University of San Jose-Recoletos

Magallanes Street, Cebu City

College of Commerce
Department of Accountancy

In partial fulfillment of the Course, Law 1:

The Law on Obligations and Contract

OUTPUT FOR THE PRELIMS:

DRAFTING OF CONTRACTS
Exclusivity Distribution
Contract

Presented to:

Atty. Chevrolie E. Maglasang-Isoto

Presented by:

Celis, Zackery Lyle B.

Fuentes, Paulino III G.

Mangle, Mark Kenneth B.

EXCLUSIVE DISTRIBUTION CONTRACT

This Exclusive Distribution Agreement is made and entered as of January 5, 2016, by and
between Agraviador Sugar Milling Inc. (hereinafter referred to as “Supplier”), duly represented
by Paulino Fuentes III, with its principal place of business located at No. 70, Paler Factory, San
Carlos Street, Dumaguete City 6200 and EZmarket Grocery (hereinafter referred to as
“Distributor”), duly represented by Mark Kenneth Mangle, with its principal place of business
located at Okad Building, B. Rodriguez Street, Cebu City (hereinafter referred to individually as a

“Party” and collectively as “the Parties”).

WI T N E S S E T H

WHEREAS

WHEREAS, Supplier is in the business of developing, manufacturing and selling throughout the
Philippines of refined white sugar and raw brown sugar

WHEREAS, Distributor is in the business of retail grocery and wishes to distribute certain
Supplier’s products in Cebu City, Philippines;

WHEREAS, Supplier wishes to provide such products to Distributor for distribution in such city
on an exclusive basis;

In consideration of the mutual covenants and conditions herein contained, and intending to be
legally bound hereby, the parties mutually agree as follows:

Definitions. In this Agreement, the following terms shall have the following respective
meanings:

“Agreement” means this Exclusive Distribution Agreement and Exhibit A and Exhibit B hereto.

“Confidential Information” means any and all information that is disclosed by one Party to the
other Party and that relates to a Party’s business or the Parties’ business relationship hereunder,
including, but not limited to, information concerning a Party’s finances, products, services,
customers and suppliers. Any Confidential Information disclosed in tangible form shall be
marked as “CONFIDENTIAL” or “PROPRIETARY” or by a similar legend by the disclosing Party
prior to disclosure. Any Confidential Information disclosed orally or visually shall be identified as
such prior to, concurrent with or following disclosure and summarized in writing by the
disclosing Party to the receiving Party within thirty (30) calendar days of the disclosure.
Confidential Information shall not include information which: (i) is in or comes into the public
domain without breach of this Agreement by the receiving Party; (ii) was in the possession of
the receiving Party prior to receipt from the disclosing Party and was not acquired by the
receiving Party from the disclosing Party under an obligation of confidentiality or non-use; (iii) is
acquired by the receiving Party from a third party not under an obligation of confidentiality or
non-use to the disclosing Party; or (iv) is independently developed by the receiving Party
without use of any Confidential Information of the disclosing Party.

“Effective Date” means the date first written above.

“General Terms and Conditions of Sale” means the Supplier’s then-current General Terms
and Conditions of Sale, a current copy of which is attached under Exhibit A hereto.

“Products” means the Supplier’s products listed in Exhibit B attached hereto from time to
time.

“Term” means the period commencing on the Effective Date and terminating as set forth in
Article 8 hereof.

“Territory” means B. Rodriguez Street, C. Rodriguez Street, V. Rama Avenue, Espina Village
and Visitacion Street are covered by the distributorship.

“Trademarks” means all trademarks, service marks, logos, brand names, trade names,
domain names and/or slogans used by Supplier in connection with the Products from time
to time (whether registered or unregistered).

Grant of Right to Distribute

Appointment. Subject to the terms and conditions of this Agreement, including, without
limitation, the General Terms and Conditions of Sale, Supplier hereby appoints the
Distributor as its exclusive distributor of the Products within the Territory, and the
Distributor hereby accepts such appointment. Distributor agrees not to distribute Products
through sub-distributors without the prior written consent of Supplier.

