In order to provide implementation of paragraph 7 of article 1 of the Decree of the President of the Republic of Azerbaijan “On application of Law of the Republic of Azerbaijan “On public procurements” No. 668 of 29 January 2002, the Cabinet of Ministers of the Republic of Azerbaijan HEREBY RESOLVES:

1. To approve sample of procurement contract on goods (works and services)” (attached).

2. This decision takes effect from the day of its signing.

This Contract has been produced in accordance with article 40.11 of the Law of the Republic of Azerbaijan “On public procurements” at procurement of goods (works and services) by state enterprises (administrations) and enterprises and organizations, state share in charter fund of which is 30% and more

1. Parties to the Contract

This Contract is entered into

(day, month, year, place of signing)

by and between

(name of procurement agency, title and full name of its authorized official)

hereinafter referred as to the “Customer” on the one hand, and

(name of consignor (contractor), which won the tender, title and full name of its authorized official)

hereinafter referred as to the “Executor” on the other hand.

2. Subject of the contract

2.1. Parties hereby confirm that Customer has accepted tender proposal of Executor in amount of

(amount in figures)

(amount in words)

for procurement of

(name of goods (works and services))

2.2. Executor undertakes to deliver procured

(name of goods)

perform

(name of works)

or provide

(name of services)

to Customer under conditions provided for in the contract. If shipped goods (performed works or provided services) are not in compliance with Executor’s tender proposal and conditions stated in this contract, Executor shall guarantee removal of discovered shortcomings in way as stated in special conditions of the contract.

2.3. Customer shall undertake to accept goods (works and services) from Executor and pay for them as provided for in the contract.

2.4. Except cases provided for in legislation, value of the contract shall remain unchanged.

2.5. Following documents shall be considered as integral part of this contract:

tender proposal of Executor and price spreadsheets;

special conditions of the contract (document specifying conditions of the contract);

technical conditions (drawings, sketches, projects);

justifying documents confirming tender proposal of Executor;

notice on acceptance of tender proposal (attached).

3. Applicable law

3.1. Provisions of the contract shall be interpreted in accordance with current legislation of the Republic of Azerbaijan. Additional legal standards and documents applied in connection with performance of the contract shall be stated in special conditions of the contract.

3.2. In connection with performance of the contract Executor shall comply with requirements of legislation of the Republic of Azerbaijan on intellectual property (Laws “On patent”, “On copyright and associated rights”, “On trademarks and geographical indices”, other associated laws and regulations) and shall hold Customer harmless against claims of third parties as a result of violation of such legislation and shall bear responsibility towards them.

3.3. Results on studies on the contract, reports and other documents prepared by Executor shall be considered as Customer’s property and shall remain at its disposal. Executor can retain copies of such documents.

If contract is cancelled due to fault of Executor, materials, facilities, equipment and temporary buildings brought under the contract shall remain in Customer’s property.

4. Language of the contract

Contract shall be produced in official language of the Republic of Azerbaijan. If necessary, contract can be translated into one of languages widely used at international trading.

5. Obligations of the parties

5.1. Executor shall carry out the obligations on shipment of goods, performance of works and provision of goods provided for in the contract and shall deliver goods (works and services) to Customer in duly order.

5.2. Executor shall sign the contract after familiarization with all conditions, requirements and associated information connected with performance of the contract. Non-familiarization of Executor with such conditions, requirements and information shall not release him from obligations under the contract.

5.3. Executor shall provide obtaining of permissions, licenses and respective agreements provided for in special conditions of the contract in connection with performance of the contract.

5.4. Customer shall immediately undertake acceptance of goods shipped, works performed and services provided under the contract (in consideration of removal of shortcomings discovered by Executor) and making payments in timely manner.

5.5. Customer shall provide settlement of legal and organization issues provided for in special conditions of the contract and obtaining of permissions and agreements relating to him.

5.6. Customer shall ensure accuracy of all information connected with performance of the contract and timely delivery of them to Executor.

6. Origin of goods and services

Origin of procured goods and provided services (including origin of procured goods and provided services within performed works) shall not be from countries (areas), procurement from which is prohibited in current legislation of the Republic of Azerbaijan and under decisions taken with international agreements, which the Republic of the Azerbaijan is supporter of.

Origin of goods and services shall mean the country (area), where goods were manufactured, planted or produced and services were provided. Origin of goods and services may differ from state belonging of Executor.

