Distribution Agreement Contract Template

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Distribution Contract

 

This Distribution Contract ("Contract") is made and entered into as of the date of last signature below by (“Execution Date”) and between the following parties:

 

)____________, with a mailing address of __________ ("Supplier"), and ____________, with a mailing address of ___________ ("Distributor").

 

The parties are sometimes collectively referred to herein as the "Parties" and individually as “Party”.

 

RECITALS

 

 

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, terms and conditions contained herein and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:

 

  1. Appointment. Supplier hereby appoints Distributor as its exclusive distributor in the Territory (as defined below) for the Products (as defined below). During the Term (as defined below), Distributor shall have the exclusive right to sell and distribute the Products in the Territory. Distributor's exclusive distributorship under this Contract shall be limited to the Products.

 

  1. Term and Termination. The term of this Contract ("Term") shall commence on the date of last signature below (“Execution Date”) and continue in full force and effect for a period of ___________ years, unless earlier terminated in accordance with the terms of this Contract.

In the event that proper notice has not been submitted for termination, either Party may still terminate this Agreement but hereby agrees to pay a monetary penalty for such termination. The monetary penalty for early termination shall be as follows: $_________

The Parties may also terminate this Agreement in the event of a breach. If either Party breaches this Agreement, the other Party may terminate upon 60 days' written notice. Such notice shall contain any and all information about the breach and shall provide the breaching Party the opportunity to cure the breach within 60 days'. If the breach has not been cured within such time, the Agreement will terminate. If the breach has been cured, this Agreement will continue in full force and effect.

Supplier may also terminate this Agreement in case of any of the following: a.) Distributor declares bankruptcy, requires a guardianship, or enters into another financial compromise agreement; b.) Distributor fails to maintain required Federal and state licenses c.) Distributor fails to maintain required insurance d.) Distributor has a material change in the structure of its business, including a change in ownership e.) Distributor fails to meet any of the Performance Metrics outlined below.

In the event of a termination of this Agreement prior to its natural expiration, Supplier may repurchase the existing Products in Distributor's inventory from Distributor or may require Distributor to sell the Product to another distributor at Supplier's sole and exclusive discretion. The purchase price of the sale back to Supplier or another Distributor shall be the cost Distributor paid. The sale shall only take place if the Distributor has maintained the products in good and saleable condition according to Supplier's examination.

 

  1. Territory. The Products will be distributed exclusively in the following geographic territory (“Territory”):

___________________

 

  1. Products. "Products" shall mean the products manufactured by Supplier that are listed on Exhibit A, which is attached hereto and incorporated herein by reference. Supplier reserves the right to modify the Products from time to time in its sole discretion; provided, that it gives a prior written notice for the same..

 

  1. Pricing. Supplier shall sell the Products to Distributor at the prices set forth on Exhibit B, which is attached hereto and incorporated herein by reference. Supplier reserves the right to modify its prices from time to time in its sole discretion; provided, however, that any such modification shall not be effective until thirty (30) days after written notice thereof is provided to Distributor.
  2. Purchase Orders. Distributor shall place purchase orders for the Products with Supplier from time to time in Distributor's sole discretion in accordance with the terms and conditions set forth herein. All purchase orders placed by Distributor shall be binding upon Distributor once accepted by Supplier.

 

  1. Delivery. Supplier shall use commercially reasonable efforts to fill Distributor's purchase orders within thirty (30) days after receipt of such purchase orders. All products shall be delivered FOB (insert location). Distributor shall be responsible for all shipping and handling charges.

 

  1. Payment. Distributor shall pay Supplier for the Products within thirty (30) days after receipt of invoice from Supplier. Payment shall be made by check or wire transfer, in U.S. dollars and in immediately available funds. Late payments shall accrue interest at the rate of one and one-half percent (1.5%) per month, or the highest rate permitted by law, whichever is lower.

 

  1. Returns. Distributor may return Products to Supplier within thirty (30) days after receipt of such Products if the Products do not conform to the specifications set forth in Exhibit A. Supplier shall, at its option, either repair or replace non-conforming Products, or refund the purchase price of such Products to Distributor.

 

  1. Intellectual Property. Distributor hereby acknowledges and agrees that Supplier (or its licensors) shall retain all right, title and interest in and to the patents, copyrights, trademarks, service marks, trade secrets and other proprietary rights associated with the Products (the "Intellectual Property Rights"). Nothing contained in this Contract shall be construed as conferring by implication, estoppel or otherwise any license or right under any patent, copyright or trademark of Supplier or any other third party. Distributor may, however, receive a limited license while this Agreement is in force and effect to the Intellectual Property Rights in order to use any promotional materials or trademarks or service marks on the Products specifically as Supplier shipped them. Distributor may not add any Intellectual Property Rights to any product or other material.

