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EXHIBIT 10.12
DISTRIBUTOR'S AGREEMENT
By and between
PROCTER & XXXXXX XX of 0, xxx xx Xxx-xx-xx Xxxxxxxx,
Xxxxxx, Xxxxxxxxxxx (hereinafter called "P&G")
- and -
Grandom Xxxxxxxxxx (Int'L) & Co., Ltd. 00-00 Xxx Xxx Xxxxxx.
0-0/X, Xxxxxxx, Xxxxxxx, Xxxx Xxxx (hereinafter called
"DISTRIBUTOR"),
IT IS HEREBY AGREED AS FOLLOWS:
Article 1. Appointment.
1.1 P&G hereby appoints DISTRIBUTOR, who accepts this appointment,
distributor of the products listed on the attached Schedule
(hereinafter called "PRODUCTS") for such of the provinces, autonomous
regions and municipalities of the People's Republic of China as are
listed on the schedule hereto. (hereinafter called "the TERRITORY")
with effect from April 1, 1995.
1.2 This distributorship is exclusive in that P&G warrants that neither
P&G, its affiliated companies nor licensed manufacturers of the
PRODUCTS shall sell the PRODUCTS to anyone in the TERRITORY other than
DISTRIBUTOR, except as otherwise specifically provided in this
Agreement.
Article 2. Distribution.
2.1 DISTRIBUTOR shall secure, maintain and develop full distribution of
the PRODUCTS throughout the TERRITORY to wholesale and retail
establishments which can handle them, in quantities adequate to cover
requirements.
2.2 To ensure such distribution, DISTRIBUTOR shall carry at all times, and
provide suitable warehouse facilities for, adequate stocks of the
PRODUCTS, and in any event not less than the minimum stocks defined
herein.
2.3 DISTRIBUTOR shall make all necessary arrangements for delivery of the
PRODUCTS from its stocks to the trade in the TERRITORY.
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2.4 DISTRIBUTOR shall comply with such instructions as P&G may issue from
time to time with respect to distribution especially as regards
marketing, sales techniques and merchandising.
2.5 DISTRIBUTOR shall bear all risks of loss of or damage to the PRODUCTS
and the advertising and promotional materials delivered to its
possession.
2.6. DISTRIBUTOR assumes responsibility for ensuring that the PRODUCTS are
sold for ultimate consumption within the TERRITORY. To the extent
that P&G can establish that quantities of the PRODUCTS delivered under
the present Agreement have been resold for ultimate consumption in
Hong Kong or elsewhere outside the TERRITORY, DISTRIBUTOR agrees to
forego his margin on such PRODUCTS.
Article 3. Price Structures for Direct Sales.
3.1 From time to time P&G will forward to DISTRIBUTOR price structures for
each of the PRODUCTS which will show, as regards DISTRIBUTOR's direct
sales from its stocks to the trade:
a. DISTRIBUTOR's purchase price,
b. the resale price to the trade and a listing of all major
increments from DISTRIBUTOR's purchase price to the retail
price, and
c. DISTRIBUTOR's margin for each of the PRODUCTS calculated at
the rate shown in the attached Schedule or as otherwise
mutually agreed upon in writing.
3.2 DISTRIBUTOR agrees to operate in accordance with these price
structures.
Article 4. DISTRIBUTOR's Margin.
4.1 DISTRIBUTOR's margin covers DISTRIBUTOR's profit and fully compensates
it for all costs it will incur in the distribution of the
PRODUCTS from taking possession of them to their delivery to any
wholesale or retail establishments purchasing the PRODUCTS, including
but not limited to landing, handling, warehousing, transportation,
commission to sub-distributors if any, salesmen's salaries and
expenses, merchandising and key account management, cost of
administration, invoicing and collecting, financing charges, cash
discounts, quantity discounts, rebates, bad debts; duties and taxes.
4.2 Before any new product is added to the PRODUCTS originally listed on
the attached Schedule the rate of DISTRIBUTOR's margin on the new
PRODUCT shall first be mutually agreed.
