Buying Agency and Supply Agreement

Exhibit 10.1

BUYING AGENCY AND SUPPLY AGREEMENT

This Agreement, made as of ________ by and between FORWARD INDUSTRIES, INC. a New York corporation (hereafter referred to as “Principal”), having an address at 700 Veterans Memorial Highway, Suite 100, Hauppauge, NY 11788 and FORWARD INDUSTRIES (ASIA-PACIFIC) CORPORATION, a BVI registered corporation wholly-owned by Terence Bernard Wise (hereinafter referred to as “Agent”) having an address at 10F-5 No.16, Lane 609, Chung Shin Road, Section 5, San Chung District, New Taipei City, Taiwan, Republic of China.

WHEREAS, Principal designs, markets and distributes carry and protective solutions and various retail items (the "Products");

WHEREAS, Agent is established as a buying and supplier agent in the Asia Pacific Region, consisting of Australia, New Zealand, Hong Kong, Taiwan, China, South Korea, Japan, Singapore, Malaysia, Thailand, Indonesia, India, the Philippines and Vietnam (the “Territory”) for merchandise and is engaged in the exportation of products for sale to the United States and elsewhere, including, but not limited to the Products; and

WHEREAS, the parties desire to enter into this Agreement for Agent to source for Principal’s Products and to arrange for sourcing, manufacture and exportation of such Products under and subject to all of the terms and conditions set forth herein.

NOW, THEREFORE, the parties hereto, in consideration of the foregoing and of the mutual covenants contained herein, and intending to be legally bound hereby, agree as follows:

1.                  Engagement. Principal hereby engages Agent and grants to Agent the right to act as the exclusive buying agent for Principal for, and in connection with, Principal’s purchases, transactions and related dealings, directly or indirectly with regard to the sourcing of Products in the Territory, including compliance and logistical services. Agent shall be required to maintain an acceptable level of performance to maintain its exclusivity hereunder. Agent shall, only with the approval of Principal, be permitted to appoint sub-agents to provide some, or all, of the services, which are required by this engagement.

A. Agent shall:

B. Agent shall arrange to have produced for Principal samples and prototypes on a timely basis at a price agreed upon in writing by Principal and consistent with Principal’s Product Development principles outlined in Appendix C. In the case of OEM business, there is no charge for samples. For retail products, any individual product sample paid for by Principal and subsequently ordered for production, Principal will receive refund exclusive of freight cost. If multiple samples are requested, either the factory will charge a development fee or the Principal will be expected to pay for the samples.

C. Agent shall act only upon the specific instructions of Principal and in no case shall the Agent act without such explicit instructions. Agent acknowledges that it has no right, power or authority to make any contract or incur any obligation or liability, which shall be binding upon Principal unless it has been specifically authorized in writing, and in advance by Principal.

D. The parties shall use good faith efforts to develop a performance appraisal methodology that is based on key operating metrics (such as quality, delivery, conduct, etc.) in order to evaluate Agent’s performance. Continued non-performance by Agent under such methodology shall constitute a material breach hereunder.

2.                  Compensation.

A. “Invoice Price” shall mean the F.O.B. purchase price of the Products purchased by Agent for Principal, which price shall be the same as the price paid by Agent for such products, excluding any Agent commissions.

B. In consideration of the services rendered by Agent under this Agreement, Principal shall pay to Agent the sum of $65,833 per month plus four percent (4%) of the Adjusted Gross Profit (hereinafter defined) of all Products sold pursuant to this Agreement (the “Service Fee”). In no case shall the total Agent fee outlined in 2.B. exceed 10% of total Invoice Price in a given calendar year. For the purpose of computing the Service Fee due hereunder, the following directions shall apply:

a.              “Adjusted Gross Profit” shall mean the amount which is equal to Net Sales less Material COGs.

b.             “Gross Sales” shall mean all revenues recognized by Principal from the sale of Products.

c.              “Material COGs” shall mean the amount which is equal to the cost of all materials, tooling, packaging, inbound freight, customs and duties incurred by Agent to deliver Products to Principal at the agreed upon shipping point (e.g. Port of Hong Kong or Port of Shen Zhen). Such “Material COGs” shall be equal to the amounts referenced in Principal’s approved purchase orders to Agent and to the amounts referenced on Agent’s invoices to Principal. Such Material COGs shall exclude Agent’s Service Fees and shall be equal to Agent’s actual cost basis as supported by the local supplier invoices.

d.             “Net Sales” should be defined as being equal to Gross Sales less returns, discounts and allowances and should be recorded and recognized in accordance with Generally Accepted Accounting Principles in the United States.

