DISTRIBUTION AGREEMENT
This Agreement, made and entered into on September 1, 1999 by and
between GolfGear International, Inc., a Nevada corporation,
having its main office and place of business at 0000X Xxxxxxxxxx
Xxxxx, Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000 (hereinafter referred
to as the "Company") and M.C. Corporation of Japan Terasiosu
Xxxx. 0-0-0 Xxxxxx Xxxxxx, Xxxxxx-xx 000-0000 Xxxxx Xxxxx
(hereinafter referred to as "Distributor").
WITNESSETH
WHEREAS, Company manufacturers and sells products;
WHEREAS, Distributor desires to perform certain services on
behalf of Company with respect to selling products;
NOW THEREFORE, in consideration of mutual conditions and
obligations hereinafter set forth, the parties hereto have agreed
as follows:
1. PRODUCTS.
Company hereby appoints Distributor, and Distributor hereby
accepts appointment as Company's exclusive sales Distributor in
Japan to promote and assist in the sales of products as listed
below:
All Golf Clubs and Parts produced by Company; All Golf
accessories produced by Company. (hereinafter referred to as
"Products").
2. TERRITORY.
The sales territory designated herein is the geographic area of
Japan as well as any area mutually agreed upon in the future, for
which Distributor shall have sales responsibility and in which
Distributor will exert its best effort for sales of the Products.
Distributor is expressly forbidden to export GolfGear product to
other markets. M.C. Corporation/GolfGear Japan will have the
option to appoint or assign distributors within their territory.
Appointees/Assignees must be approved by GolfGear International,
Inc. Distributor may not carry competing products without the
Company's permission. Should this territory be broadened to
encompass all of Asia except for Korea, GolfGear may sell direct
to customers while M.C. Corporation/GolfGear Japan would be in
the process of organizing such distribution. While this
transition is in process, M.C. Corporation/GolfGear Japan would
be paid a ten percent (10%) commission in all territories with
the exception of Korea and Japan.
3. MAJOR REPONSIBILITY OF DISTRIBUTOR.
Generate and stimulate interests in the Products and furnish
information to Company with regard to market trend and
prospective purchasers of the Products.
Participate in the sales promotion activities and trade shows to
benefit sales of Products and assist and advise Company in this
regard.
The Distributor will be responsible for all marketing efforts,
such as advertising, promotion, etc.
4. MAJOR RESPONSIBILITY OF COMPANY.
Endeavor to maintain the delivery conditions on all orders
accepted by Company.
Provide Distributor to the full extent with sales and technical
information and assistance regarding the Products.
Keep Distributor informed of specification changes of Products.
5. TERMS OF SALES.
Terms will be irrevocable letter of credit to be drawn only to
GolfGear International, Inc. as per Pro-forma invoices. F.O.B.
Huntington Beach, California, U.S.A.
6. PURCHASE ORDER AND DELIVERY.
Distributor can issue purchase orders on behalf of purchasers in
the territory and Company shall ship and deliver Products by
virtue of purchase orders. GolfGear International, Inc. requires
a 90-120 day lead time on products produced for M.C.
Corporation/GolfGear Japan on an exclusive basis. Products that
are considered "in-line" goods could be shipped in a shorter
period of time, to be determined when orders are placed.
7. RELATIONSHIP OF PARTIES.
Company shall not deal directly with customers in the territory
and in case Company is contacted by any customer in the
territory, the Company shall notify and consult with Distributor.
8. ASSIGNMENT OF AGREEMENT.
Neither this agreement nor any rights or obligations hereunder
may be assigned by Distributor without the prior written consent
of Company.
9. DURATION AND TERMINATION.
This agreement shall be effective for a initial period of five
(5) years from the effective date of this agreement, and shall be
extended automatically for a period of five (5) years unless
there is written notice from either party not less than 90 days
prior to expiration date. Upon completion of the aforementioned
two (2) five (5) year periods, there will be two additional five
(5) year periods.
If either party hereto continues in default of any obligation
imposed on it herein for more than 60 days after written notice
by the other party has been dispatched requesting the party in
default to remedy such default, the other party may terminate by
registered mail to the party in default and this agreement shall
terminate on the date of dispatch of such notice.
In the event of bankruptcy, receivership, insolvency or
assignment for the benefit of creditors or either party hereto,
the other party may terminate this agreement effective
immediately by giving written notice to that effect.
10. PRODUCT LIABILITY INSURANCE.
During the term of this agreement, the Company will maintain a
minimum of $1,000,000 each occurrence and $2,000,000 aggregate of
product liability insurance covering the sale and distribution of
its products throughout the world, and shall name the Distributor
as an additional insured under such policy. A copy of our policy
will be provided to show proof of insurance on a world-wide
basis.
11. PRODUCT WARRANTY.
All products sold by the Company shall be fully warranted against
defects in workmanship for the life of the product, and any
products identified by the Distributor as defective will be
replaced by the Company without charge, including freight and
related direct costs.
12. QUALITY CONTROL.
During the term of this agreement, the Company will maintain
documented quality control systems and procedures that meet or
exceed industry standards. Both parties will set a mutually
agreed upon standard for quality control, as to what is
acceptable and what would not be acceptable in terms of the
definition of "defective".
