agreement below is one I used with a major international distributor for a consumer electronics company I advised. This template was the starting point of discussions and several terms were modified to the agreement of both parties.
Monday, November 3, 2014
Distribution Agreement Example Template
As mentioned in the book “Make It Big, Crossing the Entrepreneur’s Gap,” distribution partners are a major part of scaling up the startup. Entrepreneurs typically start on distribution in phases (local, regional, national, international) in whatever order makes sense. The distribution
agreement below is one I used with a major international distributor for a consumer electronics company I advised. This template was the starting point of discussions and several terms were modified to the agreement of both parties.
agreement below is one I used with a major international distributor for a consumer electronics company I advised. This template was the starting point of discussions and several terms were modified to the agreement of both parties.
The reader will notice that this is an exclusive agreement and also the distributor agrees to a non-compete. Exclusivity is a benefit to distributor as the company agreed to not work through any other distributor within an agreed upon territory. This can also reduce possibility for channel conflict. Channel conflict arises when multiple distributors sell the same product into one territory. Non-compete is a benefit to the company as the distributor agrees to not sell any products that compete with the company’s product. This is possible for highly unique products but near impossible if similar products are already on the market through the distributor.
As part of any partnership creation, considerable time is spent contemplating the practical aspects of how the relationship will operate and then crafting terms to help both parties make the most of the relationship. Agreements are there to make both parties successful, not limit. With that as a mental backdrop, the reader is encouraged to modify these terms collaboratively to maximize sales and keep both parties excited about the product, customers, and relationship.
"This is a pretty standard starting point for distribution agreements," says Marc Theeuwes, former VP of Corporate Development, and now Consulting Associate Professor at Stanford University, "I've used similar agreements at startups as well as large established companies to distribute consumer electronics, software, medical device, and capital equipment products."
The book “Make It Big, Crossing the Entrepreneur’s Gap,” discusses a variety of partnerships that are essential for crossing the gap. Entrepreneurs making this journey can organize their startup and scale up relationships using suggestions throughout the book of which distribution is one.
*********** DISTRIBUTION AGREEMENT ************
This Exclusive Distributorship Agreement (“Agreement”), made and effective this ________________ (date), by and between _____________________________ (“Company”), a ____________________ Corporation and _________________________________ (“Distributor”).
Company desires to appoint Distributor, and Distributor desires to accept appointment, as an exclusive distributor of Company's products within a defined area as set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements promises set forth herein, the parties agree as follows:
1) RIGHTS GRANTED: Company hereby grants to Distributor the exclusive right, on the terms and conditions contained herein, to purchase, inventory, promote and resell Company's products (“Product”) listed in the “Price List” (Exhibit A attached hereto). Product shall include related service parts and accessories manufactured and/or sold by Company. Company reserves the right, in its sole discretion, at any time upon 60 days’ prior written notice to Distributor, to expand or reduce in any manner the Products which are covered by this Agreement.
2) TERMS OF SALE: All sales of Company's Products to Distributor shall be made pursuant to this Agreement. Except as otherwise expressly agreed by Company in advance, this Agreement shall control all aspects of the dealings between Company and Distributor with respect to the Company's Products and any additional or different terms in any Distributor order are hereby rejected.
3) ORDERS: Distributor shall order Products from Company by submitting a written purchase order identifying the Products ordered, requested delivery date(s) and any export/import information required to enable Company to fill the order. All orders for Products are subject to acceptance by Company. Company shall have no liability to Distributor with respect to purchase orders which are not accepted; provided, however, that Company will not unreasonably reject any purchase order for Products as defined in the Price List.
a) Minimum Order: A minimum order of $_________.00 US dollars is expected, with a 4 week lead time for all orders. Product will be paid as agreed by both parties. Company will mark down all items by ___________________% off list (“Discount”).
b) Purchase order discrepancy: In the event of any discrepancy between any purchase order accepted by Company and this Agreement, the terms of this Agreement shall govern.
c) Order Processing and Returns: Company will employ its best efforts to fill Distributor's orders promptly on acceptance, but reserves the light to allot available inventories among distributors at its discretion.
4) PRICING: Product prices are defined by Company and supplied to the Distributor. The prices, terms and conditions stated in this Agreement shall apply to orders for Products by Distributor regardless of the provisions of Distributor's invoices, purchase orders or other business forms. Distributor will use the prices noted in the Price List to order Products.
a) Pricing by Company: If a purchase order is accepted by Company, the prices for Products covered by such purchase order shall be in U.S. dollars in accordance with the Product and Price List set forth in Exhibit A. Company may from time to time amend Exhibit A to change those prices, such change being effective immediately upon Distributor’s receipt of notice thereof; provided, however, that no price change shall affect purchase orders offered by Distributor and accepted by Company prior to the date such price change becomes effective. Prices do not include transportation costs. Prices will be reviewed and adjusted if necessary, as mutually agreed biannually.
i) Free On Board: All prices stated are free on board (“FOB”) the Company's offices at _______________________________________________. Distributor shall bear all costs of transportation, insurance, and duty. Distributor will promptly reimburse Company if Company prepays or otherwise pays for such expenses.
