Distribution agreement
This agreement has been made on [ ] day of the month of [ ] of year [ ] in the city of Moscow, Russia, by and between:
“[NAME]” s.r.l., a legal entity duly registered and existing under the laws of Italy and having its registered office at: [ADDRESS], hereinafter referred to as the “Company”, represented by [Name], [Position], acting on the basis of [Document], from one hand,
and
[Name], a legal entity duly registered and existing under the laws of Russia and having its registered office at: [ADDRESS], hereinafter referred to as the “Distributor”, represented by Mr. [Name], [Title], acting on the basis of [Document], from the other hand,
the Company and the Distributor referred to as the “Parties” and each of them (when the identity of the person bearing and/or executing an obligation arising out or in connection to this agreement does not matter and/or may be, depending on relevant circumstances, subject to execution by each of the Parties) referred to (as well) as a “Party”,
having agreed as follows:
1. Subject of the Agreement
1.1. Under this Distribution agreement (the “Agreement”) the Company appoints the Distributor as its exclusive agent for the sale of goods referred to in Exhibit 1 to this Agreement (the “Goods”), worldwide (the “Exclusive Territory 1”) or respectively within the territory of the following countries: Russia (Russian Federation), Belarus (Republic Belarus), Kazakhstan (Republic Kazakhstan), Azerbaijan (Republic of Azerbaijan), Armenia (Republic of Armenia), Georgia, Kyrgyzstan (Kyrgyz Republic), Moldova (Republic of Moldova), Tajikistan (Republic of Tajikistan), Turkmenistan, Uzbekistan (Republic of Uzbekistan), Ukraine (the “Exclusive Territory 2”). The “Exclusive Territory 1” and the “Exclusive Territory 2” jointly referred to as the “Exclusive Territory”
1.2. In connection to the appointment referred to in clause 1.1 of this Agreement above the Company undertakes to:
(a) supply to the Distributor, on terms and conditions defined hereunder, with the Goods, for further resale (as well via Internet) within the Exclusive Territory only, and/or to supply the Goods to the clients, presented to the Company through the Distributor (as defined under article 2 of this Agreement below) (the “Distributor’s Clients”);
and
(b) to provide the Distributor, on terms and conditions defined hereunder, the right to use the Company’s trade mark (service mark), referred to in Exhibit 2 to this Agreement (the Trade mark).
1.3. In order to avoid any possible misunderstandings, it has been agreed between the Parties that the list of Goods provided in Exhibit 1 to this Agreement shall be updated (by relevant written notice of the Company to be delivered to the Distributor at least [Number] calendar days prior to the relevant change) by the Company each time it:
(a) withdraws any item of the Goods from sale;
(b) adds new items of Goods for sale;
(c) changes, modifies or in whatever other manner amends the Goods or whatever packaging of any of the Goods available for sale.
1.4. The price at which the Goods shall be supplied to the Distributor, the Distributor’s Clients and any other person, demanding supply of the Goods for the Exclusive Territory, shall be at all time (and unless otherwise agreed in writing with the Distributor) be ___% less than the one set for the relevant items of the Goods in Exhibit 1 to this Agreement (the “Price”). For the avoidance of any doubt, the Price set under Exhibit 1 is set as a price for the relevant Goods on “Ex work” conditions (as defined under Incoterms-___ rules). This price shall be mutually agreed by the Parties annually before [date]. The former (latest) Exhibit becomes not valid automatically without signing additional agreements on cancellation of the respective Exhibit 1 from the day the Parties have agreed the new version of the Exhibit 1. In the event the Company adds new items of the Goods, changes, modifies or in whatever other manner amends the Goods or whatever packaging of any of the Goods available for sale, and therefore is to fix a new Price for the relevant Goods for sale to the Exclusive Territory, the said Prices shall be first agreed in writing with the Distributor. In case the Parties have failed to agree the Price for the new term before [date], the Price shall be defined by the Parties according to article 1.5. hereunder.
1.5. In the event the Parties have failed to agree the Price for the new term before [date] and till the moment the Parties agree the Price for the new term in writing, the Price shall be defined as follows:
for the “Exclusive Territory 1”:
(a) for the same Goods which were in the latest Exhibit 1 - the Price for the previous term increased by the rate of Consumer Price Index CPI in European Union or increased on 3% depending on which rate is higher.
