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DEALER AGREEMENT
BETWEEN
AND
Virgo
DEALER AGREEMENT
Index
1. General Provision 2
1.1. Fundamental Condition 2
1.2. Definitions 3
2. Dealer’s Representations and Warranties 4
3. License of Rights 5
3.1 Grant of Non-Exclusive Rights 5
3.2 Restrictions on Dealer 6
3.3 Reservation of Distributor’s rights 6
4. Duration of Agreement and Security 7
4.1 Term of Agreement 7
4.2 Performance Security 9
4.3 Renewal of IBG 9
5. The Image of the Authorised Outlet, Furniture and Equipment 10
5.1 Authorised Outlet Identity 10
5.2 Fitting Out & Furniture and Equipment 10
5.3 Renovation and Maintenance 11
5.4 Title to Furniture and Other Distributor Supplied Items 12
6. Operation of the Authorised Outlet 14
6.1 General 14
6.2 Shop Staff 14
6.3 Other 15
7. Purchase, Sale and Promotion of the Products 15
7.1 Purchase of Product 15
7.2 Sale of Product 18
7.3 Promotion of Product 20
8. Dealer’s Obligations 21
8.1 Positive Covenants 21
8.2 Negative Covenants 24
8.3 Insurance 26
8.4 Reporting 27
9. Distributor’s Obligations 27
10. Termination 29
10.1 Termination by Both Parties 29
10.2 Termination by Either Party for Cause 29
10.3 Termination by Either Party without Cause 29
10.4 Termination by Distributor 30
10.5 Consequences upon Termination 32
10.6 No Entitlement to Damages for Economic Loss 34
10.7 Waiver of Territory Laws 34
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11. Confidentiality 34
12. Miscellaneous Provisions 35
12.1 Interpretation 35
12.2 Assignment by Dealer 36
12.3 Force Majeure 36
12.4 Copyright 38
12.5 Lease of Premises 38
12.6 Further Assurances 38
12.7 No Deductions, Withholdings or Set-Off 39
12.8 Other 39
13. Representations, Warranties and Disclosure 39
14. Notice 41
15. Severability 41
16. Survival 43
17. Governing Law and Governing Language 43
18. Settlement of Disputes 43
Annexures
Annex 1 Schedule
ii
DEALER AGREEMENT
and
WHEREAS:
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D. The Distributor has agreed to appoint the Dealer and the Dealer has
agreed to accept appointment as an authorised Dealer to operate
Authorised Outlets” as noted in Clause C above, in the Territory for the
sale, to the exclusion of all other products not previously discussed
with and agreed in writing by the Distributor, of all or some of the
Brand products (“Products”) upon the terms and conditions hereinafter
appearing.
1. General Provision
ii. Establish new Brand Stores in the Territory in accordance with Item 2
of Annex 4.
iii. Take over the specified Concession Corners locations, if any, in the
Territory in accordance with Item 3 of Annex 4.
The Dealer’s right to retail the Products under this Agreement is conditional
upon specific authorisation of each and all Authorised Outlets being given
and not withdrawn by the Distributor as evidenced by an authorisation
letter in the form set out in Annex 2. The Distributor may give or withdraw
such authorisation at any time where there is a breach of the conditions
contained within this Agreement, taking into account such factors as the
Distributor may, in its absolute discretion think fit. The list of Authorised
Outlets at any given time is set out in Annex 3, which list is subject to change
from time to time.
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1.2. Definitions
The following terms as used in this Agreement shall have the meaning set
forth below:
“Delivery Date” means the estimated date on which the Distributor will
ship the Dealer’s ordered Products out of its warehouse for delivery as
specified on the Distributor’s Order Form. This date is approximate only
although the Distributor will endeavour to deliver on this date.
“Distributor Sales Policies” means the sales polices set out in Annex 8.
“Future Order” means Orders placed by the Distributor after the Pre-
Order cut-off but not for immediate delivery of one week or less.
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“Guaranteed Quantities” means 100% of the quantities of each Product
ordered by the Dealer and accepted by the Distributor which the Dealer
agrees to buy from the Distributor, and the Distributor agrees to supply to
the Dealer.
“Price” means the price for the Products (excluding carriage, packing, and
insurance) and any applicable Goods and Service Tax (“GST”) or other sales
related taxes, calculated in accordance with Clause 7.2 and specified in the
Distributor’s Invoices.
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i. The Dealer is a company duly organised and registered under
the law of the Territory, with full legal right, power and authority to
execute and deliver this Agreement and to observe and perform its
obligations hereunder.
ii. The Dealer shall observe the laws and regulations of the
Territory and operate its business legally, and in compliance with the
requirements of the adidas Group Standards of Engagement.
iii. The Dealer accepts that the Dealership Commercial Terms &
Conditions contained in Annex 4, the General Terms & Conditions of
Trading contained in Annex 6, the Distributor’s Sales Policies
contained in Annex 8 and the adidas Group Standards of Engagement
contained in Annex 11 form an integral part of this Agreement.
3. License of Rights
The Distributor hereby grants the non-exclusive right to the Dealer to set
up and operate at the premises listed in Annex 3, an Authorised Outlet and
grants to the Dealer a non-exclusive permit to use the Trademarks and the
Know-How in connection with the operation of the Authorised Outlet and
retailing of the Products designated from time to time by the Distributor.
Subject to Clauses 3.2 and 3.3 below, the Distributor grants to the Dealer,
the following non-exclusive rights during the Term of this Agreement:
i. To sell, to the exclusion of all other branded or non-branded products,
which have not been previously the subject of discussions and
agreement to the contrary between the Distributor and the Dealer,
such Products as the Distributor notifies to the Dealer in writing from
time to time as specified in Clause 7.1 and 7.2, at the Authorised
Outlet located or to be located at the address stated in Annex 3 or at
such other location agreed to in writing by the Distributor.
ii. To use at the Authorised Outlet, the Trademarks and the Know-How
that the Distributor is licensed to use and which Distributor has
notified to the Dealer it is entitled to use in writing, such use to be in
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accordance with the Distributor’s guidelines and/or instructions given
by the Distributor to the Dealer from time to time, and as contained
in Annex 7 to this Agreement.