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Article 5. Orders to P&G.
5.1 All orders are on condition that DISTRIBUTOR assumes responsibility
for ensuring that the PRODUCTS can be imported into, sold and
distributed in the TERRITORY.
5.2 All orders forwarded to P&G or to its affiliated companies shall be
subject to acceptance by P&G.
Article 6. Terms of Sale to DISTRIBUTOR.
6.1 Shipments will be invoiced to DISTRIBUTOR at prices prevailing at the
time of shipment. P&G shall have no obligation to give DISTRIBUTOR
notice of price changes prior to invoicing but will issue new price
structures promptly.
6.2 On shipments from the United States, FOB, FAS, C&F or CIF, when used,
are pricing terms only. Title to these shipments shall pass to the
DISTRIBUTOR upon endorsement and unconditional delivery of the ocean
xxxx of lading to the DISTRIBUTOR but only after arrival of the
shipment in the port of entry. Until such arrival, ownership of,
legal title to, right of possession, control over and risk of loss of
the PRODUCTS shall remain with P&G.
6.3 Terms of sale on shipments other than those from the United States
will be as shown on the invoice and/or order acknowledgement.
Article 7. Payments to P&G.
DISTRIBUTOR shall pay P&G in accordance with the terms of payment shown in the
attached Schedule or such revised terms as may from time to time be notified to
DISTRIBUTOR.
Article 8. Stocks.
8.1 For the first six months of sale of any PRODUCT or brand size, minimum
stocks in DISTRIBUTOR's central and provincial warehouses will be as
shown on the attached Schedule.
8.2 Thereafter, minimum stocks of any PRODUCT or brand size in
DISTRIBUTOR's central and provincial warehouses will be, for any given
month, the monthly average of DISTRIBUTOR's direct sales to the trade
during the preceding six months, multiplied by the index number shown
on the attached Schedule.
8.3 DISTRIBUTOR shall bear all costs relating to stocks whether or not in
excess of the minimum.
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8.4 DISTRIBUTOR's obligations as to hygiene standards, cleanliness and
manner of stocking shall be in accordance with the Guidelines for
Warehousing provided from time to time by P&G. P&G may make
suggestions regarding the warehousing procedures applicable to the
PRODUCTS or to the manner of use of the warehousing facilities. The
implementation of such suggestions shall not in any way relieve
DISTRIBUTOR of its responsibilities for the PRODUCTS whilst in
DISTRIBUTOR's possession.
Article 9. DISTRIBUTOR's Direct Sales to Trade.
9.1 DISTRIBUTOR shall invoice the customer to which it sells directly from
its stocks and bear all resulting credit and collection risks.
9.2 Unless requested by P&G to extend less favorable terms, DISTRIBUTOR
shall extend credit to the trade on terms at least as favorable to the
customer as the credit terms extended in the TERRITORY by the leading
brands competitive with the PRODUCTS.
Article 10. P&G's Indent Sales to the Trade.
10.1 P&G reserves the right, for itself and its affiliated companies, to
effect sales of the PRODUCTS, herein called indent sales, directly to
customers in the trade in the TERRITORY.
10.2 Indent sales shall be invoiced at prices which will result in landed
cost to the customer not lower than DISTRIBUTOR's lowest selling price
to the trade as shown on the price structures. P&G shall inform
DISTRIBUTOR of its acceptance of all indent orders giving the names of
the customers and the terms of sale.
10.3 On indent sales, whether or not made against orders forwarded to P&G
by DISTRIBUTOR, P&G shall allow DISTRIBUTOR a commission as shown on
the attached Schedule.
10.4 DISTRIBUTOR shall bear all credit and collection risks on indent sales
made against orders forwarded by DISTRIBUTOR to P&G.
Article 11. P&G Sales Outside the Trade.
P&G reserves the right, for itself and its affiliated companies, to fill orders
for the PRODUCTS received directly from governments, or from companies,
institutions or international organizations, which maintain commissaries in the
TERRITORY for supplying their own personnel, or from shipchandlers in the
TERRITORY, who re-sell for eventual consumption outside the TERRITORY. On such
sales DISTRIBUTOR shall not be entitled to any remuneration or compensation.
