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This is an agreement between an owner or manufacturer of a product and a distributor to distribute and sell the product. This document contains the material terms and conditions of the agreement including product pricing, a minimum sales quota, and the rate of commission. It includes numerous standard provisions that are commonly found in these types of agreements, and may be customized to address the specific needs of the parties. This document should be used when parties enter into a distributorship agreement.
This is an agreement between an owner or manufacturer of a product and a distributor to distribute and sell the product. This document contains the material terms and conditions of the agreement including product pricing, a minimum sales quota, and the rate of commission. It includes numerous standard provisions that are commonly found in these types of agreements, and may be customized to address the specific needs of the parties. This document should be used when parties enter into a distributorship agreement. DISTRIBUTORSHIP AGREEMENT THIS AGREEMENT made effective on this ……………day of……………, 20…. (the "Effective Date") between……………………………., (the “Company”); and ……………………………, (the “Distributor”). In consideration of the promises hereinafter made by the parties hereto, it is agreed as follows: 1. APPOINTMENT OF DISTRIBUTOR The Company hereby appoints the Distributor as its exclusive Distributor in the territory (the “Territory”) as described in Schedule A annexed to this Agreement, for selling the products manufactured by the Company, as described on Schedule B attached hereto (the “Products”), upon the terms and conditions as set forth herein. 2. TERM This agreement shall be effective on the Effective Date and shall remain in force for a period of ……………. Years thereafter. 3. TERMINATION (a) Either party may terminate this Agreement for substantial breach of any material provision of this Agreement by the other, provided a notice has been given to the other specifying the alleged breach and such other party has not cured the breach within __________ days. (b) The Company may terminate this Agreement if: (i) there is an unacceptable change in the control or management of the Distributor; (ii) the Distributor ceases to function as a going concern or makes an assignment for the benefit of creditors; (iii) a petition for bankruptcy is filed by or against the Distributor, resulting in an adjudication of bankruptcy; © Copyright 2011 Docstoc Inc. 2 (iv) if the Distributor fails to pay its debts as they become due, provided due notice has been given by the Company to the Distributor and the Distributor has not cured such breach within thirty (30) days thereof; (c) Upon termination of this Agreement all further rights and obligations of the parties shall cease, except that Distributor shall not be relieved of its obligation to pay any monies due as of or after the date of termination. 4. MARKETING AND SUPPORT (a) Distributor shall use its best efforts to promote the sale and distribution of the Products and to provide adequate support, which efforts shall include the following: (i) Setting up and maintaining appropriate premises and facilities for the display and sales of the Products; (ii) Managing an adequate, trained sales and technical staff to promote the sale and provide support for the Products; (iii)Undertaking promotional and advertisement campaigns to encourage the sales of Products; (iv) Provide Company with monthly forecast reports of requirements for the next six months for Products. (b) Company shall, upon request, assist the Distributor with all advertising, sales promotion, and public relations campaigns to be conducted, including providing Distributor with brochures, pamphlets and other necessary documentation and shall also provide necessary technical information and assistance. 5. INFRASTRUCTURE The Distributor represents to the Company that it has available a showroom/outlet/warehouse (the “Showroom”) and other existing infrastructure facilities which shall be utilized in marketing and selling the Products during the term of this Agreement. The Distributor shall be responsible for all rent and other expenses of such Showroom for the purpose of its business. He shall at his own expense keep the Products at the Showroom insured against all customary risks. Company will not be liable or responsible for the expenses relating to or incidental to the Showroom. 6. PRICES © Copyright 2011 Docstoc Inc. 3 All prices stated are FOB the Company's offices in ____________________________. Prices do not include any federal, state or local taxes applicable to the Products. An amount equal to the appropriate taxes will be added to the invoice by the Company, if applicable. Distributor shall pay such amount to the Company unless Distributor provides Company with a valid tax exemption certificate authorized by the appropriate taxing authority. All transportation costs shall be borne by the Distributor. 7. PRICE CHANGES Company reserves the right, in its sole discretion, to change prices or discounts applicable to the Products by giving written notice to Distributor of any price change at least _____ days prior to the effective date of such change. 8. PAYMENT TERMS Payment terms are net cash upon delivery, except where satisfactory credit is established in which case terms are net thirty (30) days from date of delivery. The Company reserves the right to revoke any credit extended at the Company's sole discretion. Invoices not paid within thirty (30) days of the invoice date will bear late payment interest at the rate of 1-1/2% per month from the date of invoice until the date of payment. 