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Distribution Agreement STANDARD FORM DISTRIBUTION

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Distribution Agreement STANDARD FORM DISTRIBUTION Powered By Docstoc
					STANDARD FORM DISTRIBUTION AGREEMENT

THIS DISTRIBUTION AGREEMENT is made as this ------ . BY AND BETWEEN: (1)

day

of

________________________ a company duly organized and existing under and by virtue of the laws of ______________ and having its principal place of business at ______________________ (hereinafter referred to as the "Principal") of the one part, and ________________________ a company duly organized and existing under and by virtue of the laws of ______________ and having its principal place of business at ______________________ (hereinafter referred to as the "Distributor) of the other part.

(2)

IT IS HEREBY AGREED as follows: I. Definitions In this Agreement, the following words and expressions shall have the following meanings: "Control" means the power of a person to secure, whether by means of the holding of shares or the possession of voting power or by virtue of any powers conferred by or under articles of association, by-laws or statutes or any regulation, agreement or arrangement, that the affairs or business of another are conducted in accordance with its wishes;

"Principal Companies" means Principal and all other companies controlled by Principal and "Principal Company" means any of them; "Products" means the ______________ products manufactured and sold under the Trademarks for sale to retail customers and listed in Schedule A;

2 "Territory" "Trademarks" means the Schedule B; territory described in

means the registered and unregistered trademarks and trade names in respect of the Products which at any time are owned by any of the Principal Companies.

2. 2.1

Appointment as Distributor Principal hereby appoints the Distributor to be its non exclusive distributor of the Products for the Territory on the terms of this Agreement. Principal shall remain free to engage one or more other distributors in the Territory for the Products and other products from time to time manufactured by any Principal company, whether such products are similar to the Products or fall within another category of _____ product. Term of Agreement This agreement shall: (a) commence on the effective date and, subject to the provisions of clause ____, remain in full force and effect for a period of two (___) years (the ‘‘term’’); and Shall not be renewed unless both parties agree in writing to extend the term of this Agreement for additional term or terms.

2.2

3. 3.1

(b)

3.2

The acceptance of any order from, or the sale of any product to the Distributor after the expiration or the termination of this agreement shall not be construed as a renewal or extension thereof nor as a waiver of the expiration or the termination of this agreement. Neither Principle nor the Distributor has entered into this agreement on the basis, assumption or understanding that it will be renewed or extended after the expiration of the said ______ year term.” Specific Duties of Distributor The Distributor shall: (a) Use its best efforts to supervise, promote and maximize the sale of the Products in the Territory;

4.

3 (b) Achieve for each Product sales in the Territory of not less than the annual sales targets listed in Schedule C from time to time which reflect the annual market sales and business plans as agreed upon between the Distributor and Principal. Without prejudice to any other provision of this Agreement, the Distributor hereby acknowledges that a failure on its part to achieve any such annual sales target shall constitute a fundamental failure of the performance expected of it as a distributor of the Products; without prejudice to paragraph (b) above, ensure that its sales in the Territory of each of the Products each calendar year are in excess of the quantity of that Product sold by it in the Territory in the preceding calendar year. Comply with, and use all reasonable endeavors to ensure that its customers comply with all the promotional requirements of the Principal from time to time as to the display and merchandising of the Products; Comply with, and use all reasonable endeavors to ensure that its customers comply with all quality assurance procedures laid down by the Principal from time to time; provide timely delivery of the Products in accordance with the orders placed by its customers (provided always that the Distributor shall reserve the right not to accept orders placed by customers who have defaulted in respect of Products previously delivered); Purchase its full requirements of products the same as or similar to the Products exclusively from the Principal Companies and will not purchase similar products from any other manufacturer or supplier without the specific prior written consent of the Principal; Not sell or permit the export of the Products for sale outside the Territory without the Principal's written consent; sell the Products only to retail and wholesale customers in the Territory and will not without the Principal's written consent, sell the Products either directly or indirectly to embassies or government agencies or to the armed forces of any nation or of the United Nations nor to any other class or group of customers or individual customer which the Principal may notify to the Distributor from time to time;

(c)

(d)

(e)

(f)

(g)

(h)

(I)

4

(j)