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Article 12. Sales Promotion and Advertising.
12.1 P&G will initiate at its discretion and control, sales promotion and
advertising of the PRODUCTS in the TERRITORY.
12.2 Upon P&G's request and instructions, DISTRIBUTOR shall arrange sales
promotion and advertising for P&G's account. DISTRIBUTOR shall not
bear any of the costs related thereto. P&G alone shall bear such
costs provided they have received P&G's prior approval in writing and
are fully substantiated.
12.3 DISTRIBUTOR shall refrain from promoting or advertising the PRODUCTS
in the TERRITORY at its own expense.
Article 13. Reporting.
13.1 As requested by P&G, DISTRIBUTOR shall make detailed reports on sales,
stocks, customer purchase and credit records, sales promotion and
advertising and DISTRIBUTOR's costs. Such reports shall be
substantiated by DISTRIBUTOR to the extent P&G deems necessary.
13.2 DISTRIBUTOR shall, at P&G's request, provide P&G with statistical and
economic data and with information on competitors' activity in the
TERRITORY.
Article 14. Competitive or Damaging Goods.
14.1 During the term of this Agreement, DISTRIBUTOR shall not, either
directly or indirectly, import or sell or promote the sale of any
goods which would compete with the PRODUCTS.
14.2 During the term of this Agreement, DISTRIBUTOR shall not in any way
store or handle, together with the PRODUCTS, goods which by their
nature would be likely to alter or damage the PRODUCTS.
14.3 In view of P&G's widespread interests, DISTRIBUTOR shall advise P&G
whenever it is about to accept new agencies or distributorships for
any type of goods, or where DISTRIBUTOR takes on new clients purely
for the warehousing and delivery of their goods.
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Article 15. Trademarks.
15.1 DISTRIBUTOR acknowledges that the ownership of and all rights in any
advertising or promotional material used with the PRODUCTS and the
trademarks used on or with the PRODUCTS, as well as all trademarks
registered by P&G or its affiliated companies, reside in and shall
remain exclusively in P&G or its affiliated companies. DISTRIBUTOR
agrees that it will acquire no right, title or interest over such
advertising or promotional material or in any of said trademarks by
reason of this Agreement.
15.2 DISTRIBUTOR shall take no action with respect to said advertising or
promotional material or trademarks or with respect to any third
party's attempt to use or appropriate the same or similar trademarks
without first obtaining P&G's approval in writing.
15.3 DISTRIBUTOR shall immediately notify P&G of any infringement or any
attempt to appropriate the same or similar advertising or promotional
material or trademarks in the TERRITORY which come to DISTRIBUTOR's
attention, and shall co-operate in taking such action as P&G may deem
necessary in connection with any such infringement or attempt to
appropriate P&G's above-described intellectual property.
Article 16. Regulations and Product Quality.
16.1 DISTRIBUTOR shall comply with all regulations and requirements of the
government or other authorities in the TERRITORY relating to the
importation, storage, distribution and sale of the PRODUCTS and shall
hold P&G harmless for any failure to do so. DISTRIBUTOR shall assist
P&G in obtaining registrations and further ensure that the
registration of each of the PRODUCTS with the appropriate authorities
is not allowed to lapse provided that any cost incurred by the
DISTRIBUTOR in initially obtaining and renewing such registrations
will be reimbursed by P&G.
16.2 DISTRIBUTOR shall promptly advise P&G of the practical implications of
the laws and regulations promulgated in the TERRITORY affecting the
PRODUCTS, including labelling. DISTRIBUTOR shall also advise P&G with
regard to the correctness of the translation into Chinese of the
labels for the PRODUCTS.
16.3 P&G shall take all reasonable steps to ensure that PRODUCTS shipped to
DISTRIBUTOR are in good and merchantable quality at the time of
shipment to DISTRIBUTOR. P&G shall indemnify DISTRIBUTOR for all
claims, demands or costs arising out of any breach by P&G of this
obligation.
