DEALERSHIP AGREEMENT -sample

AN AGREEMENT MADE THIS DAY OF

BETWEEN

…………………………………………………………………………, a company
duly incorporated in Malaysia and having its registered office at
……………………................
………………………………………………………………………………………………
and having its business address at
………………………………………………….............
………………………………………………………………………………………………
(“Company”) of the one part.

AND

…………………………………………………………………………, a company
duly incorporated at
……………………………………………………………………………..
(“Dealer”) of the other part.

WHEREAS:

A. The Company holds the franchise from Mercedes Benz AG (“said

Franchise”) to distribute and sell Mercedes – Benz passenger cars and
commercial vehicles of all models in Malaysia.

B. The Dealer has expressed an intention and is desirous of becoming a

dealer for the Company’s Products pursuant to the terms and
conditions of this Agreement.

WHEREBY IT IS AGREED as follows:-

1. INTERPRETATION

In this Agreement, unless the context otherwise requires:-

‘Company’s Products’ means Mercedes Benz passenger cars of all

models, Mercedes Benz commercial vehicles of all models, all other
vehicles and / or machines bearing the name of Mercedes Benz and
all future models of the aforesaid as may from time to time be
distributed and sold by the Company.
 ‘Confidential Information’ means any information which is disclosed
to the Dealer by the Company pursuant to or in connection with this
Agreement (whether orally or in writing, and whether or not such
information is expressly stated to be confidential or marked as such).

‘Dealer’s Territory’ means the area shaded in red in the map

annexed hereto.

‘Force Majeure’ means, in relation to either party, any circumstances

beyond the reasonable control of that party (including, without
limitation, any strike, lock-out or other form of industrial action,
wrong, short or over carried shipments of the Company’s Products,
new policies, laws and regulations of the Government of Malaysia
relating to export or import).

‘Manufacturer’ means Mercedes Benz AG. Stuttgart, Germany.

2. APPOINTMENT OF DEALER

The Company hereby appoints the Dealer as its dealer for the sale of the
Company’s Products in the Dealer’s Territory, and the Dealer agrees to
act in that capacity, subject to the terms and conditions in this
Agreement PROVIDED ALWAYS that such appointment is without
prejudice to the Company’s right to appoint any other person, firm or
company in the Dealer’s Territory as dealer for the Company’s Products
in the Dealer’s Territory and to supply such person, firm or company any
of the Company’s Products during the continuance of this Agreement.

The Dealer hereby agrees with the Company that the Company shall
reserve the absolute right to re-define, vary and / or change the limits
and boundaries of the Dealer’s Territory PROVIDED ALWAYS THAT
notice in writing of such re-definition, variation and / or change must be
given to the Dealer at least 14 days before such re-definition, variation
and / or change can be put into effect.

The Dealer shall be entitled to describe itself as the Company’s

Authorized Dealer’ for the Company’s Products but shall not hold itself
out as the Company’s agent in all correspondence and dealings relating
directly or indirectly to the Company’s Products and the dealer shall keep
the Company indemnified against all claims losses damages or expenses
that may arise or be incurred by reason of the Dealer holding out as the
Company’s agent.

3. SUPPLY AND DELIVERY OF THE COMPANY’S PRODUCTS

The Dealer hereby agrees to obtain and purchase all its requirements for
the Company’s Products solely from the Company and shall not obtain
and purchase the Company’s Products or other such similar products
from any person, firm or company other than the Company without the
written permission from the Company.

Subject to Clause 3.3, Clause 3.4 below and the Company’s allocation
policy on the Company’s Products, which may be adopted / effected by
the Company from time to time, the Company shall supply the
Company’s Products to the Dealer in accordance with the Dealer’s orders
so long as the Company remains the holder of the said Franchise.

The parties hereby agree that the failure of the Company to supply and
deliver the Company’s Products in accordance with the Dealer’s orders
due to or on account of force majeure, the determination of the said
Franchise or short supply of the Company’s Products from the
Company’s assembly plant or other plants shall not render the Company
liable in damages costs expenses and claims to the Dealer or any other
person.

Subject to the said Franchise and all other subsequent franchising

agreement which may be entered into between the Company and the
Manufacturer, the Company shall not be under any obligation to
continue to supply all or any of the Company’s Products to the Dealer.

