An exclusive supply clause legally binds a supplier to provide goods or services solely to one buyer, prohibiting the supplier from selling to other parties. This arrangement often ensures consistent supply for the buyer, while potentially limiting the supplier's market reach.
The Company notes the Staff’s comment and has revised the disclosure regarding three-year exclusive supply agreement as follows:
“Further, the Agreement provides for the Company and the Asian supplier to enter into a new five-year exclusive supply agreement pertaining to its NV7600 product. In accordance with the Agreement, the Company and the Asian supplier entered into the initial five-year exclusive supply agreement on August 30, 2021. The initial term of the supply agreement is five years, provided that the Company has an option to renew the supply agreement for another two years. The supply agreement may be terminated by either party upon a material breach of the supply agreement, which remains uncured. In addition, the Company may terminate the supply agreement for any reason on 90 days’ notice. Among other things, the initial supply agreement provides that the pricing of the Company’s purchases of the component from the supplier during the term of the agreement will be on a “most favored nations” basis. Additionally, the initial supply agreement contains other provisions regarding purchase order scheduling, delivery and acceptance by the Company of the component purchases, and the supplier’s warranty of the purchased components. Pursuant to the supply agreement, the supplier agreed to exclusively sell the NV7600 product to the Company, which exclusivity survives the termination of the supply agreement.”
Copies of the three-year exclusive supply agreement, the lease agreement and the five-year exclusive supply agreement have been added as Exhibits 10.7, 10.9 and 10.8, respectively. Pursuant to Item 601(b)(10)(iv) of Regulation S-K promulgated by the SEC, certain portions of the exclusive supply agreement and the five-year exclusive supply agreement have been redacted to exclude confidential information and a notation of the removal of this information has been added in the table of exhibits for Exhibit 10.7 and Exhibit 10.8.
SECOND AMENDMENT TO EXCLUSIVE SUPPLY AGREEMENT This SECOND AMENDMENT TO EXCLUSIVE SUPPLY AGREEMENT (“Second Amendment”) is entered into as of June 30, 2020 (the “Second Amendment Effective Date”), by and between CHARLES & COLVARD, LTD., a North Carolina corporation, with its principal place of business at 170 Southport Drive, Morrisville, North Carolina 27560 (“C&C”), and CREE, INC., a North Carolina corporation, with its principal place of business located at 4600 Silicon Dr., Durham, North Carolina 27703 (“Cree”). C&C and Cree may be referred to hereinafter individually as “Party” and collectively as “Parties.” Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement.
WHEREAS, C&C and Cree previously entered into an Exclusive Supply Agreement dated December 12, 2014 (the “Agreement”), as amended June 22, 2018 by that First Amendment to Exclusive Supply Agreement (the “First Amendment”); and
Term. Unless earlier terminated in accordance with the provisions of this Agreement, the term of this Agreement shall commence on the Effective Date and shall end on December 31, 2031 (the “Term”); provided however, that this Agreement shall remain in effect with respect to any Valid Purchase Order then in effect at the time of such termination until performance and payment thereunder are completed in accordance with this Agreement, unless or until such Valid Purchase Order is itself terminated in accordance with this Agreement. The supply term shall commence upon the First Commercial Sale of the Product and shall end upon the later to occur of (a) the fifth (5th) anniversary of such First Commercial Sale of the Product (the “Exclusive Supply Term”), or (b) the expiration of the last Renewal Term (such period described in clauses (a) or (b), the “Supply Term”).
Following the expiration of the Exclusive Supply Term, Stryker shall have the sole option to extend the Supply Term, at its discretion, through the addition of additional one year periods (each, a “Renewal Term”) through December 31, 2031 by giving written notice at least [**] prior to the expiration of the Supply Term or then-current Renewal Term (such renewal terms, collectively, the “Non-exclusive Supply Term”). Notwithstanding the foregoing, Stryker’s obligations under Section 2.3.3 shall persist for the entire Term after the Exclusive Supply Term unless this Agreement is terminated by Stryker in accordance with its terms, it being deemed that Stryker has elected Section 2.3.3.1(b) for any periods during the Term after both the Supply Term and the Non-exclusive Supply Term have expired.
EXCLUSIVE SUPPLY AGREEMENT This Exclusive Supply Agreement is made as of May 19, 1999 (this "Agreement"), by and between Oil-Dri Corporation of America, a Delaware corporation ("Oil-Dri"), and Church & Dwight Co., Inc., a Delaware corporation ("Buyer").
IN WITNESS WHEREOF, the parties have caused this Exclusive Supply Agreement to be executed as of the date first above written.
Pursuant to the Distribution Agreement, upon completion of the development work contemplated by the Development Agreement, the Company will supply a stated percentage of Buyer’s requirements for the KIB Product during the five-year period starting with the first commercial sale of such Patient-Specific Instrumentation (the “Exclusive Supply Term”). During each year following the expiration of the Exclusive Supply Term, Buyer must either purchase a stated percentage of Buyer’s supply requirements for the preceding year (the “Prior Year Minimum”) or pay the Company a specified per-product fee based on the difference between the Prior Year Minimum and the number of products actually purchased by Buyer from the Company. Under the Distribution Agreement, the Company appointed Buyer as its exclusive distributor to market and promote sales of the KIB Product, and Buyer agreed not to contract with any third party for the manufacture of the KIB Product during the Exclusive Supply Term, subject to specified exceptions. Following the expiration of the Exclusive Supply Term, Buyer will have the sole option to extend the supply term through the addition of additional one-year periods through December 31, 2031, provided that if Buyer does not extend, it must pay the per-product fee described above for such stated percentage of Buyer’s supply requirements.