13. EFFECTIVE DATE.
This Agreement shall become effective as of the day and date
first written above.
14. APPLICABLE LAW.
This Agreement shall be governed by the law of State of California.
15. ENTIRETY.
This instrument constitutes the entire agreement and
understanding between the parties hereto relative to the subject
matter hereof and there are no understandings, agreements,
conditions or representations, oral or written, expressed or
implied, with reference to the subject matter hereof, that are
merged herein or superseded hereby. No modification hereof shall
be of any force or effect unless reduced to writing and signed by
the parties claimed to be bound thereby and no modification shall
be effected by the acknowledgment of acceptance of any order
containing different conditions.
16. CONFIDENTIALITY.
The Company and Distributor will execute a Confidentiality/Non-
Disclosure Agreement.
17. NON-TRADING.
During the term of this agreement, Distributor agrees not to
engage in any open market purchases or sales of the Company's
common stock, without the prior written consent of the Company.
18. COMPREHENSIVE AGREEMENT.
Parties may elect to prepare a more comprehensive distribution
agreement subsequent to the execution of this agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their authorized representatives as of the date first
above written:
COMPANY:
By: /s/ Xxxxxx X. Xxxxxxxx Date: September 1, 1999
Xxxxxx X. Xxxxxxxx
President/Chairman
GolfGear International, Inc.
DISTRIBUTOR:
By: /s/ Xxxxx Xxxxxxxxx Date: September 1, 1999
Xxxxx Xxxxxxxxx
President, M.C. Corporation
SCHEDULE A
Sales Performance Agreement.
This Twenty (20) year agreement of four (4) five (5) year periods
includes a sales performance agreement that is structured as
follows:
ANNUAL FORECAST AMOUNT:
In Year No. 1: Beginning January 1, 2000 total annual purchases
from Company shall exceed $500,000.00 USD.
In Year No. 2: total annual purchases from Company shall exceed
$1,000,000.00 USD.
In Year No. 3: total annual purchases from Company shall exceed
$2,000,000.00 USD.
In Year No. 4: total annual purchases from the Company shall
exceed $5,000,000 USD.
In Year No. 5: total annual purchases from the Company shall
exceed $7,500,000 USD.
There will be a minimum purchase guarantee after year one of
$750,000.00 USD. There will be a one-time grace period for one
year after year two. This grace period can be used at anytime
within the first ten (10) years, after year two (2). Both parties
agree to meet annually to review the $750,000.00 USD minimum
requirement on goods purchased.
TERM:
This agreement is for two (2) five (5) year options, with two (2)
additional five (5) year options, for a total period of twenty
(20) years. This agreement may be extended as mutually agreed
upon. Unless both parties notify the other, this agreement will
automatically renew for the next five (5) year period.
LICENSE:
It is understood that M.C. Corporation will purchase all fully
assembled hard goods (clubs, putters, wedges, etc.) from GolfGear
International, Inc.
M.C. Corporation will have the right to license the name brand
"GolfGear" and any other brands that GolfGear has used or may use
in the future, for use on apparel, bags, shoes, and other
accessories for a six (6) percent royalty based on the price that
the Distributor pays for such goods. Such royalty shall be paid
on a quarterly basis, and GolfGear International, Inc. shall have
the right to audit royalty payments from time to time.
Royalties are only to be paid on goods intended for resale. For
example, no royalty is required on goods used for promotional
items, give-aways, etc. Goods purchased directly from GolfGear
International, Inc. are exempt from royalties.
EXPORT PRICING:
Terms will be by Irrevocable Letter of Credit, F.O.B. Huntington
Beach, California U.S.A. See attached Schedule B for year 2000 pricing.
SCHEDULE B
Year 2000 Confidential Export Price List. (Subject to change
after December 31, 2000)
Export Price
Tsunami Driver #1 Wood 9 deg $195.00
XX-0 Xxxxxx #0 9,10 degree lofts $205.00
Ti-Gear Xxxxx - 9, 10, 12 degree lofts $112.50
Ti-Gear Left Hand Driver - 9 degree loft $112.50
Ti-Gear Offset Xxxxx - 10, 12 degree lofts $112.50
Ti-Gear Low Profile Xxxxx (Fairway Gear)
degree (driver), 13 and 15 degree (3 xxxxx),
19 degree (5 wood), 22 degree (7 wood) $112.50
Ti-Gear Irons (3-SW) Graphite Shaft $495.00
Ti-Gear LW, #1 Iron $ 55.00
Ti-Gear Irons (3-SW) Steel Shaft $324.00
Ti-Gear LW, #1 Iron $ 36.00
TourGear Irons - Steel Shaft $324.00
WedgeGear Wedges $ 20.00
Tour Select Putter $ 17.50
Precision Gear Putter $ 16.00
SofTec Putter $ 26.00
/s/ Xxxxxx X. Xxxxxxxx September 28, 1999
Xxxxxx X. Xxxxxxxx Date
President/Chairman
GolfGear International, Inc.