Restrictions on Distributor’s Activities. Distributor shall not: i) establish a warehouse or sales

office for the Products outside the Territory, ii) engage in any promotional activities relating
to the Products directed primarily to customers outside the Territory, iii) solicit orders for
Products from any prospective customer located outside the Territory, or iv) make any
changes to the Products or their packaging without the prior written consent of Supplier.

Restrictions on Supplier’s Activities. Subject to Article 2 (d) hereof, Supplier shall not, and
shall procure an undertaking from its distributors for territories other than the Territory that
they will not: i) establish a warehouse or sales office for the Products in the Territory, (ii)
engage in any promotional activities relating to the Products directed primarily to customers
in the Territory, and (iii) solicit orders for Products from any prospective customer located in
the Territory.
Reservation of Rights by Supplier. Supplier reserves the right to take the following actions at
any time upon ninety (90) calendar days prior written notice to Distributor without liability:
(i) to add Products to or delete Products from Exhibit B hereto, (ii) to modify the design of or
upgrade the Products or any part of the Products, and (iii) to sell exclusively, on a direct or
indirect basis, to certain types of customers or specific accounts in the Territory.

Modification of Products and Territories. Supplier reserves the right, upon consultation with
Distributor, to expand or reduce the Products and Territory which are covered by this
Agreement.

Trademarks

Ownership. The Distributor acknowledges Supplier’s exclusive ownership of the Trademarks

and acquires no right, title or interest in or to the Trademarks hereunder. Any and all
goodwill associated with the Trademarks will inure exclusively to the benefit of Supplier.
During the Term, the Distributor shall not
attempt to register any of the Trademarks or any trademarks, service marks, logos, brand
names, trade names, domain names and/or slogans confusingly similar to the Trademarks.
The Distributor shall execute such documents and do all such acts and things as may be
necessary in Supplier’s reasonable opinion to establish Supplier’s ownership of any rights in
and to the Trademarks, at Supplier’s expense.

Grant of Rights. Supplier hereby grants to the Distributor for the Term, and subject to the
terms and conditions herein, a non-exclusive, non-transferable, revocable right to use the
Trademarks in connection with the marketing, use, sale and service of the Products in the
Territory in accordance with the terms and conditions of this Agreement and any guidelines
issued by Supplier from time to time. Distributor shall not alter or remove any Trademarks
applied to the Products. During the Term, Distributor shall have the right to indicate to the
public that it is an authorized distributor of the Products.

Quality Control. In order to comply with Supplier’s quality control standards, Distributor
shall: (i) use the Trademarks in compliance with all relevant laws and regulations; (ii) accord
Supplier the right to inspect during normal business hours without prior advance notice, the
facilities used in connection with efforts to sell the Products in order to confirm that
Distributor’s use of such Trademark is in compliance with this Article; (iii) not modify any of
the Trademark in any way and not use the Trademarks with any goods or services other than
the Products.

Distributor’s Obligations

Promotion Efforts. Distributor shall actively promote the sales of Products within the
Territory. Such promotion shall include, but not be limited to, advertising the Products in
appropriate trade publications within the Territory, participating in appropriate trade shows,
and directly soliciting orders from customers for the Products. Distributor shall not
knowingly diminish from the good name of the Supplier or the reputation of the Products.

Inventory. Distributor shall maintain a sufficient and representative inventory of the

Products and spare parts to serve the customers in the Territory.

Best Efforts. Distributor shall use its best efforts to promote and sell the Products to the
maximum number of responsible customers in the Territory.

Customer Service. Distributor shall provide effective customer service (including, but not
limited to, taking orders, responding to customer inquiries, fulfilling requests for quotes on
Product pricing and providing after-sales service) on a timely basis and shall provide such
assistance and information to customers as is reasonably requested by Supplier.