ii) Taxes: Prices do not include federal, state or local taxes applicable to the products sold under this agreement. An amount equal to the appropriate taxes will be added to the invoice by the Company where the Company has legal obligation to collect such taxes. Distributor shall pay such amount to the Company unless Distributor provides Company with a valid tax exemption certificate authorized by the appropriate taxing authority. However, no sales or use tax will be charged to Distributor if Distributor has previously supplied Company with appropriate tax exemption certificates in a form satisfactory to Company. Taxes on Territory, now or hereafter imposed with respect to the transactions contemplated hereunder (with the exception of income taxes or other taxes imposed upon Company and measured by the gross or net income of Company) shall be the responsibility of Distributor, and if paid or required to be paid by Company, the amount thereof shall be added to and become a part of the amounts payable by Distributor hereunder.
b) Pricing by Distributor: Distributor shall be free to establish its own pricing for Products sold provided that the Distributor does not add more than ____% (“Distributor Margin”) to the Price List amounts. Distributor shall notify Company of its pricing, as in effect on a quarterly basis or within seven (7) days of change.
c) PAYMENTS: Company will submit an invoice for all shipments delivered to the Distributor. Distributor will make payment ______________ days after the invoice date. All such amounts shall be paid in U.S dollars by wire transfer or in such other manner as Company shall approve in advance of payment. Company will designate and may from time to time update in writing the wire transfer bank or account. No part of any amount payable to Company hereunder may be reduced due to any counterclaim, set-off, adjustment or other right which Distributor might have against Company, any other party or otherwise. Distributor will effect timely payment of invoices per the Company bank details:
(1) Bank: _______________________________
(2) IBAN Code: _________________________
(3) ABA routing number: _________________
(4) Account number: _____________________
(5) SWIFT code: _________________________
d) SHIPMENT: Company shall ship Products promptly upon receipt of Distributor's order and acceptance of such order. Company agrees to properly pack all items for shipment. Unless Distributor requests otherwise, all Products ordered by Distributor shall be packed for shipment and storage in accordance with Company’s standard commercial practices. It is Distributor’s obligation to notify Company of any special packaging requirements (which shall be at Distributor’s expense).
i) All shipments of Product shall be made FOB Company's office and liability for loss or damage in transit shall pass to Distributor upon Company's delivery of Product to a common carrier for shipment. Risk of loss, damage or destruction to Company’s Product shall pass to Distributor upon the delivery of such Product to the common carrier designated by Distributor as __________________________________. The shipper will be selected by Company unless Distributor requests a reasonable alternative. Shipping dates are approximate and are based, to a great extent, on prompt receipt by Company of all necessary ordering information from Distributor.
ii) Company shall not be in default by reason of any failure in its performance under this Agreement if such failure results from, whether directly or indirectly, fire, explosion, strike, freight embargo, war, civil disturbance, act of any government or agency or official thereof, material or labor shortage, transportation contingencies, unusually severe weather, default of any other manufacturer or a supplier or subcontractor, quarantine, restriction, epidemic, or catastrophe, lack of timely instructions or essential information from Distributor, or otherwise arisen out of causes beyond the control of the Company. Nor shall the Company at any time be liable for any incidental, special or consequential damages.
iii) Limitations. The ultimate shipment of orders to Distributor shall be subject to the right and ability of Company to make such sales and obtain required licenses and permits, under all decrees, statutes, rules and regulations of the government and agencies thereof presently in effect or which may be in effect hereafter within the Territory.
iv) Product Acceptance. The criterion for acceptance of Company Product by Distributor shall be the successful operation of the Product using Company's standard test procedures and diagnostic test programs applicable to the Product involved. All claims for non-conforming shipments must be made in writing to Company within 7 working days of the passing of risk of loss and damage, as described above. Any claims not made within such period shall be deemed waived and released.
v) Order Cancellation. Except for Company's products that are defective at the time of sale to Distributor, Company shall not be obligated to accept any of Company's Products that are returned. In the event such returns are accepted. Company may impose a reasonable restocking charge. Distributor may, at any time prior to the scheduled date of shipment, cancel any or all Product on order upon giving timely written notice and upon payment of the following cancellation charges for each unit cancelled. The cancellation charges, intended as liquidated damages and not penalties, are as noted in the schedule below where “Days” describes the number of days prior to scheduled date of shipment that notice of cancellation is received by company, and “Charge” describes the cancellation charges expressed as a percentage of purchase price on the order.
0-5 days 80%
5-15 days 50%
16-30 days 15%
31 days or more 5%
5) TERRITORY. The distribution right shall be limited to customers who have places of business in, and will initially use the Company's products in the geographic area set forth in Exhibit B attached hereto (“Territory”).
a) Nothing herein shall prevent or prohibit Company from selling any of Company’s Products directly to the following customers: none .
b) Activities outside the Territory. Distributor shall refrain from establishing or maintaining any branch, warehouse or distribution facility for the Products outside of the Territory. Distributor shall not engage in any advertising or promotional activities relating to the Products directed primarily to customers outside the Territory. Distributor shall not solicit orders from any prospective purchaser with its principal place of business located outside the Territory.
c) Requests from outside the Territory. If Distributor receives any order from a prospective purchaser whose principal place of business is located outside the Territory, Distributor shall immediately refer that order to Company. Distributor shall not accept any such orders. Distributor may not deliver or tender (or cause to be delivered or tendered) any Product outside of the Territory.
d) Expansion of Territory. Company reserves the right, in its sole discretion, at any time upon 90 days’ prior written notice to Distributor, to expand or reduce in any manner the Territory, as defined in this Agreement.