(b) for the new Goods not indicated in the Exhibit 1 earlier – the Price for the most expensive Goods in the latest Exhibit 1 increased on ___%.
for the “Exclusive Territory 2” – the highest known price for the relevant Goods on the market of European Union.
2. Order of the Goods. Invoicing. Distributor’s Clients
2.1. Under this Agreement the Company, each time it receives from the Distributor (or the Distributor’s Client) a relevant order or demand for quotation (the “Order”), undertakes to supply the Distributor with the Goods requested under each of the Distributors (or the Distributor’s Client) Order on terms and conditions set under article 3 hereunder.
2.2. Each Distributor’s Order is subject to processing by the Company only under condition that the amount of Goods (per each of their item), requested under such Order is sufficient to form full packs per item of the relevant requested Goods.
2.3. In the event the relevant Order corresponds to the requirements set under clause 2.2 of this Agreement above, the Company issues a relevant invoice (the “Invoice”), specifying at least:
(a) the quantity of requested Goods (per item) in pieces and packs it undertakes to supply to the Distributor (or the Distributor’s Client);
(b) the Price of Goods per piece of item it undertakes to supply to the Distributor (or the Distributor’s Client) (to be stated and paid in Euros);
(c) the Price of the Goods per pack of item it undertakes to supply to the Distributor (or the Distributor’s Client) (to be stated and paid in Euros);
(d) the total Price of all the Goods it undertakes to supply to the Distributor (or the Distributor’s Client) (to be stated and paid in Euros).
2.4. Notwithstanding the provisions set under clauses 2.1 – 2.3 of this Agreement above, it has been agreed between the Parties that:
(a) in the event the Order does not correspond to the requirements set under clause 2.2 of this Agreement above,
or
(b) due for whatever reason or nature the Company is not able to supply the Distributor with the requested Goods in full
the Company may (but is not obliged to) issue an Invoice corresponding to an amount of Goods (per item) differing from the one originally requested , but being as close as possible to the originally requested number of Goods (per item).
2.5. In order to avoid any possible misunderstanding, it has been agreed between the Parties, that:
(a) each of the Distributor’s Orders shall be regarded and treated as a Distributor’s (or the Distributor’s Client) offer addressed to the Company to enter into a contract for an international sale of the Goods specified into the relevant Order on terms and conditions set under article 3 of this Agreement (such offer being valid for a period of time of one year from the date it is issued, unless it is called back before the lapse of the said term, and giving the Company the right to accept it either in full or partially either at once or within the term of its validity);
(b) each of the Company’s Invoices (unless it has been issued in accordance with the provisions set under clause 2.4 of this Agreement) shall be regarded and treated as an accept of the Company addressed to the Distributor (or the Distributor’s Client) to enter into a contract for an international sale of the Goods specified into the relevant Order on terms and conditions set under article 3 of this Agreement;
(c) each of the Company’s Invoices issued in accordance with the provisions set under clause 2.4 of this Agreement shall be regarded and treated as a new offer, emanating from the Company and addressed to the Distributor (or the Distributor’s Client) to enter into a contract for an international sale of the Goods specified into the relevant Invoice on terms and conditions set under article 3 of this Agreement (such offer being valid for a period of time of [Number] business days from the date it is issued, unless it is called back before the lapse of the said term);
(d) payment of the Invoices issued by the Company to the Distributor (or the Distributor’s Client) in accordance with the provisions set under clause 2.4 of this Agreement shall be regarded and treated as an accept of the Distributor (or the Distributor’s Client) to enter into a contract for an international sale of the Goods specified into the relevant Invoice on terms and conditions set under article 3 of this Agreement.
2.6. For the avoidance of any doubt, it has been agreed that shall be considered as Distributor’s Client any person (being a legal entity or private person) being [Definition]
3. Supply of Goods
3.1. In the event the relevant Invoice is paid in full within [Term] business days from the day it has been delivered to the Distributor (or the Distributor’s Client), the Company undertakes to supply the Distributor the Goods referred to in the said Invoice within [Number] business days from the date it has been paid.
