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Independent Medical Distributors Association
DISTRIBUTOR SELLING AGREEMENT
THIS AGREEMENT is between ___________________________, a corporation hereinafter called "Manufacture", whose address is, _____________________________ and _________________________________________, a corporation hereinafter called "Distributor" whose address is ______________________________________________________________.
Appointment of Distributor
Manufacturer hereby appoints Distributor for exclusive Distribution of the products of
Manufacturer set forth by the attached Exhibit "A" labeled LIST OF PRODUCTS AND
TRADEMARS containing a detailed list of products to be sold and trademarks to be used by
Distributor, which is hereby made a part of this Agreement together with other products,
trademarks and product modifications as may be added in the future. Distributor shall have
the right of first refusal to serve as distributor within its assigned territory of all
future medical products that Manufacturer may manufacture.
Territory
The territory covered by this Agreement is described in the attached Exhibit
"B"’ labeled EXCLUSIVE TERRITORY, which is hereby made a part of this
agreement. The Manufacturer agrees not to appoint other distributors within the territory,
or to sell direct within the territory.
| A. Manufacturer will provide effective
advertising, convention participation, catalogues and literature at no cost to Distributor
to enhance Distributor’s sales efforts, as manufacturer deems necessary B. Manufacturer will keep Distributor informed of promotional activities and new products and policies of manufacturer. C. Manufacturer will refer all product inquiries from the Distributor’s territory to Distributor. D. Manufacturer will provide assistance in pertinent sales and technical information to the Distributor organization by holding periodic sales seminars, meetings, and training programs. When possible, such sessions will be held within a reasonable distance of Distributor’s place of business. E. Manufacturer will do all that is necessary in order to keep its products current with or ahead of the state of the art. F. Manufacturer will provide Distributor with
representative samples in accordance with the prevailing sample policy, either G. Insofar as possible, manufacturer will make its products
available in quantities to meet Distributor'’ reasonable require- H.Manufacturer will extend its technical expertise to Distributor, its sales people and customers, for the mutual benefit of Manufacturer and Distributor. I.Manufacturer may periodically sponsor special incentive
programs for Distributors to promote various Manufacturers’ J.Manufacturer will immediately notify the Distributor of
any customer complaint Manufacturer receives from the Distributor’s territory, and
advise Distributor of the customer making such complaint, and the nature of the complaint
to permit Distributor K.The Manufacturer and Distributor agree not to employ or
engage the services of any employee of the other during the term L.Manufacturer shall repair or replace (within the limitations of such applicable express written warranty as may be issued by manufacturer any products or parts there of that prove to be defective in workmanship material, or design. M.Manufacturer will accept full responsibility and liability for its products that are distributed by Distributor and will furnish the Distributor with an appropriate rider on manufacturer’s liability policy. N.Manufacturer agrees to indemnify Distributor for
reasonable attorney fees and costs incurred as a result of a lawsuit O.Manufacturer will pay the cost of freight for all orders over $_______________________. P. During the term of the Agreement and upon termination of
this Agreement Manufacturer will accept for credit at |
Obligations of Distributor
Distributor agrees to aggressively promote the sale of Manufacturer’s products in the territory and shall take no action to invalidate any of Manufacturer’s trademarks.
Distributor agrees to meet and/or exceed mutually agreed upon quotas. Such quotas are to be established by agreement after the first six months of the Agreement period and annually thereafter and attached as an addendum to this Agreement as Exhibit "C." Manufacturer shall disclose to Distributor the projected annual sales for Manufacturer in the Continental United States and the percentage of said sales represented by sales in the Territory for the preceding year. Distributor’s quota for any year shall not increase over the previous year’s sales by a greater percentage than the projected increase in Manufacturer’s Continental United States sales over the previous year. If Distributor’s sales are at least 75 percent of quota or increase over the previous year’s sales by the same or greater percentage than the percentage increase of manufacturer’s sales in the Continental united States over the previous year, distributor shall be deemed to have attained quota. In the event of radically changed circumstances, including, but no limited to an expansion of the number or size of geographic regions in which Manufacturer’s products are sold, quota shall be adjusted accordingly.
C. Distributor will provide manufacturer with an annual forecast for each forthcoming year in order to properly service all accounts, insure prompt service to customers and avoid out-of-stock conditions.