6) DISTRIBUTOR DUTIES. Distributor shall maintain a place of business in the Territory, including suitable showroom facilities to display Company's Products.
a) Marketing. Distributor will at all times maintain adequate inventories of Company's Products and will promote vigorously and effectively the sale of Company's Products through all channels of distribution prevailing in the Territory, in conformity with Company's established marketing policies and programs. Distributor will use its best efforts to sell Company's Products to aggressive, reputable, and financially responsible dealers providing satisfactory consumer service throughout Distributor's primary marketing area.
b) Promotional Materials. Distributor shall use sales and technical information data provided by Company. Distributor may alter such materials or develop any other materials in connection with the marketing and distribution of Products (including but not limited to product brochures and sales aids), subject to Company’s review and written approval prior to any use of such materials.
c) Translations. Distributor shall translate, at its own expense, all user manuals, and advertising and marketing information into the languages of its customers and provide Company with advance copies of all such materials for approval by Company. Company shall own such translations and related intellectual property rights, but Distributor has exclusive right to use such translations during the term of this Agreement in connection with its activities pursuant to this Agreement.
d) Facilities and resources. Distributor shall employ competent and experienced personnel, provide appropriate facilities and resources so as to render prompt and adequate assistance to the users of the Products in the Territory, and so as to comply with all of Distributor’s obligations under this Agreement. Distributor shall provide adequate and appropriate training to its staff concerning the Products. Distributor shall hire sales personnel or appoint representatives to introduce, promote, market and sell Company's Products in the Territory. Such personnel and or representatives shall be adequately trained by Distributor. Distributor shall employ sufficient numbers of sales personnel and or representatives properly to market Company's Products in the Territory.
e) Distributor representations. Distributor hereby agrees: (i) to assist Company in obtaining any required licenses or permits or complying with any other regulatory requirements in the Territory by providing all reasonably requested support, including but not limited to supplying such documentation or information as may be requested by Company; (ii) to comply with such decrees, statutes, rules and regulations of government and agencies thereof; (iii) to maintain the necessary records to comply with such decrees, statutes, rules and regulations; (iv) to not re-export any Products except in compliance with special instructions received from Company. Distributor is authorized to enter into written agreements with its dealers relating to the purchase, resale and service of Company's Products on forms approved by Company for this purpose.
f) Customer Service. Distributor shall provide customer service (including, but not limited to, taking orders, responding to customer inquiries, fulfilling requests for quotes on Product pricing, and forwarding Product complaints to Company as legally required) on a timely basis and shall provide such assistance and information to customers as is reasonably requested by Company. Distributor shall provide maintenance service on Company's Products sold in the Territory, using qualified personnel and subject to service policies satisfactory to Company.
g) Modification of Products. Distributor may not customize, modify or have customized or modified any Product unless it obtains the prior written consent of Company, which consent may be withheld in the sole discretion of Company. Any unauthorized customizing or modification of any Product by Distributor or any third party shall relieve Company from any obligation it would otherwise have had with respect to such Product under the warranties described herein.
h) Performance. Distributor agrees, for the term of and subject to the provisions of the term of this Agreement, to use its best efforts to promote and market the Products to the maximum number of customers in the Territory. Distributor and Company shall mutually agree in writing on the sales promotion activities and performance objectives to be met by Distributor for Company’s fiscal year.
i) Distributor shall provide Company with an annual analysis of the market, including market size, market share data, and competitive activities. Such information shall be provided to enable Company in developing the global marketing and business plans for the mutual advantage of Distributor and Company.
ii) Upon signing this Agreement, Distributor and Company will jointly establish Distributor’s performance objectives for Company’s fiscal year. The establishment of performance objectives will be repeated annually. The established performance objectives will become a part of this Agreement, and will be attached hereto as Exhibit C. Failure to use best efforts. Failure to meet any minimum established performance objectives shall constitute a material breach of this Agreement.
iii) Sales Target. Minimum sales target for the first year is fixed in _____________________ U.S. dollars. Sales targets shall be agreed from year to year. If sales target will not be reached by the Distributor, either party may terminate this agreement as stated.
i) Insurance. During the term of this Agreement and for two (2) years thereafter, Distributor shall maintain an insurance policy issued by a reputable insurance company, naming Company as an additional insured, which policy shall insure against any and all claims, liabilities, costs or expenses resulting from or caused by (or claimed to be resulting from or caused by) any use or operation of any products sold by Distributor.
j) Distribution Expenses. Distributor bears the cost of Distribution Expenses. “Distribution Expenses” is defined as meaning any and all bona fide out of pocket expenses and costs incurred by Distributor that are directly related to the promotion, marketing and distribution of the Product, including but not limited to publicity sheets, promotional brochures, tradeshow entries, telephone and courier charges incurred specifically relating to the distribution of the Product as such costs are standard in the industry.
