY on a "best effort" basis.
4. All matters relating to marketing, the GRANTOR must approve promotion
and retail pricing of the PRODUCTS. Prior written approval must be obtained
from GRANTOR two weeks before any promotion, marketing and retail pricing.
Any deviation and change from the approved marketing, promotion and retail
pricing of the PRODUCTS is strictly prohibited.
The DISTRIBUTOR shall only market the PRODUCTS in the TERRITORY and shall not
sell the PRODUCTS
directly or indirectly or to anyone he knows or has reason to know may sell
directly or indirectly outside the TERRITORY under any circumstances.
The DISTRIBUTOR will not sell the PRODUCTS in the TERRITORY for:
- DUTY FREE ACCOUNTS
- DISCOUNT STORES
- MAIL OR CATALOGUE SALES
4. All purchases must be made by irrevocable Letter of Credit at sight 90
days or Telegraphic Transfer in US$ 60 days prior to shipment date, and
conditions stipulated in Grantor's sales contracts.
In case of disagreement over the definition of the above it should be made in
the sole discretion of the GRANTOR.
GRANTOR'S OBLIGATION
1. The GRANTOR will guarantee the exclusivity to the DISTRIBUTOR during
the duration of the AGREEMENT.
2. The GRANTOR certfies that PRODUCTS are free from any manufacturing
defect upon shipment and will replace one for one under such defects.
3. Each order/shipment will include 1% spare units of the PRODUCT and the
GRANTOR will provide spare parts for all models sold for at least two years
from the date of last shipment.
4. Spare parts will be charged according to the standard spare parts lists
and if desired by the DISTRIBUTOR it will replace the 1% spare units with a
credit note for 1% of spare part according to the invoice value.
AFTER SALES SERVICE
1. The DISTRIBUTOR shall maintain an after sales service capability during
the duration of this AGREEMENT. The location, address, person in charge of
the after sales capability will be informed to the GRANTOR. Any serice
required by the owner of a Product will be done free of charge during the
warranty period (conditional to the repair pertaining to the warranty clause)
and only part costs will be charged after the warranty period.
ADVERTISING/PROMOTIONAL ALLOWANCE
- The GRANTOR will contribute 50% of all costs for advertising incurred by
the DISTRIBUTOR, upon submission of proper invoice thereof, on the following
conditions:
- All advertising/promotion by the DISTRIBUTOR must receive prior approval
in writing from the GRANTOR.
- Advertising must be equal to 5% of the total FOB purchases during the
specified calendar year during the duration of this AGREEMENT.
- DISTRIBUTOR must provide proof of advertising, including invoice, to the
GRANTOR.
2. The DISTRIBUTOR will participate in the purchase of promotional gift
items or special marketing campaigns
initiated by the GRANTOR.
TERMINATION
1. The GRANTOR shall be entitled to terminate this contact if and when the
minimum quantities set out in the SCHEDULE III are not acheived.
2. A written thirty (30) day notice can terminate this AGREEMENT by the
GRANTOR in the event of:
- There is at any time a material change in the management, ownership or
control of the DISTRIBUTOR.
- The DISTRIBUTOR engages in any marketing/advertising activity that is
prohibited under this AGREEMENT or any breach of this agreement i.e.
sale outside territory, sale to discounters.
3. In the event of termination of this AGREEMENT the GRANTOR has the
exclusve right to:
- Purchase all or any portion of the remaining inventory at the GRANTOR'S
invoice value if less than six months old and at 50% invoice price for
over six months old, less any amounts due under this agreement.
- Require the DISTRIBUTOR to sell all or any portion of the remaining
inventory to third party in the TERRITORY, designated by the GRANTOR at
GRANTOR'S invoice value adding the general import taxes required by the
government of the TERRITORY.
This AGREEMENT does not in any form whatsoever, grant the DISTRIBUTOR the
use of HANG TEN, in any form The PARTIES, to this AGREEMENT, recognizes that
ILC Licensing Corp. is the official licensor for all Hang Ten. The GRANTOR
manufactures and distributes Hang Ten brand watches under the agreement with
ILC Licensing Corp.
This AGREEMENT shall be governed by the laws Hong Kong.
In witness whereof this AGREEMENT has been executed on the date first written.
For GRANTOR For DISTRIBUTOR
------------------------- -------------------------
HBL Limited LEP Products Inc.
SCHEDULE I PRODUCTS
The PRODUCTS will mean Wrist Watches and Clocks manufactured under license
agreement with ILC Licensing Corp. of the HANG TEN brands.
SCHEDULE II TERRITORY
The TERRITORY will mean the domestic market of the United States and Canada.
Besides the below schedule a US$10,000 deposit to be made to HBL on signing
of the above contract which will be refundable upon completion of the
duration of this agreement providing all GRANTOR's money have been paid as in
accordance with the agreement.
SCHEDULE III MINIMUM PURCHASES
----------------------------------------------------
YR FOB H.K. IN U.S.$
----------------------------------------------------
97/98 US$350,000.00
98/99 US$600,000.00
----------------------------------------------------