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Article 17. Relations with Third Parties.
17.1 P&G and DISTRIBUTOR shall keep secret and shall not disclose to any
third party, even after termination of this Agreement, any information
on the business of the other acquired by reason of or in connection
with this Agreement. This shall include P&G's trade secrets, costs
and expenditures, methods, processes, techniques and plans particular
to P&G. DISTRIBUTOR will regard as trade secrets and maintain in the
strictest confidence all information, materials and plans given to it
in relation to the marketing of the PRODUCTS or developed by
DISTRIBUTOR specifically for the marketing of the PRODUCTS.
DISTRIBUTOR will only disclose such matters to those individuals,
whether inside or outside its organization, who must be aware of such
matters in order for DISTRIBUTOR to perform under this Agreement.
17.2 During the term of this Agreement, P&G shall be free to negotiate or
contract with third parties for the future distribution of the
PRODUCTS within the TERRITORY and DISTRIBUTOR shall be free to
negotiate or contract with third parties for the future distribution
of goods competitive with the PRODUCTS within the TERRITORY, provided
that in either case any such distribution is to take place only on
termination of this Agreement.
Article 18. Revision of Schedules and Price Structures.
18.1 The attached Schedule and any revisions thereof and the successive
Price Structures that P&G will from time to time send to DISTRIBUTOR
shall form part of the present Agreement and shall supersede versions
of the Schedules and of Price Structures bearing earlier dates and
shall be effective, from their dates, as integral parts of this
Agreement.
18.2 DISTRIBUTOR's approval of revised Schedules shall be required only as
regards any addition of new PRODUCTS to those listed on the attached
Schedules or any reduction of DISTRIBUTOR's margin on direct sales or
commission on indent sales.
18.3 As used in this Agreement the words "attached Schedule" mean the
Schedule attached to this Agreement at the date of its execution and
any supersedures thereof.
Article 19. Effect of Waiver.
No departure from the terms of this Agreement shall obligate any party to
permit any subsequent departure and no waiver of any of the provisions of this
Agreement shall be deemed to be a waiver thereafter of any such provision or of
any succeeding breach of any such provision.
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Article 20. Titles.
The several titles in this Agreement and in the attached Schedule are inserted
only for convenience of reference and shall not be deemed in any way to limit
or affect the provisions to which they relate. The same shall apply to the
titles in any supersedures of the said Agreement and Schedule and in any
supplemental contracts.
Article 21. Termination.
21.1 Within the first two years following the effective date mentioned in
Article 1.1 hereof this Agreement may be terminated at any time with
or without stating cause by either party giving the other 180 days
notice. Thereafter it may be terminated at any time by either party
giving to the other 60 days notice.
21.2 This Agreement may be terminated at once by either party giving notice
to the other, if the other is insolvent or has committed an act of
bankruptcy or has compounded with creditors or disposed of its
business or principal interests therein or if the bulk of its business
or property has been sequestrated, confiscated or nationalized or if
there has occurs a substantial change in ownership or administrative
control of the party.
21.3 P&G may at any time elect to terminate this Agreement at once, without
stating cause or by stating cause other than those mentioned in
Section 21.2, by giving DISTRIBUTOR notice of such election. P&G
shall then be obligated to compensate DISTRIBUTOR by granting it a
termination allowance equal to its margin on direct sales to the trade
on 180 days' average business and its commission on indent sales on
180 days average business during the first two years and thereafter 60
days average business for both direct and indent sales. A day's
average business shall for both direct sales and indent sales be
defined as the daily average of such sales of the PRODUCTS in the
TERRITORY during the six months immediately preceding the month of
termination.
