Agreement Between Factor And Principal

1. Introduction. Agreement made [date] between [name], with offices at [address] (Principal), and [name], with offices at [address] (Factor).

2. Appointment of Factor. Principal appoints Factor as a factor for the sale and distribution of [goods], manufactured by Principal, and for the distribution of any other products that Principal may manufacture in the future. Factor accepts the appointment and will act in accordance with the provisions of this Agreement.

3. Territory Covered by Agreement-Exclusivity. Factor shall sell and distribute Principal's products only in the following territory: [list of locations] (the Territory). Distribution and sale of Principal's products in the Territory shall be exclusive to Factor during the term of this Agreement. Principal shall not authorize or permit others, whether Principal's employees or agents, to sell or distribute Principal's products in the Territory.

[Alternative Paragraph]

3. Territory Covered by Agreement--Nonexclusivity. Factor shall sell and distribute Principal's products only in the following territory: [list of locations] (the Territory). Distribution and sale of Principal's products in the Territory shall not be exclusive to Factor, and Principal may authorize others, whether employees or agents, to sell or distribute Principal's products in the Territory.

4. Term of This Agreement. The term of this Agreement shall be [number] years starting on [date] and ending on midnight [date], unless extended by Factor in accordance with Paragraph 14 of this Agreement.

5. Factor Determines Quantity of Goods to Be Consigned. Principal shall consign to Factor Principal's products in the quantities designated by Factor from time to time.

[Alternative Paragraph]

5. Principal Determines Quantity of Goods to Be Consigned. Principal shall consign to Factor its products in the quantities determined from time to time by Principal.

6. Title to Goods to Be in Principal. The title to all products consigned to Factor by Principal shall be in Principal and shall remain with Principal even though the products have been delivered to Factor or are in Factor's possession or control. Title to the products shall not be transferred from Principal to another except to purchasers obtained by Factor.

7. Factor's Lien on Goods. Factor has loaned and advanced funds to Principal, and it is anticipated that other loans and advances will be made by Factor to Principal during the term of this Agreement and any extensions of the term. These loans and advances have been and will be made in accordance with separate agreements between Principal and Factor. Factor shall have a lien upon all of Principal's products consigned to it by Principal, whether the products are in Factor's possession or control or not, and upon any account receivable or the proceeds resulting from a sale of the consigned products. Factor's lien shall secure the advances and loans made by it to Principal prior to the beginning of the term of this Agreement or during the term of this Agreement and any extension of the term, as well as any interest due on the advances and loans and any commissions earned by Factor pursuant to the provisions of this Agreement.

8. Factor to Use Best Efforts to Sell Principal's Products. Factor shall use Factor's best efforts to sell Principal's products to retail outlets. Factor shall maintain a selling office in the Territory and shall employ a sales staff together with the necessary clerical support staff to maximize sales to the fullest extent possible.

9. Factor to Maintain Insurance. Whenever Principal's products are in Factor's possession or control, Factor shall store them in an appropriate location and shall keep them insured against loss resulting from fire, theft, or other casualty in an amount equal to at least ---------- percent (----------%) of the wholesale list price of the products, all at Factor's sole cost and expense. Principal shall be named as the beneficiary of the policies of insurance purchased by Factor, and Factor shall promptly deliver the policies to Principal.

10. Factor May Bill for Sales and Collect Proceeds. Whenever Factor sells any of Principal's products, Factor shall deliver an invoice for the sales price to the purchaser and give Principal a copy of the invoice. The invoice may be in Principal's or Factor's name, as Factor chooses. However, if the invoice is in Factor's name, there shall appear on it a statement that the merchandise billed was consigned to the Factor by Principal and that the sales price belongs to Principal but is to be paid to Factor as Principal's representative.

11. Factor's Accounting. No later than the [number] day of each month, Factor will submit to Principal a statement for the previous calendar month showing:

a. Consignments Received. All consignments of Principal's products received by Factor during the month;

b. Sales. The total sales made by Factor for Principal's account during that month, together with a breakdown of these sales by product, purchaser, and selling price;

c. Collections. The total amounts collected from purchasers during the month together with a breakdown of these collections by purchaser and amount;

d. Merchandise on Hand. An inventory of Principal's products in Factor's possession or control at the end of the month; and

e. Accounts Receivable. A schedule of unpaid accounts receivable at the end of the month by purchaser and amount, with amounts due for more than [number] days clearly indicated.

12. Factor's Compensation. As full compensation for Factor's services, Principal shall pay to Factor ---------- percent (----------%) of the net proceeds of all sales made by Factor for Principal. Net proceeds are the amounts invoiced to purchasers, less sales discounts, sales and other taxes charged, and delivery and insurance charges included in the invoice amount. Factor's compensation for any sale shall be due only when the net proceeds of that sale are actually reduced to cash. If only part of the net proceeds of any sale is reduced to cash, Factor's compensation shall be paid only as to that part.

13. Remittances to Principal. Together with the statement provided for in Paragraph 11, Factor shall remit to Principal an amount equal to all sums collected from purchasers during the month for which the accounting is rendered, less all compensation due to Factor in accordance with Paragraph 12 and any advances and loans made to Principal, with interest, that are due to Factor from the amounts collected in accordance with any agreements between Principal and Factor.

14. Factor's Option to Extend Agreement. Factor may extend this Agreement for a period of [number] years beyond the expiration date set out in Paragraph 4. Factor shall exercise this option by written notice, addressed to Principal at the address to which Factor's monthly accountings are delivered, and mailed by certified or registered mail posted no later than [date].

15. Further Extension of Agreement. Provided Factor has properly exercised the option to extend this Agreement in accordance with Paragraph 14, Factor may extend this Agreement for a further period of [number] years beyond the termination of the first extended term. Factor shall exercise this option by written notice addressed to Principal at the address to which Factor's monthly accountings are delivered, and mailed by certified or registered mail posted no later than [number] months before the expiration of the first extended term.

[signature]

Principal

[signature]

Factor

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