EXHIBIT 10.5
Document: DC-95083 of the 26th June 1995
CONTRACT ON EXCLUSIVE DISTRIBUTION
REGARDING THE SALE OF THE PRODUCTS
GAIA CONVERTER
BY THE COMPANY ENERTEC (ISRAEL)
BETWEEN: THE COMPANY GAIA CONVERTER SA, CAPITAL F 790.000
REGISTERED AT THE REGISTRAR OF TRADE AND COMPANIES IN
BORDEAUX, UNDER REGISTRATION NO. B392 666 947
HEREINAFTER: "THE GRANTOR"
AND BETWEEN: THE COMPANY ENERTEC ELECTRONICS LTD.,
REGISTERED AT THE REGISTRAR OF TRADE AND COMPANIES
NO. _____________
HEREINAFTER: "THE DISTRIBUTOR"
NOW AND THEREFORE:
The Grantor had developed and adjusted a variety of Products as described in the
Appendix, on which he has all rights and wishes to expand his chain in the
Territory stated in the Appendix.
Taking into consideration the relations created and obtained with his clientele,
the Distributor esteems that he has the tools required for the distribution of
the Products to this clientele.
DEFINITIONS:
Whenever used in this contract or in relation with its execution, the following
terms shall be defined as hereinafter.
- - "PRODUCT" shall mean the Products or Products described in the Appendix
- - "TERRITORY" shall mean the countries or regions listed in the Appendix
- - "TRADEMARK" shall mean the rights on the signs, logos, designs and models
related with the product.
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ARTICLE 1: OBLIGATIONS
By way of the present contract, the Grantor grants to the Distributor the
exclusive sale of the product in the Territory during the period of the contract
in conformity with the terms and conditions therein, and the Distributor accepts
this concession.
In view of the above, the Distributor undertakes to realize and shall be liable
for the integrality of the operations of stock keeping, promotion, sale and
invoicing of the product in the Territory as well as the collection of debts
from his clients, in conformity with the terms and conditions defined in the
present contract.
The parties shall always act independently from each other, and the present
contract shall not be viewed as creating any kind of branch or joint venture,
nor any relation of subordination, representation, mandate, agency or any
analogy among them.
ARTICLE 2: TERM
The contract shall come into force as of today.
The contract refers to a first trial period of one year, during which period the
sides shall be enabled to bring it to an end without indemnities and upon notice
of two months in advance.
At the end of this period, the contract shall be renewed automatically for a
period of 2 years, unless notice shall be given at least 6 month in advance by
any of the sides at the present contract.
ARTICLE 3: TERRITORY AND CLIENTELE
The Distributor shall perform his activity in the Territory described in the
Appendix.
ARTICLE 4: THE GRANTOR'S OBLIGATIONS
In order to enable the Distributor to fulfill his mission as granted, the
Grantor undertakes to put at his disposal any commercial and technical document
on the Products and offer, if necessary, technical support at the exhibition of
the Products.
ARTICLE 5: TRADEMARK
In all territories the Products shall be distributed under the Trademark GAIA
Converter.
The Distributor undertakes not to make use of the Trademark but for the purpose
of the present contract and in relation with the Products. He is not allowed to
use it on his company letterhead nor in brochures, advertisements or promotional
documentation, should he prepare such, but by mentioning his quality of
independent enterprise, Distributor of the Trademark GAIA Converter.
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ARTICLE 6: COMMERCIAL POLICY / ANNUAL TARGET
6.1 COMMERCIAL POLICY The Distributor shall be free to determine his commercial
policy (advertisement, price ) to be conducted in the Territory.
Notwithstanding, regarding the price policy the Grantor shall convey the
"recommended sale prices" based on the sale prices catalog used in France.
The sale prices used by the Distributor to the clients shall be based on
these "recommended sales prices".
6.2 ANNUAL TARGET For the first year no commercial target shall be fixed. At
the beginning of the Gregorian year the commercial targets shall be fixed
and enclosed to the contract. Three months before the start of each
Gregorian year, the Distributor shall inform his forecasts for orders of
the Products for the next year, forecasts that shall have an indicative
character.
ARTICLE 7: EXCHANGE OF INFORMATION BY THE SIDES
The Distributor shall keep the Grantor informed as to operational, financial,
technical and commercial aspects of the markets in the field of said Products.
ARTICLE 8: ADVERTISEMENT
The advertisement and the promotion of the Products in the Territory shall be
effected on the Distributor's account.