Be solely responsible for providing at its own cost and expense an adequate management organization and sales force dedicated to selling only the Products so as to successfully promote and sell the Products in the Territory. The identity of each member of that sales force shall require the prior approval of the Principal and the Distributor shall at the request of the Principal at any time or from time to time remove a person from that sales force and replace him or her by a person acceptable to Principal; Extend credit facilities of the kind normally available in the trade to customers at its expense as necessary to promote sales of the Products; Provide and maintain all the necessary warehousing storage, transport and other facilities and equipment to carry out its duties and responsibilities under this Agreement to the complete satisfaction of the Principal. Not make any changes in its organization which might adversely affect its ability to carry out its duties without the prior written consent of the Principal. maintain its facilities in a thoroughly clean and sanitary condition which, as a minimum, must comply with all applicable legal requirements relating to the distribution or sale of the Products in the Territory and any additional requirements as may be specified by the Principal from time to time; Provide such packaging, labeling and/or relabelling services as is necessary to comply with any applicable rules or regulations for the distribution or sale of the Products in the Territory; Comply fully with all laws, regulations, rules and orders of any government or governmental agency that may apply with this Agreement, to its performance, or to the Products; secure and maintain in full force and effect, at its exclusive cost and expense, any licenses, permits and authorizations required from time to time to enable this Agreement lawfully to be made and carried out according to its terms and conditions;

(k)

(l)

(m)

(n)

(o)

(p)

(q)

5 (r) (s) Undertake sole responsibility for compliance of the Products with the applicable laws of the Territory. regularly report to and keep the Principal informed of the progress or development of the market for the Products throughout the Territory, and shall use its reasonable endeavors to inform the Principal of all government rules and regulations affecting the import, distribution and sale of the Products in the Territory and of any other factors which the Distributor shall consider relevant for the promotion, marketing, distribution or labeling of the Products in the Territory.

5. 5.1

Import Documents, Taxes and Duties etc. The Distributor shall obtain, at his own expense, all necessary licenses and any other permits which may be required to allow the Products to be imported into and sold in the Territory and the Principal shall use its best endeavors to provide such information as may be required to obtain such licenses and permits. The Distributor shall pay all charges, duties, levies, tariffs or taxes which are assessed against the Products in the Territory. Information on Competitors The Distributor will regularly provide the Principal with information about competitive products to be introduced into or which are on sale in the Territory.

5.2 6.

7. 7.1 7.2

Terms of Supply and Payment Products will be supplied to the Distributor _______________. The Products will be sold to the Distributor at the prices applying on the date on which Products are ready for shipment to the Distributor. The Distributor shall make prompt payment in U.S. dollars or such other currency and to such bank or banks as the Principal may direct from time to time. If payment in full is not made by the due date then interest shall accrue on the unpaid amount at the rate per annum equal to __% over the London Inter-bank Offered Rate from time to time for deposits in the relevant currency as quoted by such leading international bank as the Principal may select. Payment will be made by bank letter of credit if required by the Principal.

7.3

6 7.4 All orders received from the Distributor shall be subject to the Principal's acceptance, and the Principal may accept or reject orders in whole or in part. Acceptance shall occur only upon delivery of the Products to the carrier for shipment to the Distributor. The Distributor shall promptly dispatch to the Principal or as it may direct such import documentation for each consignment of the Products as the Principal may specify are required in order that it may claim any export subsidies in respect thereof and the Distributor shall compensate the Principal for any export subsidies which it shall be made to claim as a result of the Distributor's failure to comply with the provisions of this Clause. Price and Terms of Sale The Distributor shall quote to customers only those prices and other terms in respect of the Products that the Principal shall designate to the Distributor in writing from time to time and the Distributor shall only sell the Products at those prices and on those terms. The Distributor shall advise its customers, and it shall be a specific term of the Distributor's terms of sale, that acceptance of any order does not include or imply the acceptance of any term, condition or provision appearing on the customer's order form which enlarges on or is inconsistent with any of the Distributor's terms, conditions and provisions. Competitive Interests Neither the Distributor, nor its senior employees, nor any person entitled to five per cent or more of the assets of the Distributor or of the capital of the Distributor (if incorporated) shall act as, or have any direct or indirect financial interest in or be associated directly or indirectly with any person, firm, organization, or corporation acting as the distributor, sales agent, sales representative, broker, or in any other sales capacity for any product or products which are in direct competition in the Territory with any of the Products. The Principal may, from time to time, make exceptions to the requirements of this Clause 9, if the Principal determines that such exceptions are in the best interests of both the parties. All such exceptions must be in writing and signed by a duly authorized representative of each of the parties hereto.

