Business Distribution Bond

BUSINESS DISTRIBUTION BOND

This Business Distribution Bond (the Bond) is made and entered into as of by and among the following parties:

Parties

WHEREAS

WHEREAS, Principal has been granted or seeks to be granted rights to distribute certain products of Obligee within designated territories, and Obligee requires assurance of Principal’s faithful performance of distribution obligations, compliance with commercial terms and timely payment of amounts owing in connection with distribution; and

WHEREAS, Surety is willing to execute and deliver this Bond to Obligee to secure Principal’s performance and payment obligations described herein, subject to the terms and limitations set forth in this Bond.

BOND AMOUNT & EFFECTIVE PERIOD

The aggregate liability of Surety under this Bond shall be limited to the penal sum of $ (Bond Amount). This Bond shall be effective from through unless earlier terminated or extended as provided herein.

RECITALS AS PART OF THE BOND

The recitals set forth above are incorporated into and made an operative part of this Bond. Capitalized terms used but not defined in this Bond shall have the meanings assigned in the Distribution Agreement between Principal and Obligee, if any, or as otherwise reasonably interpreted in commercial usage.

SCOPE OF DISTRIBUTION OBLIGATIONS

Principal shall at all times perform its distribution obligations in good commercial manner, comply with product handling and brand guidelines, timely remit all amounts due to Obligee, and submit periodic sales and inventory reports in accordance with the parties' commercial agreements. Failure to perform any material distribution obligation constitutes an event of default under this Bond.

PAYMENT TERMS

Principal shall pay to Obligee all amounts due arising from distribution transactions and related obligations when due. To secure such obligations, Principal shall pay to Surety a premium in the amount of $ , payable .

In the event Principal fails to pay any undisputed sum due to Obligee within days after written demand, the outstanding sum shall accrue interest at a rate of until paid. Surety's obligation to pay under this Bond is limited to valid claims presented and proven in accordance with the Claim Procedures below and shall not exceed the Bond Amount.

CONDITIONS OF LIABILITY

Surety is bound to Obligee for Principal’s obligations only insofar as Principal fails to perform or pay when due. Surety’s liability arises only after Obligee has given written notice to Principal and Surety of Principal’s default and a reasonable opportunity (not fewer than days) to cure such default, unless such cure would defeat or prejudice a claim by Obligee. Nothing in this Bond requires Surety to perform the obligations of Principal or to pay for indirect, incidental, punitive or special damages, except as required by applicable law.

CLAIM PROCEDURES

To make a claim under this Bond, Obligee must provide (a) a written notice of default describing the basis for the claim and the amount claimed, (b) copies of invoices, agreements or other documentation supporting the claim, and (c) proof that Obligee has complied with any notice or cure requirements applicable to Principal. Surety shall have a reasonable period to investigate any claim and may require reasonable additional documentation prior to payment.

TERM AND TERMINATION

This Bond shall commence on the effective date specified above and shall continue in force until the Bond Amount is exhausted, the obligations secured by this Bond are satisfied, or this Bond is terminated in accordance with its terms. Either Principal or Surety may terminate this Bond as to future liabilities by giving Obligee and the other parties not fewer than days' prior written notice; provided that termination shall not affect claims that arise from acts or omissions occurring prior to the effective date of termination.

CONFIDENTIALITY

The parties acknowledge that certain information exchanged under or in connection with this Bond may be Confidential Information. Each party shall hold such Confidential Information in confidence and shall not disclose it to third parties except to the extent necessary to enforce their rights under this Bond, to comply with legal process, or as otherwise required by applicable law. Confidential Information does not include information that is or becomes publicly available through no breach by the receiving party.

GOVERNING LAW

This Bond shall be governed by and construed in accordance with the laws of the State of without regard to conflict of laws principles. The courts located in that State shall have exclusive jurisdiction over disputes arising under this Bond unless the parties agree otherwise in writing.

ENTIRE AGREEMENT; SEVERABILITY

This Bond constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior oral or written representations or agreements regarding the bonding obligations addressed herein. If any provision of this Bond is held invalid or unenforceable, the remaining provisions shall remain in full force and effect to the extent permitted by law.

NOTICES

INDEMNITY

Principal shall indemnify and hold harmless Surety and Obligee from and against any and all claims, liabilities, losses, costs and expenses (including reasonable attorneys' fees) resulting from Principal’s breach of obligations secured by this Bond or from Principal’s negligent or willful acts or omissions in connection with distribution activities. Surety shall have the right to seek reimbursement from Principal for any amounts paid under this Bond.

CLAIMS BAR AND LIMITATIONS

No action shall be brought against Surety under this Bond unless a written claim is delivered to Surety within after the date the alleged default accrues. Surety’s aggregate liability for all claims under this Bond shall not exceed the Bond Amount.

EXECUTION

The undersigned, being duly authorized representatives of the parties, have executed this Business Distribution Bond as of the date first written above.

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