k) Change of Control of Distributor. In the event of a Change of Control of Distributor, Company shall have the right to appoint an additional distributor for the Territory, and the distributorship granted to Distributor shall automatically convert from an exclusive appointment to a coexclusive appointment. “Change of Control of Distributor” shall mean: (i) any consolidation or merger of Distributor with or into any other corporation or other entity or person, or any other corporate reorganization, in which the capital stock of Distributor immediately prior to such consolidation, merger or reorganization, represents less than fifty percent (50%) of the voting power of the surviving entity (or, if the surviving entity is a wholly owned subsidiary, its parent) immediately after such consolidation, merger or reorganization; or (ii) any transaction or series of related transactions to which Distributor is a party in which more than fifty percent (50%) of Distributor’s voting power is transferred to a third party; or (iii) the consummation of a sale of all or substantially all of the assets of Distributor in any transaction or series of related transactions, other than a sale of all or substantially all of the assets of Distributor to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are owned by shareholders of Distributor in substantially the same proportions as their ownership of Distributor immediately prior to such sale.
7) COMPANY DUTIES: Company will support the Distributor with such data relating to the Product as may be reasonably requested, including consultation, free of charge sales brochures, catalogues and other literature and visits of technical personnel for large customers and trade shows.
a) Training and Support. Company shall provide Distributor with such marketing and technical assistance and free Product samples as Company may in its discretion consider necessary to assist with the promotion of the Products. Company shall provide, in its discretion, appropriate field assistance to Distributor and Distributor’s customers. Company shall provide product launch training to Distributor’s personnel in connection with the marketing, sale, and support of the Products.
b) Advertising Policies. Company will cooperate with Distributor and its dealers in providing for continuous and effective advertising and promotion of Company's Products throughout the Territory, and Distributor agrees at Distributor's expense to participate in, actively promote and faithfully comply with the terms and conditions of such cooperative advertising and merchandising programs as Company may establish and offer to Distributor from time to time. Nothing herein shall prevent Distributor from independently advertising and marketing the Company's Products within the Territory, provided the form and content of the advertising or marketing materials are approved by Company in advance.
8) WARRANTY: In the event that any of Company's Products are proved to Company's satisfaction to have been defective at time of sale to Distributor, Company will make an appropriate adjustment in the original sales price of such product or at Company's election, replace the defective product. Company shall provide to Distributor information with respect to Company's limited warranty extended to the original consumer of Company's Products. MANUFACTURER MAKES NO WARRANTY TO Distributor WITH RESPECT TO THE PRODUCTS. EITHER EXPRESS OR IMPLIED. INCLUDING. WITHOUT LIMITATION. THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
a) All PRODUCTS are covered by 90 day warranty period for production defects. Within this period, Company will replace free of charge the defective parts only if Distributor clearly demonstrates that the cause of the problem is a production defect.
b) Misuse of Product. Any tampering, misuse or negligence in handling or use of Product renders the warranty void. Further, the warranty is void if, at any time, Distributor attempts to make any internal changes to any of the component of the Product; if at any time the power supplied to any part of the Product exceeds the rated tolerance; if any external device attached by Distributor creates conditions exceeding the tolerance of the Product; or if any time the serial number plate is removed or defaced. OPERATION OF THE EQUIPMENT THAT RENDERS THIS WARRANTY VOID WILL BE DEFINED TO INCLUDE ALL OF THE POSSIBILITIES DESCRIBED IN THIS PARAGRAPH, TOGETHER WITH ANY PRACTICE WHICH RESULTS IN CONDITIONS EXCEEDING THE DESIGN TOLERACE OF THE EQUIPMENT.
c) LIMITED WARRANTY. As to all ingredients of the Products manufactured by Company, Company warrants that, at the time of shipment, Product supplied by Company hereunder: (i) shall meet the Product specifications agreed to in writing by the parties, (ii) shall not be adulterated or misbranded within the meaning of regulations or other applicable laws that are equivalent thereto in the Territory, (iii) shall be manufactured in accordance with ISO9001 guidelines; provided, however, that Company shall not be liable for any of the foregoing with respect to any product labeling or package inserts to be provided or used by Distributor, or any translation thereof, or for any noncompliance with the foregoing due to the handling or packaging of Product by Distributor. Under no circumstances shall the warranties set forth herein apply to any Product which has been used in an unapproved manner or to any Product which has been customized or modified, damaged, reused, or misused. In the event that the warranties set forth herein are breached and Company is responsible for such breach, Company will replace the defective product at no cost to Distributor. THE PROVISIONS OF THE FOREGOING WARRANTIES ARE IN LIEU OF AN OTHER WARRANTY, WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL (INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE). PRINCIPAL’S LIABILITY ARISING OUT OF THE MANUFACTURE, SALE OR SUPPLY OF THE PRODUCTS UNDER THIS AGREEMENT OR THE USE OR DISPOSITION OF PRODUCTS BY DISTRIBUTOR OR ITS CUSTOMER, WHETHER BASED UPON WARRANTY, CONTRACT, TORT OR OTHERWISE, SHALL NOT EXCEED THE ACTUAL PURCHASE PRICE PAID BY DISTRIBUTOR FOR THE PRODUCTS. IN NO EVENT SHALL COMPANY BE LIABLE TO DISTRIBUTOR OR ANY OTHER PERSON OR ENTITY FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS, LOSS OF DATA OR LOSS OF USE DAMAGES) ARISING OUT OF THE MANUFACTURE, SALE OR SUPPLY OF THE PRODUCTS, EVEN IF PRINCIPAL HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSSES.
