EXCLUSIVE DISTRIBUTION AGREEMENT
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This Agreement is made and entered into on September 1, 2001 by and between
GolfGear International, Inc., a Nevada corporation, having its main office and
place of business at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to
as the "Company"), and Yunnan Zhongyi Industry CO. LTD., located at ▇▇/▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ (hereinafter referred to as the
"General Exclusive Distributor").
WHEREAS, Company manufacturers and sells products;
WHEREAS, General Exclusive 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 General Exclusive Distributor, and the General Exclusive
Distributor hereby accepts appointment as Company's exclusive sales distributor
in Mainland China, Macao, Hong Kong, and Taiwan 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 the "Products").
2. TERRITORY
2.1 The sales territory designated herein is the geographic area of Mainland
China as well as Macao, Hong Kong, Taiwan, for which General Exclusive
Distributor will exert its best effort for sales of the Products. General
Exclusive Distributor is expressly forbidden to export Company's Products
to other markets. General Exclusive Distributor may not carry competing
products without the Company's permission.
2.2 General Exclusive Distributor has full authorization to appoint sub
distributors within the territory agreed upon. The Company will be advised
of all sub distributor appointments.
3. MAJOR RESPONSIBILITY OF DISTRIBUTOR
3.1 Generate and stimulate interests in the Products and furnish information
with to Company with regard to market trend and prospective purchasers of
the Products.
3.2 Participate in the sales promotion activities and trade shows to benefit
sales of products and assist and advise Company in these regards.
3.3 The General Exclusive Distributor will be responsible for all marketing
efforts, such as advertising, promotion, etc within the territory as
defined herein.
4. MAJOR RESPONSIBILITY OF COMPANY
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4.1 Endeavor to maintain the delivery conditions of all orders accepted by
Company.
4.2 Provide general distribution to the full extent with sales and technical
information and assistance regarding the Products.
4.3 Keep General Exclusive Distributor informed of specification changes of
Products. The parties will mutually agree on all specifications and/or
changes to specifications on all golf clubs.
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. factory; Garden Grove,
California, U.S.A.
6. PURCHASE ORDER AND DELIVERY
The General Exclusive Distributor can issue purchase orders on behalf of
purchasers in the territory and Company shall ship and deliver Products by
virtue of purchase order. Company requires a 90-120 day lead-time on products
produced for General Exclusive Distributor 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 consumers in the territory and in case any
customer in the territory contacts Company, the Company shall notify and consult
with General Exclusive Distributor.
8. ASSIGNMENT OF AGREEMENT
Neither this agreement nor any rights or obligations, hereunder may be assigned
by General Exclusive Distributor without the prior written consent of Company,
within 30 days.
9. DURATION AND TERMINATION
9.1 This agreement shall be effective for an initial period of five (5) years
from the effective date of this agreement, and shell be extended
automatically for a period of five (5) years unless there is a 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.
9.2 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.
9.3 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
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During the term of this agreement, the Company will maintain a minimum of
$1,000,000 each occurrence and $2,000,000 aggregates of product liability
insurance covering the sale and distribution of its products throughout the
world, and shall name the General Exclusive Distributor as an additional insured
under such policy. A copy of insurance policy will be provided to show proof of
insurance on a worldwide 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
General Exclusive Distributor, as defective will be replaced by the Company
without charge, including freights 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 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 and by the
law of China.
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 hereby and no modification shall be affected by the acknowledgment of
acceptance of any order containing different conditions.
16. CONFIDENTIALITY
The Company and General Exclusive Distributor will execute a
confidentiality/Non-disclosure Agreement.
17. NON-TRADING
During the term of this agreement, the General Exclusive 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 to the
execution of this agreement.
19. RIGHT TO PURCHASE SHARES
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19.1 The General Exclusive Distributor has the right to invest one million US
dollar to purchase GolfGear International, Inc. four million shares within
six months from the date of this agreement signed detailed in the terms and
conditions written in Exhibit C.
19.2 The General Exclusive Distributor must fulfill the obligation to purchase
the order as specified as following;
First Order before October 30th, 2001, totaling US$250,000.00 or more, but
less than US$ one (1) million,
Second Order before January 30, 2002, totaling US$250,000.00 more, but less
than US$ one (1) million,
Third Order before April 30, 2002, totaling US$250,000.00 more, but less
than US$ one (1) million.
Forth Order before July 30, 2002, totaling US$250,000.00 more, but less than
US$ one (1) million.
20. SALES PERFORMANCE SCHEDULE
This twenty (20) year agreement of four (4) five (5) year periods includes a
sales performance schedule that is structured as follows:
Annual Forecast Amount
In Year No. 1: Beginning September1, 2001 total annual purchases from
Company shall exceed US$500,000 to US$3,000,000.
In Year No. 2: Totaling annual purchases from the Company shall exceed
US$500,000 to US$3,000,000.
In Year No. 3: Totaling annual purchases from the Company shall exceed
US$500,000 to US$3,000,000.
In Year No. 4: Totaling annual purchases from the Company shall exceed
US$500,000 to US$3,000,000.
In Year No. 5: Totaling annual purchases from the Company shall exceed
US$500,000 to US$3,000,000.
21. LICENSE
21.1 It is understood that General Exclusive Distributor will purchase fully
assembled hard goods (clubs, putters, wedges, etc.) from Company
21.2 The General Exclusive Distributor has the right to license the name brand
"GolfGear", including the brands Leading Edge, Diva, Player's Golf, Bel-Air
Golf, and any other brands that Company has used or may use in the future,
for use on apparel, bags, shoes, etc. and other accessories for a six (6)
percent royalty for year one, five (5) percent for year two, three (3)
percent for year three, and three (3) percent every year thereafter based
on the price that the General Exclusive Distributor pays for such goods to
manufactory. Such royalty shall be paid on a quarterly basis, and Company
shall have the right to audit royalty payments from time to time.
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21.3 Royalties are to be paid on goods intended for resale. No royalty is
required on goods used for promotional items, give-away, etc. Goods
purchased directly from Company are exempt from royalties.
21.4 The name brand GolfGear may be licensed for tobacco products for a three
(3) percent royalty based on the price paid to the manufacturers.
21.5 The General Exclusive Distributor has the right to use the brand name
GolfGear, Leading Edge, Players Golf, Diva and any other affiliated names
now or in the future on other non-golfing related items, such as sun
glasses, sun screen, bottled water etc. detailed in the royalty percentages
listed in Item 21.2 of this agreement.
IN WITNESS WHEREOF, the parties have caused this agreement to be executed by
there authorized representatives as of the date first above written:
COMPANY GENERAL EXCLUSIVE DISTRIBUTOR
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
President/Chairman Director/CEO
GolfGear International, Inc. Yunnan Zhongyi Industry CO.
LTD
Date----------------------- Date----------------------------
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