3.2. Notwithstanding the provisions of clause 3.1. the Company grants a credit to a Distributor as follows:
(a) The credit provided pursuant to this Agreement provides to the Distributor the right, regardless of the conditions specified in any of the Invoices issued by the Company to the Distributor on, before or after the date of this Agreement) to delay the payment of up to [Number] pairs of Goods (subject to the condition that the value of the said number of Goods does not exceed the Credit amount), for a term of [Number] days (the count of such dates to be made for each delivery of the Goods starting from the date the relevant Goods have been effectively handed over to the Distributor’s carrier in charge to start their shipment to their destination) (the “Credit term”);
In order to eliminate any misunderstanding, it has been agreed between the parties, that:
- the provision of the credit does not entitle the Company to any interest to accrue on the Credit amount for the time of the Credit term;
- nothing in this Agreement shall be interpreted as providing for an obligation of the Distributor to order Goods for sum, being equal to the whole or exceeding the Credit amount at once (and the Distributor may at its own discretion and at any time order any number of Goods using the Trading credit, providing that the aggregate number of the Goods does not exceed [Number] of pairs and the aggregate value of the Goods set as per the relevant Invoices does not exceed the Credit amount);
- as result of the Distributor having paid any of the Goods for which it got the Credit, the Distributor obtains the right (and this – being at the sole discretion of the Distributor) to order new Goods using the Trading credit or to extend the Trading credit to those Goods having been delivered in excess of the limits set for the Trading credit above.
(b) To avoid any misunderstanding and unless the parties agreed otherwise in writing:
- the Credit shall be applicable to all the Goods, having been ordered as of the date of this Agreement. In the event the number of Goods ordered exceeds [Number] of pairs or the aggregate value of the Goods set as per the relevant Invoices exceeds the Credit amount, the Goods being ordered in excess of the limits set in this clause above shall be deemed as being subject to payment on the terms and conditions set under the relevant Invoices;
- in the event the Distributor has ordered Goods in excess of the limits set for the Credit, but has paid (within the relevant Credit term) for the said Goods, the Distributor (unless it notifies otherwise the Company) shall be deemed to have elected to extend the Credit to those Goods, that: (i) have been delivered to the Distributor immediately after the delivery of the last portion of the Goods falling within the Credit, and (ii) remaining unpaid (though without any breach of the term for their payment set under the relevant Invoices);
- in the event of return of any part of the Goods delivered within to the Distributor within the Credit due to their inadequate quality, the value of the said Goods (as per the relevant Invoices) being accrued by: (i) the delivery costs born by the Distributor (such costs to be set as a pro rata of the number of the Goods returned due to their quality to the number of the Goods shipped within the same load), and (ii) the value of the import duties and taxes paid upon importation of the relevant Goods, shall be deducted from the Credit amount having been used by the Distributor at the date of return of the Goods of inadequate quality.
3.3. All Goods subject to supply under this Agreement shall be supplied on “Ex Works” conditions, as they are described under the International rules of interpretation of commercial terms and conditions made public in the year ___10 (“INCOTERMS ___” rules).
3.4. Delay in payment:
(a) In the event of delay of payment of any Goods delivered within the Credit (such delay deemed to have happened each time the relevant Goods have not been paid at the lapse of the Credit term), the Company may, by written notice to be served to the Distributor, request the Distributor to make an accelerated payment with regards to all of the Goods delivered within the Credit. In the event the Company exercises its right to claim an accelerated payment pursuant to this clause of the Agreement, the Distributor shall effectuate the relevant payment within [Number] days from the date of receipt of the relevant Company’s notice.
(b) In the event the Distributor fails to repay the Credit amount remaining due as of the date of receipt of the Company’s notice referred to in clause 2.1 of this Agreement within the term set in the same clause, the Company may, by written notice to be served to the Distributor, request the Distributor to pay a penalty for the delay in repayment having occurred, such penalty to accrue on the Credit amount remaining due at the rate of [Interest] percent per annum from the date of receipt of the relevant Company’s notice till the date the whole of the due Credit amount has been effectively repaid to the Company.
