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Sole Distributorship Agreement
(...A CO. LTD...) (...Country/State...)
(hereinafter referred to as "Seller")
(...B CO. LTD...) (...Country/State...)
(hereinafter referred to as "Distributor")
Whereas Seller manufactures and markets certain Products as defined in Article 2 hereunder and whereas Seller desires to appoint Distributor solely in the Territory hereinafter described in order to reach a steadily growing market share for Products, and Distributor is willing to undertake distribution for the Products.
Now, therefore, Seller and Distributor agree as follows:
Article 1. Objective
Seller hereby appoints Distributor to the Sole Distributorship of Products as defined in Article 2, in the Territory as defined in Article 3, and Distributor accepts such appointment and agrees to respect the terms and conditions hereinafter set out.
During the term of this Agreement Seller agrees to supply Distributor with Products on a continuous basis. Distributor agrees to buy such Products from Seller and to use its best efforts to sell Products in the Territory as specified hereafter in Article 3.
Article 2. Products and Conditions
"Products" shall mean the Products listed in Schedule A under the Product names, model number and guarantee periods mentioned therein. The FOB (...Country...) prices shall mean the prices listed in Schedule B. The conditions of sale shall be those shown in Schedule C. Schedules A, B and C attached hereto are an integral part of the Agreement.
Products transacted under this Agreement shall include instruments, devices, reagents, disposable products, accessories and parts made in (...Country/State...).
Seller shall be entitled at any time to add, replace or delete any item of Products listed in Schedule A, provided that it so advises Distributor at least (Number of ...) days in advance by registered mail specifying the effective date of the change made to Schedule A.
Article 3. Territory
Distributor shall be the only distributor in the following geographical area (hereinafter referred to as the "Territory"):
Seller agrees not to appoint any other Distributor in the Territory for distributing the Products covered by this agreement other than through Distributor, and shall refer to Distributor any inquiry received from a third party in the said Territory. Any inquiry coming to Distributor from outside the Territory shall be promptly referred to Seller.
Article 4. Duration
This agreement shall be effective from (...date...) and shall terminate on (...date...), subject to the provisions of Article 7 hereinafter.
The decision whether or not to renew this Agreement shall be determined through consultation between Seller and Distributor three months before the said termination date. If no decision to renew the agreement is reached, the agreement shall terminate and neither party shall be required to pay any compensation to the other party as a result of any losses suffered by such party due to such termination.
Article 5. Distributor's Obligations
Distributor shall act as an independent contractor, purchasing Products from the Seller and reselling them in its own name and on its own behalf. Distributor shall devote its best efforts for the adequate promotion, exploitation and development of sales of Product within the Territory and shall maintain an organization sufficient therefore.
Distributor shall not act as agent for Seller under this Agreement, nor shall Distributor have any right or power hereunder to act for or to bind Seller in any respect or to pledge its credit.
This agreement shall not be deemed to create any employer / employee relationship between Seller and Distributor, nor any agency, franchise, joint venture or partnership relationship between parties.
Following the execution of this agreement, Distributor shall promptly open one retail store in the territory, at a location of its choosing, for the sale, lease, or renting of the products. Distributor shall open additional retail stores in the territory when and where, in its sole discretion (which shall be reasonably exercised), it becomes necessary or desirable to do so.
Distributor shall refrain from engaging, directly or indirectly, in the sale, lease, or renting of any items, components, or products which serve the same functions as the products, other than the products.
Article 6. Seller's Obligations
All orders are subject to acceptance by Seller at its offices in (...Country...) but orders will normally be accepted subject to the availability of the supplies. Seller shall acknowledge all orders within four weeks after receipt and send Distributor a confirmation in writing for orders Seller accepts.
Seller shall use its best efforts to execute any orders accepted within the periods mentioned on such order.
However, Seller shall not be liable for any delay in the execution of such orders, the delivery dates given below an indication.
Seller shall refrain from selling any product to any person, other than Distributor, who is engaged in the business of reselling, leasing, or renting products similar to the products within the territory, or the business of selling, leasing or renting products similar to the products within the territory, or to any person for direct use if delivery will be made to a location within the territory.
Seller shall promptly refer to Distributor all leads, prospects, and related information which are directed to it or which it receives regarding potential purchasers of any product within the territory.
Seller shall, in the event he discontinues the manufacture of any of the products, continue, for a reasonable time after such discontinuance, to make available to Distributor replacement parts for such discontinued products, to the extent reasonably anticipated by Seller to be necessary to service such discontinued products previously sold to Distributor.
