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Sales Distribution Agreement

THIS AGREEMENT is made as of [date], by and between [name], a corporation organized and existing under the laws of the State of [state] with an office at [address] (hereafter Company), and [name], a corporation organized and existing under the laws of the State of [state] with an office at [address] (hereafter Distributor).

W I T N E S S E T H :

WHEREAS, Company currently manufactures equipment which is used for, among other things, the repair and maintenance of computer equipment; and

WHEREAS, Company is willing to appoint Distributor as an authorized sales distributor and dealer, and Distributor is willing to accept such appointment, all upon the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual agreements and understandings herein contained, the parties hereby agree as follows:

1. Appointment.

a. Upon the terms and conditions hereinafter set forth, Company hereby appoints Distributor:

i. As the authorized exclusive (except as otherwise provided in subsection (c) of this Section 1) sales distributor and dealer for the purchase and resale of the Company's equipment lines described in Appendix A attached hereto [omitted] as the "Maintenance Products," and all repair and replacement parts and supplies for such equipment (such equipment lines, and all repair and replacement parts therefor, are hereafter referred to as Maintenance Products) for the geographic area described in Appendix B attached hereto [omitted] as the "Exclusive Territory" (such geographic area is hereafter referred to as Exclusive Territory); and

ii. As an authorized nonexclusive sales distributor and dealer for the geographic area described in Appendix B as the "Nonexclusive Territory" (such geographic area is hereafter referred to as Nonexclusive Territory) for the following products: (x) the Maintenance Products; and (y) the equipment lines described in Appendix A as the "Other Products" and all repair and replacement parts and supplies for such equipment (such equipment lines, and all repair and replacement parts therefor, hereafter referred to as Other Products).

The Exclusive Territory and the Nonexclusive Territory are sometimes hereafter referred to collectively as Territory, and the Maintenance Products and the Other Products are sometimes hereafter referred to collectively as Products. Sales of the Products may be made by the Distributor within the Territory only and shall be solicited from all customers in the Territory that are, or may be, interested in acquiring the Products, including, without limitation, computer equipment dealers, consultants, and service contractors; provided, however, that in the Nonexclusive Territory, Distributor shall have the right to solicit orders for [name specific product] only from computer equipment dealers.

b. Distributor hereby accepts such appointment and agrees to perform the duties and obligations set forth herein.

c. Company hereby reserves, for itself or its designee, the following rights:

i. To sell in the Nonexclusive Territory the Products and any other Company products, to provide any related services, directly or indirectly, to any customer located in such territory and to grant nonexclusive distributorships to others to sell the Products and any other Company products and to provide related services in such territory;

ii. To sell any Company products other than the Maintenance Products in the Exclusive Territory, to provide any service related to such other products, directly or indirectly, to any customer located in such territory and to grant exclusive or nonexclusive distributorships to others to sell such other products and provide such related services in such territory;

iii. To sell any of the Products and provide any related services, directly or indirectly, to (x) any customer whose principal place of business or principal offices are located in the Exclusive Territory but who uses the Products sold or requires the services performed outside the Exclusive Territory; and (y) [name specific customers], and any affiliate of either, without regard, in the case of such customers, to the location of the office of such customer, the destination to which Products are delivered or the location at which Products are used or services are performed;

iv. To sell any of the Maintenance Products directly to any customer located in the Exclusive Territory that places an unsolicited order with the Company; provided, however, that as a condition precedent to making any such sale, Company shall give Distributor ten (10) days' prior written notice of such proposed sale and Company and Distributor shall mutually agree upon a sharing of any commission related to such sale;

v. To provide services related to the Maintenance Products directly to any customer located in the Exclusive Territory that makes an unsolicited request to Company for services without obligation to pay any commission to Distributor; provided, however, that as a condition precedent to the performance of any such services, Company shall give ten (10) days' prior written notice thereof and an opportunity to discuss such services with Company prior to the performance thereof; and

vi. To fulfill all purchase orders relating to Transition Accounts in accordance with the provisions of Section 12 hereof.

