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Exclusive Dealing Agreement
EXCLUSIVE DEALING AGREEMENT
MANUFACTURER AND DISTRIBUTOR-Type 1
Exclusive dealing agreement made [Date of agreement], between [Name of Manufacturer], a corporation organized and established under the laws of [State of SelleManufacturer], having its principal place of business at [Address of Manufacturer], [City of Manufacturer], [State of Manufacturer], in this agreement referred to as Manufacturer, and [Name of Distributor], of [Address of Distributor], [City of Distributor], [State of Distributor], in this agreement referred to as Distributor.
RECITALS
A. Manufacturer is in the business of manufacturing and marketing [Type of goods].
B. Manufacturer desires to grant a distributorship in the goods to distributor.
C. Distributor desires to operate a distributorship for manufacturer.
In consideration of the mutual covenants contained in this agreement the parties agree:
SECTION ONE - APPOINTMENT
Manufacturer appoints distributor as the exclusive and sole distributor for a period of [Period of agreement] years commencing on [Date effective], for the territory described in Exhibit , attached to this agreement and incorporated by reference.
Distributor shall be reappointed for succeeding [Extension period in Years]-year periods on payment of $[Payment for extension] Dollars for each renewal, providing distributor has fulfilled the conditions of this agreement.
SECTION TWO - PAYMENT
On the execution of this agreement and its acceptance by manufacturer, distributor shall pay to manufacturer $ [Initial payment] Dollars.
SECTION THREE - TRAINING AND ASSISTANCE
Manufacturer shall pay expenses, including transportation, required by the attendance of distributor at a [Number of periods] [Week or month] training session at the facility of manufacturer.
Manufacturer shall furnish to distributor, without charge, at least [Days of field training] days of field training during the term of this agreement.
Manufacturer shall furnish to distributor during the term of this agreement and without charge, periodic followup assistance and instruction that manufacturer deems necessary or appropriate to assist distributor in developing business. Distributor shall participate and shall cause any associate, as defined in Section Eight of this agreement, to participate in all training programs, seminars, and field training provided by manufacturer.
SECTION FOUR - MATERIALS AND SUPPLIES
Manufacturer shall furnish distributor, without charge, after full payment of the amount specified in Section Two and on completion of the training program, all materials and supplies set forth in Exhibit , attached to this agreement and incorporated by reference.
SECTION FIVE - INSURANCE
Manufacturer shall provide life insurance coverage for distributor in the amount of $ [Amount of insurance] Dollars and shall pay the nonrated premium costs of the insurance for the first years of coverage. The effective date of the insurance shall be the effective date of this agreement.
SECTION SIX - REBATE
Manufacturer shall provide a rebate of the total purchase price of $ [ebate of the total purchase] Dollars, as required by Section Two, by setting aside $ [Amount to set aside] Dollars out of the selling price of each [quantity] units of goods sold to distributor, and manufacturer shall deposit the rebate funds with a depository selected by manufacturer, in a separate account, until the first of the following events occurs:
(1) The amount of deposits reaches $ [amount of deposits] Dollars, at which time manufacturer shall withdraw that amount from the account and pay it to distributor as a repayment of the purchase price.
(2) [Number of years for expiration] years expire after the effective date of this agreement, at which time manufacturer shall withdraw from the account and pay to distributor the total deposits unless distributor requests manufacturer to continue making deposits until $ [continued deposits] Dollars has been deposited. In the event an extension is requested, manufacturer shall continue to make deposits until $ [Amount to reach] Dollars is deposited, at which time manufacturer shall withdraw that amount from the account and pay it to distributor.
Manufacturer shall make additional deposits in the account for the benefit of distributor provided the following required conditions are met: .
The deposit account shall at all times be under the complete and exclusive control of manufacturer. In the event of termination of this agreement, manufacturer shall be entitled to withdraw and retain all amounts deposited. Manufacturer shall be entitled to all interest earned by the account, and may withdraw the interest periodically, and shall pay all expenses in connection with the account.
The provision for refund of the purchase price stipulated in Section Six shall not be included in any renewal of this agreement if the minimum purchase requirements listed in Section Nine have not been met.
The first $ [Reimbursement] Dollars rebated under this provision shall be considered as reimbursement of training and franchise costs. The next $ [Amount of Bonus] Dollars rebated under this provision shall be considered a bonus.
SECTION SEVEN - TRADENAME RIGHTS
Distributor has the right to use and, unless otherwise instructed by manufacturer, shall use the tradename [Name of tradename], for the term of this agreement. Distributor shall obtain necessary licenses, registrations with appropriate governmental authorities, and obtain a telephone listing under the tradename in the territory assigned to distributor. The tradename registrations will automatically become the property of, and revert to, manufacturer on termination of this agreement, and distributor shall cause any such transfer to be made within days of termination.
SECTION EIGHT - ASSOCIATES
Distributor may appoint anyone of [his or her] choosing as an associate, and shall cause any associate appointed to execute an associate agreement with a copy being forwarded immediately to manufacturer for acknowledgment and approval.