Reports. Distributor shall provide Supplier with quarterly operation reports of Distributor’s
activities to market the Products in the Territory in accordance with any guidelines issued by
Supplier from time to time. Each such report shall be due within fifteen (15) calendar days
after the end of the quarter to which it relates.

Annual Report. Distributor shall provide Supplier with an annual report within one (1)
month after the end of each calendar year showing annual sales figures and the quantity of
Products on hand as of December 31 each year.
 Product Recalls. In order to assist Supplier in the event of a recall of Products sold by
Distributor in the Territory, Distributor shall maintain a complete and current listing of the
locations, together with the dates, all Products in Distributor’s inventory and the names of
customers who have purchased the Products.

Minimum Annual Purchase Quantities. Distributor shall purchase a sufficient amount of

Products from Developer so as to meet or exceed the minimum purchase requirements set
forth below, provided, however; that purchases of Products that exceed the minimum purchase
requirements shall be credited towards the subsequent periods.

Year of Agreement

Product

Minimum Number of Units

(kg)

Year 1: 2016

Refined white sugar

500

Raw brown sugar

500

Year 2: 2017

Refined white sugar

610
-

Raw brown sugar

390

Year 3: 2018

Refined white sugar

595

Raw brown sugar

600

Year 4: 2019

Refined white sugar

700

Raw brown sugar

450

Year 5: 2020

Refined white sugar

610

Raw brown sugar

530
Payment for Minimum Purchase. Notwithstanding any other provision of this Agreement to the
contrary, Distributor shall pay an amount of 27, 370.00php and 23,415.00php, respectively, for
the first order of refined white sugar and raw brown sugar before the signing of this
Agreement, with respect to Year 1.

Pricing. Distributor shall be free to establish its own pricing for Products. Distributor shall notify
Supplier of its pricing, as in effect from time to time.

Supplier’s Obligations

Supply. Supplier agrees to sell to Distributor the Products ordered by Distributor in accordance
with the terms of this Agreement, including without limitation the General Terms and
Conditions of Sale.

Marketing Assistance. Supplier shall provide Distributor with such marketing assistance and
such promotional literature in the English language as Supplier may in its discretion consider
necessary to assist with the promotion of the Products.

Training. Supplier shall provide training to Distributor’s staff in connection with the marketing,
sale and service of the Products at regular intervals to be determined by Supplier. Supplier and
Distributor shall pay their own costs for travel, food and lodging during the training period.

Approvals. Supplier is responsible for obtaining all applicable regulatory approvals necessary to
permit Distributor to market, sell and service the Products in the Territory. Supplier shall bear
all costs associated with such approvals.
6. Prices

Distributor shall pay for Products at the prices specified in Supplier’s current price list.
Supplier may change the prices at any time by providing fifteen (15) calendar days written
notice to Distributor.

Confidentiality.

Obligations of Non-Disclosure and Non-Use. Unless otherwise agreed to in advance, in

writing, by the disclosing Party or except as expressly permitted by this Agreement, the
receiving Party will not, except as required by law or court order, use Confidential
Information of the disclosing Party or disclose it to any third party for the Term and for a
period of one (1) year thereafter. The receiving Party may disclose Confidential Information
of the disclosing Party only to those of its employees or contractors who need to know such
information. In addition, prior to any disclosure of such Confidential Information to any such
employee or contractor, such employee or contractor shall be made aware of the
confidential nature of the Confidential Information and shall execute, or shall already be
bound by, a non-disclosure agreement containing terms and conditions consistent with the
terms and conditions of this Agreement. In any event, the receiving Party shall be
responsible for any breach of the terms and conditions of this Agreement by any of its
employees or contractors. The receiving Party shall use the same degree of care to avoid
disclosure of the disclosing Party’s Confidential Information as the receiving

Party employs with respect to its own Confidential Information of like importance, but not
less than a reasonable degree of care.

