DISTRIBUTORSHIP AGREEMENT
CONFIDENTIAL
Exhibit
10.1
This
AGREEMENT made and entered into on this October
2, 2006
(“Effective Date”), by and between SAMSUNG ELECTRONICS CO., LTD. having its
place of business at 416 Maetan 3-Dong, Yeongtong-Gu, Suwon City, KyungKi-Do,
KOREA (hereinafter referred to as the “Seller”), and GVI SECURITY INC. having
its place of business at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx.
00000, U.S.A (hereinafter referred to as the “Distributor”), hereinafter jointly
referred to as the PARTIES.
WITNESSETH
WHEREAS,
the Seller is engaged in manufacturing and marketing of CCTV and Security
Surveillance Equipment, the details of which is defined as below (hereinafter
referred to as the “Products”), and whereas, the Distributor desires to purchase
and market such Products under the terms and conditions of this Agreement;
WHEREAS,
the parties entered into Distributor Agreement generally describing, and
providing certain obligations and rights of the parties relating to
distributorship in effective August 31, 2004, and terminating on October 2,
2006. (“Previous Agreement”)
WHEREAS,
the parties wish to enter into a distribution arrangement by entering into
this
Agreement, which shall define and provide more detailed rights and obligations
of the parties;
NOW
THEREFORE, in consideration of the promise and mutual covenants hereunder set
forth, the Parties hereto agree as follows:
ARTICLE
1. SCOPE OF AGREEMENT
1.1 |
The
Seller entrusts the distributor with the Right to sell “SAMSUNG” CCTV and
SECURITY SURVEILLANCE PRODUCTS in the territory(s) of North, Central
and
South America.(“Territory”) During the Term of this Agreement the
Distributor is authorized to publicly define its activity with
the
following statement:
Authorized
Distributor of SAMSUNG ELECTRONICS CO., LTD. CCTV and SECURITY
SURVEILLANCE PRODUCTS. Samsung grants the Distributor the right
to sell,
market, lease and distribute the Products in the Territory. Samsung
will
not compete and sell Products directly or indirectly, through other
distributors, or Samsung business units, to the Top 25 customers
of
Distributor. (The list of Top 25 customers set forth in the Attachment
1 “
Top 25 customers”).
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1.2 |
Unless
otherwise specified in Section 1.1, Seller reserves the rights
to sell and
distribute in the Territory either directly or, through any third
party
any products under its trademarks or any other private brand names
to any
person, agent or distributor in the Territory without any liability
to the
Distributor.
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1.3 |
"Products",
which are covered by this Agreement, shall exclusively mean the
following
types of products manufactured by the Seller under "Samsung"
trademarks:
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CONFIDENTIAL
1)
Complete Professional security product line
ARTICLE
2. SALE AND PURCHASE OF PRODUCTS
2.1 |
Subject
to the terms and conditions of this Agreement, The Seller agrees
to sell
to the Distributor and the Distributor agrees to purchase Products
from
The Seller.
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2.2 |
No
order from the Distributor is binding on the Seller until the Seller
gives
the Distributor a confirmation of an acceptance of the order issued
by the
Distributor. In no event the Distributor shall rescind or amend
any order
which is accepted by the
Seller.
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2.3 |
The
Distributor shall issue to the Seller its purchase order for the
Products
at least forty five (45) days prior to the shipment of the
Products.
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2.4 |
The
Seller shall use its best effort to accept any reasonable orders
for the
products placed by the Distributor, provided that it shall not
be required
to accept a Distributor’s order or any part thereof
when:
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(a) |
the
Seller has discontinued the manufacture or sale of the Products ordered
at
the time the order is received, (provided, however, that Distributor
must
be notified 90 days in advance of any discontinued products),
or
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(b) |
the
Distributor has defaulted upon any of Sections of this
Agreement;
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ARTICLE
3. TERMS OF AGREEMENT - UNDERTAKINGS AND PROHIBITIONS
3.1 |
This
Agreement shall remain in full force and effect from the Effective
Date
until December 31, 2010, unless sooner terminated pursuant to
terms and
conditions of this Agreement. This Agreement may be renewed or
extended
only by mutual written agreement of the parties within sixty
(60) days
prior to the relevant expiration of this Agreement.
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3.2 |
The
Distributor must reach a Minimum Annual Purchase Objective of
U$
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(on
the
basis of actual shipping) for the specified Agreement period as follows
;
U$
Million
Year
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Annual
Total
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Remark
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2006
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21
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2007
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27
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2008
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2009
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2010
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3.3 |
The
Minimum Purchase Objective of the year of 2008, 2009 and 2010 shall
be
automatically increased 20% each year from the base year of 2007.