Other than following discussions between the Distributor and the Dealer,
and with the prior written agreement of the Distributor or otherwise in
accordance with this Agreement, the Dealer shall not:
i. Use the Authorised Outlet other than for the sale of the Products or
sell, display or advertise for sale at the Authorised Outlet, any goods
other than the Products.
ii. Purchase the Products from sources other than the Distributor.
iii. Sell the Products or use the name “adidas”, the Trademarks or Know-
How at any location other than at the Authorised Outlet.
ii. To sell the Products directly to its customers in the Territory (as and
when permitted by the Territory’s laws and regulations governing
foreign investment) or elsewhere as permitted by the adidas Group
and whether through its own retail outlets, the Internet, by mail order
or otherwise.
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Dealer shall not be entitled to any compensation, howsoever
described, in connection with this appointment.
vi. To assign this Agreement to another adidas Group company for the
remainder of the Term, after dutifully notifying the Dealer in writing of
the assignment. The Distributor shall bear any reasonable legal costs
associated with the assignment of this Agreement.
This Agreement shall be for an indefinite period of not less than one year
commencing on 1 January 2007(“Commencement Date”), and remaining in
effect unless earlier terminated by either Party in accordance with the
provisions of Clause 10. The Franchise Commercial Terms and Conditions
relating to this Agreement will be reviewed and mutally agreed between both
parties annually prior to the Sell-in event relating to the sale of the products
that would be affected by the revised Franchise Commercial Terms and
Conditions, if any, and in any event, no later than the anniversary date of this
Agreement (“Annual Review”). The revised Franchise Commercial Terms and
Conditions, if any, will be effective for all open Authorised Outlets from the
anniversary date of the Agreement relating to the review.
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term.
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4.2 Performance Security
The Dealer shall provide the IBG from a bank approved by the Distributor
in an agreed format. The amount of the IBG shall be the amount of two
month’s sales as determined mutually by the Dealer and the Distributor.
So long as this Agreement is in force, whether during its initial term or any
successive term following a renewal pursuant to Clause 4.2, the Dealer shall
deliver to the Distributor, not less than 14 (fourteen) days prior to the
expiry date of any IBG then applicable (“Guarantee Expiry Date”), a new and
valid IBG issued in favour of the Distributor and, subject to the following
changes, upon the same terms and conditions as those of the immediately
preceding IBG (or upon such other terms as may be agreed to in writing by
the Distributor):
i. The validity period of the new IBG shall be the relevant renewal term
commencing immediately after the Guarantee Expiry Date.
ii. If the Distributor shall have notified the Dealer in writing not less
than 30 (thirty) days prior to the Guarantee Expiry Date that the new
IBG must guarantee payment of an amount other than the amount
stated in the immediately preceding IBG, the Dealer shall deliver to
the Distributor a new IBG for the Guaranteed Amount stated in the
Distributor’s written notice aforesaid.
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5. The Image of the Authorised Outlet, Furniture and
Equipment
The Dealer shall maintain the image and outlook of the Authorised Outlet,
including the showcases, fittings, fixtures and equipment therein in
conformity at all times with the Brand’s identity as a global brand of high
quality and shall, for such purpose, consult personnel appointed by the
Distributor from time to time as to the standards of maintenance required
and comply with their directives and proposals for such maintenance.
The Dealer shall structure, decorate and equip the interior and exterior of
the Authorised Outlet in conformity with the Brand design specifications and,
where required, using designated adidas Group suppliers (as communicated
from time to time to the Dealer), and in accordance with the plans previously
submitted to and approved by the Distributor and utilising the services of
designers, supervisors and contractors previously nominated or approved by
the Distributor. Any alteration to the approved plans shall be subject to the
Distributor’s prior written consent.
The Dealer shall purchase and install in the Authorised Outlet all necessary
equipment, including but not limited to software and hardware equipment, air
conditioners, audio equipment ("Equipment"), as previously approved by or
specified from time to time by the Distributor. Title to the Equipment shall
remain with the Dealer. The costs of fitting out the Authorised Outlet,
inclusive of wet-work, electrical and ceiling works is to be borne by the
Dealer, with the cost of the Brand moveable fixtures and display modules
("Furniture") and all other fixtures and fittings that are directly attributable to
the Brand supplied by the Distributor (“Other Distributor Supplied Items”),
being borne by the Distributor. The Dealer shall install at its own cost in
the Authorised Outlet, the Furniture and Other Distributor Supplied Items
specified and supplied by the Distributor.
The Dealer is responsible for all payments to and the performance of the
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contractors used to fit out or subsequently renovate the Authorised Outlet.
The Dealer shall ensure that all fit out works comply in all respects with all
applicable laws, rules, regulations, by-laws and the like (“Laws”) and obtain
all requisite approvals, permissions, consents and the like (“Approvals”)
whether of municipal, local or other authorities (“Authorities”) or of the owner
of the building (“Building Owner”) in which the Authorised Outlet is situated.
The Dealer shall indemnify and keep the Distributor indemnified against all
liabilities, claims, proceedings, damages, costs and expenses incurred by the
Dealer to either the Authorities or the Building Owner as a result of or in
relation to a breach of the Laws or Approvals.
ii. Where the Authorised Outlet is an existing outlet for the sale of the
Products:
- At such time as the Distributor deems appropriate.
- Thereafter at such times as the Distributor deems appropriate
but no later than three years from the date of the immediately
preceding fitting out.
The Dealer shall operate a maintenance program to maintain at all times the
interior and exterior of the Authorised Outlet in good condition. The Parties
shall use their best endeavours to agree on the renovation of the Authorised
Outlet within fourteen days (or such longer period as the Distributor
stipulates) from the commencement of their consultations on the
renovations. Failing agreement, the Distributor’s proposal on renovation or
on such items thereof as the Parties shall have failed to agree upon, shall, for
the purposes of this Agreement, be deemed to be agreed to and binding
upon the Dealer.
If, at any time, the Distributor is reasonably of the opinion that the Dealer
is not complying with its renovation and maintenance obligations, the
Distributor may, without prejudice to any other remedy available to it,
including termination of this Agreement, notify the Dealer of the actions it
requires from the Dealer in order to ensure compliance with such
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obligations, and the Dealer shall, at its own expense, take the notified action
forthwith within 14 (fourteen) working days.