9) REPRESENTATIONS BY DISTRIBUTOR. Distributor hereby represents and warrants to Company that, as of the Effective Date: (i) it is qualified and permitted to enter into this Agreement and that the terms of this Agreement do not conflict with and are not inconsistent with any other of its contractual obligations. (ii) it is validly existing and in good standing as a corporation under the laws of _______________, and has all necessary corporate power to perform its obligations under this Agreement and its financial resources are sufficient to enable it to perform all of its obligations under this Agreement. (iii) it has not at any time in the past three (3) years been involved, and is not currently involved, in any litigation or disciplinary action relating to the sale of products before a regulatory authority or under the laws of any country, and to its knowledge no such proceedings are anticipated to commence during the term of this Agreement; (iv) it has sufficient personnel and capacity to perform its obligations under this Agreement; and (v) it owns or controls sufficient rights for it to perform its obligations under this Agreement.
a) Distributor hereby covenants that Distributor: (i) shall store the Products in accordance with the storage specifications that Company will provide in writing, and in accordance with all applicable laws, rules and regulations in the Territory, (ii) shall distribute and ship the Products within the Territory in accordance with Company’s packaging, shipping and distribution specifications for the Products that Company will provide in writing, and in accordance with all laws, rules and regulations in the Territory, (iii) shall not sell any Product with an expired shelf life, and shall dispose of any such expired Product in the manner required by Company, and in accordance with all laws, rules and regulations in the Territory, (iv) shall not adulterate or misbrand Products, or engage in any activity that could or does render Products adulterated or misbranded, and (v) shall maintain all necessary records for compliance with all laws, rules and regulations in the Territory.
b) Financial Policies. Distributor acknowledges the importance to Company of Distributor's sound financial operation and Distributor expressly agrees that it will: (i) Maintain and employ in connection with Distributor's business and operations wider this Agreement such working capital and net worth as may be required to enable Distributor properly and fully to carry out and perform all of Distributor's duties, obligations and responsibilities under this Agreement; (ii) Pay promptly all amounts due Company in accordance with terms of sale extended by Company from time to time. In addition to any other right or remedy to which Company may be entitled, shipments may be suspended at Company's discretion in the event that Distributor fails to promptly and faithfully discharge each and every obligation in this Agreement.
c) Non-Compete. During the term of this Agreement, Distributor shall not market directly or indirectly in the Territory any products which may compete with Company’s products. Distributor agrees not to engage in the distribution promotion, marketing or sale of any goods or products that compete or conflict with Company's Products. Distributor agrees to supply to Company a list of items handled by Distributor following Company's request to ensure that no conflict exists. In the event the Distributor breaches the terms of this Agreement, Distributor’s appointment as exclusive distributor of Products will convert to an appointment as a non-exclusive distributor of Products, which remedy shall not be exclusive of, and shall be in addition to, any other remedies available to Company at law or in equity with respect to such breach.
a) Company agrees to protect Distributor and hold Distributor harmless from any loss or claim arising out of inherent defects in any of Company's Products existing at the time such product is sold by Company to Distributor, provided that Distributor gives Company immediate notice of any such loss or claim and cooperates fully with Company in the handling thereof. Company agrees, at its own expense, to indemnify, defend and hold harmless each Distributor and its customers from and against every expense, damage, cost and loss (including attorneys' fees incurred) and to satisfy all judgments and decrees resulting from a claim, suit or proceeding insofar as it is based upon an allegation that the Product or any part thereof furnished by Company or any process which is practiced in the customary use of the Product is or has been infringing upon any patent, copyright or proprietary right, if Company is notified promptly of such claim in writing and given authority, and full and proper information and assistance (at Company's expense) for the defense of same. In case the Product, or any part thereof, in such suit is held to constitute an infringement and the use of said Product or part is enjoined. Company shall, in its sole discretion and at its own expense, either procure for the indemnitee the right to continue using said Product or part or replace or modify the same with nonperformance or capacity or affect its compatibility with the hardware or firmware comprising the Product or the software utilized thereon.