3.5. To avoid any misunderstanding and unless the parties agreed otherwise in written:
(a) any amount paid by the Distributor to the Company after the date of receipt of the Company’s notice referred to in clause 2.1 of this Agreement shall be deemed to have been made: first, to settle the remaining due Credit amount, secondly, to settle the debts with regards to the value of the Goods delivered in excess of the trading credit, and thirdly, to settle any penalty having accrued as result of late repayment of the Credit amount;
(b) upon receipt of the Company’s notice referred to in clause 3.4(a) the Credit shall be deemed as terminated with the effect set under the same clause.
3.6. The Distributor purchases all and any of the Goods at the Price set forth under Exhibit 1 – (minus) ___%.
3.7. Unless the Company instructs the Distributor (or the Distributor’s Client) otherwise, the Distributor (or the Distributor’s Client) shall take possession of Goods:
(a) at the Company’s warehouse located at: [Address]
(b) not sooner than the lapse either of the term set under clause 3.1 of this Agreement, or (in the event the Company informs the Distributor (or the Distributor’s Client) on its readiness to deliver the relevant Goods earlier) a date specified in a relevant Company’s notice, but in any way not later than within ___ (Twenty) business days from the date, when the relevant Goods have been made available for delivery as set under this subclause.
3.8. On or before the relevant Goods are loaded, the Distributor (or the Distributor’s Client) shall provide the Company a notice, specifying the immatriculation numbers of the vehicle, on which the Goods shall be loaded. The Company has the right to refuse the loading of the Goods until the notice referred to in this clause above is provided.
3.9. The inspection of the relevant Goods, related to their quantity, assortment and packaging shall be made prior to the load of the said Goods. Failure to ensure such inspection prior to the load of the said Goods (and, therefore, the load of the relevant Goods without their inspection) deprives the Distributor from any right to claim that the Goods received do not correspond (as per their quantity, assortment and/or packaging) to the conditions set under this Agreement.
4. Use of the Trade mark
4.1. Under this Agreement the Company grants to the Distributor solely the right to use (a license to use) the Trade mark for the purposes referred to in clause 4.5 of this Agreement below.
4.2. The consideration for the use of Trade mark granted by the Company to the Distributor is included in the price of the Goods purchased by the Distributor from the Company under condition that:
(a) during each year of validity of this Agreement the Distributor orders from, pays to and takes possession from the Company Goods for a value of not less than the one referred to in clause 4.3 of this Agreement below (the “Target sum”);
and
(b) during each year of validity of this Agreement the Distributor allocates an amount (such amount including relevant Value added tax) of not less than [ ] percents of the [value of the Goods purchased from the Company by the Distributor (or the Distributor’s Client)] [and/or] [Target sum] to the promotion of the Goods within the Exclusive Territory (the “Promotion budget”).
4.3. The Target sum for the first year of validity of this Agreement (means from the date of its signature by the Parties and the lapse of one year from this date) is agreed to be equal to [Sum] Euros. Unless otherwise agreed in writing by the Parties, the Target sum for each further year of validity of this Agreement is agreed to be the Target sum, set for the previous year of validity of this Agreement, increased by [Number] percents.
4.4. In order to avoid any possible misunderstanding, it has been agreed between the Parties, that the Promotion budget shall be considered as being equal to:
(a) the price of samples of the Goods the Distributor paid to and took possession from the Company;
(b) whatever other expenses (including Russian Value added tax) related to making of promotional materials of whatever kind, promotional activities (including, but not limited to: promotional sales, exhibitions, etc), payment of salaries to the Distributor’s employees working exclusively on sale, marketing and/or promotion of the Goods, in connection to which the Company has expressed in writing its consent that such expenses (or any part of them) are considered as a part of the Promotion budget (with the common understanding of the Parties, that these expenses shall then be included in the Promotion budget only once the Distributor has in fact made the relevant expenses and has presented the proofs of such to the Company).
4.5. The Trade mark is granted by the Company to the Distributor for the use on the Exclusive Territory for the following purposes:
(a) making and distribution of promotional materials of whatever kind (including, but not limited to: advertisements, booklets, packing materials including shopper bags, business cards, etc) promoting the Goods;
(b) using on the signs of the shops (of whatever kind) selling the Goods, interior decorations and shop windows of those shops;
(c) [Other].