In case
the market growth rate of the preceding year (“Market Growth Rate”) is
more than 20%, which is based on the data and information provided
by
market survey institutes with international repute such as IMS
or XX
Xxxxxxx, the Minimum Purchase Objective shall be automatically
increased
by [the Market Growth Rate + (Market Growth Rate*30%)].
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3.4 |
For
the purposes of this Section, the Products shall be deemed to have
been
purchased when Products have been shipped to Distributor from Seller’s
factory.
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3.5 |
This
Agreement can be terminated by Seller at any time if the Distributor
does
not attain the Minimum Annual Purchase Objective in each given
year.
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ARTICLE
4. MARKET DEVELOPMENT FUND
4.1 |
Subject
to Distributor’s satisfactory account status, , the Seller shall support
the Distributor by providing Quarterly Market Development Fund
(hereinafter referred to MDF) for its Samsung brand marketing and
promotion in Territory such as advertising in magazines or attending
exhibitions as follows ;
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4.1.1 |
When
the distributor reaches the Minimum Annual Purchase Objective referred
to
the above Article 3.2, the seller shall provide the distributor
with
3%
of
the Minimum Annual Purchase in the following year as
MDF.
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4.1.2 |
When
the distributor reaches80%
~ 99% of
the Minimum Annual Purchase Objective referred to the above Article
3.2,
the seller shall provide the distributor with 2.5%
of
the Minimum Annual Purchase in the following year as
MDF.
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4.1.3 |
When
the distributor reaches less than 80%
of
the Minimum Annual Purchase Objective referred to the above Article
3.2,
the seller shall provide the distributor with 2%
of
the Minimum Annual Purchase in the following year as
MDF.
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4.1.4 |
Seller
agrees to reimburse Distributor 50% of total cost of the ISC West
trade
show and will further provide products and on site engineering
support for
the ASIS show.
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ARTICLE
5. Responsibilities
of Distributor
5.1 |
The
Distributor
shall perform all of its obligations under the Agreement and
shall
make commercially reasonable efforts to promote, market and sell
the
quantity of Products, and shall conduct its business consistent
with the
reputation for quality enjoyed by Seller and its products.
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The Distributor undertakes to focus its marketing effort on Seller’s products but not to the exclusion of other products sold by the Distributor and recognizes that the level of investment required to properly support the Products is substantial. |
5.2 |
The
Distributor shall: (a) conduct its business in a manner that reflects
favorably on the Products and on the good name, goodwill and reputation
of
the Seller; (b) avoid deception, misleading or unethical practices;
and
(c) promote and further the interest of the Seller, its name and
Products.
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5.3 |
The
Distributor may contact the Seller for assistance, and shall do
so in the
event a defect can not be resolved by the distributor within a
reasonable
period of time or to the satisfaction of the Distributor's customer.
Nothing herein, however, shall be interpreted as creating any obligation
or liability for the Seller to provide, or to provide free of charge,
any
service or assistance to any customer of the Distributor, unless
specifically agreed otherwise by the Seller in
writing.
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5.4 |
The
Distributor shall maintain an inventory of spare parts and Product
components sufficient to be able to maintain the Products in serviceable
condition throughout the Term of this Agreement. The Distributor
shall
have the opportunity to order within six (6) months after termination
or
expiration of this Agreement the requisite quantity of spare parts
and
Product components or, if such products are no longer manufactured
by the
Seller, functionally equivalent units in order to fulfill its obligations,
against then Distributor pricing.
.
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5.5 |
The
relationship hereby established between SAMSUNG and Distributor
during the
term of this Agreement shall be solely that of seller and buyer,
and
nothing herein contained shall be deemed to authorize or empower
Distributor to act as agent nor employee of SAMSUNG. Distributor
shall not
enter into any contract or agreement or make any commitment,
representation, guarantee or warranty, except the warranty provisions,
,
which binds or will bind SAMSUNG or otherwise act in the name of
or on
behalf of SAMSUNG without specific written approval of
SAMSUNG.
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5.6 |
If
and when SAMSUNG indicates or makes an inquiry as to the quality
of
services provided or rendered by Distributor, Distributor shall
immediately investigate and take proper corrective measures, and
following
such implementation of the corrective measures shall report to
SAMSUNG of
such measures.
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5.7 |
Distributor
shall at all times comply with all applicable laws, regulations
and orders
in force in the Territory.
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5.8 |
The
details of Seller’s warranty obligation shall be determined by the
Warranty Service Agreement to be made and entered into separately
with
this Agreement between Seller and
Distributor.
