Non-Exclusive Distributor Agreement
This
Non-Exclusive Distributorship Agreement ("Agreement") is made and
effective this ______________ (Date), by and between ("Distributor")
________________________ (Name and Address) and ("Manufacturer")
____________________________________ (Name and Address). Manufacturer desires to appoint Distributor,
and Distributor desires to accept appointment, as a non-exclusive distributor
of Manufacturer's products within a defined area as set forth herein.
Therefore,
in consideration of the mutual agreements and promises set forth herein, it is
agreed:
1.
Rights Granted.
Manufacturer hereby grants to Distributor the
non-exclusive right, on the terms and conditions set forth herein, to purchase,
inventory, promote and resell "Manufacturer's Products" (as defined
below) within the following area (the "Territory"): Nothing herein shall prevent or prohibit
Manufacturer from selling any of Manufacturer's Products to other distributors
or directly to customers other than the ones as listed as follows:
______________________________________________________________________.
2.
Products.
The
term "Manufacturer's Products," in this Agreement, shall mean the
products, related service parts and accessories manufactured and/or sold by
Manufacturer as follows:
______________________________________________________________________.
3.
Terms of Sale.
All sales of Manufacturer's Products to Distributor shall
be made pursuant to this Agreement at such prices and on such terms, as
Manufacturer shall establish from time to time with at least thirty (30) days
written notice. All prices are FOB
Manufacturer's plant or warehouse location, unless otherwise stated in this
Agreement. Risk of loss due to damage
or destruction of Manufacturer's Products shall be the responsibility of the
Distributor after delivery to the carrier for shipment. Manufacturer will select the shipper unless
Distributor requests a reasonable alternative.
All orders are subject to acceptance by Manufacturer. Except as otherwise expressly agreed by
Manufacturer in advance, this Agreement shall control all aspects of the
dealings between the parties with respect to the Manufacturer's Products and
any additional or different terms in any Distributor order are hereby rejected
unless the parties specifically agree to them in advance of shipment and
mutually sign another agreement to that effect.
4.
Payment.
Distributor
shall pay all charges due hereunder within thirty (30) days after the date of
Manufacturer's invoice. Payment shall be
made as shown on the invoice.
Manufacturer may impose a late payment charge of one percent (I.5%) per
month on any overdue unpaid balances.
5.
Marketing Policies.
Distributor
will at all times maintain adequate inventories of Manufacturer's Products and
will promote vigorously and effectively the sale of Manufacturer's Products
through all channels of distribution prevailing in the Territory, in conformity
with Manufacturer's established marketing policies and programs. Distributor will use its best efforts to sell
Manufacturer's Products to aggressive, reputable, and financially responsible
dealers providing satisfactory consumer service throughout Distributor's
primary marketing area. Distributor is
authorized to enter into written agreements with its dealers relating to the
purchase, resale and service of Manufacturer's Products on forms approved by
Manufacturer for this purpose. The risk
of collection from dealers, however, is entirely the risk undertaken by the
Distributor. The Distributor may not,
under any circumstances, chargeback Manufacturer for unpaid invoices by a
dealer or dealers.
6. Distributor's General Duties.
A.
Distributor
shall maintain a place of business in the Territory, including suitable
showroom facilities to display Manufacturer's
Products. Distributor shall provide
maintenance service on Manufacturer's Products sold in
the Territory, using
qualified personnel and subject to service policies
satisfactory to Manufacturer.
- Distributor shall hire sales personnel or appoint representatives to introduce, promote, market and sell Manufacturer's Products in the Territory. Distributor shall adequately train such personnel and/or representatives. Distributor shall employ sufficient numbers of sales personnel and/or representatives to market Manufacturer's Products in the Territory.
- Distributor agrees not to engage in the distribution promotion, marketing or sale
of any goods or products that compete or conflict with
Manufacturer's Products. Distributor
agrees to supply to Manufacturer a list of items handled by Distributor
following Manufacturer's request to ensure that no conflict exists.
7. Sales Policies.
A.
Manufacturer
may establish sales quotas, giving reasonable regard to past performance and market
potential of the manufacturer’s Products, from time to time. Distributor agrees to employ sales personnel
of demonstrated capacity to attain such quotas and consents to rewards directly
to such personnel by Manufacturer in recognition of superior performance.
B.
Manufacturer
will provide Distributor with merchandising assistance from time to time in the
form of advertising programs, product and sales training, and field sales
assistance.
C.
Distributor
agrees to use such assistance in carrying out Manufacturer's merchandising and
sales promotion policies.
8.