D. Distributor retains the right to select its own customers and to sell at such prices and on such terms and conditions as it may elect. Title shall pass and risk of loss shall be on Distributor from time of delivery to Distributor.
Distributor will not alter original packages or repackage products in any way prior to resale, except those products designated as loaners.
Distributor agrees to set up and implement any control procedures required to conform to existing state or federal laws or regulations.
G. Distributor will give fair representation and sales efforts to products at conventions. Distributor’s costs of exhibiting at local conventions are to be shared equally between Manufacturer and Distributor. Distributor shall invoice Manufacturer for such costs.
H. Distributor agrees to maintain a level of expertise necessary to competently promote and service Manufacturer’s products.
Competitive Products
Distributor agrees that Distributor will not sell competitive products; if however, the Manufacturer after the date of this starting date of this Agreement adds to its product line, product(s) that are competitive with product(s) of a company that Distributor already represents, then Distributor can continue to sell such competitive product(s). If a company that Distributor already represents adds product(s) to its product line that compete with those of manufacturer, then if Distributor can contractually refuse to sell such product(s). Distributor will do so. Otherwise Distributor shall be entitled to sell said products or product lines. Manufacturer recognizes that Distributor’s representation of the following c companies may involve some competition between certain products, but recognizes the advantage of Distributor carrying each of these lines:
(List Companies)
National Contracts
If Manufacturer enters into Agreements with national accounts or buying groups. Distributor shall at its sole option service any entities that comprise such national accounts or buying groups and are located within Distributor’s territory. If Distributor elects to participate in servicing these entities, Distributor shall be paid by Manufacturer as follows: Distributor shall receive commissions equal to the difference between the hospital list price and the price the national account or buying group pays to Manufacturer, but in no event less that 75 percent of the difference between hospital list price and Manufacturer’s price to Distributor. Freight charges and taxes will not be included in the calculation of commissions due Distributor. Commissions will be paid within 30 days of the date Manufacturer invoices customer. Commissions paid to Distributor on any good later validly returned to Manufacturer by the national account or buying group will be returned to Manufacturer by Distributor within 30 days of receipt of notice in writing of entitlement to such return.
(NOTE: In Paragraph 7 below, the gross margin as a percentage of hospital list must be filled in.)
Prices to Distributor
Prices to Distributor shall be Manufacturer’s list prices in effect at the time of acceptance of Distributor’s orders less any applicable Distributor discounts. Discounts off list to Distributor shall, in no event be less that _________percent. Manufacturer’s current terms and conditions in effect at the time the order is placed shall be applicable to all orders placed pursuant to this Agreement, so long as those terms and conditions do not conflict with any of the provisions of this Agreement. Manufacturer will exert its best efforts to meet all orders in whole or in part placed by Distributor. Manufacturer shall give the Distributor at least 30 days’ advance notice of a price increase.
Payment
Terms of payment shall be discount of two percent for payment within 10 days, net 30 days unless longer terms are specified on the invoice. A separate invoice will be issued for each shipment. If Distributor is delinquent, without basis, or without mutual written agreement, subsequent shipments may be on a C.O.D. basis. Delinquency in excess of 90 days shall be cause for termination of this Agreement.
Legal Relationship
Distributor is an independent contractor and the relationship between Manufacturer and Distributor is that of Vendor and Vendee. Nothing herein is intended or shall be construed to authorize Distributor to create or assume any liability or obligation of any kind for or on behalf of Manufacturer. Distributor is no the agent of Manufacturer for any purpose.
Assignment
Distributor shall have the right to assign or transfer this Agreement with manufacturer’s written consent, which will not be unreasonably withheld.
Applicable Law
Any controversy or claim relating to this Agreement, or its breach, or the relationship created by this Agreement shall be settled by any appropriate court in the state where the distributor has its principal place of business. The laws of that state shall control as to all such matters. If any portion of this Agreement itself is contrary to law, the remaining provisions shall remain valid.
(Note: In paragraph 12, the length of this Agreement is subject to negotiation.)
Duration of Agreement
This Agreement shall continue in full force and effect for (four) years from date of execution and shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. Termination shall be for cause as specified below.
The Agreement may be terminated by Manufacturer if Distributor fails to meet its quota as set in accordance with paragraph 4B above, provided such failure was not caused by manufacturer’s actions or failure to act.