Where Principal determines the Products to be defective, no Service Fee shall be paid by the Principal and Agent shall provide a credit or refund to Principal for any commission paid for Products by Principal.

C. In the event of a significant increase or decrease in the Principal’s Gross Sales over two consecutive financial quarters, such increase or decrease to be no less than 20% of Gross Sales from the prior quarter, Principal and Agent agree to negotiate in good faith on a revised Service Fee that may be more or less than the Service Fee considering any savings that may be achieved by Agent as a direct consequence of any significant reduction in Gross Sales and any additional resources that may be required by Agent as a direct consequence of any significant increase in Gross Sales.

D. The Service Fee above shall include all costs of travel and entertainment, telephone, telex, telecopies, postage, office space, personnel (including salaries, benefits, overtime, and any related taxes), legal and professional services and all other costs deemed necessary and incurred by Agent in the performance of its obligations hereunder.

E. Agent shall pay all costs of conducting its agency and all taxes, including assessments, which may be made against the salary or wages of those directly or indirectly employed by Agent.

3.                  Payment. Principal shall pay Agent for amounts due under the terms of this Agreement as follows:

A. For the purchase of Products, including samples and prototypes, Agent shall, at the end of each month, provide Principal with an itemized invoice for all Products delivered in such month, which invoice shall not include any Service Fee. Principal shall pay Agent within sixty (60) days of receipt of Agent’s monthly invoice.

B. Agent shall provide to Principal on a monthly basis, a separate invoice for the Service Fees earned during the previous month. Principal agrees to pay all Service Fees within sixty (60) days of receipt of the Agent’s invoice; provided however that if Principal notifies Agent in writing that it objects to any invoice within ten (10) days of receipt of such invoice, payment on the disputed invoice shall be made when the dispute is resolved.

4.                  Purchases and Delivery.

A. Principal’s order of Products shall be effectuated by Principal’s submission to Agent of a firm written purchase order in advance of delivery. Principal may submit to Agent forecasts of Principal’s Product needs, however, any such forecasts shall be an estimate only and not a commitment to purchase. Agent shall either confirm or reject Principal’s purchase orders within three (3) business days via the Principals LCP. Agent shall promptly update Principal with purchase, production, inspection and logistic data and documentation (e.g. Advanced Shipping Notification or Certificates of Origin), including via Principal’s LCP, as requested and deemed necessary by Principal. No such purchase order may be changed or terminated without the prior written consent of Principal.

B. Amended Purchase Orders. Principal shall have the right prior to delivery of the Products to make changes to the purchase order. If any such changes cause an increase or decrease in cost or delivery time, Agent shall notify Principal in writing immediately and explain the amount and basis for any such adjustment in cost or delivery time. If Principal accepts such adjustments, Principal and Agent shall execute an amendment to the purchase order to evidence such adjustments or Principal shall issue a revised purchase order.

C. Late Delivery. If Agent determines that it is unable to deliver Product timely as provided in an accepted purchase order, Agent shall immediately notify Principal and Principal shall have the right to: (i) accept late delivery; (ii) specify a more rapid method of shipment with Agent paying the additional transportation cost (subject to Agent’s use of best effort to effectuate manufacturers agreement to such); (iii) terminate the purchase order without liability or penalty (subject to Agent’s use of best effort to effectuate manufacturers agreement to such).

D. Early Delivery. If Product is available for delivery to Principal prior to the specified or requested delivery date, Principal shall make reasonable effort to accept the Product. Otherwise, Agent shall be responsible for arranging the Product to be properly stored and redelivered on the specified or requested delivery date.

5.                  Returns. Returns of defective and/or noncompliant Products that are under warranty by Agent (refer to Section 7 below) shall be shipped pre-paid by Principal and Agent shall be charged back for shipping costs unless otherwise specifically agreed to by Principal (subject to Agent’s use of best effort to effectuate manufacturers agreement to such). Prior to return of any Product, Principal shall notify Agent in writing, and Agent shall provide Principal with a Return Authorization within five (5) business days of such written notice. Under no circumstances is Agent or its manufacturers permitted to sell to any party other than Principal any Products or sample Products manufactured under this Agreement, including Products, samples and prototypes that are returned by Principal and that Agent is unable to rework to meet specifications and quality requirements. In addition, Agent agrees to submit to Principal a Certificate of Destruction in which Agent identifies the defective Products and sample Products and verifies under oath that such Products and sample Products have been destroyed.