2. Duties of Distributor. In the performance of its duties under this Agreement, Distributor shall:

a. Use its best efforts to promote the sale of, and stimulate interest in, the Maintenance Products in the Exclusive Territory, so that the Maintenance Products will be used as extensively as possible in the Exclusive Territory;

b. Use its best efforts to promote the sale of complete systems consisting of the Maintenance Products in the Exclusive Territory;

c. Diligently attempt to conduct demonstrations of the Products for potential purchasers;

d. Provide for its customers, and use its best efforts to cause its customers to utilize, orientation and training services for purchasers of the Products to ensure correct use and application of the Products;

e. Maintain a trained sales and service staff in the Exclusive Territory;

f. Maintain a suitable place of business within the Exclusive Territory sufficient to display, store and service the Maintenance Products;

g. Maintain an inventory of the Maintenance Products (including repair and replacement parts and supplies), all of which shall be adequate, in the reasonable opinion of Company, to meet the Exclusive Territory's sales potential;

h. In each calendar year during the Distributorship Period (as such term is defined in Section 11 hereof), purchase Maintenance Products having an aggregate recommended list price (as determined on the basis of the retail price lists prepared by Company) of not less than .......... dollars ($..........); provided, however, that in the case of any calendar year in which the Distributorship Period was not in effect for the full twelve (12) months thereof, the minimum dollar amount of purchases required by this subsection (h) shall be prorated for the number of months or portions thereof during such year that the Distributorship Period was in effect.

3. Terms of Sale.

a. Except as otherwise provided in Subsection (f) of this Section 3 with respect to Products that do not conform to Company's standard specifications (hereafter referred to as Nonstandard Products), all purchase orders submitted by Distributor to Company shall be submitted:

i. In the case of purchase orders for assembled equipment, not fewer than ninety (90) days prior to the desired date of shipment thereof, unless otherwise mutually agreed between Company and Distributor, and

ii. In the case of purchase orders for repair or replacement parts (other than repair or replacement parts not normally maintained in stock by Company), not fewer than thirty (30) days prior to the desired date of shipment thereof.

All purchase orders submitted by Distributor to Company shall be subject to acceptance by Company, and each such purchase order shall, as of the date of acceptance thereof in writing by Company, become a binding and enforceable contract of sale between Company and Distributor.

b. Except as otherwise provided in subsection (f) of this Section 3 with regard to Nonstandard Products, the purchase price for each Product to be sold by Company to Distributor pursuant to this Agreement shall be the price for such Product shown on Company's dealer recommended price list then in effect, less the distributor's discount for such Product indicated on or attached to such price list. Company shall provide Distributor with the current price list upon the execution of this Agreement. Company may revise such price list in whole or in part at any time, and any changes thereon shall be effective upon Distributor's receipt of written notice thereof.

c. All prices for Products shall be F.O.B. [city]. All freight, insurance, handling and forwarding agent's fees, taxes, storage, and all other charges applicable to the Products, if any, from the time such Products leave Company's factory shall be borne by the Distributor.

d. At any time during the term of this Agreement, Company may, in its sole discretion, (i) modify the specifications of any Product (other than a Nonstandard Product with respect to which a purchase order has previously been accepted by Company) or (ii) discontinue the manufacture and sale of any Product; provided, however, that in the event that Company discontinues the manufacture or sale of any Product subsequent to the acceptance by Company of a purchase order therefor but prior to the delivery thereof to the customer, Company shall be obligated to effect delivery under such purchase order.

e. Unless otherwise agreed to in writing by Company and Distributor, payment for any Product sold to Distributor hereunder shall be made, in cash, by wire transfer or by certified check, not later than thirty (30) days after the date of the invoice relating to such Product. In the case of any invoice that is not paid in full on or before the date thirty (30) days after the date of such invoice, interest shall accrue on the unpaid amount of such invoice, from the date of such invoice until the date of payment, at the rate of eighteen percent (18%) per annum.

f. Any purchase order for a Nonstandard Product or for a repair or replacement part not normally maintained in stock by Company shall be submitted to Company with complete specifications in reasonable detail for such Product. The price and shipment schedule for any Nonstandard Product and any such part shall be agreed upon between Company and Distributor within a reasonable time after the submission of such purchase order.