9. SALE OF PRODUCTS BY DISTRIBUTOR Distributor shall use its best efforts to distribute the Products and to fully develop the market for the Products within the Territory. The parties hereby agree that Distributor shall purchase and distribute a minimum of _______ Products per ___________. 10. MINIMUM STOCK The Distributor shall purchase and maintain a minimum stock of ………… pieces each of the Company’s Products to enable Distributor to perform its obligations hereunder, and such quantity shall be reviewed every quarter in the light of the sales during the previous quarter, demand, consumers preferences and market trends. All Products purchased by Distributor shall be purchased solely for commercial resale or lease, excepting those Products reasonably required by Distributor for advertising and demonstration purposes. © Copyright 2011 Docstoc Inc. 4 11. PURCHASE ORDERS Distributor shall order Product by written notice to the Company. Each order for Products issued by Distributor to Company shall specify the delivery date, the description and quantity of Products which are to be delivered on each of such dates. 12. CANCELLATION OF ORDERS Distributor may, at any time prior to the scheduled date of shipment, cancel any or all orders for Products 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 follows: 0-5 days ____________% cancellation charges 5-15 days ____________% cancellation charges 15-30 days ____________% cancellation charges 13. DELIVERY All deliveries of Products sold by Company to Distributor pursuant to this Agreement shall be made F.O.B. ___________________________ (the “Delivery Point”), and title to and risk of loss of Products shall pass from Company to Distributor at the Delivery Point. Distributor shall bear all costs of transportation and insurance and will promptly reimburse Company if Company prepays or otherwise pays for such expenses. 14. FORCE MAJEURE Company shall not be in default by reason of any failure in its performance under this Agreement if such failure results , whether directly or indirectly, from fire, explosion, strike, freight embargo, Act of God, war, civil disturbance, material or labor shortage, transportation contingencies, unusually severe weather, default of any other manufacturer, supplier or subcontractor, quarantine, restriction, epidemic, or catastrophe, lack of timely instructions or essential information from Distributor, or otherwise arises out of causes beyond the control of the Company. Company shall not at any time be liable for any incidental, special or consequential damages. 15. INSPECTION AND ACCEPTANCE © Copyright 2011 Docstoc Inc. 5 Promptly upon the receipt of a shipment of Products, Distributor shall examine the shipment to determine whether any Products are in short supply, defective or damaged. Within __________ days of receipt of the shipment, Distributor shall notify Company in writing of any such shortages, defects or damage, which existed at the time of delivery. Within ______ days after the receipt of such notice, Company will investigate such claims and deliver to Distributor Products to replace any which Company determines were missing, defective or damaged at the time of delivery. If Distributor fails to give notice as provided herein, Distributor shall be deemed to have accepted such Products and to have waived all claims for shortages, defect or damage. 16. PATENT INDEMNITY Company agrees, at its own expense, to indemnify, defend and hold harmless the Distributor, its representatives and agents from and against every expense, damage, cost and loss (including attorneys' fees incurred) resulting from a claim, suit or proceeding for infringement of 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. 17. CONSIDERATION The Distributor shall be entitled to a commission at the rate of ___________% of the net sale price realized by it in retail outlets from sale of the Products. The term “net sale price” shall mean the selling price of the Products, excluding any sales tax, local taxes and other levies imposed upon the sale or purchase of the Products and/or on the total turnover, packing and forwarding charges. Company has the final discretion to evaluate the performance of the Distributor and all payments to the Distributor are linked to its performance as per the targets that may be given by the Company from time to time. In case the Distributor does not perform as per the targets set by the Company, the Company may, in its own sole discretion, terminate the Distributorship without cause. 18. EXPENSES All expenses incurred by the Distributor in connection with its performance of this Agreement and its activities as agent for the Company, including but not limited to travel, automobile, salaries and supplies, shall be borne by the Distributor and the Distributor shall be solely responsible for the payment thereof. © Copyright 2011 Docstoc Inc. 6 19. INDEPENDENT CONTRACTOR The status of the Distributor shall be that of an independent contractor and the Distributor shall have no authority to assume or create any obligation whatsoever, expressed or implied, in the name of the Company, nor to bind the Company in any manner whatsoever. The Distributor shall not have any authority hereunder to enter into any contract of any kind on behalf of the Company.. The Distributor undertakes and agrees that it will not furnish to any customer or prospective customer any warranties, undertakings or guarantees of any nature whatsoever which may create an obligation or liability of the Company. In the event that the Distributor does allow or furnish to customers or prospective customers, such warranties, undertakings or guarantees then, in such event, the Distributor shall indemnify and save the Company harmless from any claims, demands, damages, costs or losses whatsoever arising out of or in any way connected with such warranties, undertakings or guarantees. 