The title to the Furniture and Other Distributor Supplied Items will remain
with the Distributor for a period of one year from the date of their initial
acquisition. The Dealer shall not sell the Furniture and Other Distributor
Supplied Items or otherwise create or permit to be created any charge, lien,
assignment or other encumbrance, equity or security interest whatsoever
over the Furniture and Other Distributor Supplied Items. In particular, the
Dealer shall ensure that the Furniture and Other Distributor Supplied Items
are expressly excluded from any security interest over its assets and are not
transferred to a third party pursuant to the exercise of the statutory pledge
securing a lessor's claims for overdue rental fees, or as a result of any
execution procedure. The Dealer shall promptly notify the Distributor of,
and take all possible actions against, any such event threatening the
Distributor's title to the Furniture and Other Distributor Supplied Items.
The Dealer shall compensate the Distributor for any breach by the Dealer
with respect to protecting the title to the Furniture and Other Distributor
Supplied Items. Compensation shall be the highest of the cost of replacement,
the market value or the Distributor’s book value (as applicable) of the
Furniture and Other Distributor Supplied Items.
Upon sale of any of the Equipment and Other Distributor Supplied Items by
the Dealer to any third party, all Trademarks affixed to such items shall be
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removed by the Dealer.
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6. Operation of the Authorised Outlet
6.1 General
The Dealer shall commence or continue, as the case may be, the operation
of the Authorised Outlet not later than the date specified in Annex 3, in
accordance with the terms of this Agreement.
The Dealer shall ensure that the image and reputation of the Distributor
and of the Brand are at all times maintained to the reasonable satisfaction of
the Distributor and that nothing which may be detrimental to that image or
reputation is carried out by the Dealer or its employees. The Dealer shall
use its best efforts to maintain the highest standards in all matters connected
with the operation of the Authorised Outlet and shall comply with all advice
and instructions given to it by the Distributor with regard to the display and
sale of the Products.
The Dealer shall use the Trademarks and other signs in accordance with the
Distributor's instructions solely and in connection with the operation of the
Authorised Outlet, and shall refrain from using the Trademarks or any other
name, sign, symbol or colour scheme in any way that has not been previously
approved in writing by the Distributor.
The Dealer shall use the Know-How only in connection with the operation of
the Authorised Outlet and in accordance with the Distributor's instructions.
The Dealer shall employ an adequate work force which, in the opinion of the
Distributor, will enable the Authorised Outlet to operate efficiently,
including a full time manager (the "Manager" and collectively the "Staff").
The Dealer shall ensure that the members of the Staff attend such training
courses and seminars with regard to the operation of the Authorised Outlet
as may be organised by the Distributor from time to time. The Dealer shall,
in addition, maintain a training program for the Staff as prescribed by the
Distributor. Unless the Distributor decides otherwise, the Dealer shall
bear the costs for the attendance and participation of the Staff at and in such
training programs.
The Dealer shall comply with all instructions given to it by the Distributor
with regard to the Staff’s uniforms, appearance, cleanliness and demeanor,
which in the opinion of the Distributor, are reasonably necessary in order to
maintain the uniformly high standards associated with Authorised Outlets as
detailed in Annex 9. The Dealer shall, at its own cost, provide uniforms for all
Staff as designed and supplied by the Distributor.
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6.3 Other
The Dealer shall ensure that all POSM bags or carriers, giveaways, purchase
with purchase or gifts with purchase, materials, invoices or other stationery
used by the Dealer in connection with the Authorised Outlets are in the form
designated by and in accordance with the specifications of the Distributor
and the same may either be purchased at cost from the Distributor or, with
the prior approval of the Distributor, procured elsewhere from other
sources.
All purchases of the Products by the Dealer directly from the Distributor
shall be governed by the Franchise Commercial Terms and Conditions
attached as Annex 4, and the General Terms and Conditions of Trading
attached as Annex 6, subject to the differences contained in this Clause 7. In
the event that the General Terms and Conditions of Trading are amended by
the Distributor then, with the agreement of both Parties from time to time,
the same amendments shall apply to this Agreement as from the date of
such amendment.
The Dealer shall send Orders to the Distributor from time to time. All
Orders shall be addressed to the Distributor at the legal address set forth
herein, or to such other address as may subsequently be notified to the
Dealer by the Distributor.
If the delivery time for an Order is less than that required for a Pre-Order as
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defined in the previous paragraph, but more than one week in the future,
such Order is referred to as a “Future Order”, and the terms of the Future
Order will be subject to the Distributor’s General Terms and Conditions of
Trading as applicable to Future Orders. Orders for delivery within one week
will be referred to as “Stock Orders” and such Orders will be subject to the
Distributor’s General Terms and Conditions of Trading, as the same apply to
Stock Orders.
The Dealer may place Orders provided the aggregated amount of all
outstanding amounts due by the Dealer to the Distributor does not exceed
the Dealer’s agreed credit limit, and that none of its payables to the
Distributor are overdue. Where the Dealer neglects to make timely
payment for the Products, the Distributor has the right, at its discretion, to
cancel any open Orders.
The Dealer undertakes and commits to use its absolute best efforts to
purchase from the Distributor the minimum amounts of the Products stated
in Item 11 of Annex 4 (“Mininum Purchase Guarantee”). Should the Dealer
fail to comply with the Minimum Purchase Guarantee, the discount it is
entitled to as a “market model” may, in the absolute discretion of the
Distributor, be reduced by the percentage specified in Item 7 of Annex 4,
being the equivalent of the Distributor’s Pre-Order Discount. At the end of
each calendar year, a reconciliation of the total prior year purchases made by
the Dealer shall be done for purposes of calculating the correct discount rate
to be applied and a debit or credit note shall be issued by the Distributor to
the Dealer.
The Distributor shall use its best efforts to ship the Products to the Dealer
on the agreed delivery date and to the address shown on the Sales Order
Confirmation, including arranging transportation and related insurance. All
relevant transportation and insurance costs by land or sea delivery for Orders
meeting minimum quantities shall be borne by the Distributor unless
otherwise agreed by both Parties.
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The Dealer shall bear any extra costs associated with supplying the Products
to Authorised Outlets on an expedited basis, where this is not the result of
late delivery by the Distributor. In all cases, the costs associated with any
subsequent movement of the Products, such as for clearance, shall be borne
by the Dealer.