6.                  Representations by Agent. Agent represents and warrants the following, each of which shall be deemed to be independently material and have been relied upon by Principal:

A. Agent is a corporation duly organized and validly existing under the laws of the country in which it maintains the office from which it shall perform its obligations under this Agreement.

B. Agent has the full right, power and authority to execute and deliver, and perform fully and in accordance with all of the terms of, this Agreement, and the performance by the Agent of all of its obligations and covenants hereunder does not and will not violate any law or regulation, agreement or other instrument to which Agent is a party or by which Agent may be bound.

C. Agent is engaged in the business of sourcing products in the Territory. Agent has the requisite experience to properly supervise the manufacture of the Products.

D. Agent warrants and represents that it will not knowingly or intentionally make any statement or representation inconsistent with the terms and provisions of this Agreement in any affidavit, special invoice, special Customs invoice, pro forma invoice, consular invoice or any other document or communication, oral, written or otherwise. In addition, no part of the compensation paid, or to be paid, to Agent pursuant to this Agreement shall in any manner be paid or payable directly or indirectly to any manufacturer of Products or to any government agent.

E. Agent, in executing this agreement, certifies that it has no ownership or direct financial interest in, nor any control of, the factories making the commodities purchased with the assistance of the Agent and that the factories have no ownership or financial interest in, or any control over, the Agent. In the event that any such interest is consummated, then the Agent will immediately inform Principal. Failure to do so will result in the forfeiture of the Agent’s commission on the goods purchased from the related or controlled factories.

F. Agent shall accept no remuneration for its services other than the commissions paid hereunder by Principal and will not share commissions in any manner with the manufacturer or others.

7.                  Claims, Inspections and Warranties.

A. Principal may inform Agent of any claims against a manufacturer regarding the Products. Agent will, pursuant to the instructions of the Principal, act on behalf of the Principal and use its best efforts to assist in the resolution of any claim.

B. Agent shall allow, and shall require its manufacturers to allow, Principal or its designees the right to enter their manufacturing and storage facilities during regular business hours, with or without notice, to inspect Products, tools, packaging and working conditions in order to confirm Agent’s and Manufacturer’s compliance with this Agreement.

C. Agent shall make all reasonable efforts to provide Principal with a one (1) year product warranty from the date of delivery to Principal or Principal’s customers. Such warranty shall be predicated on Agent’s ability to secure equivalent or better terms from its manufacturers in its manufacturing agreements. Agent shall make all reasonable efforts to ensure that the Products will be free from defects in materials and workmanship, be merchantable, safe and fit for the particular uses and purposes for which the Products were manufactured, and strictly conform to all approved samples and specifications. For Products under warranty, Principal may return defective products for refund or credit, including shipping charges to return such defective product, if required.

8.                  Term and Termination. The term of this Agreement shall begin on October 24, 2023 and continue until October 31, 2024 (the “Term”) subject to earlier termination as provided for in Section 9 below. Thereafter, provided the parties have reached an agreement in writing as to the Service Fee at least one hundred twenty (60) days prior to the end of the then expiring Term, the Term shall be eligible for renewal for one (1) two (2) year term (the “First Renewal Term”), unless terminated. Following the First Renewal Term, in each instance, provided the parties have reached an agreement in writing as to the Service Fee at least one hundred twenty (60) days prior to the end of then expiring Term, the Term shall be eligible for renewal for successive one (1) year terms (together with the First Renewal Term, the “Renewal Terms”). Renewal Terms that have commenced shall be included in the Term. On expiration or termination, this Agreement shall continue to apply to orders for Products placed during the Term, which may be shipped after expiration or termination of the Term.

9.                  Termination.

A. Termination for Cause. This Agreement may be terminated for Cause at any time. For purposes hereof, "Cause” shall mean: (i) a material breach by either party of the terms of this Agreement, (ii) a default by either party in the performance of any duties or obligations hereunder that is not remedied within thirty (30) days of written notice, (iii) a failure by Agent to maintain an acceptable level of performance in terms of price, quality, quantity or delivery; (iv) if Agent shall be insolvent or shall make an assignment for the benefit of creditors or is adjudged bankrupt in any legal proceeding under any applicable law or a trustee or receiver of its business or affairs or of a material part of its properties is appointed in any legal proceeding under any applicable law and any such proceeding is not dismissed within thirty (30) days after its commencement; or (v) upon any change of control of Agent. For purposes hereof, the term “change of control” shall mean the sale, transfer or conveyance of a majority of the presently existing voting stock of Agent, this Agreement may be terminated by the non-breaching/defaulting party on written notice to the other party.