7. Standards

Indicated goods or services shall be in accordance with standards provided for in collection of basic tender conditions if no such standards are indicated (available) - with current standards of the country of origin of goods or services. Executor shall confirm compliance of goods or services to required standards by appropriate documents.

8. Shipping and legalization of goods

Customer shall set requirements regarding shipment of goods procured out of the Republic of Azerbaijan in compliance with conditions of current “International Rules of construing of trading terms “INCOTERMS” published by International Chamber of Commerce in Paris. The relevant information shall be indicated in special conditions of the contract.

Requirements and conditions relating to shipment of goods within the Republic of Azerbaijan shall be determined in accordance with current legislation of the Republic of Azerbaijan and information about it shall be reflected in special conditions of the contract.

9. Packing, marking and transportation of goods

9.1. Goods shall be packed, marked and transported to determined final destination in accordance with requirements indicated in special conditions of the contract.

9.2. Packing

Packing shall ensure delivery of goods to final destination stated in the contract with no damage and spoiling to them. General (meeting appropriate standards) conditions and (or) specific (meeting additional requirements of Customer) conditions shall be stated in special conditions of the contract. Durability of package to certain temperature, saltiness, radioactive and other emergency environment, sediments and storage at open air, dimensions and weight of packing boxes enabling to transport goods by required lifting and transportation means as well as other requirements can be stated in additional requirements of Customer.

9.3. Marking

Marking shall enable to distinguish goods from other goods within short time at their review. Packed part of goods shall be marked inside and outside and shall be accompanied with appropriate documents.

9.4. Transportation

Type of transport means providing transportation of goods to final destination, shall be determined by Executor.

10. Spare parts

As provided for in special conditions of the contract, Executor shall deliver required spare parts to Customer and provide detailed information about them. Upon agreement of the parties, after manufacturing of spare parts was stopped, Executor shall submit drawings, sketches and projects, required for their manufacturing to Customer for free.

11. Organizational and legal form of Executor

If Executor is joint venture, consortium or union of legal persons without creation of legal entity and its structure changes during performance of the contract, Customer shall be immediately notified of this and performance of the contract can be continued upon its consent only.

12. Requirements relating to qualification of Executor

12.1. Executor shall provide participation of basic employees and leading experts in performance of the contract in accordance with list submitted in his tender proposal and approved by Customer. Customer shall reconfirm list (qualification compliance and competency) of employees replaced during performance of the contract.

12.2. If Customer requires to keep any employee of Executor away from performance of the contract with indication of the reason, Executor shall meet such requirement within 3 days provided that no effect is made to performance of the contract.

13. Payments under the contract

13.1. Payments under the contract (including advance payment) shall be made by Customer as provided for in collection of basic tender conditions and special conditions of the contract under documents (way-bills, acts, other documents) submitted by Executor within short period of time but not later than 30 banking days.

13.2. Customer can pay in advance to Executor for performance of procured works in amount stated in special conditions of the contract. In order to get advance payment, Executor shall provide advance payment guarantee to Customer as determined in collection of basic tender conditions. Guarantee provided for advance payment shall remain in force until the advance is returned, its amount shall be reduced by amount of performed works. Executor can use advance for provided purpose only (for payment of costs of equipment, facilities, materials and their mobilization). Executor shall justify use of advance for stated purposes by appropriate documents and submit their copies to Customer.

13.3. Customer shall withhold from each payment the amount stated in special conditions of the contract for the purpose of performance of the contract. Such amounts shall be paid to Executor within 30 banking days after full performance of the contract (including term of technical guarantee) and after production of relevant confirming documents (in consideration of removal of shortcomings).

13.4. If contract is canceled by Executor or Customer, the parties shall produce the documents, which determine amount of payments (including advance and other payments) and confirm performance of the contract as stated in special conditions of the contract. Difference identified on the basis of submitted documents shall be paid within 15 banking days.

14. Performance of the contract

14.1. Executor shall sign the procurement contract in the period stated in collection of basic tender conditions and shall provide guarantee for performance of the contract. Failure of Executor to sign the procurement contract or provide guarantee for performance of the contract within required period will be considered as inability to perform the obligations.

If Executor fails to perform its obligations under the contract, he shall pay damage caused to Customer from guarantee for performance of the contract.

14.2. Contract shall take effect once it is signed by Customer and Executor. If special conditions of the contract provides for concluded contract to be approved by higher body of Customer, contract shall take effect once it is approved.

