Exclusive Supply Agreement

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									This Exclusive Supply Agreement is an agreement between a supplier of products and a
distributor. This document is drafted from the distributor company's perspective
whereby the distributor appoints the supplier as the exclusive supplier of products to the
company's territory within a specified territory. The agreement provides standard
provisions, such as how the product is ordered and supplied, the method of delivery,
method of payment, supplier and distributor warranties, and a provision on the title and
risk of loss. This agreement can be modified to fit the needs of the drafting parties.
                          EXCLUSIVE SUPPLY AGREEMENT

         This Exclusive Supply Agreement (this “Agreement”) is hereby made and entered into
on this _____ day of ___________________, 20__ (the “Effective Date”) by and between
______________________ having a place of business at _________________________
(“Supplier”) and ___________________ having a place of business at ________________
(“Company”) (collectively, the “Parties” and individually, a or the “Party”).


         WHEREAS, Supplier is in the business of selling ____________________________
(the “Products”) as more particularly described in Schedule “A” attached hereto; and

          WHEREAS, Company desires to purchase from Supplier all Products listed in
Schedule “A” and Supplier desires to provide same to Company on the terms and conditions set
forth herein.

         NOW, THEREFORE, based upon the foregoing, and in consideration of the mutual
promises set forth herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged Company and Supplier hereby agree as follows,


                                               GRANT OF RIGHTS

1.1      Appointment

       Company hereby appoints Supplier as the exclusive supplier of the Products to
Company’s customers (“Customers”) in _____________________ (the “Territory”). Company
and Supplier agree that so long as Company’s agreements with Customers remain in effect,
Company shall purchase exclusively from Supplier, in accordance with the terms described
herein. The terms and conditions set forth herein shall apply to the purchase order and other
documents of purchase (collectively, the “Purchase Orders”) that Company may place with
Supplier for Products, all order acknowledgments (“Order Acknowledgements”), and other
documents issued by Supplier to Company with respect to the purchase of Products.

                                         OFFER AND ACCEPTANCE

2.1         Issuance of Purchase Order

         A Purchase Order, in the format attached hereto as Schedule “B,” shall be deemed an
offer to purchase Products on the terms and conditions set forth in said Purchase Order.
Company may rescind, withdraw, or revoke such offer to purchase at any time prior to

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acceptance by Supplier. Supplier may accept Company’s offer by issuing an Order
Acknowledgment to Company within ___________ (__) days of its receipt of the Purchase
Order. Supplier shall promptly supply such Products to Company on the terms and conditions
described in the Purchase Order. Prior to delivery, Supplier reserves the right to make
substitutions, modifications, and improvements to the Products, provided that such substitution,
modification, or improvements shall not diminish or materially affect the performance of the
Products as they were originally demonstrated to and agreed upon by Company and Supplier.
Any modifications or additional terms and conditions included in the Order Acknowledgment
shall not become effective unless and until Company notifies Supplier in writing that the
proposed modifications and/or additions are acceptable.

2.2         Delays or Non-delivery

          If, after Supplier has transmitted an Order Acknowledgment to Company, Supplier
finds that the Products cannot be delivered within the term specified in the Purchase Order,
Supplier will promptly notify Company of the revised delivery date. Company shall have the
option (in its sole discretion) of either canceling the Purchase Order without obligation for
payment or of accepting the revised delivery date. In the event of delays in delivery due to a
cause constituting Force Majeure (as described below), the date of delivery shall be extended for
a period equal to the time lost by reason of such occurrence; provided, however, Company may,
at its option, cancel the Purchase Order, and payment of any appropriate cancellation charges
will be negotiated between the Parties. In the event a delay results from Company’s fault or
negligence, Supplier will also be entitled to an equitable adjustment calculated on a time and
materials basis which shall be mutually agreed upon by both Parties.