7.5

8. 8.1

8.2

9. 9.1

9.2

7 9.3 The Principal shall remain free to engage one or more other distributors in the Territory for the Products and other products from time to time manufactured by any Principal Company, whether such products are similar to the Products or fall within another category of product. Stocks

10.

10.1 The Distributor shall maintain in store in its warehouses in the Territory a minimum stock equivalent to two forward month's average monthly sales ("AMS") of the Products in the Territory, and will have at all times an equivalent of four months AMS of the Products on orders which have been accepted or in transit. 10.2 The Distributor will submit to the Principal on a monthly basis as specified by the Principal and in a format prescribed by the Principal a report showing the stock position on the last day of the previous month together with monthly and cumulative sales and product receipts figures. 11. Storage Conditions

11.1 The Distributor will ensure that both it and its customers will at all times store, distribute and keep Products in conditions appropriate for the Products and at such temperatures as may be necessary to ensure the safety and integrity of the Products up to the point of sale to consumers. The Distributor will not sell Products to customers unless such conditions are met and will inspect customers' facilities from time to time to ensure that this obligation is complied with. 11.2 The Distributor shall grant to the Principal and its authorized representatives access to its premises for the purpose of making examinations, inspections and taking samples to ensure that the provisions of this Clause 11 are complied with and the Distributor shall co-operate fully with the Principal in carrying out all such examinations and inspections. 11.3 If at any time the Principal has reason to believe that the quality of the Products might not comply with any applicable law or regulation, the Principal may notify the Distributor to suspend the distribution of the Products and recover any or all Products from the market. The Distributor shall bear the cost of any such action, unless such action arose as a result of a defect in the manufacture of the Products or the negligence or willful default of the Principal. 12. Advertising and Promotion

8 12.1 Any advertising, marketing or promotion of the Products carried out by the Distributor shall be directed, prepared and approved by the Principal in every detail and no labels, copy layout or other advertising material of any kind shall be used by the Distributor without the specific prior written approval of the Principal. The Principal shall supply to the Distributor without charge such quantities of its regular printed material for the purpose of aiding in the promotion of sales as the Principal shall deem to be necessary. 12.2 The Distributor shall co-operate fully in any advertising, sales promotions and marketing campaigns prepared by the Principal for the Territory and shall not be entitled to reimbursement for any costs or expenses incurred by it in so doing. 13. Trademarks

13.1 The Distributor shall not without the prior written consent of Principal alter the labeling or packaging of any of the Products nor make any addition thereto. 13.2 During the term of this Agreement and after its expiration or termination for any reason whatsoever, the Distributor shall not, and shall procure that its affiliated companies shall not, use the Trademarks or any names similar to the Trademarks for any purpose (including as the name or part of the name of any business or company) except as permitted by the Principal in connection with selling the Products. 13.3 The Distributor shall do nothing during or after the expiration or termination of this Agreement which would adversely affect the validity or enforceability of the Trademarks. 13.4 The Principal makes no representation or warranty as to the validity or enforceability of the Trademarks nor as to whether the same infringes upon any intellectual property right of third parties in the Territory. 13.5 The Distributor acknowledges that this Agreement shall not operate to vest any right, title or interest in the Trademarks in the Distributor. As and when requested by the Principal at any time during the subsistence of this Agreement, the Distributor shall at the expense of the Principal do all such acts and deeds and shall execute all such documents as the Principal shall consider to be necessary or desirable for the protection of the Trademarks or the interests of Principal Companies therein. 13.6 The Distributor shall immediately report to the Principal any infringement or improper or wrongful use of any of the

9 Trademarks and shall at the request and expense of the Principal do whatever may lawfully be done to assist in the protection and preservation of the rights of the Principal Companies. 13.7 The Distributor will take all necessary steps to ensure that all the Principal's Trademarks are protected against mis-use, copying, passing-off or any other unauthorised activity and will, at the Principal's request and expense but not otherwise, take legal action in such instances as may be required. 13.8 The distributor shall not engage in any unfair trade practices or make any false or misleading statements or representations in advertising, printed material or otherwise with respect to any of the Products. 14. Changes to the Products The Principal may at its absolute discretion from time to time by notice to the Distributor delete Products from or add new Products to Schedule A or alter the specification of products. 15. Independent Status Neither the Principal nor the Distributor shall have any authority to employ any person on behalf of the other. Subject to the provisions of Clause 4(j), each party shall have its own exclusive right to select, engage, pay, discharge and otherwise manage, supervise and control the persons employed by it and shall with respect to such persons perform all obligations and discharge all liabilities imposed upon employers by local laws and regulations. At the request of the Principal, the Distributor shall co-operate with the Principal to act as sponsor in the Territory for the Principal employees. 16. Scope of Authority The Distributor is an independent contractor and not an agent or partner of the Principal and accordingly the Distributor has no authority or power, express or implied, to accept any order on behalf of any of the Principal companies or to bind any of the Principal companies either directly or indirectly with respect to any order or with respect of any other contract or matter whatsoever. 17. Insurance The Distributor shall maintain appropriate product and public liability insurance cover approved by the Principal for up to at