FIRST AMENDMENT TO EXCLUSIVE SUPPLY AGREEMENT This First Amendment to Exclusive Supply Agreement (the “Amendment”), entered into as of June 1, 2020 (the “Amendment Effective Date”) modifies that certain Exclusive Supply Agreement between Shenzhen Mindray Bio- Medical Electronics Co., Ltd. (“Mindray”) and Heska Corporation (Heska”), dated September 1, 2013 (“Original Agreement”). The Original Agreement, as amended by this Amendment, shall hereinafter be referred to as the “Agreement”. Capitalized terms not otherwise defined have the meanings ascribed to them in the Original Agreement. In the event of any conflict between the terms and conditions of the Original Agreement and this Amendment, the terms and conditions of this Amendment shall control. The headings in this Amendment are included for purposes of convenience only and shall not affect the construction or interpretation of its provisions.
(iv) Cardiol entered into an exclusive supply agreement (the “Exclusive Supply Agreement”) with Noramco, Inc. (“Noramco”) dated September 28, 2018, as amended on December 7, 2018, December 11, 2018, July 2, 2019 and September 11, 2019, and November 12, 2019 pursuant to which Noramco will be the exclusive supplier of pharmaceutical cannabidiol for Cardiol, provided Noramco is able to meet Cardiol’s supply requirements.
During 2020, the Exclusive Supply Agreement was assigned to Purisys, LLC (“Purisys”), an affiliate of Noramco headquartered in Athens, Georgia. This assignment had no impact on Cardiol’s rights under the Exclusive Supply Agreement.
Pursuant to the terms of the Exclusive Supply Agreement, Cardiol paid a non-refundable payment of US$3,000,000 (the “Exclusivity Payment”). The Exclusivity Payment represents a prepayment for inventory and is being credited towards purchases.
In connection with the termination of an exclusive supply agreement with a co-manufacturer in May 2017, we recorded restructuring expenses related to the impairment write-off of long-lived assets, primarily comprised of certain unrecoverable equipment located at the co-manufacturer’s site and company-paid leasehold improvements to the co-manufacturer’s facility, and legal and other expenses associated with the dispute with the co-manufacturer. 2 Consists of additional charges related to inventory losses incurred as a result of termination of an exclusive supply agreement with a co-manufacturer recorded in cost of goods sold.
3 Consists of additional charges incurred as a result of termination of an exclusive supply agreement with a co-manufacturer recorded in selling, general and administrative expenses.
Pursuant to the terms of the Exclusive Supply Agreement, Cardiol paid a non-refundable payment of US$3,000,000 (the “Exclusivity Payment”). The Exclusivity Payment represents a prepayment for inventory and is being credited towards purchases.
The Exclusive Supply Agreement expires on December 31, 2038, subject to certain renewal provisions.
Further, the Agreement provides for the Company and the Asian supplier to enter into a new five-year exclusive supply agreement pertaining to the significant component. In accordance with the Agreement, the Company and the Asian supplier entered into the initial five-year exclusive supply agreement on August 30, 2021.
On December 2, 2020 the Company executed a new License Agreement and an Exclusive Supply Agreement (collectively “Agreements”) with Zylo Therapeutics, Inc. (“ZTI”) of Greenville, S.C. which amended and replaced the July 27, 2020 Exclusive License and Supply Agreement between ZTI and the Company. The new Agreements grant the Company an exclusive license to use ZTI’s patented Xerogel silica delivery system (“Z-Pods”) to power the Company’s disruptive “Hourglass by Grapefruit™” THC+Cannabinoid full spectrum time-release topical delivery cream and a non-exclusive license to use the Z-Pod delivery system in a hemp-derived time-released cannabinoid topical delivery cream manufactured in compliance with the provisions of the Federal Farm Bill of 2018 to power a Hemp-derived version of “Hourglass by Grapefruit™”. The exclusive THC license covers initially California and Illinois and provides a mechanism to add additional states as THC becomes legal in such states. That license also covers the countries of Canada and Mexico. With respect to the non-exclusive license to use the Z-Pod delivery system in a Hemp-derived Farm Bill compliant version of “Hourglass by Grapefruit™”, the license initially covers sales through retail stores located in California and e-commerce sales directly throughout North America—excluding Canada. Terms of Compensation to ZTI in the form of GPFT common stock grants, cash payments and royalties mirror those disclosed with respect to the July 27, 2020 Agreement.
Exclusive supply refers to an agreement between a supplier and a buyer where the supplier agrees to provide specific products or services only to that buyer, preventing the supplier from selling the same products or services to other parties. This type of arrangement is generally beneficial for both parties as the supplier may secure a steady demand while the buyer receives a committed and reliable source for their needs.
Consider using an exclusive supply agreement in scenarios such as:
When crafting an exclusive supply agreement, include the following key elements:
Example: “The Supplier agrees to exclusively provide -product A- to the Buyer within the United States territory for a period of 3 years, commencing on [start date].”
Exclusive supply clauses are commonly found in various types of contracts, including:
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Dive deeper into the world of clauses and learn more about these other clauses that are used in real contracts.
The "Exclusive Use" clause grants one party the sole right to utilize or benefit from a particular asset, property, or service, thereby restricting others from doing the same. This provision ensures that the party with the exclusive rights has priority access without interference from competitors or other parties.
An exclusivity clause is a contractual provision that restricts one party from engaging in certain activities or dealings with other parties outside the agreement. Typically used to secure a commitment, it ensures that the party provides services, products, or rights solely to the other contracting party, often to maintain competitive advantage or preserve confidentiality.
An exculpatory clause is a contract provision that relieves one party from liability for harm or damages caused during the execution of the contract, often found in agreements where one party is at risk for potential loss or damage. These clauses aim to limit or altogether exclude the legal responsibility of a party, though their enforceability varies based on jurisdiction and the specific circumstances surrounding the contract and the event.
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