(* * *) Certain information contained in this Agreement has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment was requested with regard to omitted parts. A distribution agreement, also known as a distribution agreement, is an agreement between distributors that defines the responsibilities of both parties. The agreement usually exists between a manufacturer or seller and a distributor, but in some cases it may involve two dealers or a distributor and another distribution unit. A distribution agreement can be international. The largest electronics and computer distributors, including Arrow Electronics, Avnet, Ingram Micro and Tech Data, operate subsidiaries in a number of countries for wide geographic coverage. The manufacturer or seller must also determine whether the distribution agreement is exclusive or non-exclusive. In an exclusive agreement, the specified distributor is the only distributor with the right to sell the product in a specific geographic region or in multiple regions. If the agreement is not exclusive, the manufacturer or seller may supply other distributors who sometimes compete in the same market.
The basic elements of a distribution agreement include the duration (period for which the agreement is in force), the terms of delivery and the sales territories covered by the agreement (regions of the US and/or international markets). Here is a checklist of factors to consider when drafting a distribution agreement: In addition, the manufacturer or seller must decide on a distribution strategy when considering the type of agreements to be entered into. A selective strategy requires a small group of distributors to cover the channel partner`s target markets. An intensive strategy aims to put the product in front of as many potential buyers as possible through wide distribution. The latter generally applies to products intended for consumers rather than those developed for commercial markets. A dealer agreement generally sets out the terms and conditions of sale of the products purchased by the dealer, the expected duties and responsibilities of the dealer, and the circumstances in which the contract may be terminated. A merchant contract may also specify the merchant`s means of payment, delivery date and extent of territorial rights. Suppliers who use channel partners as part of their distribution network can use a one- or two-tier sales channel. In a single-tier distribution system, the provider develops relationships with distribution companies such as VARs, system integrators (IS) and managed service providers (MSPs) that sell to end customers. In a two-tier system, the supplier sells products to an independent distributor, who in turn delivers products to distribution partners who then package solutions for end customers.