Seller shall provide Distributor with suggested retail list prices for each of the products sold to Distributor but such prices shall in all cases be suggestions only and shall not be binding upon Distributor.
Seller further undertakes to:
(a) supply Distributor with all technical and scientific information that it deems necessary for the marketing of Product, together with the documentation relating to said Product.
(b) supply the technicians designated by Distributor, at the latter's expense, the fullest technical training on Products with all technical documentation necessary for the execution of their duties.
(c) supply Distributor (a) with the list of tools necessary for the verification, repair and regulation of Product and (b) with the list of spare parts, consumables and reagents necessary for a good quality after-sales service.
(d) supply by its specialized personnel, at the request of Distributor and in consideration of a fair remuneration to be fixed by parties, the technical assistance necessary for the servicing which Distributor's technicians may not have been able to carry out themselves.
Article 7. Earlier Termination
Each party may terminate the present contract with immediate effect, in occurrence of an important event constituting a justifiable reason for the contract termination, by written notice sent by registered mail with return receipt.
A justifiable reason for the contract termination is any violation of the contract obligations that is of sufficient importance not to allow for the continuing of the relationship on a reciprocal confidence basis. The parties jointly declare that the violation of the provisions under Articles (...Numbers...) of the present contract is to be considered as a justifiable reason for the contract termination.
The following events shall also be considered as justifiable reasons for contract termination: bankruptcy, any kind of composition between the bankrupt and the creditors, death or incapacity of Distributor, civil or criminal sentences which may affect his reputation or hammer his activities, as well as important chances in the juridical structure or in the management of Distributor company. In particular, it is understood that Seller may immediately terminate the contract from the moment when Mr/Mrs (...Identity...) shall cease to be of the Distributor company (...Details...)
Article 8. Sales Efforts
Distributor shall sell no product which competes with Products listed in Schedule A., without the Seller's prior written consent. Distributor shall annually, starting on (...Date...) of one year and ending (...Date...) of the next year, buy from Seller and effect the sale of a total of (...Currency...) worth of Products specified in Schedule A. This total (...Currency...) worth of Products will be revised annually upon mutual consultation of the parties. If such amount is not decided upon, or if the amount that was decided upon for the preceding year was not purchased from Seller by Distributor, Seller may terminate this agreement by giving three months written notice to Distributor at any time during the six months after the end of the annual period for which Distributor failed to attain the sales amount.
Distributor shall create (or maintain) an efficient sales service comprising a competent technical staff sufficient to develop the sale of Product in Territory and give customers technical assistance in the field of the installation, maintenance and use of Product.
Article 9. Supply of Products, Delivery, Prices and Conditions of Sale
Seller will whenever possible sell to the Distributor upon Seller's Standard Terms and Conditions of Sale such quantities of Products as Distributor may order, subject to the conditions set out in Article 6. Seller's Standard Terms and Conditions of Sale are set out in Schedule C appended hereto.
The sale price of Product sold by Seller to Distributor shall be Seller's usual prices as set out in the prices as set out in the price lists attached hereto as Schedule B, less a discount of (...Percentage...) per cent.
All prices of Products shall be FOB (...City, Country/State...). Prices are in principle those in effect the day the order is received by seller. Any chances in prices during the period of this agreement shall be notified to Distributor in writing with the prior notice of sixty days and without creating any liability on the part of Seller to Distributor.
Article 10. Terms of Payment
The payment shall be made in (...City...) in (...Currency...) by the means of an irrevocable and confirmed documentary credit at the date of order with a first class (...Nationality...) Bank. The credit is to remain valid during five weeks from the date of receipt of the order by the company and its amounts shall be payable against presentation of the usual documents.
Article 11. Monthly Reports
Distributor shall send to Seller by the fifteenth day following the end of each month during the continuance of this agreement a report of stocks held and sales made of Products in Territory during that month, together with such other marketing and other information in relation to the operation of the Agreement as Seller may reasonably require. Forms for these reports will be supplied by Seller.
Article 12. Distributor's Responsibilities
Distributor undertakes to:
(a) pay all levies, dues, taxes and duties imposed on the Products purchased by Distributor or due by reason of importing, storing or selling Products in Territory;
(b) obtain at its own costs all permissions and licenses for importing, storing and selling Products in Territory;
(c) make sure that Products are suitable for sale in Territory and particularly that they comply with all trade provisions, regulations, specifications or recommendations in force or customary in Territory, namely that the containers bear all the marks and indications required in the trade.