4. Shipment, Risk of Loss, Force Majeure.

a. After acceptance by Company of a purchase order submitted by Distributor, and as promptly as reasonably possible in accordance with the date of shipment specified in such purchase order or otherwise agreed to in writing by Company and Distributor, Company shall deliver the Products specified in such purchase order to a carrier of Company's choice in [city, state]. Risk of loss in respect of any Products sold by Company to Distributor shall pass from Company to Distributor at the time such Products leave the factory.

b. Company shall not be liable for any delay in delivery or for nondelivery, in whole or in part, caused by the occurrence of any contingency beyond the control of Company, including, without limitation, war (whether an actual declaration thereof is made or not), sabotage, insurrection, riot or other act of civil disobedience, act of a public enemy, failure or delay in transportation, act of any government or any agency or subdivision thereof, judicial action, labor dispute, accident, fire, explosion, flood, storm or other act of God, and shortage of labor, fuel, raw material, or machinery.

5. Warranties.

a. A copy of the warranty to be used in connection with the Products is attached hereto as Appendix C [omitted]. COMPANY MAKES NO EXPRESS WARRANTIES TO DISTRIBUTOR WITH RESPECT TO THE PRODUCTS OTHER THAN AS CONTAINED IN THE WARRANTY. ALL IMPLIED WARRANTIES ARE HEREBY EXCLUDED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. Distributor shall make no warranties to its customers regarding the Products in the name of Company or otherwise having the effect of giving the customer direct recourse to other than as permitted in accordance with Appendix D attached hereto [omitted].

b. Distributor shall maintain facilities at its own expense within the Exclusive Territory to render complete warranty service on all Maintenance Products. The cost of rendering repair warranty services on the Maintenance Products in the Exclusive Territory shall be reimbursed by Company to Distributor only to the extent agreed to in writing in advance between Company and Distributor.

c. Any Products or component materials claimed to be defective shall be returned to Company for warranty determination, freight prepaid, with an appropriate returned materials authorization. If Company determines that a returned Product or component is defective and is subject to Company's warranty therefor, Company shall have the option, exercisable at its sole discretion, to issue a replacement for such Product or component or to issue a credit therefor to Distributor's account. Company shall have no liability with respect to returned materials for lost work time, lost profits, or any other consequential or incidental damages.

6. Samples and Promotional Materials. Company will furnish, for use by Distributor in promoting sales of the Products, catalogs, and other promotional and descriptive literature, technical and product data sheets and drawings, service manuals, and other selling aids that Company customarily furnishes to its other distributors engaged in like activities. These materials shall remain the property of Company and shall be returned to Company, at the cost and expense of Distributor, within ten (10) days after termination of the Distributorship Period, or whenever requested by Company. Specimens of all advertising and other promotional materials proposed to be utilized by Distributor, other than materials provided by Company, shall be submitted to Company for written approval prior to use.

7. Reports by Distributor.

a. Within fifteen (15) days following the end of each month during the Distributorship Period, Distributor shall submit to Company a written report concerning the promotional, sales and service activities of Distributor during the preceding month. This report shall contain, among other things, an accounting by item as to the quantity of complete Product systems and major Product components sold, the names and locations of purchasers of Products, and the serial numbers, if any, of the Products sold to them. Within thirty (30) days of each June 30 and December 31 during the Distributorship Period, Distributor shall provide Company with a report of the results of a complete physical inventory of Products on hand as of such June 30 and December 31.

b. Distributor shall maintain accurate and complete books and records with respect to all sales of Products and other goods purchased from Company and shall, at any time and from time to time upon Company's request, provide Company with copies of such books and records or any part thereof.

c. Company shall have the right, upon its request, to inspect Distributor's facilities, operations and records related to this Agreement during normal business hours and to observe Distributor's taking of inventory. Distributor shall maintain, and shall make available to Company upon its request, such marketing information, sales and inventory reports and financial statements Company reasonably requests.

8. Additional Covenants, Representations, and Warranties by Distributor.

a. Distributor shall not in any manner, directly or indirectly, engage in, or represent, advise, or assist any other person, firm, or corporation engaged in:

i. The business of producing, selling, soliciting orders for, or making offers for the sale of any products, equipment, supplies, or replacement parts that are competitive with the Products (collectively, Competitive Equipment);

ii. The offering of services utilizing Competitive Equipment; or

iii. The maintenance of an inventory of Competitive Equipment.