                                              PRICES AND TAXES

3.1.        Purchase Price

         The purchase price for the Products shall be the retail price plus _____ percent (__%).
“Retail Price” shall mean Supplier’s direct retail price listing in effect at the time Company
issues a Purchase Order, or as otherwise agreed to by the Parties. The Retail Prices of the
Products are set forth in Schedule “A.”

3.2.        Prices Exclusive of Taxes

          All prices are exclusive of sales, use, excise, and other taxes, duties, or charges. Unless
Company provides evidence of tax exempt status, Company shall pay to, or upon receipt of
invoice from Supplier shall reimburse, Supplier for all such taxes or charges levied or imposed
on Company or otherwise required to be collected by Supplier, resulting from this transaction or
any part thereof.

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3.3         FOB and Insurance

         All prices are Free on Board (“FOB”) unless instructed otherwise. Supplier may
arrange for insurance and standard commercial shipping, the costs of which will be invoiced to

                                PAYMENT, PACKING, AND INVOICING

4.1         Payment

          Unless otherwise agreed, invoice payment terms for all purchases made under this
Agreement shall be net ___ (__) calendar days on a per order basis. All payments shall be made
to Supplier no later than the agreed number of days from date of invoice. Late payments shall
result in the assessment of a late charge equal to _______ percent (__%) per month on any
outstanding balance, or the maximum amount of interest chargeable by law, whichever is less.

4.2      Packing and Invoicing

       Supplier shall include with each shipment an itemized packing list, clearly indicating
Company’s Purchase Order number, quantity shipped, Company’s part number, and the number
of packages included in the shipment. Each package must be numbered and labeled with
Company’s Purchase Order number. Invoices, shipping notices, and bills of lading must include
the Purchase Order number and Product number(s) and shall be mailed within ___ (__) business
day after shipment, unless Company specifies a different time, to the address specified in the
Purchase Order. Supplier’s name must not appear anywhere on or in the shipment without
Company’s prior written permission.


5.1    Supplier expressly warrants and guarantees that the goods, Products, and services
covered by each Purchase Order will:

         A.        Be delivered free from any claim of any third party by way of infringement or the

        B.     Conform to the specifications, drawings, sample, or other descriptions furnished
or specified by Company;

      C.     Conform to oral or written representations, affirmations, promises, descriptions,
drawings, models, or samples furnished by Supplier to Company or to its Customers;

         D.        Be merchantable, of good material and workmanship, and free from defect; and

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       E.      Be fit for their intended use. These warranties are in addition to all other express
or implied warranties, all of which run to Company, its successors, assigns, agents, and
Customers, and users of the warranted Product or service. No warranty hereunder may be
waived, excluded, or modified by course of dealing, course of performance, usage of trade, or
pursuant to any additional terms and conditions contained in any Purchase Order or in any Order
Acknowledgment, confirmation, acceptance form, or other agreement prepared and delivered by

5.2       Supplier’s sole responsibility to Company with respect to any Products or components
and parts manufactured by a third party and incorporated into the Products shall be to pass
through to Company such original Product manufacturer’s available Product warranty. The
warranty provided by said third parties does not cover (A) any item of the Products that has been
altered or modified including any change, addition, or improvement or (B) any damage, defect,
malfunction, or service failure caused by:

                 i.      Company’s failure to follow Supplier’s or the Product
manufacturer’s environmental, installation, operation, or maintenance specifications or

                   ii.     Modifications, alterations, or repairs made other than by Supplier or
original Products manufacturers;

                    iii.      Company’s mishandling, abuse, misuse, negligence, or improper
storage, servicing, or operation of the Products (including without limitation use of Products that
is not designed or suitable for use in conjunction with the Products purchased from Supplier);

                   iv.       Power failures, surges, fire, flood, accident, actions of third parties,
or other like events outside Supplier’s control. In the event repairs necessitated during the
warranty period are made by Supplier, Company shall pay Supplier standard charges for time
and materials, together with all shipping and handling charges arising from such repairs.