Return of Confidential Information. Upon the termination or expiration of this

Agreement for any reason, or upon the disclosing Party’s earlier request, the receiving Party
will deliver to the disclosing Party all of the disclosing Party’s property or Confidential
Information in tangible form that the receiving Party may have in its possession or control.
The receiving Party may retain one copy of the Confidential Information in its legal files.

Term and Termination

Term. This Agreement shall commence on the Effective Date and shall, unless earlier
terminated pursuant to Article 8 (b) or (c), continue for a term of five (5) years following the
Effective Date (the “Initial Term”). This Agreement will be automatically renewed for an
additional one (1) year term unless terminated by either Party.

Termination Without Cause. After the third year of this Agreement, this Agreement may be
terminated by Supplier and Distributor at any time for any reason by giving sixty (60)
calendar days written notice of such termination by either party.

Termination for Material Breach. This Agreement may be terminated by either party by
giving sixty (60) calendar days written notice of such termination in the event of a Material
Breach which include: (i) any violation of the terms of Articles 2(b), 2(c), or 3, (ii)
Distributor’s failure to meet minimum annual purchase quantities agreed, (iii) the
insolvency, liquidation or bankruptcy of a party.

No Compensation. In the event of termination or expiration of this Agreement, Supplier

shall not have any obligation to Distributor for compensation or for damages of any kind.
Sell-Off Period; Repurchase of Inventory

Sell-Off Period. Upon termination or expiration of this Agreement, Distributor shall have the
right to sell of its remaining inventory of Products on a non-exclusive basis for so long as
such inventory exists; provided, however, that Distributor shall comply with all terms and
conditions of this Agreement.

Option to Repurchase. Upon termination or expiration of this Agreement, Supplier shall

have the option to repurchase Distributor’s inventory, which option must be exercised in
writing within thirty (30) calendar days after such termination of expiration. Any such
repurchase of Distributor’s inventory shall be at the original purchase price paid by
Distributor. Supplier shall pay Distributor for such repurchased Products within fifteen (15)
calendar days after Supplier receives those products.

Independent Contractors

It is understood that both Parties are independent contractors and engage in the operation
of their own respective business. The relationship between both parties shall not be
construed to be that of employer and employee, or to constitute a partnership, joint
venture, or agency of any kind.

Non-Publicity

Each of Supplier and Distributor agree not to disclose the existence or contents of this
Agreement to any third party without the prior written consent of the other Party except: (i)
to its advisors, attorneys or auditors who have a need to know such information, (ii) as
required by law or court order, (iii) as required in connection with the reorganization of a
Party, or (iv) as may be required in connection with the enforcement of this Agreement.

Assignment

Neither Party may without written approval of the other assign this Agreement or transfer
its interest or any part thereof under this Agreement to any third party except that a Party
may assign its rights or obligations to a third party in connection with the merger,
reorganization of assets of the assigning party.

Governing Law and Dispute Resolution

Governing Law. This agreement shall be governed by and construed in accordance with the
laws of Republic of the Philippines, without giving effect to any choice of law or conflict of
law provisions. The Parties consent to the exclusive jurisdiction and venue in the local courts
in the city of Cebu.

Specific Performance. Notwithstanding anything contained in Article 13(a), each party shall
have the right to constitute judicial proceedings against the other party in order to enforce
the instituting party’s rights hereunder through reformation of contracts, specific
performance or similar equitable relief.

General

This Agreement constitutes the entire agreement of the parties on the subject and
supersedes all prior understanding and instruments on such subject. In the event of any
discrepancy between the provisions of the Exclusive Distribution Agreement and the
provisions of Exhibit A or Exhibit B, the terms and conditions of the Exclusive Distribution
Agreement shall prevail. This Agreement may not be modified other than by a written
instrument executed by duly authorized representatives of the Parties.
15. Counterparts

This Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute on and the same instrument.

IN WITNESS WHEREOF, and intending to be legally bound, the Parties have duly executed
this Agreement by their authorized representatives as of the date first written above.

Signed for and on behalf of

Signed for and on behalf of

Agraviador Sugar Milling Inc.

