IV. TERMS OF SUPPLY AND PAYMENT
6.1. FDI shall source and order the products from UCNWI in accordance with the confirmed three‐month rolling plan. However, FDI shall be allowed a variance of plus, minus Ten Percent(±10%)of the confirmed rolling plan orders.
6.2. After the three一month period covered by the rolling plan, FDI shall likewise be allowed for the following month a variance of plus, minus Ten Percent (±10%) of the confirmed rolling plan orders.
6.3. FDI shall be given a sixty (60) day trading term from the date of the issuance of the bill of lading for its orders. In the event that FDI fails to pay its obligations seven(7)days after the end of the trading term. UCNWI shall be entitled call on the irrevocable standby letter of credit. Written ten(10) days from such call, FDI shall restore such letter of credits to its agreed amount of US$500,000.00. If the standby letter of credit is not restored or maintained at its agreed sum, UCNWI shall have to the option to terminate the Distributorship Agreement without need of recourse to judicial process.
6.4. FDI shall be given a Thirty Percent (30%) Distributorship Margin by way of consideration for the undertaking of the importation, distribution, logistics, warehousing, advertising, promotions, brand building, merchandiser deployment(including sales promo girls), and providing trade flow through discounts for UCNWI's products. This distribution margin, which is the difference, between the price structure set by UCNWI vis-a-vis the transfer/acquisition price that FDI pays for the goods, shall neither be increased nor decreased during the duration of this Agreement.
6.5. The Thirty Percent (30%) Distribution Margin mentioned in the immediately preceding paragraph is agreed by the parties herein to be pegged at the Foreign Exchange (Forex) Rate of US$1,00=Php48.50.
In the event of fluctuations in the Forex Rate at the rate of or more than plus or minus Five Percent (+/- 5%), the parties shall renegotiate the transfer/acquisition price that FDI pays for the products it obtains from UCNWI in order to maintain the distributorship margin at the agreed Thirty Percent(30%).UCNWI assumes no obligation or liability in favor of FDI the event of Forex Rate fluctuations and changes in the transfer/acquisition price.
6.6. FDI allows UCNWI, as UCNWI may deem fit, to designate which of its production units in Asia shall be the source of the products.
6.7. All payments of FDl as obligations to any of UCNWI’s subsidiaries or production units wherever located and that nay be the source of the products shall be coursed through UCNWI.
6.8. All orders received from FDI shall be subject to UCNWI's acceptance, and UCNWI may accept or reject orders in whole or in part. Acceptance shall occur only upon delivery of the products to the carrier for shipment to FDl.
6.9. Product returns or the return of bad orders shall be in accordance with UCNWI's existing policy.
Ⅶ. PRICE AND TERM OF SALE
7.1. FDI shall follow the price structure set by UCNWI. The price structure may be changed from time to time by UCNWI. UCNWI assumes no obligation or liability in favor of FDI in the event of price fluctuations.
7.2. The initial wholesale and retail price of the products shall be agreed upon by the parties herein, taking into account the prices of similar and competing products and the reputation, image and manufacturer thereof. Reasonable price gaps between UCNWI’s products and the competitor's shall be mutually established. Any change in the wholesale or retail price which would have the erect of diminishing the competitive position of the products vis-à-vis other competing brands shall only be made with the prior written consent of UCNWI.
7.3. In case of price increase of the products of UCNWI,FDI shall be entitled to order an additional inventory equivalent to sixty(60)days. However, this additional order shall not exceed the two –month inventory based on the rolling average of the three months immediately preceding FDI's receipt of the notice of the price increase.
Ⅷ. SALES QUOTA AND TRADE INCENTIVE
8.1. FDI must fulfill the trade requirements and sales quotas mutually agreed upon by the parties through the key performance indicators(KPl) and key result areas(KRA) contracts, These KPI and KPA contracts shall form integral parts hereof.
8.2. To be entitled to incentives, FDI must meet the trade requirements and sales quotas indicated in the KPI and KPA contracts within a six month period. FDI shall be subjected to a semestral performance evaluation by UCNWI.