                                DELIVERY, TITLE, AND RISK OF LOSS

6.1    Supplier shall deliver Products to Company at the address, in the quantities, and on the
dates specified in the Purchase Order. On partial or periodic shipments, a ___ percent (__%)
over or under shipment shall be permitted. However, quantities in excess of the total order will
be returned at Supplier’s expense. Company requires, and Supplier shall meet, 100 percent
(100%) on-time deliveries. Company and/or its Customers may reject any deliveries made in
advance of or on any date after the date of delivery specified in the Purchase Order. Supplier

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will not charge Company or its Customers for any costs, expenses, or other amounts resulting
from the restocking, packing, crating, freight, express, or cartage of returned Products or
packages. Each package delivered must be individually numbered as well as labeled with
Company’s Purchase Order number and/or contract number. Except as otherwise clearly stated
on a Purchase Order, all Products must be shipped prepaid with costs of transportation included
in Supplier’s invoice. Company reserves the right to select Supplier’s method of shipment and
the carrier to be used by Supplier for shipment of the Products to Company’s Customers.

6.2      Title and Risk of Loss

        Unless the Purchase Order specifies otherwise, title to and risk of loss for all Products
delivered hereunder shall pass to Company’s Customer at the FOB destination (i.e. customer’s
“ship to” address contained in the Purchase Order), notwithstanding any contrary term in
Supplier’s documents. Risk of loss for nonconforming or rejected Products shall remain with

6.3      Inspection

       All Products shall be subject to inspection by Company and/or its Customers. Payment
for any Products shall not constitute an acceptance thereof or a waiver of inspection rights, and
such Products shall remain subject to the inspection rights of Company and/or its Customers.

6.4      Rejection and Return of Products

        Company and its Customers shall have the right to reject and return Products, in whole or
in part and at any time, if any Products are found to be defective or not in accordance with
specifications, designated quantities, or any other term of the Purchase Order. Supplier shall
bear all fees, costs, and expenses associated with the storage, maintenance, and transportation of
rejected Products. If at any time after inspection, a defect not normally discoverable by visual
inspection becomes apparent, Company and/or its Customers may reject the defective Products.
Rejected Products shall not be replaced or cured except upon receipt by Supplier of a
replacement Purchase Order or purchase schedule from Company, which Company may deliver
or withhold in its sole discretion. Supplier shall promptly reimburse Company and/or its
Customers for the cost of inspecting rejected Products.


7.1         Training

          Supplier will provide documents, manuals, and visual aids to be utilized in the required
training of Company’s employees in use of Products purchased under this Agreement.

7.2      __________________________________ [Instruction: Add details as to how
training and support services shall be undertaken]

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                                                FORCE MAJEURE

          Supplier shall be excused from performance under the Purchase Order and not be liable
to Company for delay in performance attributable in whole or in part to any cause beyond its
reasonable control, including but not limited to, action or inaction of any government, war, civil
disturbance, insurrection, sabotage, act of public enemy, labor strike, difficulty or dispute,
unpredictable failure or delay in delivery by Supplier’s suppliers or subcontractors,
transportation difficulties, shortage of energy, materials, accident, fire, flood, storm, or other act
of God, or Company fault or negligence. In the event of an excusable delay, Supplier shall make
reasonable efforts to notify Company of the nature and extent of such a delay and Supplier shall
be entitled to a reasonable schedule extension.