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If delivery of a portion or all of the Products cannot be made on the delivery
date despite the Distributor’s best efforts, the Distributor shall promptly
notify the Dealer of the same and both Parties shall discuss how to respond
to the situation. The Distributor shall not be liable for any delays in the
delivery of the Products.
In case the Dealer finds defective Products, it shall handle this issue
according to the Distributor’s Defective Product Return Policy specified in
Item 27 of Annex 4.
The Distributor reserves retention of title over the Products until they have
been paid for in full by the Dealer, as well as the right to recover them from
the Dealer’s premises if the Dealer fails to pay for the Products by the due
date, is declared bankrupt or enters into voluntary or compulsory liquidation
or administrated receivership.
The Dealer shall sell exclusively the Products designated from time to time
by the Distributor in the Authorised Outlet and exclusively to retail
consumers.
The Dealer shall keep a selection of the Products according to the Product
launch calendar, in such types, sizes, colors and quantities to fully satisfy
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consumer-demand and as required by the Distributor. For this purpose, the
Dealer agrees the Distributor may, at its discretion, provide the Dealer
with select styles of the Products, referred to as “points of differentiation”
(PODs), and/or a mandatory product range, under such terms and conditions
as may be agreed upon by the Parties. Notwithstanding this, the Distributor
may unilaterally determine up to that percentage of Product selection for the
Authorised Outlet as is specified in Item 13 of Annex 4 in order to ensure
proper adidas brand and technology representation in the Authorised Outlet.
The Dealer shall use its best efforts to maximise the turnover of the
Authorised Outlet and, achieve as a minimum turnover figure, the amounts
indicated in Item 11 of Annex 4 (the "Minimum Turnover Figure") in each
consecutive twelve-month period. In achieving these targets, the Dealer is
entitled to receive a Dealer bonus equal to the agreed percentage (as
specified in Item 12 of Annex 4) of the Dealer’s net purchases from the
Distributor. The Dealer bonus shall be paid by way of issuing a credit note
which will be applied against the next invoice issued to the Dealer pursuant
to any delivery of the Products.
Without prejudice to the Dealer's right to determine its retail prices, the
Distributor may, by taking advantage of its expert knowledge in evaluating
market conditions and developing marketing policy, continuously recommend
retail prices to the Dealer by Article or Model number (“Recommended Retail
Prices”) at which the Dealer shall retail and only sell the Products at these
Recommended Retail Prices. The Distributor shall not mark-down the
Product from the Recommended Retail Prices prior to 90 days of the date of
the introduction. In any situation where the Dealer believes that it would be
commercially desirable to sell the Products at less than the Recommended
Retail Prices prior to 90 days from their date of introduction, the Dealer shall
only mark-down the Products from the Recommended Retail Prices following
consultations with the Distributor and the reaching of a consensus with the
Distributor on the commercial desirability of such mark-downs from the
Recommended Retail Prices. In the event of a breach of this obligation:
i. The Dealer shall pay to the Distributor an amount equivalent to the
difference in value between the Recommended Retail Price and the
price at which the Dealer sold the Products.
ii. The Distributor shall be entitled to terminate this Agreement.
The maximum discount from the Recommended Retail Price for the sale of
Products in the Authorised Outlet shall be as specified in Item 16 of Annex 4.
Discount sales of Products may not exceed the percentage of the total
monthly sales in the Authorised Outlet as specified in Item 16 of Annex 4.
Save for the competitive brand(s) that the Dealer is currently selling and the
Distributor is fully aware of and has consented to the same or as otherwise
discussed with and agreed in writing by the Distributor, the Dealer shall
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refrain from participating, directly or indirectly, in the distribution or
promotion of any product which is competitive with the Products, unless with
the Distributor’s prior written consent.
Should the Dealer become aware of, or reasonably suspect, any wholesale
activity with the Products by any unauthorised person, the Dealer shall
promptly inform the Distributor accordingly.
The Dealer shall use its best efforts to achieve the Authorised Outlet
performance targets specified in Item 11 of Annex 4.
The Dealer shall allocate the minimum percentage of its Gross Annual Sales
specified in Item 18 of Annex 4 for joint advertising and sales promotion
campaigns co-ordinated by the Distributor, from which the percentage of
Gross Annual Sales specified in Item 18 of Annex 4 shall be paid by the
Dealer to the Distributor’s Marketing Advertising Fund (“Fund”). The Fund
shall be used by Distributor to sustain its efforts in advertising for the Brand
and specifically for the Authorised Outlet. The contribution to the Fund shall
be billed monthly by the Distributor to the Dealer. The Dealer shall pay
the amount within ten (10) days from receipt of the statement of account.
Without prejudice to the generality of the above, the Distributor and the
Dealer hereby agree to conduct joint promotion and advertising campaigns
during the term of this Agreement. For this purpose, the Distributor and the
Dealer shall meet quarterly to discuss and agree on the budget, scale and
activities in connection with such joint promotion and advertising campaigns
and the contribution by each Party towards such budget or fees required to
mount the said joint promotion and advertising campaign.
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The Dealer may only establish a web site or other form of presentation,
advertising and/or sale of the Products on the Internet with the written
approval of the Distributor. In any event, any advertising and promotional
activities on the internet must conform to the global advertising and
promotional policies of the adidas Group.
The Dealer shall at all times protect and promote the interest, reputation
and goodwill of the adidas Group, the “adidas” name, the Brand, the Products
and the Trademarks.
The Distributor shall provide and bear the cost of the POS material to be
displayed in the Authorised Outlet. The Distributor and the Dealer shall
also comply with the additional Product marketing, promotion and sales
obligations for the Territory, if any, specified in Item 19 of Annex 4.
