MEMORANDUM OF UNDERSTANDING TEMPLATE

A memorandum of understanding doesn’t typically form any legal obligations for the parties involved. It is like a formalized handshake or a method of documenting good faith negotiations or certain agreements expected in an agreement currently being worked out by the parties. This memorandum of understanding assumes a future reseller or product distribution agreement.

This Memorandum of Understanding (this “Memorandum of Understanding” or this “MOU”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”), by and between [RESELLER] (“Reseller”), with an address at [RESELLER ADDRESS], and [COMPANY] (“Company”), with an address at [COMPANY ADDRESS]. This Memorandum of Understanding sets forth the understanding of the parties related to Company’s appointment of Reseller, and this Memorandum of Understanding shall expire upon the earlier of [NUMBER OF MONTHS] months following the Effective Date, unless it is extended by written modification, or a written successor agreement pertaining to the subject matter of this MOU.

WHEREAS, in connection with the establishment of a business relationship between the parties whereby Reseller would sell Company products in [TERRITORY] (the “Territory”), and the parties negotiation of a reseller agreement, the parties wish to set forth their current understanding and certain agreements made to date with respect to such relationship.

BACKGROUND. Company is the owner of the following products (the “Products”), which it desires for Reseller to resell in the Territory:

You can describe the products in this space or refer to a product catalog, if you have one.

PURPOSE. The purpose of this MOU is to set forth certain understandings of the parties in relation to the terms and conditions to be agreed between Company and Reseller in a reseller agreement.

UNDERSTANDINGS. The parties set forth their understandings under this MOU with respect to the reseller agreement as follows:

It goes without saying that the below terms assume a specific arrangement which in many cases may be different from your specific arrangement. Tailor as appropriate.

Company will ensure that a sufficient number of its resources have been assigned to support Reseller in any related services.
Company intends to produce and sell the Products to existing resellers, including Reseller, without any change, modification, or alteration for a term not to exceed the first twelve (12) months.
Following the initial twelve (12) months, Company will endeavor to further develop, improve and enhance the Products over time.
With respect to any reseller agreement, the following minimum terms will apply:
To provide a neutral, internationally recognized governing law and jurisdiction, the reseller agreement will be under the laws of the State of [STATE] in the United States and the parties will submit to exclusive jurisdiction and venue in [COUNTY], [STATE].
The term of the agreement will be for a minimum term of two (2) years, without any termination for convenience on the part of Company, and will automatically renew for additional one (1) year periods. The agreement may only be terminated by Company at the end of the initial term or any renewal term upon ninety (90) days prior written notice.
Reseller will be granted exclusive reseller rights in the Territory for the term of the agreement.
Exclusivity in the Territory will be contingent on Reseller maintaining a minimum sales volume of 15 units in the first year and 15 units in subsequent years, subject to Company fulfilling any obligations under the agreement that may impact Reseller’s ability to achieve these sales volumes.
Reseller will continue to provide first and second level customer support on all matters pertaining to the Products.
Incremental support by Company, if requested by Reseller, will be charged at a design services rate of [SERVICES RATE] per hour.
All prices between Company and Reseller will be in US Dollars (USD) and Company will sell the Products to Reseller at the following prices:
In order for Reseller to maintain a healthy margin and to be afforded adequate flexibility to price the Products for customers in the Territory competitively, the aforementioned prices will not be subject to change for any reason within the first 12 months of the Agreement.
Company is committed to exercising best efforts to implement design changes and continuous improvement initiatives in order to maintain competitiveness in cost and quality. The prices above include any such changes to the Products.
Throughout the term of the agreement plus 12 months following expiration or termination of the agreement, Company and any associated entity or individual will not (without Reseller consent) directly or indirectly initiate, solicit, negotiate, contract or enter into any business transactions, agreements or undertakings with any third party customer identified or introduced by Reseller.
Customer requested integration services will be treated as custom design services, and will be rendered at the above Company rate.
Company agrees that lead times for delivery of Products will be [DELIVERY TIMEFRAME]. If Company does not meet these lead times, Company and/or Reseller will have the right to procure similar products from other sources in order to meet contractual obligations Reseller has with its customers.
Company will provide Reseller with one (1) demonstration unit at no cost, to be used for customer presentations, demos, and other such marketing activities. The unit will remain the property of Company, but will be available for the term of the agreement, for exclusive use by Reseller.

IN WITNESS WHEREOF, by their signatures below, the parties have caused this Memorandum of Understanding to be executed and effective as of the Effective Date.

[COMPANY]

___________________________ ______________

[NAME], [TITLE] DATE

[RESELLER]

___________________________ ______________

[NAME], [TITLE] DATE