The covenants contained in this subsection shall survive the termination of the Distributorship Period as such term is defined in Section 11 below for a period of two (2) years after such termination.

b. Distributor shall secure and maintain in effect during the Distributorship period and for a period of at least one (1) year thereafter product liability insurance with an insurance company acceptable to Company, which insurance shall provide coverage of at least .......... dollars ($..........) per occurrence for any damage or injury suffered by a purchaser or user of any of the Products sold by Distributor. Each such policy shall name Company as a co-insured, and, at any time and from time to time upon Company's request, Distributor shall provide Company reasonable evidence that such insurance coverage is in effect.

c. Distributor shall not, during the Distributorship Period and for a period of five (5) years after termination of the Distributorship Period, for any reason, use, publish, or disclose to any third party, without the express prior written authorization of Company, any know-how or other such information, data, designs, plans, drawings, customer lists, or other material furnished to Distributor by Company of a secret or confidential nature.

d. Distributor shall not use any component or part in connection with the assembly, installation or repair of any Product or any system composed of Products in whole or in part, or sell as a replacement component or part for any Product, any components or parts other than those provided or approved by Company; provided, however, that Distributor shall be permitted to use any hardware items, such as nuts, bolts, and similar hardware, in connection with the assembly of the Products if such parts have a quality and specifications equivalent to those approved by Company.

e. Distributor hereby acknowledges that in the event of a breach or threatened breach by Distributor of any covenant set forth in this Section 8, Company will not have an adequate remedy at law with respect to such breach and, therefore, in addition to all other remedies available to Company, Company shall be entitled to such equitable and injunctive relief as may be appropriate to restrain violations of or enforce the provisions of such covenants.

f. Each covenant and agreement of Distributor in subsections (a) through (e) of this Section 8 shall apply in all respects to any corporation, firm, or other business entity that is affiliated, by way of common ownership or otherwise, with Distributor.

g. Distributor acknowledges that nothing in this Agreement shall be construed to license, or otherwise grant Distributor any rights under, any patent rights owned by Company, except that Distributor shall have the right to resell Products that are covered by Company's patents and patent applications and that are purchased from Company.

h. Distributor covenants, represents and warrants to Company as follows:

i. Distributor's net worth and working capital as of the date of this Agreement are not less than .......... dollars ($ ..........) and .......... dollars ($..........), respectively, and at all times during the Distributorship Period, Distributor shall maintain a net worth and working capital at least equal to such respective amounts;

ii. Distributor is, on the date of this Agreement, and at all times during the Distributorship Period Distributor will remain, a corporation which (x) is existing in good standing under the laws of the State of [state]; (y) is duly qualified and in good standing under the laws of each jurisdiction where such qualification is required; and (z) possesses all licenses, franchises, and approvals required under applicable law to permit Distributor to conduct its business in the manner contemplated by this Agreement.

9. Technical Assistance.

a. In the event that Company makes any material change in any product or service for which Distributor is now or hereafter designated as a sales distributor and dealer under this Agreement, Company shall, at its expense, provide an orientation and technical review of such material change for up to two members of Distributor's sales and service staff. Such orientation and technical review shall not exceed five (5) days. Company shall pay the travel expenses and food and lodging of the Distributor's trainees at such review but shall not be responsible for the salaries or wages of Distributor's trainees who attend such review.

b. In addition to the orientation and technical review provided by subsection (a) of this Section 9, Company agrees to provide Distributor with on-site technical assistance at Distributor's principal place of business and at Distributor's expense at such times as Distributor shall reasonably request, subject to availability of appropriate Company personnel.