B. Termination without Cause.

10.              Seconds, Thirds or Excess Goods. Agent agrees to use its best efforts to recover the cost of all seconds, thirds or excess goods from the manufacturer on Principal’s behalf. Agent is not entitled to recover either the costs of reinspection or costs associated with obtaining refunds from Principal. Agent covenants that it will ensure that no seconds will be released by the manufacturer.

11.              Proprietary Rights.

A. Agent acknowledges that all patents, trademarks, tradenames, copyrights and designs relating to the merchandise shall be and remain the property of Principal, or its customers. Agent agrees that any use or copy of these patents, trademarks, tradenames, copyrights or designs must be accompanied by a statement of Principal’s rights thereto. Agent will not, during the term of this agreement or at any time thereafter, claim any right or property interest in such patents, trademarks, tradenames, copyrights and designs, or take or permit any action which will have an adverse effect on Principal’s rights to such owned or licensed patents, trademarks, tradenames, copyrights and designs. In case such rights of Principal or its customers are abused, Agent will do its best to give notice to Principal and to help Principal avoid the same, but all costs involved will be paid by Principal.

B. Principal shall own the exclusive rights to the trade dress and visual design of the Products, Product materials, and related packaging for the Products. Principal shall also own all right, title and interest in all tooling, molds or special equipment which have been furnished or paid for by, or charged against, Principal in connection with the manufacture of the Products.

12.              Non-Compete. Agent agrees that during the Term of this Agreement and for twelve (12) months thereafter, neither it nor its affiliates or subsidiaries shall source or supply to any party other than Principal, products that, in Principal’s sole determination, incorporate or are similar in nature, use, appearance, construction, design or performance to the characteristics of any of Principal’s products.

13.              Confidentiality.

A. For the purposes hereof, “Confidential Information” shall mean all proprietary and confidential information and trade secrets of a party about its business, including without limitation designs, drawings and graphics and information about colors, fabrics and other materials, new and modified products financial and business data and plans and related reports.

B. Each party acknowledges that the other party’s Confidential Information constitutes valuable and proprietary trade secrets of such other party and, except as provided herein or in any other agreements between the parties or their affiliates, such party shall not use or cause to be used or disclose or cause to be disclosed any Confidential Information unless otherwise authorized in writing. Each party shall limit access to Confidential Information to the other party to those employees or agents whose duties require the possession thereof, and such party shall inform them of the confidential nature thereof. Each party shall use commercially reasonable efforts to safeguard the other party’s Confidential Information and to prevent the unauthorized, negligent or inadvertent use of disclosure thereof. At the end of the Term hereof, each party will return or destroy the other parties Confidential Information.

C. The parties recognize that remedy at law for any breach of the provisions of this paragraph will be inadequate and, accordingly, agree that in addition to such other remedies that may be available, at law or in equity, any court of competent jurisdiction may enjoin, without the necessity of requiring proof of actual damages or the posting of any bond or other security, any actual or threatened breach of the provisions of any of this paragraph.

14.              Rights Upon Cancellation or Termination. Upon the cancellation or termination of this Agreement: (a) all rights and obligations of the parties hereunder shall cease and terminate except as to rights and obligations accrued by either of the parties prior to the date of such cancellation or termination, including rights and obligations under outstanding import contracts not yet performed; (b) Principal shall have the right to deal with all manufacturers dealt with by Agent in connection with Principal’s business either directly or through one or more other buying agents without further obligation to Agent; and (c) Agent shall turn over to Principal any and all copies of contracts and other information in the Agent’s files relating to arrangements made by Agent with sellers of merchandise on Principal’s behalf (it being understood that all such contracts and other information shall be treated by Agent as confidential and shall not be disclosed by Agent to any third party either during or after the term hereof). Without limiting the generality of any of the other terms of this Agreement, upon the expiration or termination of this Agreement, Agent shall not be entitled to, and hereby waives its right, if any, to make any claim for damages, losses or compensation arising from any expectancy of continuation of this Agreement, or for any other reason whatsoever (except with respect to Service Fees payable to Agent as a result of orders for Products placed prior to the termination of this Agreement but not shipped until after the termination of this Agreement disregarding the shipment date of the merchandise).