The Dealer hereby agrees that orders for the Company’s Products by the
Dealer shall first be made by placing tentative written orders (“said
Tentative Orders”) and such orders are to be received at the Company’s
premises at…. or at any other place or places as may be specified in
writing by the Company from time to time six (6) months before the date
of delivery.

The parties hereby agree that in the event that the Dealer shall place
final written orders (“said Final Orders”) for the Company’s Products,
such orders are to be received at the Company’s premises at …. or at any
other place or places as may be specified in writing by the Company from
time to time three (3) months before the date of delivery and the said
Final Orders, shall, subject to Clause 3.7 below, not be cancelled by the
Dealer.

In the event of any cancellation of the said Final Orders by the Dealer,
the Dealer shall be liable to indemnify the Company for all losses
damages or expenses that may arise or be incurred by reason of such
cancellation.
Each order, whether final or tentative, for the Company’s Products shall
constitute a separate contact of sale of the Company’s Products so
ordered by the Dealer, and any default by the Company in relation to any
one order shall not entitle the Dealer to treat this Agreement as
terminated.

The Dealer hereby agrees to place minimum final orders of the

Company’s Products as specified herein below with the Company in every
calendar year of this Agreement:-

a) Passenger cars -

b) Commercial vehicles -

PROVIDED ALWAYS THAT such minimum total may be subject to

annual review by the Company and the Dealer shall forthwith
company with the revised minimum total, if any, upon notification in
writing by the Company.

Subject to the minimum final orders as stated in Clause 3.9 above, the
Dealer hereby agrees to place orders for such models and make of the
Company’s Products in quantities as may be required by the Company.

Upon receipt and confirmation of the said Final Orders, the Company
shall as soon as is practicable inform the Dealer of the Company’s
estimated delivery date for the consignment. The company shall use all
reasonable endeavors to meet the delivery date, but time of delivery shall
not be of the essence and accordingly the Company shall have no liability
to the Dealer if, not withstanding such endeavors, there is any delay in
delivery.

The title of any consignment of the Company’s Products shall not pass to
the Dealer until the Company has received payment in full of the price
therefore and notwithstanding anything contained herein in this
Agreement, all Company’s Product wherein the title thereof has passed
are not refundable to the Company.

Whenever the Company’s Products are ready for delivery, the Company
shall forthwith inform the Dealer in writing (“Delivery Notice”) to take
delivery of the same at the Company’s Distribution Department at… or at
any other place or places as may be specified by the Company from time
to time and in the event that the Dealer fails to take delivery of the
Company’s Products within the time as stipulated in the Delivery Notice,
the Company shall be entitled to sell or dispose of the same by private
treaty or otherwise and at such price or prices as may be specified by the
Company in its absolute discretion and any loss suffered by the
Company as a result thereof shall be recoverable from the Dealer as debt
due from the Dealer to the Company.

The parties herein agree that all costs and expenses of transport and
insurance when taking delivery of the Company’s Products shall be solely
borne by the Dealer.

4. PRICE AND PAYMENT FOR THE COMPANY’S PRODUCTS

The purchase price of any of the Company’s Products shall be

determined entirely at the absolute discretion of the Company from time
to time and the Company shall not be bound by any of its previous price
structuring PROVIDED ALWAYS that the Dealer must be given notice in
writing of any change in the purchase price of any of the Company’s
Products before such change in price can be put into effect.

Unless otherwise agreed between the parties herein, all Company’s

Products to be supplied by the Company pursuant to this Agreement
shall be sold on a cash on delivery basis ad payment for the Company’s
Products shall be made in cash, by Banker’s Draft or Cashier’s Order or
any other modes of payment or arrangement for payment as may be
expressly approved in writing by the Company.

5. SELLING AND MARKETING OF THE COMPANY’S PRODUCTS

The dealer shall use its best endeavors to promote the sale of the
Company’s Products throughout the Dealer’s Territory and to satisfy
market demand there for.

The Dealer shall be entitled to promote and market the Company’s

Products in the Dealer’s Territory in such manner as to comply with the
Company’s policy on advertising and promotion in force from time to
time.