14.3. Performance of the contract shall be made within period stated in special conditions of the contract and under schedules approved by Customer. Schedules can be changed upon written consent of the parties only. In such cases obligations of Executor under contract and period of performance of the contract shall not be changed.

15. Insurance

15.1. Risks of Customer and Executor associated with performance of the contract shall be insured in accordance with current legislation of the Republic of Azerbaijan. The relevant information shall be stated in special conditions of the contract.

15.2. Executor shall bear responsibility for insurance of insurance risks provided for in the contract and shall provide appropriate insurance contracts (their copies) to Customer. If Executor fails to provide any of required insurance contracts, Customer shall maintain such insurances and deduct their amount from payment to Executor provided for by the contract. If insurance contract is cancelled (changed) during performance of the contract Executor shall provide written information to Customer about it within 3 (three) banking days.

15.3. Validity of insurance contract shall fully cover period of performance of the contract.

15.4. Insurance of goods (including equipment, facilities, spare parts) up to their final destination stated in special conditions of the contract shall be determined in accordance with conditions of current International Rules of construing of trading terms “INCOTERMS” published by International Chamber of Commerce in Paris.

15.5. Insurance of insurance risks associated with performance of works (including construction, installation and other works) shall cover possible losses and damage before completion of works provided for in this contract. In order to provide reimbursement of losses and damage occurred during removal of shortcomings, Customer shall extend time, during which he is at the Executor’s production site.

15.6. Insurance of civil liability towards third persons shall provide reimbursement of damage caused to health (including death) of physical persons, who are considered to be third persons (including employees of Customer) as well as to property of physical and legal persons. Such insurance shall fully cover the period of bringing and installation of goods (equipment, facilities etc.), performance of works and provision of services.

15.7. If insurance of other insurance risks is provided for by Customer, such requirements shall be stated in special conditions of the contract.

15.8. Executor shall bear responsibility for insurance of insurance risks provided for during performance of the subcontracts.

16. Subcontracts

Executor can enter into subcontracts required for performance of the contract if it is provided for in collection of basic tender conditions. Detailed information about subcontracts (including information about qualification compliance of persons who perform them) shall be stated in tender proposal of Executor. Conclusion of subcontracts and making any changes to them shall be only made upon written consent of the Customer. Executor shall bear responsibility toward Customer for performance of subcontracts. Total value of subcontracts associated with performance of works or provision of services cannot be more than 50% of the contract. Conclusion of subcontracts shall not release Executor from obligations under the procurement contract.

17. Technical inspection over performance of the contract and test

17.1. Customer (or its representatives) shall have the right to inspect technical and other conditions of the contract and hold test with no additional costs as provided for in collection of basic tender conditions.

17.2. Place of holding and type of any technical inspection and holding of test required for Customer shall be stated in special conditions of the contract. Customer shall provide written and timely information to Executor about representatives appointed for holding of such technical inspection and test.

17.3. Technical inspection and test can be held at the territory of Executor (executors of subcontracts). In such cases Executor shall render necessary assistance to Customer (or its representatives).

17.4. Customer may reject goods, which did not pass technical inspection or test. In such case Executor shall replace goods, which did not pass technical inspection or test, provide other goods, meeting requirements of Customer.

18. Removal of shortcomings during performance of the contract

18.1. During performance of the contract Customer shall give immediate notice to Executor about discovered shortcomings. Notice shall include period of responsibility for removal of shortcomings.

18.2. After receipt of notice on shortcomings Executor shall remove such shortcomings within term of responsibility determined in notice.

18.3. If Executor fails to remove shortcomings within period of responsibility, Customer shall calculate amount required for removal of such shortcomings and deduct it from amount to be paid to Executor.

19. Technical guarantee

19.1. Unless other requirements are provided for in special conditions of the contract, Executor shall provide technical guarantee for delivered goods (performed work and provided services) within the contract for 12 months.

19.2. Shortcomings discovered by Customer during period of guarantee shall be removed within short period of time at the Executor’s cost.

19.3. If Executor fails to remove shortcomings in period stated in special conditions of the contract, Customer can apply penalty sanctions.

20. Penalties

20.1. If Executor fails to perform or delay performance of the contract (or any part thereof) as determined in collection of basic tender conditions, Customer shall without prejudice to other rights apply penalty sanctions provided for in special conditions of the contract (except effect of force-major). Maximum limit of amount of penalties shall be stated in special conditions of the contract and this amount shall not be more than 10% of the contract value. After amount of penalties reaches the determined maximum level, Customer can cancel the contract.