15.              No Joint Venture. Nothing contained herein shall be construed to place the parties in the relationship of partners or joint ventures, it being agreed and understood that Agent is an independent contractor and not an employee of Principal. Agent shall have no power to obligate or bind Principal in any manner whatsoever except as otherwise provided herein. Agent shall not hold itself out as employed by or otherwise affiliated with Principal. Agent shall obtain all approvals and permits (if any) from any and all governmental authorities that are necessary or appropriate in order that Agent shall be permitted under the local laws of the Territory to engage in all activities provided for under this Agreement.

16.              Notices. All notices required or permitted under this Agreement shall be in writing and shall be mailed by overnight delivery to the party to receive notice at the addresses first set forth above or at such other address as any party may, by written notice, direct and shall be made in accordance with New York law. All notices given under this paragraph shall be deemed as given on the two business days following the day on which the notice is mailed or faxed.

17.              Further Assurance. Each party agrees, upon the reasonable request of the other party, to take such action and to execute and deliver such documents as may reasonably be necessary or appropriate to effectuate the terms of this Agreement and the transactions contemplated hereby.

18.              Assignments.

A. Principal may assign this Agreement to a successor to all or substantially all of that portion of its business which deals with the Products. Agent may not assign this Agreement without the prior written consent of Principal.

B. Except as provided for in Subparagraph (A), neither party shall assign or transfer all or any portion of this Agreement, whether voluntarily, by operation of law, or otherwise, without the prior written consent of the other party.

19.              Headings. The paragraph headings of this Agreement are for convenience of reference only and do not form a part of the terms and conditions of this Agreement or give full notice thereof.

20.              Construction. This Agreement shall be governed by and construed and take effect as an enforceable contract in accordance with the laws of the State of New York governing such agreements, without regard to conflicts-of-law principles thereof that would require applicability of any other law.

21.              Jurisdiction. Any legal action or proceeding with respect to this Agreement may be brought exclusively in the courts of the State of New York County or of the United States for the Southern District of New York. Each party hereto irrevocably submit to the exclusive jurisdiction of such courts, irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER. The parties agree that a final judgment in any lawsuit, action or other proceeding arising out of or relating to this Agreement brought in such courts shall be conclusive and binding upon each of the parties hereto and may be enforced in any other courts to the jurisdiction of which each of the parties is or may be subject, by suit upon such judgment.

22.              Entire Agreement. This Agreement contains the entire understanding between the parties with respect to the subject matter hereof. It may not be amended or modified in any manner, except by a written agreement duly executed by both parties hereto. No custom or course of dealing shall be referred to as amending or altering the terms of this Agreement and no waiver shall be deemed to apply to any matter other than or subsequent to the matter to which it relates.

23.              Indemnification.

A. Agent shall indemnify Principal, its officers, agents, employees, directors, shareholders and representatives (collectively, the “Principal Indemnified Parties”), and hold them harmless, from and against any and all losses, damages, liabilities, claims, payments, liens, judgments, orders and decrees of every description, recoveries, costs and expenses (including attorneys’ fees incurred by Principal Indemnified Parties both in connection with claims against Agent and as well as third party claims) arising out of or relating to, in whole or in part, any act or omission, negligence, misconduct or fraud of any of its officers, agents, employees, directors, shareholders, and representatives in performing its obligations under this Agreement.

B. Principal shall indemnify Agent, its officers, agents, employees, directors, shareholders and representatives (collectively, the “Agent Indemnified Parties”), and hold them harmless, from and against any and all losses, damages, liabilities, claims, payments, liens, judgments, orders and decrees of every description, recoveries, costs and expenses (including attorneys’ fees incurred by Agent Indemnified Parties both in connection with claims against Agent and as well as third party claims) arising out of or relating to, in whole in part, any act or omission of any of Principal, its officers, agents, employees, directors, shareholders, and representatives in performing its obligations under this Agreement.

24.              No Waiver. The failure by any party to complain of any act or omission on the part of the other, no matter how long the same may continue, shall not be deemed to be a waiver by such party of any of its rights under this Agreement. The waiver by any party at any time, expressed or implied, of any breach, attempted breach, or default of any provision of this agreement shall not be deemed a waiver of any other provision of this agreement or a consent to any subsequent breach, attempted breach or default of the same or any other type. If any action by Agent shall require the consent or approval of Principal, such consent or approval of Principal to such action on any one occasion shall not be deemed a consent or approval of any other action on the same or any subsequent occasion.

25.              Invalidity. Should any term or provision of this agreement for any reason be held to be illegal, invalid, void or unenforceable either in its entirety or in a particular application, the remainder of this agreement shall nonetheless remain in full force.

26.              Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.