        As between Supplier and Company, Supplier shall own all right, title, and interest in the
Product Trademarks (“Trademarks”). Company agrees that it will not challenge the title of any
rights of Supplier in and to the Trademarks or make any claim or take any action adverse to
Supplier’s rights thereto. Both Parties agree that they will not challenge the validity of this
Agreement. Company further agrees that all use by Company or its agents of the Trademarks or
domain name shall inure to the benefit of Supplier. Further (A) Company shall not use, display,
or relate in any manner, either directly or indirectly, the Trademark in connection with any
Products and (B) Company agrees that during the term of this Agreement and after its
termination, however occurring, that Company shall not: (i) use the Trademark or any other mark
confusingly similar thereto in connection with any Products that would be likely to cause
confusion between the Parties or which would dilute the Trademark; (ii) apply for or seek
registration anywhere in the world, at any time, for the Trademark or any other mark confusingly
similar thereto; or (iii) commit or do any act that might prejudice or adversely affect the validity
of the Trademark, Supplier’s ownership thereof, or dilute or diminish the value of the Trademark
to Supplier.


        Before selling or shipping any Products, Company shall obtain, from a reputable
insurance carrier acceptable to Supplier, liability insurance in the minimum amount of
____________ dollars ($__) (combined single limit) in order to protect and insure Supplier and
Company against any claims or liabilities with which it or they may be charged because of
personal or property damage or injuries suffered by any person or entity, resulting from the
Products or the use or sale thereof, whether during the term of this Agreement or thereafter.
Supplier shall be named in the policy of such insurance as a named insured, and such policy shall
provide that the insurance cannot be cancelled without the insurer giving Supplier written notice
thereof at least ___ (__) days prior to the effective date of the cancellation and that the insurance
covers the contractual liability of Company to Supplier under the provisions of this Agreement.

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       Within ____ (__) days after the date this Agreement is executed and on the first day of
each year thereafter, Company shall deliver to Supplier a certificate of insurance evidencing that
such insurance is in full force and effect and that it cannot be canceled without the insurer giving
Supplier written notice thereof at least ____ (__) days prior to the effective date of the
cancellation. The insurance described herein is understood to be primary, and is not subject to
contribution by any other insurance that may be available to Supplier.


        Supplier shall continuously maintain appropriate insurance for protection against the
claims of all persons or entities in an amount of not less than ___________ dollars ($__) per
occurrence covering injury or death to one or more persons and not less than ___________
dollars ($__) per occurrence covering property damage, insuring Indemnities against all liability
that may accrue against them or any of them by reason of the sale by Company to third parties of
Products produced or partially produced by Supplier or as to which Supplier provided services of
any nature. The insurance shall be placed with insurance carriers satisfactory to Company and
shall not be subject to cancellation or any material change except after ____ (__) days’ prior
written notice to Company. A certificate of insurance reflecting full compliance with these
requirements, including the naming of Company as an additional insured, shall be furnished
annually to Company, and no change in or cancellation of insurance shall be made by Supplier
without written notice to Company.


11.1     Supplier

        Supplier shall be liable for and shall indemnify, defend, and hold harmless each of
Company, its parent company, and its subsidiaries and affiliates, and their respective directors,
officers, employees, resellers, distributors, Customers, and agents from and against all reasonable
costs (including, without limitation, reasonable attorney fees) incurred in connection with any
claim, suit, or other proceeding made, threatened, or initiated by a third party: (A) under
intellectual property laws, product descriptions, trade practices law, or product liability laws of
any country or (B) with respect to any product recalls or problems that arise therefrom.

11.2     Company

        Company shall be liable for and shall indemnify, defend, and hold harmless Supplier and
its directors, officers, employees, and agents from and against all reasonable costs (including,
without limitation, reasonable attorney fees) in connection with any claim, suit, or other
proceeding made, threatened, or initiated by a third party under intellectual property laws
resulting solely from Company’s modifications of or additions to the Products, or resulting from
any act, omission, negligence or performance under this Agreement by Company, its
sublicensees, or agents.

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                                     UNDERTAKINGS BY COMPANY

12.1 Company may use its own trademarks, trade names, logos, advertising slogans, and other
related marks to identify Company with respect to its distribution of Products (collectively,
“Company Marks”) provided such other marks are not confusingly similar to the Trademark.