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ARTICLE
6. PROPRIETARY AND INTELLECTUAL PROPERTIES
6.1 |
The
Distributor acknowledges and agrees that all information disclosed
directly and or indirectly by the Seller or embodied in the Products
and
relating in any way to the markets, products, plans and business
of the
Seller or the designs and technical data relating to the Products,
other
than information in general circulated published form or specifically
designated as non-confidential by the Seller, is confidential and
proprietary to the Seller.
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ARTICLE
7. PRICES AND TERMS OF PAYMENT
7.1 |
Prices
for the Products and other options shall be as set forth in the
current
price list, excluding of the applicable discount entitled to the
Distributor. The Seller, at its sole discretion, may change the
prices of
the Products. In the event of a price increase, Seller will provide
advance notice to Distributor of 30 days for new purchase orders.
However,
the Distributor may negotiate the price on the basis of the market
situation. The Seller shall endeavor to notify the Distributor
of any
change in pricing by written notice made at least 30 (thirty) days
prior
to the effective date. Seller agrees to provide Distributor with
best
pricing given to other distributors and customers within the
Territory.
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7.2 |
Prices
for spare parts shall be in accordance with the Spare Parts Price
List
less Distributor’s discount issued from time to
time.
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7.3 |
All
Payments shall be made in United
States Dollars (USD).
The payment shall be in full amount for all purchases affected
hereunder
according to the terms and conditions agreed. The Seller shall
make
commercially reasonable efforts to deliver the Products on a timely
manner
as reflected within the delivery schedule.
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7.4 |
All
prices are quoted by the Seller on the basis of FOB China or Korea
Port(s), unless otherwise
agreed.
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7.5 |
The
Distributor shall pay the Seller the amounts due for Products ordered
hereunder by Telegraphic Transfer within
90 days from the date of shipment.
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7.6 |
ARTICLE
8. TERMINATION
8.1 |
Seller
shall have the right to terminate this Agreement
if:
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a) |
Seller
can no longer retain the distributorship due to Seller’s policy or any
governmental policies or regulations;
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b) |
Seller
determines that invalidation or retraction of Distributor’s
distributorship is warranted due to failure or breach of Distributor’s
obligations of this Agreement;
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c) |
Seller
terminates or no longer engages in its CCTV business in the Territory
or
transfers substantial portion of its CCTV business to an unaffiliated
third party.
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Upon
termination of this Agreement pursuant to Section 8.1, neither party shall
be
liable to the other, either for compensation or for damages of any kind or
character whatsoever, on account of the loss by Seller or Distributor and/or
Distributor of present or prospective profits on sales or anticipated sales,
good will, or expenditures, investments or commitments made in connection
therewith or in connection with the establishment, development or maintenance
of
distributor’s/Distributor’s business, except that termination shall not
prejudice or otherwise affect the rights or liabilities of the parties with
respect to Products sold under this Agreement or any indebtedness then owing
by
either party to the other
8.2 |
Upon
termination or expiration of the Agreement for whatever reason,
Seller
will have no obligation to grant negotiation or offer to
Distributor/Distributor an extension or renewal to this Agreement
or any
other new distributorship
agreement.
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8.3 |
This
Agreement may be terminated at the option of the non-defaulting
party,
effective immediately upon a prior written notice of termination
given to
the other party, in each of the following
events:
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1. |
When
the other party becomes bankrupt or insolvent or has its business
placed
in the hands of receiver, assignee or trustee, whether by voluntary
act or
otherwise;
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2. |
When
the other party attempts to assign this Agreement or any rights hereunder
to a third party without the party’s prior written consent;
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3. |
If
the other party ceases to function as a going concern or to conduct
its
operations in the normal course of business, as this is described
in the
terms of this agreement;
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4. |
If
the other party shall not have remedied a breach or failure to perform
or
observe its obligations under this Agreement within thirty (30) days
of a
written notice requiring the remedy of such breach or failure;
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5. |
If
Distributor breaches its obligations regarding the confidentiality
information as provided in Article 9;
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6. |
If
Distributor breaches its obligations of the Minimum Annual Purchase
as
provided in Article 3
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7. |
If
Distributor breaches its obligations of the Payment as provided in
Article
7.
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ARTICLE
9. CONFIDENTIALITY
Distributor
and Seller shall not be allowed to make use of any business or trade secrets
or
other information of the Seller or to pass those secrets on to any third party
without prior written consent of the Seller. Distributor
and Seller shall not disclose to any third party without the prior written
consent of Seller, nor use for any purpose other than the performance of the
obligations under this Agreement, any confidential information concerning the
Products or business affairs of Seller (including but not limited to prices,
discounts, terms and conditions of sales, customers, business affairs, Products,
or Product specification) which it receives directly or indirectly from Seller,
or which it requires or develops in the course of its transactions with Seller.