ARTICLE 9: CONDITIONS OF THE DISTRIBUTOR'S OPERATION
The Distributor must act in accordance with all professional diligence in order
to promote the sales of the Products subject of the present contract and in
order to preserve the confidence of his clientele in his sector of activity.
In his quality of Distributor, the Distributor enjoys independence in the
organization of his activity. He shall determine by himself the methods of work
as well as the choice of his colleagues; consequently, the Distributor shall
cover all occasional expenses of his activity.
The Distributor shall never be considered in regards to the fiscal and social
laws as the Grantor's employee.
10.
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SUPPLIES AND STOCKS
10.1 SUPPLIES The price of transfer of the Products as well as the terms of
transport and delivery are listed in the Appendix. Prices shall be updated
yearly at the beginning of the Gregorian year. The Distributor shall be
informed on revised prices with sufficient notice in advance. With each
shipment an invoice shall be issued. Invoices shall be paid according to
the conditions listed in the Appendix.
10.2 STOCKS The Distributor undertakes to keep in his premises stocks for
immediate disposal in order to fulfill the requirements of the market. The
Products shall be received, stocked and delivered according to the
instructions of GAIA Converter.
10.3 EXCHANGE OF STOCKS At the beginning of each Gregorian year the Grantor
undertakes to replace the references of the Products as the case may be.
ARTICLE 11: NON-COMPETITION
During the period of the contract, the Distributor undertakes not to
manufacture, distribute and/or sell, directly or indirectly, any competing
product, meaning any product that is identical or substantial in the consumer's
spirit.
ARTICLE 12: CONFIDENTIALITY
The Distributor undertakes to preserve the confidentiality and not to reveal to
any third party whatsoever without the Grantor's prior authorization, in writing
and explicitly, during the period of the present contract and for a period of 5
years following it, any data whatsoever that had reached the Distributor during
his collaboration with the Grantor.
ARTICLE 13: GUARANTEE CIVIL LIABILITY
At the Distributor's disposal 8 days as of the date of reception of each
shipment in his warehouses to inform the Grantor of any quality failure of the
Products in order to enable him, after control thereof, to perform the
replacement.
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The Grantor undertakes full and complete liability for all consequences of
damage that may occur from the use of the Products, except such damages sourced
in the Distributor's mistake or non-observation by the Distributor of the
Grantor's instructions, as well as the legislation in the Territory as
applicable, regarding the stocking and sale of the Products.
If it comes to the Distributor's attention, directly or indirectly, that the use
of any of the Products sold in the Territory causes material or corporeal
damages, he is to inform immediately the Grantor and to communicate him all data
that he had collected in the matter.
The Distributor undertakes to take an insurance covering the risks and torts
derived from the operations of reception of the stocks and the delivery of the
Products.
ARTICLE 14: SUSPENSION THE CONTRACT
14.1 SUSPENSION
The side wishing to bring the contract to an end shall inform the other
side by registered letter with receipt of delivery by notice of 6 months in
advance.
14.2 TERMINATION
Should the Distributor breach his obligations as stated above, the present
contact shall be ended automatically by way of registered letter with
receipt of delivery.
If up to one year the Distributor shall not fulfill his trade objectives,
the Grantor shall be entitled to end the present contract in conformity
with the terms listed in art. 14.1 above.
In case of such termination by the Grantor, the Distributor shall not be
entitled to require any indemnity for the orders passed to the Grantor
after the entry into force of such termination and shall not be entitled
otherwise to collect any indemnity whatsoever.
Unless consented otherwise by the Grantor, the present contract shall be
automatically null and avoid in case of legal occurrence or change in the
management and/or control of the Distributor.
The Grantor preserves the right to stop completely or partly the
manufacturing or to stop the trading in the Territory of the Products
without the Distributor's complaint of any type or kind whatsoever, nor to
pretend for indemnities thereof.
In case the present contract shall not be renewed after the initial term,
the sides agree that no right shall be preserved.
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14.3 CONSEQUENCES
On the date or date of enforcement of termination of the present contract,
the Distributor undertakes:
To transfer free of charge to the Grantor or to any person designed by the
Grantor any authorization for trading of the Products in the Territory. To
return to the Grantor all technical or commercial documents in his
possession.
To stop immediately the use of the Trademark
The stocks of Products in good condition and suitable for sale, held and
paid for by the Distributor during the term or on the date of effect of the
termination of the contract shall be taken by the Grantor at the valid
prices paid.
ARTICLE 15: TRANSFER OF THE CONTRACT
The present contract, made intuiti personae, shall not be transferred to any
third party whatsoever without the Grantor's preliminary written and explicit
consent.