12.2     Trademark Infringement

       Company shall promptly bring to the attention of Supplier any infringement or misuse of
the Trademark that comes to Company’s attention.

12.3     Compliance with Laws

       Company shall comply with all laws and regulations relating or pertaining to the
marketing of the Products.

12.4     Company shall not create any expenses chargeable to Supplier.

12.5 Company shall not, directly or indirectly, hold Supplier out as a sponsor or endorser of
Company’s business or suggest or imply any connection or relationship between Company and
Supplier in any manner whatsoever.

                                         TERM AND TERMINATION

        This Agreement shall commence on the Effective Date and shall continue in full force
and effect, unless and until terminated as follows: (A) this Agreement may be terminated by
either Party for any reason without cause upon ____ (__) days written notice to the other Party;
(B) Supplier shall have the right to terminate this Agreement immediately upon written notice to
Company if Company shall fail to comply with or perform any term or condition of this
Agreement and if such failure shall continue for a period of ____ (__) days after written notice of
such failure is sent by Supplier to Company; (C) this Agreement shall terminate automatically if
Company files a petition in bankruptcy, is adjudicated bankrupt, or files a petition or otherwise
seeks relief under or pursuant to any bankruptcy, insolvency, or reorganization statute or
proceeding, or if a petition in bankruptcy is filed against it or it becomes insolvent or makes an
assignment for the benefit of its creditors, or a custodian, receiver or trustee is appointed for all
or a substantial portion of its business or assets, provided such circumstances are not cured
within ____ (__) days of the commencement of the above stated event; no assignment for the
benefit of creditors, custodian, receiver, trustee in bankruptcy, sheriff or any other officer of the
court or official charged with taking over custody of Company’s assets or business shall include
any right to continue this Agreement if this Agreement terminates pursuant to this paragraph and
nothing contained herein shall be deemed to preclude or impair any rights Supplier may have as
a creditor in any bankruptcy proceeding; and (D) upon termination of this Agreement for any
reason, all rights granted by Supplier to Company, whether explicit or implicit, shall terminate
and Company shall immediately cease and desist from any sale of the Products.

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14.1 During the Term, and for a period of ____ (__) years thereafter, each Party shall hold in
trust and confidence for the other Party all Confidential Information disclosed to the receiving
Party at any time during the Term and neither Party shall disclose such Confidential Information
to any third party except as expressly permitted by this Agreement. For purposes of this
Agreement, a Party’s attorneys and accountants shall not be considered third parties.
“Confidential Information” means any information that is marked or identified as “Confidential”
prior to its disclosure or, for any information that is not so marked, or is disclosed orally or
visually, is identified as confidential within ____ (__) days after such disclosure.

14.2     Exceptions

        Confidential Information shall not include any information disclosed by a Party
hereunder that: (A) is already known to the receiving Party prior to the date of disclosure; (B) is
rightfully received by the receiving Party in the routine course of business from a third party; (C)
is approved for release or publication by written authorization of the disclosing Party; (D) is
independently developed by a Party through no breach of this Agreement; or (E) has become
generally available to the public through no act of the receiving Party.

14.3     Limitations on Use; Return of Information

        All Confidential Information disclosed to a Party hereunder is, and shall remain, the sole
property of the disclosing Party. Upon termination or expiration of this Agreement each Party
shall cease use of all Confidential Information of the other Party, and shall promptly destroy or
return to the disclosing Party all such Confidential Information upon written request.

                                        LIMITATION OF LIABILITY

          In no event shall either Party be liable to the other Party or any other person for any
indirect, punitive (to the fullest extent permitted by applicable law), special, consequential, or
incidental damages, however caused on any theory of liability arising out of this Agreement, and
whether or not such Party has been advised of the possibility of such damage, unless specifically
noted herein. These limitations shall apply notwithstanding any failure of essential purpose of
any limited remedy provided herein.