8. Dealer’s Obligations
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iv. Monitor and record all Product sales at the Authorised Outlet with POS
terminals and give the Distributor on-line access to all sales data
recorded on POS terminals.
v. Be responsible for and bear all recurring charges and expenses
whatsoever incurred or to be incurred in operating the Authorised
Outlet.
vi. Only use POS terminals at the Authorised Outlet as approved by the
Distributor at the Dealer’s own cost.
vii. Communicate to the Distributor any experience gained during the
operation of the Authorised Outlet, however, it shall not introduce any
improvement, or modification into the operation of the Authorised
Outlet without the Distributor's prior written consent. The
Distributor shall have the right to integrate into the Know-How any
such improvements without any payment being made in respect
thereof.
viii. As soon as practicable, notify the Distributor in writing of any
suspected unauthorised use of any of the Trademarks or the Know-
How by third parties, or any act of unfair competition by third parties
relating to any of the Trademarks or other signs or symbols used in
connection with the operation of the Authorised Outlet. The Dealer
shall not take any action against such infringement or unfair
competition unless prior written approval is given by the Distributor.
If the Distributor decides, in its discretion, to take judicial action
against such infringement or imitation, the Dealer shall provide such
co-operation as the Distributor may request in connection with any
such action. The Distributor will have the right to conduct any such
action and shall be obliged to pay all legal expenses and costs which
may arise as the result of joining of the Dealer as a party, except legal
expenses and costs which the Dealer may incur by obtaining separate
legal advice.
ix. Permit the Distributor or his agent or employee the right to enter,
during normal business hours, the premises of the Authorised Outlet,
including its store-rooms and offices, and to inspect the inventory, any
accounts or records and to take copies thereof at the Distributor's
expense.
x. Fully comply on a timely basis, with all laws and regulations of the
Territory including, without limitation, those specific laws, if any,
mentioned in Item 9 of Annex 1.
xi. Obtain and maintain a Sales Tax (VAT collector) registration
xii. Be responsible for any damage, injury, risk caused by or in relation
with Distributor supplied promotion materials and display materials
including but not limited to fixtures, decoration materials, POP material
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and outfitting items.
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xiii. Compensate the Distributor for any use by the Dealer of the
Trademarks and Know-How otherwise than in accordance with this
Agreement.
xiv. Indemnify the Distributor for any liability incurred to third parties for
any use of the Brand Trdemarks or intellectual property belonging to
such third parties.
xv. Deliver to the Distributor within three months of its year end a copy
of financial statements.
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agent, Dealer, or representative in the Territory of the Distributor.
25
vii. At any time cause or permit anything which may damage or endanger
the Distributor’s title to the Trademarks and Know-How or assist or
allow others to do so.
viii. Use the Trademarks and Know-How other than as permitted by this
Agreement and directly in its business as an authorised Dealer in the
Products.
ix. Use without prior approval of the Distributor, the Trademarks on any
stationery, store sign, paper bags, light boxes, leaflets, internet web
site and other promotional and advertising material for the Products.
x. Seek any privilege or favour by offering cash, coupons, valuable gifts,
excessive entertainment to the Distributor’s employees, as well as
by other non-professional behavior beyond normal business practice,
and shall inform the Distributor of any non-professional behaviour on
the part of the Distributor’s employees, if any.
xi. Do or refrain from doing anything which amounts to a breach of the
laws of the Territory including, without limitation, those specific laws, if
any, mentioned in Item 9 of Annex 1.
8.3 Insurance
The Dealer shall take out and maintain for the duration of this Agreement an
insurance policy, or modify its existing insurance policy as required by the
Distributor, within 15 days from signing this Agreement, so as to be
reasonably satisfactory to the Distributor, at the Dealer's expense, and
with an insurance company of good reputation, against all reasonably
foreseeable risks, including;
i. All risks insurance covering loss (including loss of profits) or damage to
or destruction of the Authorised Outlet and of the Products on sale
which may arise from fire, flood, explosion, vandalism or burglary, third
party liability and all other foreseeable risks.
ii. Public liability insurance to cover any expenses, liabilities, losses,
claims or proceedings which the Dealer may incur or sustain by
reason of damage to any property of the Distributor or injury to any
customers in the Authorised Outlet, including personal injuries or
deaths arising out of, or in the course of or caused to any third party in
the Authorised Outlet.
iii. Workmen's compensation or employer's liability and other insurance as
may, in the Distributor’s absolute discretion, be deemed to be
necessary to cover the liability of the Dealer.
The Dealer will provide the Distributor with a copy of the insurance
certificate and the subsequent renewal certificates, and ensure that the
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insurance policy or policies are endorsed with provisions that their cancellation
shall not be effected without prior written notification to the Distributor.
The Dealer shall utilise all insurance monies received by it (whether on any
insurance of the property and effects belonging to the Dealer in the
Authorised Outlet) firstly towards payment of all monies payable by the
Dealer to the Distributor (including without limitation to all compensation
payable by the Dealer to the Distributor pursuant to this Agreement).
8.4 Reporting
The Dealer shall provide soft copy sales and inventory information in a
format and frequency required by the Distributor including, without
limitation:
i. Monthly Sales and Inventory Report including sell though data by
Authorised Outlet and total to be submitted on every first Monday of
the month.
ii. Monthly a report of all matters of importance affecting each Authorised
Outlet, including advertising and promotional activities.
The Dealer shall at all times inform the Distributor of its selling prices for
all Products which are not at the Recommended Retail Price or within the
mark down schedule in Item 16 of Annex 4.
9. Distributor’s Obligations
27
consideration or approval.
iv. Undertake to provide the Dealer with the necessary training in
merchandising support in the form of product display, display modules,
fixtures and fittings, point-of-purchase (POP) and merchandising
materials such as posters, banners, window displays, signage, etc. In
addition, the Distributor may provide merchandising support such as
flyers and streamers.
v. Arrange for the delivery of the Furniture and Other Distributor Supplied
Items to the Authorised Outlet for its set up at the Dealer's expense in
time to enable the Dealer to commence the operation of the
Authorised Outlet on the date specified in Annex 3.
vi. At its sole discretion, take all actions as it may deem necessary to
protect the Dealer against any unauthorised use of the Trademarks or
the Know-How, which may adversely effect the operation of the
Authorised Outlet.
v. Assure the Dealer that, should an opportunity arise to set up another
Brand Store in the vicinity (defined as within the same shopping mall,
complex or centre) of the Dealer’s Brand Store, the Distributor will
grant the Dealer a “right of first refusal” in respect of the other Brand
Store only.
vi. Support the Dealer in its efforts to sell the Products through providing
adequate advertising and promotion of the Products at such times and
in such manner as it considers fit. The Distributor shall provide such
marketing support to the Dealer as the Distributor shall consider
necessary for the Dealer to fulfil its obligations under this Agreement
vii. Promptly communicate with the Dealer about new Product
information, including but not limited to Product ranges and prices, and
alterations to the information concerning the Products.
viii. Promptly communicate with the Dealer about all updates of the
Distributor’s sales policies and assist the Dealer in observing these
policies.