b) Distributor agrees to protect Company and hold Company harmless from any loss or claim arising out of the negligence of Distributor. Distributor's agents, employees or representatives in the installation, use. sale or servicing of Company's Products or arising out of any representation or warranty made by Distributor, its agents, employees or representations with respect to Company's Products that exceeds Company's limited warranty. Further, in the event that any of Distributor's dealers shall, with respect to any of Company's Products purchased from Distributor, fail to discharge the dealer's obligations to the original consumer pursuant to the terms and conditions of Company's product warranty and consumer service policies. Distributor agrees to discharge promptly such unfulfilled obligations. Distributor shall indemnify, protect and save Company, its Affiliates (as defined below) and all officers, directors, employees and agents thereof (hereinafter referred to as “Indemnitees”) harmless from all claims, demands, suits or actions (including attorneys’ fees incurred in connection therewith) which may be asserted against Company for any kind of damages, including without limitation damage or injury to property or persons and incidental and consequential damages, which may be sustained by any third party or any of the Indemnitees arising out of or incident to the conduct of Distributor’s operations under this Agreement. For the purpose of this Agreement, “Affiliate” shall mean, with respect to a party, any company, natural person, partnership or other business entity that controls, is controlled by, or is under common control with such party, where the term “controls” denotes the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities or other ownership interest of an entity, or the possession, directly or indirectly, of the power to direct the management or policies of an entity, whether through the ownership of voting securities, by contract, or otherwise (with correlative definitions for the terms “controlled by” and “common control”).
11) RELATIONSHIP OF THE PARTIES: The relationship between Company and Distributor is that of vendor and vendee. Distributor, its agents and employees shall, under no circumstances, be deemed employees, agents or representatives of Company. Distributor will not modify any of Company's Products without written permission from Company. Neither Distributor nor Company shall have any right to enter into any contract or commitment in the name of, or on behalf of, the other, or to bind the other in any respect whatsoever.
a) Independent contractor. Distributor shall be considered to be an independent contractor. The relationship shall not be construed to be that of employer and employee, nor to constitute a partnership, joint venture or agency of any kind.
b) Expenses. Distributor agrees to pay, and shall solely bear, all of its incurred expenses in connection with this Agreement, including without limitation all travel, lodging and entertainment expenses.
c) No obligations to third parties. In addition, Distributor shall not obligate or purport to obligate Company by issuing or making any affirmations, representations, warranties or guaranties with respect to the Products to any third party.
a) Customer reports. Distributor shall provide Company with written quarterly reports, which shall include customer call reports, business trends, sales forecasts for the significant customers in the Territory, market forecasts and other reports requested by Company.
b) Adverse Event Reporting. Distributor shall notify Company immediately of: (i) all adverse comments or complaints by Distributor’s customers regarding the Products, including comments regarding the Products’ quality, stability, contamination, potency, condition, packaging, or any other attributes or defects, and (ii) all adverse events and adverse reactions that may be attributable to a customer’s use of the Products, whether or not Distributor can confirm that the event is actually associated with the Product, and whether or not Distributor can confirm that the event was due to improper use or other negligence on the part of the customer. Distributor shall provide Company with information regarding the reporting requirements in the Territory.
c) Alleged Defects. In the event of an actual or alleged defect of a Product, Distributor or its representatives or agents shall not make any statement as to the cause, prior to receiving Company’s written analysis of such defect, and shall thereafter make no statements contrary to or inconsistent with the results of such analysis.
d) Product Recall. If either Party believes that a recall of any Products in the Territory is desirable or required by law in the Territory or elsewhere, it shall immediately notify the other Party. The Parties shall then discuss reasonably and in good faith whether such recall is appropriate or required and the manner in which such recall should be handled.
e) Remedial Actions. It is Company’s exclusive right to issue recalls, safety alerts, advisory notices or similar remedial actions with respect to the Products. In the event of such remedial action, Distributor will support and fully co-operate with Company to comply with applicable laws and regulations, and Distributor will notify its customers and, upon Company’s request, retrieve identified Products.
f) Inspection of Books and Records: (a) The Distributor shall maintain proper books and records in relation to the matters set out in this Agreement and in accordance with generally accepted accounting principles. For the purposes of verifying the accuracy of the Reports and the remittance of Payments, the Company or its authorized agent shall be entitled, during normal business hours and upon 48 hours prior notice, to examine at its own expense such books and records, and may at any time and at its own expense require an audit of such books and records.
13) TERM AND TERMINATION: Unless earlier terminated as provided below, the term of this Agreement shall commence ______________________ (date) and shall continue for one (1) year. At the end of the term, the Agreement shall automatically renew for one (1) year periods until terminated by either party.
a) Termination: This agreement may be terminated before the expiry either by Company or by the Distributor with or without cause, with a written notice delivered to the other party. Termination shall be effected 90 days from the date of the notice. Upon the date of the termination of the agreement, all legal obligations, rights and duties arising out of this agreement shall terminate.
b) Obligations on Termination. On termination of this Agreement, Distributor shall cease to be an authorized distributor of Company and: (i) All amounts owing by Distributor to Company shall, notwithstanding prior terms of sale, become immediately due and payable; (ii) All unshipped orders shall be cancelled without liability of either party to the other; (iii) Distributor will resell and deliver to Company on demand, free and clear of liens and encumbrances, such of Company's Products and materials bearing Company's name as Company shall elect to repurchase, at a mutually agree price, but not in excess of Company's current price to distributors for such products and materials, provided that Company shall not be obligated to pay Distributor for any item originally provided free of charge; and (iv) Neither party shall be liable to the other because of such termination for compensation, reimbursement or damages on account of the loss of prospective profits or anticipated sales, or on account of expenditures, investments, lease or commitments in connection with the business or goodwill of Company or Distributor or for any other reason whatsoever growing out of such termination.