20. ACCOUNTS The Distributor shall keep proper accounts of all Products received, sold, damaged and furnish to the Company each week full particulars of the Products and shall permit the Company, and its agents and servants, to inspect all books of account relating to the Products maintained in the Showroom at all reasonable times. 21. CONFIDENTIALITY Each party acknowledges that in the course of its obligations pursuant to this Agreement, it may obtain certain confidential information, each party hereby agrees that all such confidential information received by it, its parents, affiliates, subsidiaries, or Customers, whether before or after the date of this Agreement, shall be kept in strict confidence and shall be used only for the purposes of this Agreement, and shall not be disclosed without the prior written consent of the other party. 22. GENERAL INDEMNITY Each party shall indemnify, defend and hold the other harmless from and against any and all claims, actions, damages, demands, liabilities, costs and expenses, including reasonable attorney’s fees and expenses, resulting from any act or omission of the acting party or its employees under this Agreement, that causes or results in property damage, personal injury or death. 23. INSURANCE The Distributor shall insure the Products in its custody and control against all risks including but not restricting to risks against riots, strike, hurricane, typhoon, and wilful damage. The Company © Copyright 2011 Docstoc Inc. 7 shall not be liable to take back any Products that have been damaged due to the negligence or carelessness of the Distributor. 24. COMPLIANCE The Distributor shall be liable for all compliance under any local laws and state government rules and shall take all necessary steps for obtaining registrations, licenses and renewals thereof, maintaining proper registers and also submitting necessary returns to the authorized agencies. In the event of any contravention by the Distributor of the provisions thereof, the Distributor shall remain fully liable and shall also keep the Company indemnified against any breach and monetary liability or cost arising thereof. 25. SUB-DISTRIBUTORS The Distributor is free and entitled to appoint sub-Distributors, salesmen, commission agents or other sales personnel on salary, commission or any other basis, but with the condition that they will function in accordance with the provisions of this agreement and not do anything which is detrimental to the interests of the Company, the Distributor, or the collective interests of both. 26. ASSIGNMENT This Agreement or the benefit therefrom shall not be assignable or transferable by the Distributor in favor of anyone without prior written consent of the Company. 27. NOTICES All notices, correspondence, writings, statements or other communication required or permitted to be given hereunder by either of the parties to the other of them shall be given, made or communicated, as the case may be, by personally delivering the same, by telex, telegram or electronic facsimile transfer, or by registered or certified mail, first-class, postage prepaid, return receipt requested, addressed to the recipient as follows: TO THE COMPANY: _____________________________________ _____________________________________ TO THE DISTRIBUTOR: _____________________________________ © Copyright 2011 Docstoc Inc. 8 _____________________________________ Both parties reserve the right to change the address of service at any time, with notice in writing to the receiving party. 28. GOVERNING LAW AND DISPUTE RESOLUTION This Agreement shall be governed by the laws of the State of ______. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision. Any controversies arising out of the terms of this Agreement or its interpretation shall be settled in accordance with the rules of the American Arbitration Association, and the judgment upon award may be entered in any court having jurisdiction thereof 29. ENTIRE AGREEMENT This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof, and replaces and supersedes all other agreements or understandings, whether written or oral. No amendment or extension of this Agreement shall be binding unless in writing and signed by both parties. 30. SUCCESSORS AND ASSIGNS This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assignees. Neither party may assign this Agreement without the prior written consent of the other 31. AMENDMENTS AND WAIVERS No amendment to this Agreement shall be valid or binding unless set forth in writing and duly executed by the parties hereto. No waiver of any breach of this Agreement shall be binding or effective unless made in writing and signed by the party purporting to give the same and, unless otherwise provided in the written waiver, shall be limited to the specific breach waived. IN WITNESS WHEREOF, the parties have executed this agreement as of the Effective Date. COMPANY: _____________________________________ © Copyright 2011 Docstoc Inc. 9 _____________________________________ DISTRIBUTOR: ______________________________________ ______________________________________ © Copyright 2011 Docstoc Inc. 10 SCHEDULE A TERRITORY © Copyright 2011 Docstoc Inc. 11 SCHEDULE B PRODUCT DESCRIPTION © Copyright 2011 Docstoc Inc. 12
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