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xi. Insure at its own cost and solely in the name of the Distributor, all
such items in the Authorised Outlet in which the Distributor has an
insurable interest (including, without limitation, the Furniture and the
Other Distributor Supplied Items) against loss or damage by fire and all
such other risks in such amounts and with such insurers as the
Distributor may, from time to time, deem appropriate. The Dealer
confirms and acknowledges that all monies payable under any
insurance policy/policies affected by the Distributor shall belong to
the Distributor absolutely.
10. Termination
29
resolution passed for its winding-up.
iii. Is placed under judicial management or enters or attempts to enter
into any compromise or arrangement with its creditors.
iv. Is the subject of a distress notice or execution, or other process of a
court of competent jurisdiction levied upon or issued against the other
Party’s property and such distress, execution or other process as the
case may be, is not satisfied by such Party within 14 (fourteen) days
from the date thereof.
v. Is unable to continue fulfilling its obligations under this Agreement for
six (6) months or more due to an event of Force Majeure and, after
consultations, the Parties are unable to agree on a method to improve
their economic situation to an extent satisfactory to both Parties.
30
commenced or any other event occurs that causes its dissolution.
v. The Dealer defaults on any of its payment obligations under this
Agreement and as stipulated in the Franchise Commercial Terms and
Conditions or the General Terms & Conditions of Trading, or
subsequently fails to pay its overdue and outstanding liabilities to the
Distributor within 14 (fourteen) days when the Distributor demands
payment of the same.
vi. The Dealer fails to deliver a valid Irrevocable Bank Guarantee to the
Distributor in accordance with the terms of this Agreement.
vii. The Dealer imports or purchases the Products from any source other
than the Distributor without the Distributor’s prior written approval
and/or if the Dealer exports/sells the Products to any person other
than the consumers permitted under this Agreement or as specifically
agreed to in writing by the Distributor.
viii. The selling or displaying of counterfeit Products by the Dealer in its
Authorised Outlet.
ix. The performance of the Dealer is such that it fails to achieve the
Minimum Turnover Guarantee.
x. The Dealer fails to commence or cease the operation of the
Authorised Outlet by the date specified in Annex 3 or to carry out the
renovation and maintenance program in accordance with the
requirements of this Agreement.
xi. The Dealer infringes in any way the rights of the Distributor or of the
proprietor of the Trademarks to the Trademarks, or fails to promptly
notify the Distributor of any suspected unauthorised use of any of the
Trademarks or the Know-How.
xii. The Dealer shall be or attempts to act in breach of any of the
covenants and undertakings set out within this Agreement.
xiii. The Dealer provides to the Distributor at any time false or misleading
information, or omits to disclose to the Distributor any material fact,
the non-disclosure of which renders any statement made by the
Dealer to the Distributor misleading, or fails to inform the Distributor
of any change which may have a material effect on this Agreement.
xiv. The Dealer divulges Confidential Information to unauthorised third
parties.
xv. If the Distributor ceases to be the exclusive Distributor of the
Products in the Territory, whether by its own default or otherwise.
The Distributor may also terminate this Agreement by giving six (6) months
notice in writing to the Dealer at any time on or after the initial period of one
year from the date of commencement of this Agreement.
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10.5 Consequences upon Termination
The expiration or termination of this Agreement shall not relieve either Party
of any obligation under this Agreement, which is expressed to continue after
expiration or termination or any of their prior respective obligations or impair
or prejudice their respective rights against the other.
Upon termination of this Agreement, for any reason whatsoever, the Dealer
shall:
i. Immediately discontinue operation of the Authorised Outlet as a Brand
Store or Concession Corner location, as the case may be, and the use
of any Trademark and any Promotional Item indicative of the
Distributor or any of its affiliates, and the use of the Know-How,
except where the Know-How has become, by means other than breach
by the Dealer of its confidentiality obligations, generally known or
easily accessible. If the Dealer remains an authorised retailer of the
Distributor, the Dealer may continue using the Trademarks and the
Know-How, but only in connection with the resale of the Products and
to the extent permitted by the Distributor.
ii. Notwithstanding the stipulations in Clause 10.6(i), immediately make
such changes in the Furniture, Equipment, Other Distributor Supplied
Items, the Promotional Items, and the interior and exterior of the
Authorised Outlet as prescribed by the Distributor so as to effectively
distinguish the business of the Dealer from its former public and
marketing image as a Brand Store or Concession Corner location, as
the case may be. If the Dealer, within 14 days of such direction, fails
to make any such change, then the Distributor shall have the right to
enter into the Premises and to make any such changes at the Dealer's
expense.
iii. When requested by the Distributor but, in any case, within 1 (one)
month from the date of termination of this Agreement, return to the
Distributor, deal with or otherwise dispose of in accordance with the
directions of the Distributor, all samples of the Products, any
Promotional Items, operating manuals and any other items whatsoever
bearing any of the Trademarks owned or lent by the Distributor,
including the Furniture and Other Distributor Supplied Items then in
the possession of the Dealer (“Distributor Property”), free of any
charge.
iv. Acquire the Distributor Property, if the Distributor has elected by
written notice to the Dealer to sell all or any of the Distributor
Property to the Dealer, at a price equivalent to the Distributor’s net
book value of the Distributor Property; namely, the cost to the
Distributor of the Distributor Property less the depreciation of such
cost over a period of 3 (three) years at such rate as the Distributor
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has applied.
v. Forthwith pay to the Distributor (without any right of set-off) all
outstanding unpaid invoices and any other sums of money that may be
due from the Dealer to the Distributor pursuant to this Agreement
within 14 days, including such claims which are considered as a result
of such termination to be overdue. All Orders placed by the Dealer but
not fulfilled by the Distributor at the date of termination of this
Agreement shall be cancelled at the Distributor’s option.