c) On termination of this Agreement. Distributor will remove and not thereafter use any sign containing any trade name, logo or trademark of Company, and will immediately destroy all stationery, advertising matter and other printed matter in its possession or under its control containing such name, or any of Company's trademarks, trade names or logos. Distributor will not at any time after such termination use or permit any such trademark, trade name or logo to be used in any manner in connection with any business conducted by it or in which it may have an interest, or otherwise whatsoever as descriptive of or referring to anything other than merchandise or products of Company. Regardless of the cause of termination, Distributor will immediately take all appropriate steps to remove and cancel its listings in telephone books, and other directories, and public records, or elsewhere that contain the Company's name, logo or trademark. If Distributor fails to obtain such removals or cancellations promptly, Company may make application for such removals or cancellations on behalf of Distributor and in Distributor's name and in such event Distributor will render every assistance.
14) USE OF NAME AND PUBLICITY: Distributor will not use, authorize or permit the use of any trademark or trade name owned by Company as part of its firm, corporate or business name in any way. Distributor shall not contest the right of Company to exclusive use of any trademark or trade name used or claimed by Company. Distributor may, subject to Company's policies regarding reproduction of same, utilize Company's name, trademarks or logos in advertising on stationery and business cards, without written permission.
a) Use of logo and literature. Company authorizes the Distributor to use the “Company” logo for all printed or electronic sales name cards, brochures, sales catalogue, promotional materials, advertisements and other literature of the Distributor for the purpose of soliciting orders for the Product only. Print or duplication of all or part of Company catalogues or brochures are permitted only prior written authorization by Company.
b) Publicity. Distributor agrees that any publicity or advertising which shall be released by it in which Company is identified in connection with the Products shall be in accordance with the terms of this Agreement and with any information or data which Company has furnished in connection with this Agreement. Copies of all such publicity and advertising shall be forwarded promptly to Company.
15) TRADEMARKS, SERVICE MARKS AND OTHER INTELLECTUAL PROPERTY.
a) Intellectual Property. Distributor may use Company’s trade names, trademarks, service marks that are designated by Company for each Product (the “Company Intellectual Property”) on an exclusive basis in the Territory, only for the duration of this Agreement and solely in connection with selling, marketing and distributing the Products in accordance with this Agreement. Distributor shall, upon Company’s request, cooperate with Company in any action necessary or desirable to register with the appropriate governmental agencies any Company trademark used or proposed to be used hereunder, and to protect any Company trademark proposed to be used. Distributor shall not at any time do or permit any act to be done which may in any way impair the rights of Company in the Company Intellectual Property or the value of the Company Intellectual Property.
b) Proper Use. In order to comply with Company’s quality control standards, Distributor shall: (i) use the Company Intellectual Property in compliance with all relevant laws and regulations; (ii) accord Company the right to inspect during normal business hours, without prior advance notice, Distributor’s facilities used in connection with efforts to store or sell the Products in order to confirm that Distributor’s use of such Company Intellectual Property is in compliance with this provision; and (iii) not modify any of the Company Intellectual Property in any way and not use any of the Company Intellectual Property on or in connection with any goods or services other than the Products.
c) Inventions. Any inventions made, developed, conceived, or reduced to practice by Distributor that relate to the Products (including any associated delivery systems), and any intellectual property relating thereto, shall be owned solely by Company. Distributor hereby assigns and transfers to Company all right, title, and interest in and to such inventions and related intellectual property and agrees to take all further acts reasonably required to evidence such assignment and transfer to Company, all at Company’s expense. Company hereby grants to Distributor an exclusive, royalty-free, nontransferable, nonsublicenseable license to such improvements made by Distributor for uses other than in the Products and associated delivery systems.
d) Notice of Intellectual Property Infringement. Distributor shall promptly notify Company in writing of any patent or copyright infringement or unauthorized use of Company trade secrets or trademarks in the Territory of which Distributor becomes aware. Company shall have the exclusive right in its sole discretion to institute any proceedings against such third party in its name and on its behalf. Distributor shall cooperate fully with Company in any legal action taken by Company against such third parties, provided that Company shall pay all expenses of such action and all damage relating to damage suffered personally by Company which may be awarded or agreed upon in settlement of such action shall accrue to Company.
16) CONFIDENTIALITY: Distributor shall not, during or subsequent to the termination of this agreement, disclose Company’s confidential information to any third party or use Company’s confidential information for any purpose whatsoever other than the performance of the service on behalf of Company without the previous written authorization of Company. Distributor agrees that Company has a proprietary interest in any information provided to Distributor by Company, whether in connection with this Agreement or otherwise, whether in written or oral form, which is; (i) a trade secret, confidential or proprietary information, and (ii) not publicly known (the “Proprietary Information”). Distributor shall disclose the Proprietary Information only to those of its agents and employees to whom it is necessary in order properly to carry out their duties as limited by the terms and conditions hereof. Both during and after the term of this Agreement, all disclosures by Distributor to its agents and employees shall be held in strict confidence by such agents and employees. During and after the term of this Agreement, Distributor, its agents and employees shall not use the Proprietary Information for any purpose other than in connection with Distributor’s sale and distribution of the Products in the Territory pursuant to this Agreement. Distributor shall, at its expense, return to Company the Proprietary Information as soon as practicable after the termination or expiration of this Agreement. All such Proprietary Information shall remain the exclusive property of Company during the term of this Agreement and thereafter. This section shall also apply to any consultants or subcontractors that Distributor may engage in connection with its obligations under this Agreement.