10. Trade Names and Trademarks.

a. Company grants to Distributor the license and right to use Company trade names and trademarks in connection with the advertising, sale, offer for sale or distribution of Products in the Territory. Such trade names and trademarks shall not be used by Distributor in combination with any other trade names or trademarks without the prior written approval of Company. Distributor shall diligently promote the identity and market recognition of Company as the manufacturer of the Products.

b. Distributor recognizes the right, title, and interest of Company in and to all trademarks and trade names used by Company on or in connection with Products and agrees not to engage, directly or indirectly, in any activities which may contest or otherwise impair the right, title, and interest of Company therein. Distributor shall neither acquire, nor claim for itself any right, title, or interest in or to Company's trademarks and trade names by virtue of this Agreement or through the use by Distributor of Company's trademarks and trade names. The parties hereto agree that all uses of Company's trademarks and trade names by Distributor shall be in such manner as to inure to the benefit of Company.

c. If Distributor learns of the delivery into the Territory of any products bearing any Company trademark or trade name (other than Products delivered by Company), Distributor shall promptly report to Company the full details known to Distributor regarding such products and shall fully cooperate with Company in pursuing any lawful remedies therefor to which Company or Distributor may be entitled. Distributor acknowledges that only Company, and not Distributor, has the right to sue for infringement of Company's trademarks and trade names.

d. On all advertising and other material on which Distributor shall use any of Company's trademarks, Distributor shall include the following statement in relation to such trademark: "Trademark owned by [name of company]."

e. Distributor shall not remove or modify in any way the labels affixed by Company on the Products, including, without limitation, any listing of patent or patent application numbers, except as may be required by the laws of the jurisdiction within the Territory in which the Products are to be sold.

f. The obligations undertaken by Distributor pursuant to this Section 10, with the exception of subsection (c), shall survive termination of the Distributorship Period, and in the event of such termination, Distributor agrees not to register or use any trademarks or trade names that are the same as, or confusingly similar to, the Company's trademarks or trade names.

11. Term and Termination.

a. The distributorship rights granted by Company to the Distributor in this Agreement shall become effective as of the date first above written, shall remain in effect until the first anniversary of said date, and shall thereafter be automatically renewed for successive one (1) year periods unless terminated either: (i) pursuant to the following provisions of this Section 11 or (ii) upon the delivery by either party to the other party of written notice of termination of the Distributorship Period, not fewer than ninety (90) days prior to the end of the first or any renewal period. The period from the date first above written until the termination, for any reason, of Distributor's rights hereunder (including all extension and renewal periods), is referred to herein as the Distributorship Period.

b. At the option of Company, the Distributorship Period shall immediately terminate without prior notice to Distributor in the event and as of the date that:

i. Distributor shall become insolvent, or Distributor commences, has commenced against it, or acquiesces in the commencement of a proceeding in bankruptcy or for similar relief under applicable law, or a receiver, trustee, liquidator, or similar official is appointed for Distributor or any of its assets, or Distributor is reorganized or declared bankrupt or makes an assignment for the benefit of creditors; or

ii. Distributor shall be dissolved or liquidated;

iii. Distributor shall be merged or otherwise amalgamated into another company or come under the direct or indirect control of any party other than [name of present owner of Distributor]; or

iv. Distributor shall fail in any calendar year to purchase the minimum amount of Maintenance Products specified in subsection (h) of Section 2 of this Agreement.

Distributor shall immediately notify Company in writing of the occurrence of any event referred to in clauses (i) through (iv) above.

c. In the event of any breach of this Agreement, the party hereto not in breach shall be entitled, in addition to availing itself of remedies provided by applicable law, to terminate the Distributorship Period by giving written notice of termination to the breaching party hereto if such breach is not corrected within thirty (30) days after the breaching party's receipt of written notice of such breach. The written notice of such breach shall state that this Agreement will become terminable at the nonbreaching party's option if the breach is not corrected within thirty (30) days thereafter.

d. Upon termination of the Distributorship Period for any cause, Company or its designee shall have the right, but not the obligation, to purchase from Distributor any or all Products that are owned by Distributor as of the date of such termination and for which Distributor has not entered into a binding contract of sale to another. Such right shall be exercised not later than ninety (90) days after the effective date of termination of the Distributorship Period. The price of any such Products to Company shall be the price at which such Products were purchased by Distributor from Company, plus the cost of shipping such Products from Distributor's warehouse to Company's plant, less any discounts, rebates, or commissions applicable thereto.

e. Upon termination of the Distributorship Period for any reason, Distributor shall forthwith deliver to Company (or at Company's written instruction, shall destroy) such samples, correspondence, specifications, price books, and other documents or materials furnished by Company to Distributor, together with any and all copies thereof.

f. Termination of the Distributorship Period for any cause shall not entitle Distributor to any compensation by reason thereof nor shall it release either party hereto from any then existing obligation; provided, however, that Company may, without liability, cancel any previously accepted purchase order if the Distributorship Period is terminated pursuant to Section 11(b) hereof or pursuant to Section 11(c) hereof by reason of breach by Distributor.