ARTICLE 16: DISPUTES
All disputes regarding the interpretation or the implementation of the
dispositions in the present contract and which cannot be solved amicably, shall
be solved by arbitration in Paris (France) according to the regulations on
conciliation and arbitrage of the International Chamber of Commerce, by one or
several arbitrators nominated in conformity with the same regulations, the
language of the arbitrage being the French language and the arbitration decision
shall be definitive and beholding the sides.
The law of the present contract is the French law.
For ENERTEX For GAIA Converter
Date: 10.11.95 Date:
Name: Harry Mund Name: H. Huillet
Title: General Manager President, General Director
Signature (-) Seal and signature (-)
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APPENDIX TO CONTRACT
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A. THE PRODUCTS
Standard Modules Converters such as defined in the datasheets of the
product GAIA Converter enclosed to the contract.
Following models are available:
- Range 4W named MGDM-04
- Range 10W named MGDM-10
- Pre-Regulator PGDS-50
B. TERRITORY
ISRAEL
C. CLIENTS
All kinds of clients and fields
D. TERMS OF PURCHASE
Discount of 20% on the sale prices appearing in the catalog for France.
This price does not cover packing and port fees and is at factory gate (Ex
works)
Products are under GAIA Converter guarantee.
The terms of Purchase are conditioned by a minimum invoice of 3.000 F. not
including tax.
E. PRICE OF SALE TO CLIENTS
The price of sale for the products to the clients shall be in the local
currency of the country and shall be determined by the Distributor.
Notwithstanding GAIA Converter shall inform the "recommended sale price"
based on its price-list for sale in France.
This price of sale to the client in France is quantity conditioned:
- orders from 1-3 units of same reference:
- orders from 4-9 units of same reference:
- orders from 10-49 units of same reference:
- orders from 50-99 units of same reference:
- orders from 100-199 units of same reference:
Orders exceeding 200 units are named "OEM". These are dealt with jointly in
order to reach a satisfactory conclusion.
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F. TERMS OF PAYMENT
Orders placed by the Distributor shall be paid by bank transfer within 30
days as of receipt of invoice.
For ENERTEX For GAIA Converter
Date: 10.11.95 Date:
Name: Harry Mund Name: H. Huillet
Title: General Manager President, General Director
Signature (-) Seal and signature (-)
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CONDITIONS OF SALES & WARRANTY
1 General terms:
1.1 Except special written conventions, all orders from the customer shall
comply with the present general terms & conditions of sale and information
contained in the catalogs, leaflets are not binding on GAIA Converter. GAIA
reserves the right to change or modify without notice any of the specifications
of the products in addition our general terms & conditions-shall overrule any
special conditions included in the customer's purchase order.
1.2 Orders received by our customers doesn't constitute a firm sale order
until they have been confirmed and accepted in writing by GAIA Converter
1.3 Gaia Converter shall not be bound to any order taken by its
representatives or employees unless such order has been confirmed in writing by
one of its duly authorized representative
2 Quotations:
Unless indicated otherwise quotations are valid for 30 days.
3 Prices:
3.1 All prices quoted are fob factory. without taxes and/or import duties,
packing and transport are not included and shall be a separate item on the
invoice.
3.2 Our products are invoiced at a price based on the current price list at
the time of order. Our price list is periodically revised and will be disclosed
to our customer upon request.
4 Payment Conditions:
4.1 Our invoices are payable, net 30 days. Gaia's representative or
employees are not authorized to collect payment.
4.2 All invoice that are not paid when due shall be subject to a penalty
interest charge equal to one and a half time the bank prime rate permitted by
local regulations starting on the due date of the invoice. The accounting of
this penalty in Gala's accounting, book and the resulting obligation by the
customer to pay such amount will be confirmed in writing and shall be applicable
to any discount or credit due by Gaia Converter.
4.3 If customer failed to make any payment. Any and all other payment become
immediately due and Gaia reserves the right to suspend or cancel current orders
if it has not heard from the customer within 8 days after; t has informed the
customer in writing by registered mail. Under such condition if Gaia cancel a.
customer's order, any payment received will be kept as compensation
4.4 Cash payment or bank guaranty maybe required until proper customer's
credit has been established or for the first order of the customer or when the
customer's financial condition deteriorate. Gaia reserves the right at all time
and according to its risk perception to establish the credit limit of each
customer and to adjust its payment terms.