10 least __________________ Dollars (US$___________) in respect of each single claim which may arise in connection with the Products and their importation, distribution, sale and use in the Territory and the Distributor shall provide evidence of the existence of such cover to the Principal on request from time to time. 18. Indemnification The Distributor hereby undertakes to the Principal, for itself and as agent and trustee for each other Principal Company and its and their respective officers, employees and agents, that it will indemnify, defend and hold the Principal Companies, their officers, employees and agents harmless from and against any and all liabilities, losses, costs, damages, injuries, claims, suits, judgments, causes of action and expenses (including reasonable lawyer's fees, court costs and out-of-pocket expenses) suffered or incurred by any of them as a result of any action, omission or default of the Distributor, its employees or agents, in the course of performing this Agreement or of selling, offering for sale or promoting the sale of the Products in the Territory. 19. Force Majeure

19.1 If either party is prevented from complying, either totally or in part, with any of the terms or provisions of this Agreement by reason of fire, flood, storm, strike, lockout or other labor trouble, riot, war, armed conflict, rebellion, accident or other acts of God or legal restraints of any relevant government then upon written notice to the other party, the affected provisions and/or requirements of this Agreement shall be suspended during the period of such disability. The disabled party shall make all reasonable efforts to remove such disability within thirty days of giving notice thereof. If any of the obligations of the Distributor shall be suspended as aforesaid then during such period of suspension the Principal may seek to have the Products distributed by others without liability to the Distributor. 19.2 The provisions of Clause 19.1 shall not apply to the parties' obligations under Clauses 7.3 (prompt payment), 13 (Trademarks), 17 (Insurance), and 18 (Indemnification) and under no circumstances shall the parties obligations under those provisions be suspended for any reason whatsoever. 20. Confidentiality The Distributor shall regard as confidential and proprietary all of the information communicated to it by the Principal

11 Companies in connection with this Agreement and the Products and such information shall at all times be the property of the Principal. The Distributor shall not, without the Principal's prior written consent, at any time use such information for any purpose other than in connection with the performance of its obligations under this Agreement or disclose any of such information to employees or third parties, except to employees, agents and sub-contractors only on a "need to know" basis provided they have undertaken to keep such information confidential and use it only for the purpose for which it was disclosed to them. 21. Delegation and Assignment

21.1 The Principal shall be at liberty at any time or from time to time to delegate its obligations hereunder to another Principal Company and arrange for that Principal Company to supply all or any of the Products to the Distributor. If any of the Products shall be supplied to the Distributor by any other Principal Company then all the provisions of this Agreement shall apply as if that other Principal Company was a party to this Agreement and each reference herein to Principal was construed as including a reference to that Principal Company. 21.2 The rights and obligations of the Principal and the Distributor hereunder may not be assigned by operation of law or otherwise without the prior written consent of the other party provided, however, that the Principal may at any time assign and transfer its rights and obligations hereunder to any other of the Principal Companies without the prior written consent of the Distributor. Save with the prior written consent of the Principal, the Distributor shall not have the right to appoint sub-distributors for the Products. 22. Records and Right to Examine The Distributor shall keep and maintain under its control full and proper documentation and records of all transactions and matters relating to the performance of this Agreement. The Principal shall have the right to enter the Distributor's premises at a reasonable time to examine and audit such documents and records and such right may be exercised by an independent firm of accountants or other professionals nominated by the Principal. 23. Termination

23.1 Without prejudice to any other rights to which it may be entitled, either party may at any time terminate this Agreement:

12

(a) (b)

By giving to the other 90 days' written notice to that effect; By giving to the other 30 days' written notice to that effect if the other party is in breach of any provision of this Agreement; If the other has served notice pursuant to Clause 19 suspending performance under this Agreement and a period of more than thirty days has elapsed without such party being able to recommence performing its obligations hereunder; with immediate effect on written notice if either party, becomes insolvent or bankrupt or subject to any winding up procedure or makes any arrangements with its creditors or if a receiver or administrator or equivalent is appointed of all or any of its assets or undertaking or any reorganization takes place for the purposes of amalgamation or reconstruction; with immediate effect on written notice from the Principal if in the Principal's opinion a substantial change in the identity or nature of the ownership or control or management of the Distributor has occurred or is contemplated (for which purpose a change in the ownership of twenty-five per cent or more of the voting shares in the Distributor shall be deemed to constitute a substantial change for the purposes of this paragraph).