In connection with the promotion and marketing of the Company’s

Products the Dealer shall:-

a) make clear, in all dealings with customers and prospective

customers, that it is acting as dealer of the Company’s Products
and not as agent of the Company;

b) comply with clause 7 below;

 c) at its own costs and expense display in its showroom and office
such signboards or advertisements as may be recommended by the
Company or as may be supplied from time to time by the Company
in respect of the Company’s Products;

d) at its own costs and expenses use in relation to the Company’s

Products only such mode of advertising and advertising,
promotional and selling materials as are approved in writing by the
Company;

e) ensure that not less than one sixteenth per centum (0.06%) of the
Dealer’s annual turnover or such other amount as may be
determined by the Company, must be utilized towards the
promotion and marketing of the Company’s Products;

f) comply with all legal requirements from time to time in force

relating to the storage and sale of the Company’s Products;

g) provide the Company on a monthly basis with a report, in such

form as the Company may reasonably require, of sales of the
Company’s Products which it has made in the preceding month
and containing such other information as the company may
reasonably require;

h) from time to time consult with the Company’s authorized

representatives for the purpose of assessing the state of the market
in the / Dealer’s Territory and permit them to inspect any premises
(including the Dealer’s office and showroom) or documents used by
the Dealer in connection with the sale of the Company’s Products;
and

i) supply the Company within six (6) months from the end of each
financial year of the Dealer a certified true copy of the Dealer’s
detail accounts for its business operations for that particular
financial year.

The Dealer, its directors and subsidiaries shall not during the currency
of this Agreement deal or trade in any place within Malaysia, including
the Dealer’s Territory, either on its own account or as a partner with or
as an agent of any party or though a company or any indirect control or
otherwise be concerned or interest either directly or indirectly in any way
with regard to the importation sale hire or advertisement of any products
similar to or competing with or in the same class of merchandise as the
products of the Company or which might otherwise compete or interfere
with the sale of any of the Company’s Products.

The Dealer hereby agree to confine the promotion, sales and all other
acts and transactions related thereto in respect of the Company’s
Products to the Dealer’s Territory only and the Dealer shall not sell let or
hire the Company’s Products in any territory other than the Dealer’s
Territory and the Dealer shall not enter into any contract or agreement to
provide for the delivery of any of the Company’s Products to any places
outside the Dealer’s Territory.

PROVIDED ALWAYS THAT in the event that two or more dealers have
been appointed by the Company in respect of the same territory, then
the provisions of this Clause, Clauses 5.6 and 5.7 herein below shall
not be applicable to govern the rights and liabilities between dealers
within such territory.

In the event that the Dealer breaches Clause 5.5 above,

a) the Dealer shall be liable to pay either the Company or the

aggrieved party in the infringed territory a sum of money to be
determined by the company as territorial infringement penalty in
accordance with the guidelines to be issued by the Company from
time to time; and / or

b) the Company in its absolute discretion shall be entitled to

terminate forthwith this Agreement by giving the Dealer one (1)
month notice and this Agreement shall be deemed to terminated
after the expiry of such notice.

The parties herein agree that any disputes in relation to the

contravention of territorial restrictions between the Dealer and other
dealers of the Company’s Products shall be referred to the Company
whose decision on the matter shall be final and conclusive.

6. SUPPORT AND TRAINING

The Company shall from time to time provide the Dealer with such sales
leaflets, catalogues, brochures and up-to-date information concerning
the Company’s Products as the company may consider appropriate or as
the Dealer may reasonably require in order to assist the Dealer with the
sale of the Company’s Products in the Dealer’s Territory, and the
Company shall endeavor to answer as soon as practicable any technical
enquires concerning the Company’s Product which are made by the
Dealer or its customers.
7. CORPORATE IDENTITY OF THE MANUFACTURER

The Dealer hereby agrees at its own costs and expense:-

a) to construct and complete a showroom and office; or

b) if the Dealer already owns an existing showroom and office, to

ensure that such showroom and office; and

c) to take and implement all necessary actions and steps as may be

stipulated in writing by the Company to comply with the
Manufacturer’s Corporate Identity as may be issued by the
Manufacturer from time to time within such time as may be
stipulated in writing by the Company.

In the event of any non-compliance of Clause 7.1 above by the Dealer,

the Company shall give a notice in writing to the Dealer stating out in
express terms the requirements and specifications which have not been
complied with by the Dealer and until and unless the Dealer complies
with all the requirements and specifications to the reasonable
satisfaction of the Company within the time as stipulated in such notice,
the Company shall be entitled to immediately terminate this Agreement.