a) Permitted disclosure. Notwithstanding anything contained in this Agreement to the contrary, Distributor shall not be liable for a disclosure of the Proprietary Information of Company, solely to the extent that the information so disclosed: (i) was in the public domain at the time of disclosure without breach of this Agreement; or (ii) was known to or contained in the records of Distributor from a source other than Company at the time of disclosure by Company to Distributor and can be so demonstrated by competent written records; or (iii) was independently developed and is so demonstrated promptly upon receipt of the documentation and technology by Distributor; or (iv) becomes known to Distributor, without any restrictions on further disclosure, from a source other than Company without breach of this Agreement by Distributor and can be so demonstrated by competent written records.
17) ACKNOWLEDGEMENTS: Each party acknowledges that no representation or statement, and no understanding or agreement, has been made, or exists, and that in entering into this Agreement each party has not relied on anything done or said or on any presumption in fact or in law: (i) with respect to this Agreement, or to the duration, termination or renewal of this Agreement, or with respect to the relationship between the parties, other than as expressly set forth in this Agreement; or (ii) that in any way tends to change or modify the terms, or any of them, of this Agreement or to prevent this Agreement becoming effective; or (iii) that in any way affects or relates to the subject matter hereof. Distributor also acknowledges that the terms and conditions of this Agreement, and each of them, are reasonable and fair and equitable.
18) NOTICES: Any notice required by this Agreement or given in connection with it shall be in writing and shall be given to the appropriate party by personal delivery or by certified mail, postage prepaid, recognized overnight delivery services, or email (with confirmation). Either party may change its address or its e-mail or fax number for purposes of this Agreement by giving the other party written notice of its new address, e-mail or fax number. Any such notice if given or made by registered or recorded delivery international air mail letter shall be deemed to have been received on the earlier of the date actually received and the date 7 (seven) days after the same was posted (and in providing such it shall be sufficient to prove that the envelope containing the same was properly addressed and posted as aforesaid) and if given or made by telecopy transmission shall be deemed to have been received at the time of dispatch, unless such date of deemed receipt is not a Business Day, in which case the date of deemed receipt shall be the next such succeeding Business Day. All notices given under this Agreement shall be in writing and shall be addressed to the parties at their respective addresses set forth below:
19) ASSIGNMENT. Neither this Agreement nor any interest in this Agreement may be assigned by Distributor without the prior express written approval of Company, which may be withheld by Company at Company's absolute discretion. This agreement and all its terms are limited to the Distributor and may not be transferred to any other party.
20) NO IMPLIED WAIVERS. Except as expressly provided in this Agreement, waiver by either party, or failure by either party to claim a default, of any provision of this Agreement shall not be a waiver of any default or subsequent default.
21) GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the laws of the state of __________________________, USA.
22) SEVERABILITY. If any term of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, then this Agreement, including all of the remaining terms, will remain in full force and effect as if such invalid or unenforceable term had never been included.
23) FORCE MAJEURE. (a) No liability for damages. Neither Company nor Distributor shall be liable in damages, or shall be subject to termination of this Agreement by the other party, for any delay or default in performing any obligation hereunder if that delay or default is due to any cause beyond the reasonable control and without fault or negligence of that party; provided that, in order to excuse its delay or default hereunder, a party shall notify the other of the occurrence or the cause, specifying the nature and particulars thereof and the expected duration thereof; and provided, further, that within fifteen (15) calendar days after the termination of such occurrence or cause, such party shall give notice to the other party specifying the date of termination thereof. All obligations of both parties shall return to being in full force and effect upon the termination of such occurrence or cause (including without limitation any payments which became due and payable hereunder prior to the termination of such occurrence or cause). (b) Cause beyond reasonable control. For the purposes of this Section, a “cause beyond the reasonable control” of a party shall include, without limiting the generality of the phrase, any act of God, act of any government or other authority or statutory undertaking, industrial dispute, fire, explosion, accident, power failure, flood, riot or war (declared or undeclared).
24) FINAL AGREEMENT. This Agreement terminates and supersedes all prior understandings or agreements on the subject matter hereof. This Agreement may be modified only by a further writing that is duly executed by both parties.
25) MODIFICATION. No modification or change may be made in this Agreement except by written instrument duly signed by Distributor and by a duly authorized representative of Company.
26) ENTIRE AGREEMENT. This Agreement, including all Exhibits hereto, supersedes and cancels any previous agreements or understandings, whether oral, written or implied, heretofore in effect and sets forth the entire agreement between Company and Distributor with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
Name: _____________________________ ______________________________
Title: _____________________________ ______________________________
Date: _____________________________ ______________________________
Signature: _____________________________ ______________________________
Attach Exhibits here:
“Price List” (Exhibit A)
“Territory” (Exhibit B)
Distributor Performance Objectives (Exhibit C)
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