(d) generally speaking, fulfill all obligations resulting from the laws and regulations on import and sale which apply to Territory.
(e) comply with all legal obligations incumbent on independent contractors in Territory with regard to taxation and social security.
Article 13. Sub-Distributors
Distributor shall have the right to recruit parties for sub-distribution within the Territory and grant authorisation for sub-distribution upon terms and conditions consistent with this Agreement, it being understood that all legal and financial consequences of such sub-distribution agreement shall be the sole responsibility of Distributor which shall have no capacity to enter into any obligation or to contract any debt whatsoever on behalf of Seller.
Furthermore, Distributor binds himself to refrain from entry into any sub-distribution Agreement without prior written consent by Seller.
Article 14. Advertising
Distributor shall be responsible for all advertising necessary to promote the Products in Territory. The costs of such advertising are to be completely covered by Distributor.
In order to help with sales promotion of Products, Seller shall furnish Distributor with samples of leaflets and/or catalogs in English as well as with sample promotional materials including technical material, etc.
Article 15. Fairs and Exhibitions
In principle, Distributor shall participate in any appropriate fair or exhibition relative to Products in Territory. Distributor shall bear the costs of displaying Products at those fairs or exhibitions. No expense for which Seller may be held responsible shall be incurred by Distributor without prior approval in writing from Seller.
Article 16. Duty to Give Service
Distributor shall effect repairs to and the replacement of all faulty products whether or not they were sold by Distributor, at its own charge, so as to satisfy customers in all circumstances and shall also make good the warranties given by Seller. For prompt servicing Distributor shall maintain an inventory of components, accessories and other parts.
Article 17. Warranty Service
All sales of the Product by Seller to Distributor under this Agreement shall be made according to Seller's general conditions of sale given in Schedule C hereto.
Distributor shall give the same warranties to the purchaser, when selling Products, as Seller has given to Distributor.
Distributor will not charge customers for work done in satisfaction of Seller's warranties. Seller will reimburse Distributor for this work at an agreed hourly rate which will be decided subsequent to the signing of this agreement.
Distributor undertakes not to grant in the name and on behalf of Seller any warranty or undertaking whatsoever, including any warranty for defect or faulty design, materials, etc., other than that expressly granted by Seller and given in Schedule C hereto.
Article 18. Distributor's Rights to Use Seller's Trademark
Seller hereby grants a license to Distributor to use Seller's trademark(s) and consisting of an emblem as per (...Date...). Registration numbers (...Numbers...) provided that such use is limited to distribution of printed material, exhibitions and advertising regarding and only regarding the contractual products.
The use of said trademark(s) in pursuance of the license granted hereabove shall be reputed use thereof by Seller and Distributor agrees that he shall not acquire any property rights in the trademark(s) through the use of same hereunder.
Distributor shall not use the trademark for any other purpose than that of dealing in Seller's Products. Distributor shall not modify or remove the brand inscribed on any of Products.
At the termination or expiration of this contract Distributor shall immediately cease the use of the trademark.
Article 19. Patents
No provision of this Agreement may be construed as giving Distributor a license to use the patents, trademarks and know-how covering the Product of which Seller is or may be the owner.
Seller shall assure responsibility for claims by third parties in Territory that Products are infringing such third parties industrial property rights. This includes only compensation of damages to be paid by the patentee or fees and costs of solicitors and courts for defending the Distributor. Seller shall not be responsible for any loss of profits of Distributor as a result of any third party's claims. Seller shall have the option to take over the defense of any case at its own costs.
If and when any such claim is made by a third party, or if Distributor learns that any patent owned by the Seller is infringed upon by a third party, Distributor shall immediately notify the Seller of the fact.
Article 20. Trade Secrets and Know-How.
Each party agrees not to divulge to any third party and not to use, except for the purpose of this Agreement, any information of confidential nature such as technical information and data, commercial information and know-how, price structures, costs, administrative and operational information. Each party shall take steps of effectively ensure the confidential nature of said information.
This clause shall remain in force even after expiry or cancellation of this agreement.
Article 21. Undertaking Not to Compete
During the whole term of this Agreement and during one year as from its expiration, Distributor shall not represent, sell or manufacture any Products which are identical or similar to Products, for the whole term of this contract. In particular he shall not engage in acting as distributor commission merchant, reseller, distributor, or in any other way, for the benefit of third parties manufacturing or distributing in competition with Products.