EZmarket Grocery

By:

By:

Name: Paulino Fuentes III

Name: Mark Kenneth Mangle

Title: Operations Manager

Title: Purchasing Manager

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

CEBU CITY ) S.S.

BEFORE ME, a Notary Public for and in Cebu City, Philippines, this 5th day of January, 2016,
personally appeared:

NAME CTC NO. ID NO. ISSUED AT/ON

Paulino Fuentes III 82113478 314718 Cebu City
 420816

Mark Kenneth Mangle 29983863

known to me and known to be the same person who executed the foregoing instrument
consisting of fifteen (15) pages, including the page whereon the acknowledgment is written
and acknowledged before me that the same is their free and voluntary act and deed and
that of the Corporation he represents.

WITNESS MY HAND AND NOTARIAL SEAL, at the place and on the date first above written.

Atty. Zackery Lyle B. Celis

Notary Public

Until 31 December 2020

PTR No. 1092797

Issued at: Cebu City

Issued on: January 5, 2016

Doc. No. 202

Page No. 16

Book No. 152

Series of 2016
Exhibit A

General Terms & Conditions for Sale of Goods

Definitions

In this document the following words shall have the following meanings:

"Buyer" means EZmarket Grocery which is a distributor

"Goods" means the sugar to be supplied to EZmarket Grocery by Agraviador Sugar Milling Inc.

"Intellectual Property Rights" means all patents, registered and unregistered designs,
copyright, trademarks, know-how and all other forms of intellectual property wherever in the
world enforceable;

"Seller" means Agraviador Sugar Milling Inc. the supplier

General

These Terms and Conditions shall apply to sales of Goods by the Seller to the Buyer to the
exclusion of all other terms and conditions referred to, offered or relied on by the Buyer
whether in negotiation or at any stage in the dealings between the parties, including any
standard or printed terms tendered by the Buyer, unless the Buyer specifically states in
writing, separately from such terms, that it wishes such terms to apply and this has been
acknowledged by the Seller in writing.

Any variation to these Terms and Conditions (including any special terms and conditions
agreed between the parties) shall be inapplicable unless agreed in writing by the Seller.

Price and Payment

The price shall be the Recommended Retail Price less agreed discount, unless otherwise
agreed in writing between the parties. The price is exclusive of VAT or any other applicable
costs.

Credit terms may be offered subject to satisfactory credit vetting of the Buyer by the Seller.
The offer of credit will be at the sole discretion of the Seller.

Where credit is offered payment of the price and VAT and any other applicable costs shall be due
within 30 days of the date of the invoice supplied by the Seller, unless otherwise agreed in
writing. In cases where credit is not offered payment will be required before release of goods by
the Seller.

The Seller shall be entitled to charge interest on overdue invoices from the date when payment
becomes due from day to day until the date of payment at a rate of 2 per cent per annum above
the base rate of the Sterling Bank

If payment of the price or any part thereof is not made by the due date, the Seller shall be
entitled to:

require payment in advance of delivery in relation to any Goods not previously delivered;

refuse to make delivery of any undelivered Goods without incurring any liability whatever to
the Buyer for non-delivery or any delay in delivery;
IV. Description

Any description given or applied to the Goods is given by way of identification only and
the use of such description shall not constitute a sale by description. For the avoidance of
doubt, the Buyer hereby affirms that it does not in any way rely on any description when
entering into the contract.

Sample

Where a sample of the Goods is shown to and inspected by the Buyer, the parties hereto
accept that such a sample is representative in nature and the bulk of the order may differ
slightly as a result of the manufacturing process.

VI. Delivery

Unless otherwise agreed in writing, delivery of the Goods shall take place at the address
specified by the Buyer on, or as close as possible to the date required by the Buyer. The
Buyer shall make all arrangements necessary to take delivery of the Goods whenever they
are tendered for delivery.

If the Seller is unable to deliver the Goods because of actions or circumstances under the
control of the Buyer, then the Seller shall be entitled to place the Goods in storage until
such times as delivery may be effected and the Buyer shall be liable for any expense
associated with such storage.