21.4 If notice has been given by either party as provided in Section 21.1,
P&G may, at any time within the notice period. elect to terminate
this Agreement at once, without stating cause or by stating cause
other than those mentioned in Section 21.2, by giving DISTRIBUTOR
notice of such election. P&G shall then be obligated to compensate
DISTRIBUTOR by granting it the margin, as defined in Section 21.3, on
direct sales to the trade and its commission on indent sales on as
many days' average business as there are days to run between the date
of notice of election and the date set for termination in the first
notice of termination given pursuant to Section 21.1 but, in any
event, on not less than thirty (30) days' average business. A day's
average business shall be defined as in Section 21.3.
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21.5 All notices given pursuant to this Agreement shall be by registered
letter addressed to P&G or DISTRIBUTOR at their respective addresses
shown hereinabove. The period of notice shall count from the date of
posting of the letter.
Article 22. Settlements Following Termination.
22.1 Upon termination of this Agreement, DISTRIBUTOR shall fill orders
accepted by it prior to termination but shall otherwise cease to sell
the PRODUCTS, except at P&G's request as provided in this Section.
DISTRIBUTOR shall sell and P&G shall purchase or cause to be purchased
from DISTRIBUTOR within thirty (30) days after termination
DISTRIBUTOR's stocks of PRODUCTS that are in excellent saleable
condition at the original actual landed cost in DISTRIBUTOR's central
and provincial warehouses. DISTRIBUTOR shall assign and make
available such stocks to any purchaser designated by P&G within seven
(7) days of P&G's request to do so. Stocks not in excellent saleable
condition will be disposed of in a manner mutually agreed upon at
DISTRIBUTOR's expense.
22.2 P&G shall have no obligation to purchase the stocks of PRODUCTS or of
promotional materials held by the trade at any time.
22.3 DISTRIBUTOR shall assign, at P&G's request, to any individual or
company named by P&G all trading licenses or quotas and any rights or
privileges acquired by DISTRIBUTOR in connection with its
distributorship of the PRODUCTS which are necessary or useful for the
importation or handling of P&G goods in the TERRITORY. These
assignments shall be made by DISTRIBUTOR within seven (7) days of
P&G's request and no compensation shall be due to DISTRIBUTOR by
reason of these assignments.
22.4 Compensation payable to DISTRIBUTOR pursuant to Section 21.3 or to
Section 21.4 shall be credited by P&G to DISTRIBUTOR's account no
later than sixty (60) days after termination.
22.5 Any claim, the cause of which has arisen during the term of this
Agreement, which is not submitted and properly substantiated within
the sixty (60) days following termination shall be deemed waived and
shall be conclusively barred from assertion by the claimant unless the
delay in submission or substantiation is due to circumstances beyond
the claimant's control.
22.6 Except for compensation as provided in Section 21.3 and in Section
21.4 no indemnity, claim or compensation shall be due to either party
by reason solely of termination.
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Article 23. P&G's Policy on Payments.
P&G does not make any special payments whatsoever, in cash or in kind, either
directly or indirectly, to any third party with a view to influencing unduly
the decision of such third party in order to obtain any benefit or advantage
whatsoever. Nothing herein authorizes DISTRIBUTOR to make any such payment,
either directly or indirectly, in the performance of its obligations hereunder
nor shall P&G reimburse any such payments.
Article 24. Jurisdiction.
24.1 This Agreement supersedes and replaces all previous arrangements in
favour of DISTRIBUTOR for the sale of TEMPO in China.
24.2 This Agreement shall be governed by Swiss Law.
24.3 Any dispute arising directly or indirectly out of this Agreement shall
be settled by arbitration to take place in Geneva, Switzerland,
following the proceedings established by the Code of Civil Procedure
of the Canton of Geneva.
An arbitrator shall be chosen by each party and the two arbitrators
shall choose a third arbitrator. In the event of one party failing to
exercise its choice or in the event the two arbitrators fail to agree
on the choice of the third, the missing arbitrator shall be appointed
by the President of the Supreme Court of the Canton of Geneva at the
request of one of the parties.
