Legal Anti-Diversion Agreement

LEGAL ANTI-DIVERSION AGREEMENT

This Anti-Diversion Agreement ("Agreement") is entered into as of between Supplier Name: , an entity organized under the laws of with its principal place of business at , and Distributor Name: , an entity organized under the laws of with its principal place of business at .

RECITALS

WHEREAS, Supplier designs, manufactures and sells certain products subject to diversion risk described as Restricted Products:

WHEREAS, Distributor purchases and resells certain of Supplier's products and desires to purchase and resell such products in the Territory:

WHEREAS, the parties desire to establish controls, reporting, inspection rights and remedies to prevent diversion of Restricted Products to unauthorized channels, resellers, end users or geographic regions.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. DEFINITIONS

1.1 "Authorized Customer" means a customer approved in writing by Supplier to receive Restricted Products from Distributor within the Territory. Distributor shall maintain a current list of Authorized Customers and provide it to Supplier upon request.

1.2 "Diversion" means any sale, transfer, shipment, shipment routing, resale, or other disposition of Restricted Products by Distributor or its downstream customers to any person, entity or destination that is not an Authorized Customer in the Territory, or otherwise in violation of this Agreement.

1.3 "Restricted Products" has the meaning set forth in the Recitals and includes any product line identified by Supplier from time to time in writing to Distributor.

2. APPOINTMENT; SALES LIMITATIONS

2.1 Supplier hereby authorizes Distributor to purchase and resell Restricted Products solely for resale to Authorized Customers in the Territory, subject to the terms of this Agreement. Distributor shall not deliberately circumvent Supplier's distribution controls or materially alter shipping labels or documents in a manner intended to conceal the true destination of Restricted Products.

2.2 Distributor shall, prior to shipment, verify ship-to information and customer identity against the list of Authorized Customers. Distributor shall not break shipments or consolidate orders to facilitate diversion.

3. PROHIBITION ON DIVERSION

3.1 Distributor covenants that it will not engage in any Diversion. Distributor shall implement commercially reasonable controls, including but not limited to background checks of resellers, invoice controls, shipment verification, and recordkeeping sufficient to detect and prevent Diversion.

3.2 If Distributor becomes aware of any actual or suspected Diversion, Distributor shall immediately notify Supplier in writing and take all commercially reasonable steps to stop further Diversion, preserve evidence and cooperate with Supplier's investigation.

4. MONITORING; AUDITS

4.1 Supplier shall have the right, upon reasonable prior notice and during normal business hours, to audit Distributor's books, records, order files, shipping records and warehouse locations to verify compliance with this Agreement. Such audits shall be conducted no more frequently than times per calendar year unless Supplier reasonably suspects material noncompliance.

4.2 Distributor shall promptly provide access to requested records and shall not withhold, alter, or destroy records relevant to an audit or investigation.

5. REPORTING

5.1 Distributor shall report to Supplier any suspicious orders, unusual shipping instructions, or refusals to provide required ship-to information within business days of awareness and shall complete a written incident report describing the occurrence, steps taken and any identified downstream parties.

6. REMEDIES

6.1 In the event of a breach of this Agreement involving Diversion, Supplier shall be entitled to immediate injunctive relief to prevent further Diversion in addition to any other remedies at law or in equity. Distributor acknowledges that monetary damages may be inadequate to remedy certain Diversions.

6.2 Supplier may, at its election, terminate Distributor's rights to purchase Restricted Products upon written notice if Supplier reasonably determines that Distributor has engaged in material Diversion. Termination shall be in addition to recovery of damages, which may include liquidated damages of per diverted shipment or such other measure of damages as may be proved, together with costs and attorneys' fees.

7. INDEMNIFICATION

Distributor shall indemnify, defend and hold harmless Supplier and its officers, directors and affiliates from and against any and all losses, liabilities, claims, damages, costs and expenses (including reasonable attorneys' fees) arising out of or related to Distributor's breach of this Agreement, including any Diversion by Distributor or its downstream customers.

8. CONFIDENTIALITY

Each party shall treat as confidential all non-public information disclosed in connection with audits, investigations, Authorized Customer lists, pricing or other information marked or reasonably understood to be confidential, and shall not use such information for any purpose other than compliance with this Agreement.

9. TERM AND TERMINATION

9.1 This Agreement shall commence on the Effective Date and continue for a period of years, unless earlier terminated in accordance with this Agreement.

9.2 Either party may terminate this Agreement for material breach if the breaching party fails to cure within days after receipt of written notice specifying the breach. Supplier may terminate immediately for uncured Diversion.

10. NOTICES

11. ASSIGNMENT

Neither party may assign this Agreement or any rights hereunder without the prior written consent of the other party, except that Supplier may assign this Agreement to an affiliate or in connection with a sale of substantially all of Supplier's assets or business relating to the Restricted Products.

12. AMENDMENTS; WAIVER

No amendment, modification or waiver of any provision of this Agreement shall be effective unless in writing signed by both parties. No failure or delay in exercising any right shall operate as a waiver.

13. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of , without regard to its conflicts of law rules.

14. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior and contemporaneous agreements, understandings and representations, whether written or oral.

15. SEVERABILITY

If any provision of this Agreement is held to be invalid or unenforceable, such provision shall be reformed only to the extent necessary to make it enforceable, and the remaining provisions shall remain in full force and effect.

16. COUNTERPARTS

This Agreement may be executed in counterparts, each of which when executed and delivered shall be an original, and all of which together shall constitute one and the same instrument.

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