Any damages, shortages, over deliveries and duplicated orders should be reported to the
Seller within 14 days of signed receipt to enable replacement or refund.

VII. RISK
Risk in the Goods shall pass to the Buyer upon receipt of the goods. Where the Buyer
chooses to collect the Goods itself, risk will pass when the Goods are entrusted to it or set
aside for its collection, whichever happens first.

VIII. TITLE

Title in the Goods shall not pass to the Buyer until the Seller has been paid in full for the
Goods.

IX. RETURN OF UNUSED GOODS

All goods are sold on a firm sale basis, i.e. the Seller will not take back any goods not
required or sold by the Buyer, unless otherwise agreed, in which case the following terms
apply.

Any returns must be authorised by a representative of the Seller before any credit will be
given.

Where the Seller agrees to accept the return of goods that are not damaged the Buyer will
be responsible for the cost of carriage and will ensure that they are carefully packaged to
avoid any damage in transit. The Seller will not be obliged to accept any goods that are
damaged in any way. The Seller will only accept returns that appear in the Sellers current
Publication List.

Credit of amounts due or paid in will only be given for goods that are in saleable
condition.
LIMITATION OF LIABILITY

The Seller shall not be liable for any all loss or damage suffered by the Buyer in excess of the
contract price.

Nothing contained in these Terms and Conditions shall be construed so as to limit or exclude
the liability of the Seller for death or personal injury as a result of the Seller's negligence or
that of its employees or agents.

XI. INTELLECTUAL PROPERTY RIGHTS

All Intellectual Property Rights produced from or arising as a result of the performance of this
Agreement shall, so far as not already vested, become the absolute property of the Seller, and
the Buyer shall do all that is reasonably necessary to ensure that such rights vest in the Seller
by the execution of appropriate instruments or the making of agreements with third parties.

XII. FORCE MAJEURE

The Seller shall not be liable for any delay or failure to perform any of its obligations if the
delay or failure results from events or circumstances outside its reasonable control, including
but not limited to acts of God, strikes, lock outs, accidents, war, fire, breakdown of plant or
machinery or shortage or unavailability of raw materials from a natural source of supply, and
the Seller shall be entitled to a reasonable extension of its obligations. If the delay persists for
such time as the Seller considers unreasonable, it may, without liability on its part, terminate
the contract.

XIII. RELATIONSHIP OF PARTIES

Nothing contained in these Terms and Conditions shall be construed as establishing or

implying any partnership or joint venture between the parties and nothing in these Terms and
Conditions shall be deemed to construe either of the parties as the agent of the other.
XIV. ASSIGNMENT AND SUB-CONTRACTING

The contract between the Buyer and Seller for the sale of Goods shall not be assigned or
transferred, nor the performance of any obligation sub-contracted, in either case by the
Buyer, without the prior written consent of the Seller.

XV. WAIVER

The failure by either party to enforce at any time or for any period any one or more of the
Terms and Conditions herein shall not be a waiver of them or of the right at any time
subsequently to enforce all Terms and Conditions of this Agreement.

XVI. SEVERABILITY

If any term or provision of these Terms and Conditions is held invalid, illegal or unenforceable
for any reason by any court of competent jurisdiction such provision shall be severed and the
remainder of the provisions hereof shall continue in full force and effect as if these Terms and
Conditions had been agreed with the invalid, illegal or unenforceable provision eliminated.
XVII. GOVERNING LAW AND JURISDICTION

This Agreement shall be governed by and construed in accordance with the laws of Philippines
and the parties hereby submit to the exclusive jurisdiction of the Philippine courts.
Exhibit B

Schedules

Products

Prices

Schedule A – Products

Raw Brown Sugar

Refined White Sugar

Schedule B – Prices

1.

Raw Brown Sugar

Php per kilo 46.83

2.

Refined White Sugar

Php per kilo 54.74