12. Transition Accounts.

a. In the case of the purchase orders referred to in Appendix C (In-House Orders), Company shall have the right to fulfill such orders and shall be responsible for shipping the Product referred to in each such order, paying any commission owed in connection with such order and training the purchaser in the use of the Product purchased.

b. In the case of the pending award and orders referred to in Appendix D attached hereto [omitted] (Pending Awards and Orders), and together with the In-House Orders (Transition Accounts), if any such Pending Award and Order results in a sale within 120 days of the date hereof, (i) Company shall have the right to make such sale, and shall be responsible for shipping the Product that is the subject of such sale and (ii) Distributor shall be responsible for paying any commission owed in connection with such sale and training the purchaser in the use of the Product sold. Any gross margin resulting from such sale shall be shared by Company and Distributor on the basis of the percentages shown in Appendix D.

13. Miscellaneous.

a. The validity, construction, and performance of this Agreement shall be governed by and interpreted in accordance with the laws of the State of [state].

b. No addition to or modification of this Agreement, or of a purchase order submitted to Company by Distributor, or of an acceptance of a purchase order dispatched by Company to Distributor shall be effective or binding on either of the parties hereto unless reduced to writing and executed by the respective duly authorized representatives of each of the parties hereto. In the event of any conflict or other inconsistency between this Agreement and any purchase order, this Agreement shall govern in all respects.

c. Except as otherwise expressly provided herein or as required by applicable law, Distributor hereby covenants and represents that it will indemnify and hold Company harmless from and against any and all suits, claims, liabilities, losses, damages, and expenses (including legal expenses) of any kind or character, including injury to persons or damage to property or infringement of property rights, alleged, charged or otherwise asserted by third persons, arising out of, in connection with, or in any way related to any acts performed by Distributor involving or affecting Products sold by Company to Distributor pursuant hereto that occurred after the time that said Products left the factory (including, without limitation, assembly, installation, and maintenance of such Products).

d. This Agreement, and all rights and obligations hereunder, are personal as to the parties hereto and shall not be assigned in whole or in part by either of the parties hereto to any other person, firm, or corporation without the prior written consent thereto by the other party hereto; provided, however, that Company may assign this Agreement and purchase orders hereunder, without the prior written consent of Distributor, to any person, firm, or corporation acquiring all or substantially all of the assets of Company or to any successor to Company by merger.

e. Any waiver by either party hereto of any right hereunder or of any failure to perform or breach hereof by the other party hereto must be express and in writing and shall not constitute or be deemed a waiver of any other right hereunder or any other failure to perform or breach hereof by the other party hereto, whether of a similar or dissimilar nature.

f. Company and Distributor acknowledge that Distributor is and shall at all times be an independent distributor for Company. Distributor is not authorized to act as an agent for or legal representative of Company. Distributor shall not have authority to assume or create any obligation on behalf or in the name of, or binding upon, Company, nor to represent Company as a distributor in any matter not specifically provided for herein. All sales by Distributor shall be in its own name and for its own account.

g. This Agreement is the entire agreement between the parties hereto respecting the subject matter hereof and supersedes all prior agreements between the parties hereto relative to the subject matter hereof.

h. Except as otherwise provided in this Agreement, all notices required or permitted to be given hereunder shall be in writing and shall be valid and sufficient if dispatched by registered mail, postage prepaid, in any post office in the United States, or in the Territory, as the case may be, addressed as follows:

If to the Company: [name and address of company]

Att: [name]

If to the Distributor: [name and address of distributor]

Att: [name]

Either party hereto may change its address by a notice given to the other party hereto in the manner set forth above. Notice given as herein provided shall be considered to have been given upon the mailing thereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

[name of company]

By: [print name and title]

[name of distributor]

By: [print name and title]