8. EXPANSION PROGRAMME

The Dealer hereby agrees with the Company that the Dealer shall
maintain a reserve fund for further expansion programs of its dealership
and such reserve fund shall be contributed yearly by the Dealer to the
amount of 10% of net profit (after tax but prior to the declaration of
dividends or transfer of reserves) of the Dealer.

9. AFTER SALES SERVICE

If the Dealer also maintains a service workshop at its premises, the

Dealer shall also abide by the terms and conditions as stated in Schedule
A which is annexed to this agreement.

10. STOCKS OF SPARE PARTS AND ACCESSORIES

The Dealer hereby agrees to keep and maintain spare parts of the
Company’s Products in accordance to the terms and conditions as laid
out and stated in Schedule C which is annexed to this Agreement.
The Dealer further agrees to obtain and purchase all the spare parts of
the Company’s Products solely from the Company and shall not obtain
and purchase such spare parts or other similar products (including all
imitation of spare parts of the Company’s Products) from any person,
firm or company other than the Company without the written permission
of the Company.

11. CONFIDENTIALITY

The Dealer, its agents and employees shall at all times during the
continuance of this Agreement and after its termination:-

a) use the best endeavors to keep all Confidential Information,

confidential and accordingly not to disclose any Confidential
Information to any other person; and

b) not use any Confidential Information for any purpose other than
the performance of the obligations under this Agreement.

The Dealer agrees that the Dealer will not at any time communicate
directly or participate in any form of direct correspondence with the
Manufacturer in regard to this Agreement and to matters pertaining to
the sale and purchase of the Company’s Products.

12. DUTY OF DISCLOSURE

The Dealer hereby agrees to inform the Company in writing of the change
in the shareholdings of the Dealer, change in the constitution of the
board of directors of the Dealer, change in structure of its senior
management, change in the paid-up share capital of the Dealer and
change of address of the Dealer within fourteen (14) days from such
change.

13. DURATION AND TERMINATION

This Agreement shall come into force from the date of this Agreement
and shall continue in force for a period of ……… years and thereafter
unless or until terminated earlier pursuant to this Agreement, shall lapse
at the end of the period of ………. years from the date of this Agreement:-

The Company shall be entitled to terminate this Agreement:-

a) as provided in Clause 5.6 and Clause 7.2 above;

 b) by giving not less than thirty (30) days written notice to the Dealer
if there is at any time a material change in the management,
ownership or control of the Dealer or if a manager and / or receiver
has been appointed over the Dealer or if the Dealer goes into
liquidation, whether voluntary or otherwise; or

c) if the Dealer commits any breach of any of the provisions of this

Agreement and, in the case of breach capable or remedy, fails to
remedy the same within thirty (30) days after receipt of a written
notice.

14. WAIVER AND INDULGENCE

No failure or delay on the part of the Company in exercising nor any

failure to exercise any right power privilege or remedy accruing to the
Company under this Agreement upon any default shall impair any such
right power privilege or remedy or be construed as a waiver thereof or
any acquiescence to such defaults nor shall any action of the Company
of any default or any acquiescence to any such default affect or impair
any right power privilege or remedy of the Company in respect of any
other or subsequent default.

15. ASSIGNMENT

The parties herein agree that the Dealer shall not assign, whether
absolutely or by way of charge only, or enter into arrangement which
have the effect of assigning some or all of the rights, interests, benefits,
liabilities of the Dealer under this Agreement and any such assignment
or arrangement shall be invalid and of no effect.

16. PREVIOUS AGREEMENT

The parties irrevocably agree that all previous terms and conditions
agreed between the parties hereto if any, shall lapse and be substituted
by the terms and conditions contained in this Agreement.

17. TIME

Time whenever mentioned in this Agreement shall be of the essence

unless expressly provided.

18. NOTICES

Any notice, request or demand required to be served by either party

hereto on the other party under any of the provision hereto shall be in
writing and shall be deemed to be sufficiently served if it is sent by
registered post to the other party at the address mentioned herein or
such other address as may be notified in writing by such other party and
in such a case, it shall be deemed (whether it is actually received or not)
to have been received at the time when such registered letter would be in
the ordinary course of post be delivered.

19. BINDING EFFECT

This Agreement shall be binding upon the heirs, personal

representatives, liquidators, receivers and / or managers, Official
Assignees, all other successors-in-title and assigns of the parties hereto.

SCHEDULE A

(requirements and specifications on showroom and office)