 

  1. Confidentiality. Distributor acknowledges that the Products and all other information and materials that are disclosed to Distributor by Supplier and that are marked "confidential" or that Distributor knows or reasonably should know are confidential and proprietary ("Confidential Information") are the valuable trade secrets and proprietary intellectual property of Supplier. Distributor agrees to hold and maintain the Confidential Information in strictest confidence for the sole and exclusive benefit of Supplier. Distributor agrees not to disclose any Confidential Information to any person or entity, except to its employees, contractors and agents who have a legitimate need to know such Confidential Information and who have signed nondisclosure restrictions at least as protective of the Confidential Information as those in this Contract. Distributor agrees not to use for any purpose whatsoever, except as expressly permitted in this Contract, any Confidential Information. Distributor acknowledges and agrees that any misuse or disclosure of Confidential Information by Distributor may cause irreparable damage to Supplier, and that monetary damages would not provide an adequate remedy to Supplier. Accordingly, Supplier shall be entitled to seek injunctive relief to prevent the violation of its Confidential Information by Distributor in addition to whatever remedies it may have at law.

 

  1. No Warranty. Supplier MAKES NO WARRANTY WHATSOEVER WITH RESPECT TO THE PRODUCTS, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS.

 

  1. Limitation of Liability. IN NO EVENT SHALL Supplier BE LIABLE TO Distributor FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION OR DATA, OR PERSONAL INJURY) ARISING OUT OF OR RELATING TO THIS CONTRACT, WHETHER SUCH DAMAGES ARE BASED ON BREACH OF CONTRACT, BREACH OF WARRANTY, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY OR OTHERWISE, EVEN IF Supplier HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL Supplier'S LIABILITY TO Distributor UNDER THIS CONTRACT EXCEED THE TOTAL AMOUNTS PAID BY Distributor FOR THE PRODUCTS PURCHASED UNDER THIS CONTRACT.

 

  1. Indemnification. Distributor shall indemnify, defend and hold harmless Supplier, its affiliates and their respective directors, officers, employees and agents from and against any and all claims, actions, suits or proceedings, as well as any and all losses, liabilities, damages, costs and expenses (including reasonable attorneys' fees) arising out of or accruing from (i) any claims or suits based on allegations that the Products infringe or misappropriate any patent, copyright, trademark or other proprietary right of a third party, or (ii) Distributor's breach of any of its representations, warranties or covenants under this Contract.

 

  1. Export Regulations. Distributor acknowledges that the Products are subject to U.S. export control laws and regulations and agrees that it will not export or re-export the Products without compliance with such laws and regulations.

 

  1. Compliance with Laws. Distributor shall comply with all applicable

laws, rules, regulations and orders of any governmental authority in connection with its performance of its obligations under this Contract.

 

  1. Assignment. This Contract and the rights and obligations of the Parties hereunder may not be assigned by either Party without the prior written consent of the other Party; provided, however, that either Party may assign this Contract without the prior written consent of the other Party to any entity that acquires all or substantially all of the business or assets of such Party. Any purported assignment of this Contract in violation of this Section shall be void.

 

  1. Entire Agreement. This Contract constitutes the sole and entire agreement of the Parties with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter.
  2. Amendments. No amendment to or modification of this Contract is effective unless it is in writing and signed by a duly authorized representative of each Party.

 

  1. Waiver. No waiver by either Party of any term or condition set forth in this Contract shall be deemed a further or continuing waiver of such term or condition or a waiver of any other term or condition, and any failure of either Party to assert a right or provision under this Contract shall not constitute a waiver of such right or provision.

 

  1. Severability. If any provision of this Contract is invalid, illegal or unenforceable in any respect, such provision shall be limited or eliminated to the minimum extent necessary so that this Contract shall otherwise remain in full force and effect and enforceable.