The Distributor retains the right to repurchase all remaining Product stocks
that are in merchantable condition held by the Dealer upon termination of
this Agreement, in accordance with the conditions given below:
i. The Dealer shall be entitled to sell the Product stocks for a period of 3
(three) months commencing upon the date of termination of this
Agreement. The Dealer shall only sell such Product stocks during the
first 30 (thirty) day period upon termination of this Agreement at the
Authorised Outlet with the Distributor’s prior written approval.
ii. The means by and locations at which the Dealer shall dispose of the
Product stocks in the 3 (three) month period commencing upon the
date of termination of this Agreement shall require the prior written
approval of the Distributor, and such approval may be withheld or
granted with or without conditions, at the Distributor’s absolute
discretion.
iii. The Distributor shall be entitled to repurchase from the Dealer, all or
part of the Product stocks in merchantable condition held by the
Dealer, which the Dealer has not sold within the period of 3 (three)
months from the date of termination of this Agreement, on or before
the end of the 3 (three) month period following the termination of this
Agreement.
iv. The price at which the Distributor shall be entitled to repurchase the
Product stocks in good and merchantable condition from the Dealer,
will be a sum equivalent to the depreciated value of the Product stocks
according to their seasonality as calculated in accordance with the
adidas Group’s Global Accounting Procedures (see Item 28 of Annex 4
and Annex 5) prevailing as at the date when the Distributor
repurchases the Product stocks. The Distributor shall calculate the
depreciated value of the Product stocks repurchased by multiplying the
appropriate seasonality depreciation rate for the Product stocks by the
price paid by the Dealer to the Distributor for each item of Product
stock at the time of original purchase. The Distributor shall not
compensate the Dealer for any items of Product stock which are soiled
or not in merchantable condition.
v. The Distributor reserves the right to change its accounting
procedures and depreciation rates from time to time from those given
33
in Annex 5 and to notify the changes in writing to the Dealer within
seven (7) days after the termination of this Agreement. Upon such
written notice, the new rates of depreciation (if any) set out in such
written notice shall apply to any Products stocks repurchased by the
Distributor on termination of this Agreement.
vi. The Distributor shall arrange, at its own cost and expense, for the
collection and transport of the Product stocks repurchased by the
Distributor from the Dealer upon the termination of this Agreement.
In the event that the Distributor terminates this Agreement for any reason,
the Dealer shall not be entitled to any compensation, howsoever described,
from the Distributor in connection with the Dealer ceasing to be an
authorised Dealer in the Territory for the Products, and the Dealer now
irrevocably and unconditionally waives any and all rights which it might
otherwise have to claim such compensation.
Any losses which may be suffered by the Dealer as a result of its compliance
with its obligations upon the termination of this Agreement shall be borne
solely by the Dealer and the Dealer shall not be entitled to any
compensation from the Distributor.
Each of the Parties waives its right to insist on compliance with the Territory
Laws, if any, specified in Item 10 of Annex 1.
11. Confidentiality
34
except for the sole purpose of operating the Authorised Outlet in accordance
with the provisions of this Agreement, disclose or make available to any
person any Confidential Information. The Dealer's failure to comply with its
obligation to keep the Confidential Information confidential qualifies as a
breach of this Agreement, for which the Distributor is entitled to seek an
injunction, as well as claim damages and pursue any other legal remedies
available to the Distributor.
12.1 Interpretation
This Agreement and the attached Annexures constitute the entire agreement
and understanding of the Parties with respect to the subject matter of this
Agreement, and supersede all previous oral or written discussions,
understandings and agreements between the Parties with respect to the
subject matter hereof. The Dealer acknowledges that it has not relied upon
any oral or written representations made to it by the Distributor or by its
employees or agents.
35
The singular shall include the plural and the plural shall include the singular.
In the event of any conflict between the provisions of this Agreement and the
Franchise Commercial Terms and Conditions or the General Terms and
Conditions of Trading, the relevant provisions of this Agreement shall prevail.
In computing time for the purposes of this Agreement, the period of days from
the happening of an event or the doing of any act or thing shall be deemed to
be exclusive of the day on which the event happens or the act or thing is done
and, if the last day of the period is a weekly or public holiday, the period shall
include the next following day which is not a weekly or public holiday.
The Dealer shall not assign or purport to assign any of its rights or
obligations contained in this Agreement without the prior written consent of
the Distributor, which consent may be withheld or granted, with or without
conditions, by the Distributor in its absolute discretion.
For this purpose, the Dealer shall not change its existing proprietorship or
allow withdrawal of any of its existing partners or allow any changes or
transfers of its issued shares resulting in a change of existing shareholders
without the prior written approval of the Distributor, and such approval shall
not to be unreasonably withheld.
Neither Party shall be liable for any loss suffered by the other Party arising
out of delay in performance, or non-performance, of the Party's obligations
due to any cause beyond the reasonable control of either Party.
Neither Party shall be liable for delay in performing its obligations or for
failure to perform its obligations hereunder if the delay or failure resulted
from circumstances beyond its reasonable control. Such circumstances shall
include but shall not be limited to acts of God or government, war, fire,
explosion, flood, accident, natural calamities or impossibility of obtaining
36
services or materials (“Force Majeure”), provided that such Party shall have
used all reasonable efforts in the circumstances to avoid or minimise the
effects of any such delay or failure and to perform such obligations,
notwithstanding the events which have occurred and such Party shall be
granted an extension of time for the performance of such of its obligations as
shall be so delayed for a period equal to the duration of such delay, provided
such extension shall not be beyond three (3) months. If an event of Force
Majeure continues for a period of three (3) months or more, either Party may
terminate this Agreement by written notice to the other Party.
For avoidance of doubt, employee action (or the lack of it) by the employees
of the Dealer shall not amount to an event of Force Majeure which may be
relied upon by the Dealer.
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12.4 Copyright
The copyright and all other rights in any software, the Distributor’s intranet
or website, any designs, photographs and all other documents which the
Distributor may supply to the Dealer from time to time (“Copyright
Material”), and all secret or confidential information contained therein
belongs to the Distributor. The Dealer undertakes not to copy the
Copyright Material or disclose the content or concept of the Copyright
Material to any other persons or party and further undertakes not to make
any direct or indirect use of the Copyright Material otherwise than for the
operation of the Authorised Outlet in accordance with this Agreement.
38
i. In good faith.
iii. With respect for the spirit as well as the letter of this Agreement.