Advertising Policies.
Manufacturer will cooperate with Distributor and its
dealers in providing for continuous and effective advertising and promotion of
Manufacturer'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 Manufacturer may establish and offer to Distributor from time to
time. Nothing herein shall prevent
Distributor from separately advertising and marketing the Manufacturer's
Products within the Territory, provided the form and content of the advertising
or marketing materials are approved by Manufacturer in advance.
9. Warranty Policies.
If any of
Manufacturer's Products are proven to Manufacturer's satisfaction to have been
defective at time of sale to Distributor, Manufacturer will make an appropriate
adjustment in the original sales price of such product or, at Manufacturer's
election, replace the defective product.
Manufacturer shall provide to Distributor information with respect to
Manufacturer's limited warranty extended to the original consumer of Manufacturer's
Products. MANUFACTURER MAKES NO WARRANTY
TO DISTRIBUTOR, OR ITS CUSTOMERS, WITH RESPECT TO THE PRODUCTS, EITHER EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
10. Indemnification.
A.
Manufacturer
agrees to protect Distributor and hold Distributor harmless from any loss or
claim arising out of inherent defects in any of Manufacturer's Products
existing at the time such product is sold by Manufacturer to Distributor,
provided that Distributor gives Manufacturer immediate notice of any such loss
or claim and cooperates fully with Manufacturer in the handling thereof.
B.
Distributor
agrees to protect Manufacturer and hold Manufacturer 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
Manufacturer's Products or arising out of any representation or warranty made
by Distributor, its agents, employees or representations with respect to
Manufacturer's Products that exceeds Manufacturer's limited warranty. Further, in the event that any of
Distributor's dealers shall, with respect to any of Manufacturer's Products
purchased from Distributor, fail to discharge the dealer's obligations to the
original consumer pursuant to the terms and conditions of Manufacturer's
product warranty and consumer service policies, Distributor agrees to discharge
promptly such unfulfilled obligations.
11.
Order Processing and Returns.
A.
Manufacturer will employ its best efforts to
fill Distributor's orders promptly on acceptance, but reserves the right to
allot available inventories among distributors and end user customers at its
discretion.
B.
Except
for Manufacturer's products that are defective at the time of sale to
Distributor, Manufacturer shall not be obligated to accept any of
Manufacturer's Products that are returned.
In the event such returns are accepted, Manufacturer may impose a
reasonable restocking charge.
12.
Financial Policies.
Distributor
acknowledges the importance to Manufacturer of Distributor's sound financial
operation
and Distributor expressly agrees that it will:
A.
Maintain
and employ in connection with Distributor's business and operations under this
Agreement such working capital and net worth as may be required to enable
Distributor properly carry out and perform all of Distributor's duties,
obligations and responsibilities under this Agreement;
B.
Pay
promptly all amounts due Manufacturer in accordance with terms of sale extended
by Manufacturer from time to time;
C.
Furnish
Manufacturer with financial statements in such form as Manufacturer may
reasonably require from time to time for credit purposes; and
D.
Furnish,
at Manufacturer's request, a detailed reconciliation of Manufacturer's
statements of account with Distributor's records, listing all differences, and
showing net amount Distributor acknowledges to be due Manufacturer.
In
addition to any other right or remedy to which Manufacturer may be entitled,
shipments may be suspended at Manufacturer's discretion in the event that
Distributor fails to promptly and faithfully discharge each and every
obligation in this Section.
13.
Use of Manufacturer's Name.
Distributor
will not use, authorize or permit the use of, the name or any other trademark
or trade name owned by Manufacturer as part of its firm, corporate or business
name in any way. Distributor shall not
contest the right of Manufacturer to exclusive use of any trademark or trade
name used or claimed by Manufacturer.
Distributor may, subject to Manufacturer's policies regarding
reproduction of same, utilize Manufacturer's name, trademarks and logos in
advertising, on stationery and business cards, or on its website.
14.
Relationship of the Parties.
The relationship between Manufacturer and Distributor is
that of vendor and vendee. Distributor,
its agents and employees shall, under no circumstances, be deemed employees,
agents or representatives of Manufacturer.
Distributor will not modify any of Manufacturer's Products without
written permission from Manufacturer.
Neither Distributor nor Manufacturer 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.
15.
Term and Termination.
Unless earlier terminated as provided below, the term of
this Agreement shall commence on ________________ (Date) and shall continue
until ______________ (Date). At the end of the term, the Agreement shall
continue until terminated by either party on at least 30 Days prior notice.
A.