The Agreement may be terminated by one party if the other party commits an act of bankruptcy, files a voluntary petition for bankruptcy or reorganization, is the subject of an involuntary petition for bankruptcy, has its affairs placed in the hands of a receiver, enters into a composition for the benefit of creditors, or is insolvent.
Should either party be in material breach of the material terms of this Agreement, the other party may terminate this Agreement by giving written notice of such breach and the right to correct the breach. If the breach is not cured within 60 days of the date of such notice, or, if the breach cannot be cured within 60 days, if substantial steps are not taken to cure the breach within 60 days, this agreement may be terminated immediately at the end of said 60-day period. This Agreement will automatically be renewed for successive four years periods unless, at least 120 days prior to its expiration date, one party notifies the other by registered mail, return receipt requested, of its intention not to renew.
(NOTE: The following additional paragraphs (tree alternatives) should only be added if you are willing to agree to termination without cause. In such event, the terms should be negotiated)
This agreement may also be terminated as follows:
Alternative A
In the event that termination is without cause, Manufacture shall pay Distributor an amount equal to the total gross margins and commissions earned by Distributor during the 12-month period immediately proper to such termination. If this Agreement has not been in effect for 12 months, then the amount paid on termination shall be 12 times the average monthly gross margins and commission earned by Distributor during the effective period of this Agreement. Gross margins are defined as the difference between the price Distributor paid to Manufacturer and the price paid to Distributor by its customer for the products.
OR
Alternative B
In the event that termination is without cause. Manufacturer shall give Distributor six months notice of the effective date of termination, shall honor all orders placed by Distributor during the six month notice period and for a period of six months following the effective date of termination.
OR
Alternative C
In the event that termination is without cause, Manufacturer shall give Distributor six months notice of the effective date of termination, shall honor all orders placed by Distributor during the six month notice period and for a period of six months following the effective date of termination.
Obligations Upon Termination
Upon termination of this Agreement, Distributor will promptly return to manufacturer all inventory (including but not limited to instruments) of Manufacturer’s products and all samples and literature relating to manufacturer’s products. Manufacturer shall promptly pay Distributor for all such inventory, samples and literature at Distributor’s cost with no reduction for shipping, handling or restocking or any other cause.
Stock Options
Distributor is hereby granted options on __________________________________(FILL IN NUMBER OF SHARES) shares of the common stock of Manufacturer on the terms and conditions set forth in the agreement attached hereto as Exhibit "D". In the event that the shares can be registered, Manufacturer will register said shares at its sole cost and expense.
Indemnification
Manufacturer hereby agrees to indemnify and hold Distributor harmless from any and all claims, causes of action, suits, debts, losses, costs or expenses, judgements, liabilities, and demands relating to or arising from the sale of manufacturer’s products to third parties and for product liability and/or patent and/or trademark infringement. This paragraph 15 shall survive the termination of this agreement.
Complete Agreement
This Agreement constitutes the entire contract between the Distributor and Manufacturer. No modifications of its terms or conditions shall be binding on either party unless made in writing and signed by both parties. This Agreement supersedes and cancels any and all previous contracts, arrangements, or understandings that may have existed or may exist between the parties.
There are no understandings, representations or warranties of any kind expressed or implied between the parties that are not expressly set forth herein.
Notices
All notices required under this Agreement shall be sent registered mail, return receipt requested. Notice becomes effective upon receipt or on the third business day after the date on which the notice is postmarked, whichever is earlier. Notice shall be sent to the addresses set forth below:
If to the Manufacturer:
If to the Distributor:
Either party may change its address for notice purposes by notifying the other party of such change of address, such notice to be as required herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year indicated below.
_________________________________ _______________________________
Distributor Manufacturer
By_______________________ By_______________________
Title _____________________ Title_____________________
Date ____________________ Date _____________________
Exhibit "A"
LIST OF PRODUCTS AND TRADEMARKS
Exhibit "B"
EXCLUSIVE TERRITORY
Exhibit "C"
MUTUALLY AGREED TO QUOTAS
The following quota shall be for the one year period commencing six months after the effective date of this agreement:
Exhibit "D"
TERMS AND CONDITIONS OF STOCK OPTIONS