GRANDOM XXXXXXXXXX (INT'L) & CO., LTD PROCTER & XXXXXX XX
By: /s/ ILLEGIBLE By: /s/ ILLEGIBLE
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Place: Hong Kong Place:
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Date: Date:
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SCHEDULE ATTACHED TO THE DISTRIBUTOR'S AGREEMENT BETWEEN
PROCTER & XXXXXX XX
AND
Grandom Xxxxxxxxxx (Int'L) & Co., Ltd. 36-42 Pok Man Street. 1-2F, Mongkok,
Kowloon, Hong Kong.
This Schedule forms part of the Distributor's Agreement for the territory of
the People's Republic of China "PRC", which takes effect from April 1, 1995.
For the purpose of the above Agreement and this schedule the Peoples Republic
of China shall mean the following provinces, autonomous regions and
municipalities: Beijing, Tianjin, Hebei, Shanxi, Inner Mongolia, Liaoning,
Jilin, Heilongjiang, Shanghai, Jiangsu, Zheijiang, Anhui, Fujian, Jiangxi,
Shandong, Henan, Hubei, Hunan, Guangdong, Guangxi, Sichuan, Guizhou, Yunnan,
Tibet, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Hainan.
1. Products, margins, commissions, stocks
Minimum Stocks
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Products covered DISTRIBUTOR's DISTRIBUTOR's First 6 months; After 6 months:
by the Agreement Margin on Direct Commission on Number of Cases Index Number
Sales, as a Indent Sales, as at all times
percentage of a percentage of
price to the landed cost
China Trader
(Section 1.1) (Section 3.1c) (Section 10.2) (Section 8.1) (Section 8.2)
Physical cases In line with
('000) P&G's launch
plans
TEMPO up to 280 11%
DEMAK'UP 280-320 10% 5% 1
over 320 9%
l. During the first year of this Agreement the DISTRIBUTOR shall be
entitled to a margin at the rate specified above on each successive
level of sales
2. During the second and subsequent years of this Agreement DISTRIBUTOR's
margin shall be at the single rate determined in accordance with the
above scale based on DISTRIBUTOR total sales to the trade in the
preceding year.
3. For the purpose of calculating the margin, price to China Trader shall
mean the price indicated under this heading in the price structure,
whether or not sales are made to the China Trader or other customers
of DISTRIBUTOR in the TERRITORY.
4. Any product or brand not listed above which Procter & Xxxxxx may from
time to time sell to the Distributor shall be sold on a non-exclusive,
non agency, non commission basis and shall not be part of this
Agreement until such time as the parties agree to the inclusion of
such products/brands into a formal revision of this Schedule.
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2. Terms of Sale to DISTRIBUTOR:
Pricing Terms CIF Hong Kong Part.
3. Terms of Sale from Distributor to the Trade
In accordance with Article 9 of the Agreement.
4. Currency, Place and Terms of Payment
Payment in Hong Kong Dollars to the account of Procter & Xxxxxx XX
with the Union Bank Switzerland, Lucerne, Switzerland to be received
not more than 45 days from the Xxxx of Lading date. Payment shall be
secured by an irrevocable Standby Letter of Credit in terms, and
confirmed by a Bank in Switzerland both acceptable to P&G.
5. Special Terms
a. In Derogation from Article 4.1 DISTRIBUTOR shall be entitled to
recover from his resale price, in addition to the margin:
- China Trader's Commission at PRC first port,
- financing
- landing and handling charges
- Freight and insurance from in Hong Kong to the first port in the
PRC, (as reflected in the price structures issued from time to time to
the DISTRIBUTOR).
b. In derogation of Article 14.1 DISTRIBUTOR may continue to distribute
the facial tissue KARE until such time as P&G makes available to
DISTRIBUTOR the facial tissue TEMPO at which time DISTRIBUTOR has
volunteered and agreed to relinquish the distribution of the facial
tissue KARE.
GRANDOM XXXXXXXXXX (INT'L) & CO., LTD PROCTER & XXXXXX XX
By: /s/ ILLEGIBLE By: /s/ ILLEGIBLE
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Place: Hong Kong Place:
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Date: July 22, 1995 Date:
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