20.2. If Customer fails to make payments in terms provided for in the contract and in special conditions of the contract, Executor can apply penalty sanctions in amount determined in special conditions of the contract.

21. Force-major

21.1. If performance of the contract is influenced by force-major, Executor shall be released from payment of penalties and shall bear no responsibility for breach of the contract without depriving of guarantee for performance of the contract.

21.2. Force-major circumstances shall relate to conditions, which are out of control of Customer and Executor, which did not occur as a result of their fault or negligence and which cannot be foreseen.

21.3. Executor shall immediately send to Customer written information about influence and occurrence reasons of force-major. If no written instruction is provided by Customer, Executor shall continue performance of obligations under the contract irrespective of influence of force-major within his possibilities and shall seek alternative methods to perform obligations under the contract which depend on influence of force-major.

22. Documentation on the contract

22.1. Documentation on the contract (including notices, warnings etc.) shall be made in writing. Receiving party shall confirm receipt of documents (information). Indicated documents (information) shall take effect from the day of delivery to other party.

22.2. Documentation on performance of the contract shall be made by Executor as provided for in special conditions of the contract. Customer may supervise over proper maintaining of documentation (including through audit and other inspections). Such inspections can be made during performance of the contract or within three months after completion of performance of the contract.

23. Taxes and duties

Parties shall bear responsibility for payment of all taxes, duties, license fees and other payments in accordance with requirements provided for in current legislation of the Republic of Azerbaijan.

24. Cancellation of the contract

24.1. Cancellation of the contract due to breach of its obligations

If gross breach of conditions of law is made, Customer of Executor can cancel contract in full or partially subject to giving 30 days prior notice to other party.

The following breaches shall be considered as gross breaches:

If Executor suspends works in cases not provided for in the contract or without agreement with Customer for more than 15 days;

If works are suspended for more than 15 days on the basis of instructions given by Customer and no agreement on payment of costs on delay associated with suspension of works was reached with Executor;

If Customer or Executor goes bankrupt or is liquidated (except cases of reorganization of enterprise and organization);

Failure of Executor to take measures on the basis of submitted document within 30 days despite written notice of Customer about shortcomings, which can cause breach of the contract;

if maximal limit of damage caused as per special conditions of the contract is exceeded.

if upper limit of penalty amount applied by the parties is exceeded.

failure to perform other obligations of the parties provided for in the contract.

If contract is cancelled, Executor shall suspend performance of the contract for 15 days and shall take immediate measures to protect goods (works and services) acquired as a result of performance of the contract and deliver them to Customer.

24.2. Cancellation of the contract due to insolvency

In case of insolvency of Customer or Executor, other party may cancel the contract by sending written notice.

If case of bankruptcy of Executor, If his successor within 10 days after obtaining of succession rights applies in writing to Customer about performance of undertaken obligations, new contract on completion of procurement contract on the basis of conditions o the contract can be concluded with successor of bankrupted Executor. Otherwise performed obligations of bankrupted Executor or means paid under the contract shall be passed to Customer’s disposal.

25. Conflict of interests

If Executor takes part in the contract in capacity of consultant, he or his subordinated entities during performance of the contract or after its completion cannot participate in procurement of goods (works and services) arising from or associated with consultancy services provided under the contract.

26. Settlement of disputes

26.1. The parties shall settle disputes or uncertainties arisen on the basis of the contract between them, through negotiations and mutual concessions.

26.2. If settlement of disputes and uncertainties cannot settled by negotiations within 30 days, such disputes shall be resolved under current legislation of the Republic of Azerbaijan and conditions of agreements, which the Republic of Azerbaijan is supporter of.

Customer

Title and full name of official

_______________________________________

Signature _______________________________

Place of seal

Executor

Title and full name of official

_______________________________________

Signature _______________________________

Place of seal

	(registration number)		(day, month, year)

(name of tenderer, which won in tender)

(address of such tenderer)

We hereby state that in tender conducted on

(day, month, year)

for procurement of

(name and amount of procured goods (works and services))

your tender proposal dated

(day, month, year)

in amount of

(amount in figures)

(amount in words)

has been accepted by

(name of procurement agency)

In this connection, you are requested to provide guarantee required for performance of the contract and sign and return the procurement contract until

(day, month, year)

_________________________________

(signature of official)

Place of seal

__________________________________