Distributor shall require each associate to attend, as soon after the appointment of the associate as is convenient to manufacturer, a [number of training sessions] month training session at the training facility of manufacturer. The training of associates shall be at the expense of distributor.
Distributors shall not permit any other persons to sell manufacturers goods in the territory of distributor unless those persons are properly appointed associates and have attended the training program.
SECTION NINE - MINIMUM PURCHASE REQUIREMENTS
Commencing [Initial date], distributor shall purchase from manufacturer the following minimum quantities of goods: [Minimum quantities to purchase].
Minimum purchase requirements per calendar [quarter or year or as the case may be] under renewals of this agreement shall be as follows: .
The purchase price of the goods shall be established by manufacturer. A day advance notice in writing shall be given distributor in the event of a change of purchase price. The price list currently in force is listed in Exhibit , attached to this agreement and made a part hereof by this reference as though fully set forth. All purchase orders by distributor shall be on forms furnished by manufacturer, and all orders will be shipped freight prepaid by the most economical system of transportation.
Distributors purchases during the term of this agreement are cumulative and any excess over the minimum purchase requirements during any designated period shall be credited against the minimum for the subsequent period.
SECTION TEN - PREPARATION OF TAX RETURNS
Distributor shall not be responsible for, nor prepare, income tax returns. The preparation of income tax returns for distributor shall be the sole responsibility of manufacturer.
SECTION ELEVEN - ADVERTISING AND PROMOTION
Where the advertising and promotional material has not been provided by manufacturer, distributor shall obtain prior written approval from manufacturer of any advertising copy, promotional material, or other written or printed material used by distributor in promoting sales of manufacturers goods.
SECTION TWELVE - RESTRICTIONS
Distributor shall not interfere with any employees or associates of manufacturer, or directly or indirectly, as principal, agent, employee or otherwise, engage in or be concerned with any business activities directly or indirectly involving the use of goods in competition with those of manufacturer within the territory or in any place within miles of the outside boundary of the territory at any time during the term of this agreement, or for a period of years after the termination of this agreement, regardless of the cause of termination. Further, distributor shall not at any time, except in performing the responsibilities of this agreement, divulge or use for the purposes of distributor any confidential or business information relating to the business affairs of manufacturer.
Distributor shall have no right after termination of this agreement to use the name or any similar name that may confuse or tend to confuse the general public. Any violation of the restrictions in Section Seven or this Section shall result in stipulated damages against distributor of Dollars [$] in addition to other rights and remedies available to manufacturer.
SECTION THIRTEEN - SALE OF FRANCHISE
Distributor may at any time sell the rights of distributor under this agreement provided:
(1) The purchaser is approved by manufacturer in writing, which approval shall not be unreasonably withheld. The approval shall be considered effective on the execution by the purchaser and an officer of manufacturer of the standard distributor agreement then being used by manufacturer for all new distributors.
(2) Prior to the execution of a standard agreement with the purchaser of the distributorship, manufacturer shall be paid Dollars [$] as reimbursement for providing the purchaser field training, transportation, formal training and insurance as described in this agreement, and the operating supplies and materials listed in Exhibit , attached to this agreement and made a part hereof by this reference as though fully set forth.
SECTION FOURTEEN - TERMINATION
Except for purposes of resale described in Section Thirteen, this agreement may be terminated only by distributor or by manufacturer as provided below:
(1) Distributor may terminate this agreement at any time by not requesting renewal, or by notifying manufacturer in writing of the desire of distributor to cancel this agreement and by surrendering to manufacturer any items supplied or sold to distributor by manufacturer in the possession of distributor.
(2) Manufacturer may terminate this agreement by notifying distributor in writing of the termination, but only if distributor has violated a provision of this agreement and has been notified in writing of the default, and failed to remedy the default within [Days of notice] days of the giving of the notice.
SECTION FIFTEEN - ESTATE OF DISTRIBUTOR
This agreement shall be considered as a property right of distributor and may be included in the estate of distributor on the death of distributor provided:
(1) Manufacturer is notified by the executor or administrator of distributor within days after the death of distributor of the name of the person responsible for fulfilling the obligations of this agreement.
(2) The person named must have attended the training course of manufacturer or be willing to attend within days after the death of distributor.
Failure to comply with the above will be considered an automatic request for termination pursuant to Section Fourteen.
SECTION SIXTEEN - WAIVER
Failure of either party at any time to require performance by the other party of any provision of this agreement shall not be deemed a continuing waiver of that provision or a waiver of any other provision of this agreement.
SECTION SEVENTEEN - MODIFICATION
This agreement reflects all the agreements, understandings, representations, conditions and warranties by and between the parties. Neither party shall be liable for any representation made unless it is expressly set forth in this agreement, and this agreement may not be modified or amended except in a writing signed by both of the parties.
In witness whereof, the parties have executed this agreement at [Designated place of execution] the day and year first above written.
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