Manufacturer
may terminate at any time by written notice given to Distributor not less than
ninety (90) days prior to the effective date of such notice in the event
Manufacturer decides to terminate all outstanding distributor agreements for
Manufacturer's Products and to offer a new or amended form of distributor
agreement.
B.
Manufacturer
may terminate this Agreement upon notice to Distributor on any of the following
events: (1) failure of Distributor to fulfill or perform any one of the
duties, obligations or responsibilities of Distributor in this Agreement, which
failure not cured within 30 Days notice from Manufacturer; (2) any assignment by
Distributor of any interest in this agreement or delegation of Distributor’s
obligations without Manufacturer's written consent; (3) any sale, transfer or
relinquishment, voluntary or involuntary, by operation of law or otherwise, of
a material interest in the direct or indirect ownership or any change in the
managers of Distributor; (4) failure of Distributor for any reason to function
in the ordinary course of business; (5) conviction in a court of competent
jurisdiction of Distributor, or of a significant partner, principal officer or
major stockholder of Distributor for any violation of law that, in
Manufacturer's opinion, to affect adversely the operation or business of
Distributor or the good name, goodwill, or reputation of Manufacturer, products
of Manufacturer, or Distributor; or (6) submission by Distributor to
Manufacturer of fraudulent reports or statements, including, without
limitation, claims for any refund, credit, rebate, incentive, allowance,
discount, reimbursement or other payment by Manufacturer.
16.
Obligations on Termination.
On
termination of this Agreement, Distributor shall cease to be an authorized
distributor.
All
amounts owing by Distributor to Manufacturer shall, notwithstanding prior terms
of sale, become immediately due and payable;
A.
All
unshipped orders shall be cancelled without liability of either party to the
other;
B.
Distributor
will resell and deliver to Manufacturer on demand, free and clear of liens and
encumbrances, such of Manufacturer's Products and materials bearing
Manufacturer's name as Manufacturer shall elect to repurchase, at a mutually
agree price, but not in excess of Manufacturer's current price to distributors
for such products and materials, provided that Manufacturer shall not be
obligated to pay Distributor for any item originally provided free of charge;
- 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 Manufacturer or Distributor or for any other reason whatsoever growing out of such termination.
- In sum, both parties acknowledge that termination of this Agreement at some point is highly probable and should be treated in the ordinary course of business with both parties exerting their best efforts to end the relationship amicably.
17. 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
recognized overnight services such as Federal Express.
If
to Manufacturer: _______________________________________________________.
(Name
& Address)
If
to Distributor:
________________________________________________________.
(Name
& Address)
18. No Waiver.
The
waiver or failure of either party to exercise in any respect any right provided
in this agreement shall not be deemed a waiver of any other right or remedy to
which the party may be entitled.
19. Entirety
of Agreement.
The terms and conditions set forth herein constitute the
entire agreement between the parties and supersede any communications or
previous agreements with respect to the subject matter of this Agreement. There are no written or oral understandings
directly or indirectly related to this Agreement that are not set forth
herein. No change can be made to this
Agreement other than in writing and signed by both parties.
20. Governing Law.
This
Agreement shall be construed and enforced according to the laws of the State of
____________________ and any dispute under this Agreement must be brought in
this venue and no other.
21. Headings in this Agreement
The
headings in this Agreement are for convenience only, confirm no rights or
obligations in either party, and do not alter any terms of this Agreement.
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.
In
Witness whereof, the parties have executed this Agreement as of the date
first written above.
_________________________ _______________________
Manufacturer Distributor
Distributorship Agreement – Non-Exclusive
Review List
This
review list is provided to inform you about the document in question and assist
you in its preparation.
1. The
Manufacturer should be alert to the dangers in establishing any long-term
exclusive relationship with a Distributor.
This non-exclusive agreement sidesteps most of those issues.
2. This
agreement creates a non-exclusive right on behalf of the Distributor to market
the products in the territory defined by the parties. This is a relatively benign agreement with
limited recourse of the Distributor against the Manufacturer.
Manufacturers
still need to also be alert that terminating a Distributor with or without cause, can lead to serious legal
charges being brought against the Manufacturer involving everything from the
broad category of “good faith” dealing to antitrust claims. This is an area ripe with dangerous legal
traps that are different in many states.
Before entering into a non-exclusive Distributor Agreement we strongly
recommend you consult with a knowledgeable business attorney about the
implications in your state and the Distributor’s state regarding such
agreements. Having said this, there are
far fewer risks associated with a non-exclusive than with an exclusive agreement.
3. Print two copies of the Agreement so each
party can have a copy that is an original.
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