5 Delivery:
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5.1 Whatever is the destination of our products, the delivery is always done
from our factory or warehouse, either directly to the customer or by a notice
that those products are available for pick up or when notice is given to the
customers transport company that goods are ready for pick up.
5.2 Delivery delay are computed from the factory as per the terms indicated
on our delivery slip that is used as an order acknowledgment.
5.3 Delivery dates are indicated as accurately as possible, but are given as
an indication, according to our suppliers and transport facilities, therefore
any delivery delays shall not be subject to penalty or order cancellation or
delivery cancellation.
5.4 Furthermore, delivery can only take place if customer has fulfilled all
its current obligations.
6 Modifications or cancellation of order:
6.1 If the customer want to modify the specifications of the product, after
the order has been processed, GALA reserves the right to changes the prices and
delivery quoted.
6.2 No modifications or cancellation of order can be accepted:
- For special products, developed at the request of a customer,
- For standard products, at less than 7 weeks before the scheduled delivery
date,.
- In all other cases a total or partial cancellation can only take place
upon GAIA's written agreement. A cancellation charge of 35% of the order
shall be due
7 Warranty & Compliance:
7.1 Gaia Converter reserves the right to modify the specifications of its
products (characteristics, size, form functions) according to the technological
evolution. It the products have already been ordered, the customer has the
option to accept or refuse such modification, in which case, the order will be
cancelled without prejudice
7.2 GAIA warrants that all of its products are free from defects in material
or workmanship under normal use and service for a period of one year from
delivery date. Provided the product has been used according to its normal usage,
and not subject to misuse or accident:
7.3 GAIA's obligations under this warranty are limited to replacing or
repairing, at our option, at our factory or facility, any of the products which
shall within the applicable period after shipment be returned to us,
transportation charges prepaid, and which are, after examination, disclosed to
the satisfaction of GAIA to be thus defective. The warranty does not apply to
any products or equipment which have been repaired or altered, except by GAIA,
or which have been subjected to misuse, negligence or accident. Under no
circumstances shall Gala's liability exceed the original purchase price. The
aforementioned provisions do not extend the original warranty period of any
product, which has either been repaired or replaced by GAIA.
7.4 Customer can only claim warranty if he has comply with all payment
conditions.
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7.5 The return of products is subject to authorization, and furthermore will
be accepted only if the 4 following conditions are met:
- The exact reason for the return must be indicated on all alleged defected
product,
- The return must be done in the original packing in good condition at the
customer's expense,
- The product must not have been tempered with or modify by the customer,
- The product must not be deteriorated for any reasons.
8 Title and Claim:
All operations of transport, customs, handling and insurance of the product
outside of our factories or stores are at the expenses and risks of the
customer, and he must verify all shipment upon arrival whether freight. was
prepaid or not. We reserve the right of invoicing the packing.
9 Retention of Title:
The products shall remain our property until payment in made in full. In the
event when the delivered products are resold before full payment, all products
of the same type, delivered during the last 6 months by Gala and owned by
customer could be seized up to a value estimated on the current price list, and
according the amount owed. In the even the customer is subject to any action
from a third party, he must immediately inform the seller so that he can protect
his rights. In addition, customer cannot give. as a guaranty property of the
goods. Should the customer use the goods as collateral, GAIA Converter shall
have. the right to take the goods away from the customer. All amount due then
become Immediately payable without further notice. Customer must have a proper
insurance to cover all risk related to delivered or said delivered goods
(article 5). The above clauses can be placed In force as soon as any payment is
outstanding.
Retention of title and collective procedure - the goods being sold under the
clause of retention of title, the ownership transfer can only occur when full
payment for all goods and accessories have been received. In the event that the
customer is subject to a judiciary procedure, he must Inform GAIA Converter by
registered mail with acknowledgement within 15 days of the start of such
procedure, so that GAIA Converter can claim the goods being part of the company
assets. Fn that respect the customer will make sure that goods can be well
identified in his office or warehouse, or the price that they were sold.
Customer will make due diligence in making sure that the germs of the insurance
contract are fully respected, following a claim that the seller may place.
10 Applicable laws - Jurisdiction:
The sale: of our products shall be regulated exclusively by the French law
whatever final the destination of the product. Any action that may arise that
cannot be settle in a friendly manner by the parties will be submitted to the
_Tribunal du Commerce_ located within district were GAIA Converter is
registered. The present clause is stipulated in GAIA Converter's interest and
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only CAI can decide to renounce it. All actions generated by a sale between the
parties shall be deemed to expire after 2 years from the date of its inception.
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