       In addition to any damages that may be awarded as a result of a breach of this Agreement
by Company, Supplier shall be entitled to injunctive relief. Company acknowledges that a
remedy at law for any breach or threatened breach of this Agreement may be inadequate, and
that accordingly, Supplier shall be entitled to seek injunctive relief in addition to any other
remedy it may have. Neither Supplier’s right to injunctive relief nor any other provision of this

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Agreement shall be construed as prohibiting Supplier from pursuing any other legal or equitable
remedy available to it for such breach or threatened breach, including the recovery of damages
and attorney fees.

                             GOVERNING LAW/DISPUTE RESOLUTION

          This Agreement shall be governed by and interpreted in accordance with the laws of
the State of ________ without regard to conflicts of law principles and any proceedings
pertaining to this Agreement shall be commenced and maintained in the State of __________,
County of ______. Each of the Parties in any suit, action, or proceeding arising out of or relating
to this Agreement, irrevocably (A) submits to the jurisdiction of the state courts of the State of
_______ and the United States District Court for the district of ______________ over any suit,
action, or proceeding arising out of or relating to this Agreement, (B) waives to the fullest extent
enforceable under applicable law any objection which it may now or hereafter have to the above
venue of any such suit, action or proceeding and any claim that any such suit, action or
proceeding brought in such Court has been brought in an inconvenient forum, (C) waives, to the
fullest extent enforceable under applicable law, any objection it may now or hereafter have to the
above-mentioned Court having jurisdiction over the Parties hereto and the subject matter of this
Agreement, and (D) acknowledges that a final judgment in any such suit, action, or proceeding
brought in such Court, after all appropriate appeals, shall be conclusive and binding upon it. In
any suit or arbitration regarding the Agreement, the prevailing party shall be entitled to
reasonable attorney fees and costs.


18.1        Entire Agreement

         This Agreement and the attached Schedules constitute the entire agreement between
Company and Supplier with respect to the subject matter hereof and there are no representations,
understandings, or agreements that are not fully expressed in this Agreement.

18.2        Amendments

          No amendment, change, waiver, or discharge hereof shall be valid unless in writing and
signed by the Party against whom such amendment, change, waiver, or discharge is sought to be

18.3        Notice

          Any notice provided pursuant to this Agreement, if specified to be in writing, shall be
made in writing and shall be deemed given: (A) if by hand delivery, upon receipt thereof, (B) if
by mail, ____ (__) business days after deposit in the United States mails, postage prepaid,
certified mail, return receipt requested, (C) if by facsimile transmission, upon electronic
confirmation thereof, (D) if by electronic mail (e-mail), upon electronic confirmation thereof, or

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(E) if by next day delivery service, upon such delivery. All notices shall be addressed as follows
(or such other address as either Party may in the future specify in writing to the other):

In the case of Company to:

Fax: (___)

In the case of Supplier to:

Fax: (___)

18.4        Waiver

         The wavier or failure of either Party to exercise any right in any respect provided for
herein shall not be deemed a waiver of any further right hereunder.

18.5        Severability

         If any section, portion, provision, paragraph, clause, sentence, language, or word of this
Agreement is determined to be invalid, illegal, void, voidable, or unenforceable for any reason
whatsoever, this Agreement shall be read as if it did not contain such section, portion, provision,
paragraph, clause, sentence, language, or word; it is to that extent to be deemed omitted and the
balance of this Agreement shall remain enforceable.

18.6        Counterparts

          This Agreement may be executed in several counterparts, including by means of
facsimile signatures, all of which taken together shall constitute one and the same agreement and
the entire agreement between the Parties hereto.

18.7        Headings

          The section headings used herein are for reference and convenience only and shall not
enter into the interpretation hereof.

       IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
above written.


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                                                SCHEDULE “A”
                                    PRODUCTS AND RETAIL PRICES

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                                                SCHEDULE “B”
                                              PURCHASE ORDERS

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