Each Party shall, at its own expense, on the request of the other Party, do
everything reasonably necessary to give effect to this Agreement and the
transactions contemplated by it, including, but not limited to, the execution
of documents.
All amounts payable to the Distributor under this Agreement shall be paid:
ii. Free and clear of and (except to the extent required by law) without
any deduction or withholding on account of any tax.
12.8 Other
Each Party shall bear the costs and expenses incurred by it in connection
with this Agreement.
The failure of either Party to exercise any right or remedy (including its right
to terminate this Agreement) upon default by the other Party, or to insist on
strict compliance with any obligation hereunder, shall not in any event be
deemed a waiver of such default or of any subsequent default.
Each Party warrants and represents to the other Party that its execution of
this Agreement is duly authorised and that upon execution, the terms of this
39
Agreement shall be binding and enforceable against it.
The Dealer acknowledges that it alone bears all risks of operating the
Authorised Outlet.
Each Party acknowledges that it has taken full independent legal, financial
and business commercial advice from its own consultants on this Agreement
prior to its execution and confirms that, in making its assessment or decision
to enter into this Agreement, it has not relied on any statement or
representation of the other Party, its directors, employees, agents,
representatives or any person whomsoever and howsoever connected with
the other Party.
Each Party warrants that, on entering this Agreement and during the
continuance thereof and at all times, it has made and shall continue to make
full disclosure of all material facts, circumstances and other matters that
would be likely to influence the decision of the other Party to enter into
and/or to continue as a party to this Agreement.
The Dealer shall not make or give any representation or warranty to anyone
in respect of the Products or in connection with the operation of the
Authorised Outlet save for those representations and warranties, if any,
which have been specifically authorised by the Distributor in writing, and
the Dealer hereby undertakes to keep the Distributor fully and effectively
indemnified against all claims, demands, losses, expenses and costs incurred
by the Distributor as a result of any breach by the Dealer of this provision.
The Dealer shall indemnify the Distributor and keep the Distributor
indemnified against all losses, damages, liabilities, claims or expenses
incurred or suffered by the Distributor as a result of the Dealer’s conduct
or operation of the Authorised Outlet, including but not limited to costs,
claims, damages, losses, penalties, fines, liabilities and expenses of
investigating and defending any claim, including legal fees and
disbursements, and consultant’s fees and disbursements and in particular,
those incurred as a result of:
i. The Dealer’s failure to comply with any applicable existing or future
laws, regulations, registrations, codes of conduct, notices, permits,
consents, approvals or licenses, including, without limitation, any such
laws or regulations relating to protection of the environment, damage
to or use of any property or harm to human health or the protection of
public health and hygiene.
ii. The Dealer’s unauthorised use of the Trademarks.
iii. Any failure whether by the Dealer or its employees and agents to
comply with this Agreement.
iv. Any deliberate or negligent act, omission or error by the Dealer or its
40
employees or agents.
The Distributor shall indemnify the Dealer and keep the Dealer fully
indemnified against any claims arising out of the sale or use of the Products.
14. Notice
Any notice sent by post shall be deemed to have been served 2 (two)
business days after posting. In proving service, it shall be sufficient to prove
that a notice was properly addressed and stamped and put into the post. Any
notice sent by fax shall be deemed to have been served on the next business
day following the date of despatch of it. Any notice delivered by hand shall be
deemed to have been served when physically delivered at the relevant
address.
15. Severability
41
ii. The Offending Part shall be deemed to be deleted from this
Agreement.
42
iii. The Parties shall negotiate in good faith a substitute part for the
Offending Part (“Substitute Part”), which Substitute Part is valid, legal
and enforceable and gives effect, as near as is reasonably possible, to
the economic result intended by the Parties at the time this Agreement
was entered into.
If, however, the Parties fail to reach agreement on the Substitute Part within
60 days, each Party shall have the right to terminate this Agreement on 30
days written notice to the other Party provided that the terminating Party
would not have originally entered into this Agreement but for the presence of
the Offending Part.
16. Survival
The Parties agree that, if any dispute arises out of or in connection with this
Agreement, including without limitation any question regarding its existence,
validity, termination of rights or obligations of any Party, or interpretation,
the Parties shall attempt, for a period of 60 (sixty) days after the receipt by
one Party of a notice from the other Party of the existence of the dispute, to
settle such dispute in the first instance by mutual discussions between the
Parties.
43
Any dispute that cannot be settled amicably by mutual discussion within the
60 (sixty) day period referred to in the previous paragraph shall be finally
settled by arbitration in accordance with the Rules of Conciliation and
Arbitration (“Rules”) of the International Chamber of Commerce (“ICC”) then
in force for arbitration. The number of arbitrators shall be three, who shall be
nominated in the manner provided in the Rules.
The decision of the arbitrators in any matter within this Clause 18 shall be
final, binding and incontestable and may be used as a basis for judgment
thereon in the Territory or elsewhere. It shall include a determination as to
which of the Parties shall pay the costs and expenses of the arbitrators, the
administrative costs of the arbitration, the legal fees incurred by the Parties,
the cost and expenses of witnesses and all other costs and expenses
necessarily incurred in the opinion of the arbitrators in order to properly
settle the dispute.
Without limiting the application of law and regulations and without prejudice
to a Party’s right to seek enforcement in any forum or jurisdiction, for the
purpose of enforcing any decision of the arbitrators, the Parties hereby
choose the domicile specified in Item 11 of Annex 1.
Subject to Clause 12.3, each Party shall continue to perform all its obligations
under this Agreement notwithstanding the existence of a dispute and/or the
44
reference of the dispute to arbitration pursuant to this Clause 18, and
pending the decision of the arbitrators.
45
IN WITNESS WHEREOF the Parties have executed this Agreement on the
dates indicated below with effect from the date on which this Agreement was
signed. The persons signing below for the Distributor and for the Dealer by
his/her signature represents that he/she has read and fully understood this
Agreement as well as all its annexures, has full authority to sign this
Agreement and to bind the Distributor or the Dealer, as the case may be,
and/or any other persons or entities whose authorisation may be needed to
make this Agreement binding upon the Distributor or the Dealer, as the
case may be, and to secure performance of the obligations contained herein,
has given the necessary auhtorisation.
By: By:
________________________ ________________________
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