Parties expressly agree that any (...Type of Product...) will be considered as products in competition with Products, for the purpose of this Article.
However, as an exception to the provision stated above, Distributor may act, or continue to act, to the benefit of competing manufacturers, after having received a prior written authorisation from Seller to that effect. Such authorisation will be given if the competing products differ, as concerns quality and price level, from Products in such a way that they cannot have an influence on the sale of Products.
Article 22. Prohibition of Assignment
The rights conferred on Distributor by this agreement are not assignable or transferable without prior written consent of Seller.
Seller may terminate this Agreement in case of any merger of Distributor with another firm or Company or any transaction resulting in a substantial change in the person(s) having a majority of the shares of or a controlling interest in Distributor.
Article 23. Release from Responsibility
Neither party shall be liable for failure to perform its part of this Agreement when such failure is due to fire, flood, strikes, labour troubles or other industrial disturbances, inevitable accidents, war (declared or undeclared), embargoes, blockades, legal restriction, riots, insurrections, or any cause beyond the control of the parties, providing these events could not be foreseen or the effects of these events prevented, when the contract was entered into. Such events will only release a party from responsibility if they result in the impossibility, temporarily or definitely, of performing its part of the agreement to the exclusion of events which simply involve that performance will be more difficult or more costly. Moreover, the benefit of this clause shall only be applicable if the said events are not subject to other dispositions under one of the clauses of the present Agreement.
Article 24. Claims
The (...Country...) goods shall be packed by Seller in accordance with appropriate methods of exporting packaging. Seller shall accept no responsibility for breakage, damage or theft of Products in transit. If there is any loss or damage claimed by Distributor, it shall be referred to the insurance company in Territory by Distributor for compensation.
Distributor undertakes to indemnify the Seller for any sum that the latter may have to pay following any claims or actions resulting from commitments made by Distributor exceeding those stipulated by Seller in the general conditions of sale attached hereto as Schedule C.
Article 25. Purchase of Stock after Termination and Lien
In the event of termination of this Agreement by Seller for its own convenience and not breach of this agreement by Distributor, the existing saleable inventory of Distributor will be purchased by Seller except those Products and parts which are damaged at the landed cost Distributor purchased them from Seller. The price shall be determined by common agreements between the parties or, in the absence of agreement between parties, by an expert appointed at the request of the most expeditious party by the Arbitrator or Arbitrators in accordance with Article 31.
Distributor has no lien on the property of Seller.
Article 26. Return of Documentation and Collection
On the expiration of the contract, Distributor shall return to Seller the collection of samples , advertising material and any other documents (catalogs, prices, lists, tariffs, etc.) which have been made available to him by Seller as well as any Products belonging to Seller and which are in his possession.
Article 27. Notices
Any notice by one party to the other under this Agreement, shall be deemed delivered when a written notice is delivered either by registered mail or personally to the Managing Director, or the person in charge of the matter with which the notice is concerned, addressed to the other party, at its address set forth in the introduction of this Agreement.
Article 28. Complete Agreement, Additions and Modifications, Authentic Text
This Agreement, with exhibits and any amendments, constitutes the final expression of the entire Agreement and supersedes any prior agreement or any contemporaneous oral agreement between the two parties, on the subjects.
No addition or modification of the present contract shall be valid unless made in writing.
The (...Language...) of the present Agreement shall be the only authentic text.
Article 29. Binding and Severability
This Agreement shall be binding upon and ensure to the benefit of the parties, their legal representatives, successors and assigns.
In the event that particular provisions or requirements or this Agreement are in violation of any law of (...Country...), the validity of any other provisions or requirements shall not be affected thereby and such other provisions or requirements shall be enforced and remain in full force and effect.
Article 30. Applicable Law
The present contract as well as all purchases, or sales or any other agreements in connection therewith shall be governed by the laws of (...Country...).
Article 31. Arbitration
Any dispute arising out of or in connection with the present contract shall be finally settled in accordance with the rules of conciliation and arbitration of the International Chamber of Commerce, by one or more Arbitrators designated in accordance to said rules.
The arbitration proceedings shall be governed by the laws of (...Country/State...).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their representatives duly authorised and signed in duplicate, one copy of which shall be held by each party.
SCHEDULE A: List of Products
SCHEDULE B: Selling Price of Seller to Distributor
SCHEDULE C: General Conditions of Sale of Seller to Distributor