4.6. If the Company wishes so, it can instruct the Distributor in writing to apply the Trade mark in a certain manner. If the Company does so, then the Distributor shall apply the Trade mark only in a way that has been expressed in writing by the Company.
5. Company’s assistance
5.1. The Company undertakes to provide the Distributor support in its efforts to achieve the Target sum for the purchases of Goods, by:
(a) not selling (without Ditributor’s prior written consent) the Goods to whatever person, if this person has permanent establishment in the Exclusive Territory or is to export the Goods to the Exclusive Territory (this including the Company’s obligation to contractually waive further resale of the Goods to the Exclusive Territory, and to direct all demands for Goods, related to the Exclusive Territory to the Distributor;
(b) providing samples of the Goods (with the common understanding that the Company shall not be obliged to provide more than [Number] pieces of samples per [Number] packs of Goods) without any charge to be paid by the Distributor;
(c) setting at least once a year promotions for the Distributor (with the common understanding of the Parties that the form of such promotions and their conditions shall always remain at the sole Company’s discretion)
(d) [Seminars, other]
5.2. Notwithstanding the provisions of clause 5.1 of this Agreement above, in the event that on any of the anniversaries of the validity of this Agreement, the Distributor does not achieve the Target sum in terms of purchases of Goods from the Company, the Company will be free from any of the undertakings referred to under clause 5.1 of this Agreement above.
6. Distributor’s remuneration
6.1. Unless otherwise agreed in writing between the Parties, the Distributor shall be paid a commission of ___% percent of the Price (as this term is defined in this Agreement) of the Goods sold by the Company the Distributor’s Clients.
6.2. Unless otherwise agreed in writing between the Parties, in the event the Company sells (subject to the Distributor’s written consent) any of the Goods to any other person, it shall pay to the Distributor a commission of ___% percent of the Price (as this term is defined in this Agreement) of the Goods sold to such person.
6.3. For the avoidance of any doubt, the commission to be paid to the Distributor shall be at all time paid from the total Price of the Goods sold and agreed with the Distributor. Any discount provided by the Company to the Distributor’s Clients and other persons (but to the Distributor) shall be at all time at the sole cost of the Company and shall not affect the sum to be paid to the Distributor as commission. In the event the Price of the Goods has never been agreed with the Distributor, it shall be then at all time be deemed as being set as defined under clause 1.5 of this Agreement.
7. Term of the Agreement
This Agreement is made for the term of 15 (fifteen) years and shall be prolonged automatically for the next 15 (fifteen) years unless the Distributor notifies the Company 3 (months) before the day of expiration of the Agreement that the Distributor is not eager to prolong the Agreement. In this case the Agreement expires at the end of the first term.
The Agreement can be terminated under mutual agreement of the Parties.
8. Liability
8.1. In the event of any late payment or any delay in delivery of Goods the guilty shall pay a penalty in amount of [amount]% of the amount due for each day of such delay. The payment shall be made subject to a written demand of the other Party.
8.2. In the event the Company breaches any other of its obligations with regards to the exclusivity the Company shall pay the Distributor a penalty in amount of [amount].
9. Notices
9.1. All Orders, Invoices, instructions, requests, demands, notices and other kind of notifications, that under or in connection to this Agreement any of the Parties may or must send or serve to the other Party shall be made in writing and sent by registered first class mail or by courier, allowing (in each case) to identify the content of the relevant mail and the date of its delivery to one of the following addresses:
For the Company:
[Address]
For the Distributor:
[Address]
or to an other address, each of the Parties may specify in the same manner as indicated above.
9.2. All Orders, Invoices, instructions, requests, demands, notices and other kind of notifications, that under or in connection to this Agreement any of the Parties may or must send or serve to the other Party, will be considered as made in written, properly sent or served and being emanated from one of the Parties, if they have been sent by e-mail (electronic mail) from and to the following electronic addresses:
For the Company:
[Address]
For the Distributor:
[Address]
or to an other address, each of the Parties may specify in the same manner as indicated above.