(c)

(d)

(e)

In addition, the Principal may at any time terminate this Agreement upon thirty days notice to the Distributor to that effect if (I) the Distributor shall be in breach of or fail to comply with the terms of supply or payment for any Products; or (ii) any other agreement for the distribution of products between a Principal Company and the Distributor shall be terminated. 23.2 Upon the expiration or termination of this Agreement for any reason whatsoever, the Distributor shall: (a) Promptly return to the Principal all confidential information and documents (in whatever form) relating to the business or affairs of any Principal Company which the Distributor may have in its possession or under its control; Promptly return to the Principal all unused promotional materials supplied by any Principal Company;

(b)

13

(c)

Forthwith cease to make any representation that it is a distributor of the Products or that it is authorized to sell the Products; refrain from any and all use of the Trademarks and shall not use any name or mark which is similar to the Trademarks in connection with any products whatsoever, and Remove from public view any signs, banners, wall charts, certificates, plaques, or ornamentations stating or suggesting that it is a distributor of the Products or that it is authorized to sell the Products.

(d)

(e)

23.3 Upon notice being given to terminate this Agreement, the Principal shall cease to be bound to, but has the right to, complete its obligations as to any orders received from the Distributor and accepted by the Principal prior thereto. 23.4 Expiration or termination of this Agreement for any reason shall not affect the liability of either party to the other in respect of any antecedent matter or thing or the provisions of Clauses 7.3 (prompt payment), 13 (Trademarks), 20 (Confidentiality) and 23.2 (Termination of this Agreement) which shall survive termination of this Agreement. 23.5 Neither party hereto shall be entitled to any compensation, damages, payment for goodwill that has been established, severance pay or, without prejudice to the provisions of Clause 23.4, any amount for any cause by reason of the expiration or termination of this Agreement pursuant to the provisions hereof despite any applicable law to the contrary. The Distributor hereby waives and renounces any claim for compensation, damages or other legal or equitable relief which it might hereafter be entitled to assert against the Principal or any Principal Company under the laws of the Territory or any political sub-division thereof, or the applicable laws of any country, by reason of the expiration or termination of this Agreement or by reason of the expiration or termination of any relationships between the Distributor and the Principal or any other Principal Company resulting from this Agreement or any course of dealing at any time arising under any such laws. 24. Notices Any notice required to be given pursuant to this Agreement shall be given in writing delivered by hand at or sent by prepaid registered post or air mail (if overseas) or by telefax to the

14 address or telefax number of the relevant party set out below or its last known address: To _______ [ ] Telefax: Attention: To the Distributor: [ ] Telefax: Attention: Notices shall be deemed to have been given if delivered by hand, at the time of delivery, if sent by post, two days after posting or six days after posting if sent by air mail, and if sent by telefax, when sent.

25.

No Waiver No failure or delay by any party in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of the same preclude any further exercise thereof or the exercise of any right, power or remedy.

26.

Entire Agreement This Agreement (including any schedules attached hereto) constitutes the entire agreement between the parties and cancels and supersedes all prior agreements, representations, and arrangements (whether oral or written) if any between the Distributor and any of the Principal Companies on the subject matter of this Agreement. This Agreement may only be modified by an agreement in writing signed by both parties.

27.

Governing Law and Jurisdiction This Agreement shall be governed by and construed in accordance with the laws of _______ and the parties hereto irrevocably submit to the non-exclusive jurisdiction of the ____________ Courts.

IN WITNESS WHEREOF this Agreement has been executed on the day and year first above written.

15

For and on Behalf of The Principal

For and on Behalf of The Distributor

_____________________ Name ________________ Title _________________ Date _________________

____________________ Name _______________ Title ________________ Date ________________

16

Schedule A [The Products]

17

Schedule B [The Territory]

18

Schedule C Minimum Quantities


				
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