 

  1. Governing Law; Arbitration. This Contract shall be governed by and construed in accordance with the laws of the State of XYZ without giving effect to any choice or conflict of law provision or rule (whether of the State of XYZ or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than those of the State of XYZ. ANY DISPUTE ARISING OUT OF OR RELATED TO THIS CONTRACT SHALL BE SUBMITTED TO BINDING ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. THE ARBITRATION SHALL BE HELD IN (INSERT LOCATION) BEFORE A SINGLE ARBITRATOR. THE ARBITRATOR SHALL BE SELECTED PURSUANT TO THE APPLICABLE RULES OF THE AMERICAN ARBITRATION ASSOCIATION. THE DECISION OF THE ARBITRATOR SHALL BE FINAL AND BINDING ON THE PARTIES, AND JUDGMENT MAY BE ENTERED THEREON IN ANY COURT OF COMPETENT JURISDICTION.

 

  1. Distribution Terms. Distributor hereby agrees to exercise its best efforts to obtain and promote the sale of the Products in the Territory. Distributor will maintain adequate staff at all times, including but not limited to adequate sales staff. Distributor further agrees to abide by each of Supplier's policies, procedures or other rules regarding the purchase and sale of the Products. Distributor agrees to conduct its business in a manner that is favorable to and promotional of Supplier and the Products and to not disparage, tarnish, or imply poor favor of the name, reputation or goodwill of Supplier.

No sale, resale, promotion, delivery, installment, service or other distribution of the Products by Distributor shall be permitted outside the Territory. Should Distributor make any significant change to its distribution network, it agrees to notify Supplier as soon as is practicable.

Distributor hereby acknowledges and agrees that its only rights with respect to the Product are the rights specifically outlined in this Agreement and that any and all other rights regarding the Product are specifically reserved to Supplier.

Supplier will exercise its best efforts to fulfill Distributor's orders for the Products.

 

  1. Exclusivity. Supplier agrees not to sell or ship the Products in the Territory to anyone except the Distributor. Supplier further agrees not to sell or ship any similar products or products with the same or similar trademark or other business identification on the product or package to anyone in the Territory except Distributor. Any inquiries received by Supplier about Products in the Territory shall be directed to Distributor.

 

  1. Security Interest. Title for the Products will pass to the Distributor when the Products have been delivered. However, Supplier shall retain a security interest in the Products delivered until payment for the Products has been fully received.

Supplier will have all rights of a secured party.

If the Distributor does not pay, the Supplier may enter Distributor's property and recover the Products. Supplier shall also be able to pursue any remedy under this Agreement or any remedy existing at law or equity.

 

  1. Promotional Materials. Supplier may furnish promotional material to Distributor from time to time to assist in the sale of the Products. Distributor may use such materials but acknowledges and agrees that Supplier retains ownership of all proprietary rights, including intellectual property rights in and to the materials.

 

  1. Performance Metrics. Distributor shall be required to use reasonable commercial efforts to meet the following performance metrics (the "Performance Metrics"): ________________.

 

  1. Outside Territory Transactions. Distributor shall not sell, attempt to sell, promote, advertise, or otherwise solicit orders for any Products outside of the Territory. If Distributor receives any inquiries for Products outside the Territory, Distributor shall contact Supplier to determine how Supplier would like to proceed.

 

  1. Language. All communications made or notices given pursuant to this Agreement shall be in the English language.

 

  1. Headings. Headings to this Agreement are for convenience only and shall not be construed to limit or otherwise affect the terms of this Agreement.

 

  1. Counterparts. This Agreement may be executed in counterparts, all of which shall constitute a single agreement. If the dates set forth at the end of this document are different, this Agreement is to be considered effective as of the date that both Parties have signed the agreement, which may be the later date.

 

  1. Force Majeure. Supplier is not liable for any failure to perform due to causes beyond its reasonable control including, but not limited to, acts of God, acts of civil authorities, acts of military authorities, riots, embargoes, acts of nature and natural disasters, and other acts which may be due to unforeseen circumstances.

 

  1. Notices, Electronic Communications Permitted. i) Any notice to be given under this Agreement shall be in writing and shall be sent by first-class mail, airmail, or email, to the address of the relevant Party set out at the head of this Agreement, or to the relevant email address set out below or other email address as that Party may from time to time notify the other Party in accordance with this clause. The relevant contact information for the Parties is as follows:

Supplier: ______________

Distributor: _____________

Notices sent as above shall be deemed to have been received 3 working days after the day of posting (in the case of inland first-class mail), or 7 working days after the date of posting (in the case of airmail), or next working day after sending (in the case of email).    

 

EXECUTION:

 

SUPPLIER:

Name: _____________

Representative Name: ___________

Representative Title: ___________

Date: ___________

DISTRIBUTOR:

Name: ___________

Representative Name: ___________

Representative Title: ___________

Date: ___________