The obligation herein provided shall survive the termination or expiration
of
this Agreement for five (5) years.
The
Seller Price Lists for Products and Spare Parts shall be deemed as Confidential
Information, remain as the property of the Seller and must be kept private
&
confidential.
ARTICLE
10. FORCE MAJEURE
10.1 |
Either
party shall be excused from and bear no liability for any delay
or failure
to perform any obligations relating to this Agreement or any purchase
order hereunder due to causes beyond its reasonable control, including,
but not limited to, acts of God, natural disasters, earthquakes,
fire,
riots, flood, material shortages, strikes, delays in transportation
or
inability to obtain labor or materials through its regular sources.
The
time for performance of any such obligation shall be extended for
the time
period lost by reason of the
delay.
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ARTICLE
11. Governing Law and Dispute Resolution
11.1 |
This
Agreement shall be governed by and construed in accordance with
the laws
of the State of New York, USA. Any dispute, controversy or difference
which may arise between the parties, out of or in relation to or
in
connection with this Agreement or for the breach hereof which cannot
be
settled amicably shall be finally settled by arbitration in the
place and
country of the respondent in accordance with the rules of International
Chamber of Commerce, whose award shall be final and binding upon
both
parties.
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ARTICLE
12. MISCELLANEOUS
12.1 |
Entire
Agreement / Amendments: This
Agreement constitutes the entire understanding between Seller and
Distributor with respect to the subject matter hereof and shall
supersede
and revoke all prior agreements, representations, communications,
oral or
written, between the parties hereto. No amendment, modification or
alteration of any terms of this Agreement shall be binding on either
party
unless the same shall be made in writing dated subsequent to the
date
hereof and executed by or on behalf of the parties
hereto.
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12.2 |
Waiver: Failure
or delay by either party to assert any of its rights on any one
occasion
under this Agreement shall in no way be construed as a waiver of
such
rights on any other future occasion, nor shall delay on the part
of either
party to act upon any breach be deemed a waiver thereof nor shall
a waiver
of any right by either party constitute or be deemed a waiver of
any other
right expect for the conditions as described in Section
3.4.
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12.3 |
Severability: The
terms and conditions of this Agreement shall be applicable severally
to
each Product, if more than one, and any dispute affecting either
party's
rights or obligations as to one or more Product(s) shall not affect
the
rights granted hereunder as to any other Product. If any provision
of this
Agreement is held to be invalid or unenforceable by a court of
competent
jurisdiction, then the remaining provisions will nevertheless remain
in
full force and effect, and the parties will negotiate in good-faith
a
substitute, valid and enforceable provision which most nearly effects
the
parties' intent in entering into this Agreement.
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12.4 |
References:
All references in this Agreement to "days" shall, unless otherwise
specified herein, mean calendar
days.
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12.5 |
Headings:
The Section headings used in this Agreement are for convenience
of
reference only. They shall not limit or extend the meaning of any
provision of this Agreement, and shall not be relevant in interpreting
any
provision of this Agreement.
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12.6 |
Product
Use: Products are manufactured for standard commercial use and
are not
intended to be sold or licensed for use in such applications as
critical
safety systems in nuclear
facilities.
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12.7 |
No
License: Neither this Agreement, nor the sale of Products under
it, will
be deemed to give either party any licenses, immunities or other
rights,
directly or by implication under the trademarks, trade names, patents,
copyrights or any other intellectual property rights of other,
except as
provided in this Agreement.
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12.8 |
Independent
Contractor: This
Agreement does not create or should not be construed to create
an agency
relationship between Seller and
Distributor.
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12.9 |
Further
Assurances: Each Party hereby covenants and agrees that it shall
execute
and deliver such deeds and other documents as may be required to
implement
any of the provisions of this
Agreement.
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12.10 |
No
Assignment: Distributor may, directly or indirectly, in whole or
in part,
neither by operation of law or otherwise, assign or transfer this
Agreement or delegate any of its obligations under this Agreement
without
Seller’s written consent. Any attempted assignment, transfer or delegation
without such prior written consent will be
void.
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IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement the day and
year
first written below.
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The
seller
SAMSUNG
ELECTRONICS CO., LTD
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The distributor, | ||
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By
:
Position : Date
: 2006
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By:
Xxxxxx X. Xxxxx
Position:
CEO
Date:
2006
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This
Agreement is executed in two original copies.
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