If any of the Parties chooses to send or serve any of the Orders, Invoices, instructions, requests, demands, notices and other kind of notifications by e-mail as set above, the said Orders, Invoices, instructions, requests, demands, notices and other kind of notifications shall be considered as delivered once the sending Party has received on its e-mail address referred to in this clause above from the receiving Party’s e-mail address referred to above a corresponding electronic notification, stating the fact that the relevant e-mail has been in fact displayed on the receiving Party’s side.
Notwithstanding the provisions of this clause above, it has been agreed by the Parties that in case any of the Parties denies the fact of receipt of the relevant e-mail, the other Party shall present this first Party with proofs of delivery to be made in the form of certificate, to be issued by a notary, acting in the city of any of the Parties head offices, stating that the said notary has in fact inspected the computer, from which the relevant e-mail was sent, and has found both the relevant sent message and the relevant notification of delivery, copies of which shall be attached to the said certificate.
9.3. All Orders, Invoices, instructions, requests, demands, notices and other kind of notifications, that under or in connection to this Agreement any of the Parties may or must send or serve to the other Party, shall be made either in English or in Russian.
10. Governing law and disputes
10.1. Unless the provisions of international agreements recognized both in Russia and Italy apply to the Parties’ relationships arising out or in connection to this Agreement, this Agreement shall be governed by the laws of of England and Wales.
10.2. The arbitration shall be conducted in English language in accordance with the Rules of the London Court of International Arbitration (“LCIA”)
10.3. The arbitration proceedings shall take place in London, England and shall be conducted in English, and all arbitrators shall be conversant in and have a thorough command of the English language. The Parties hereby waive any objections as to the jurisdiction of LCIA as they may have by reference to jurisdiction of local courts or by reference to LCIA not being a court of competent jurisdiction. The Parties hereby acknowledge and agree that they are subject to the authority of LCIA.
10.4. The award rendered by the arbitrators shall be final and binding on all Parties and judgment thereon may be entered in any court of competent jurisdiction. The Parties agree to exclude any right of appeal from the arbitrators' award to any court which would otherwise have jurisdiction in the matter.
10.5. Nothing in this clause shall prevent either Party from having recourse to a court of competent jurisdiction for the sole purpose of seeking a preliminary injunction or such other provisional relief as it considers necessary..
11. Miscellaneous
11.1. In order to avoid any possible misunderstanding, it has been agreed between the Parties, that:
(a) whenever under this Agreement any term for performance of any obligation of any of the Parties is set in business days, the term of “business day” shall be interpreted as:
- when the relevant obligation shall be performed by the Company – any day of the week except weekends (which are normally Saturdays and Sundays), days of public holidays in Italy and days from [Date] till [Date];
- when the relevant obligation shall be performed by the Distributor – any day of the week except weekends (which are normally Saturdays and Sundays), days of public holidays in Russia and (but only when obligations to pay whatever amount of money are concerned) days when banks in Italy are closed for normal banking operations;
(b) each of the Parties obligations arising out of this Agreement or in connection to it to pay whatever amounts of monies, shall be considered as fulfilled once the Party having the obligation to pay the corresponding amount of money has ensured that the relevant sum has been in fact credited to the relevant account of the Party being the beneficiary;
(c) unless otherwise specified in the relevant requests for payments or Invoices, monies due by one of the Parties to the other Party shall be paid to the bank accounts of the respective Party shown in this Agreement below;
(d) whatever price of whatever item of the Goods indicated in whatever document emanating from the Company, except for the Invoice, shall not be regarded as a binding declaration of the Company on its readiness to sell the said Goods on the said price; such prices will be regarded by the Parties as an indication only, and solely prices per item of the Goods stated in each of the relevant Invoices shall be considered as the price of the Goods to be charged in the event the Distributor acquires the overall number of the Goods specified in the relevant Invoice.
12. Final provisions
12.1. This Agreement is made in four original copies: two copies of this Agreement are made in Russian, and two copies of this Agreement are made in English. Each of the Parties has one copy of this Agreement in each of the languages.
12.2. In case of discrepancies between the Russian and English texts of this Agreement, the text of this Agreement in English shall be paramount.
Parties details and Signatures
Exhibit 1
The list of Goods
Exhibit 2
The Trade mark
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