EXCLUSIVE SUPPLY
AGREEMENT
This Exclusive Supply Agreement (this " Agreement "), is
entered into as of March 29, 2005, by and between Cornerstone
Building and Remodeling, Inc., a Florida corporation ("
Customer ") and Cornerstone Granite & Marble Wholesale,
Inc., a Florida corporation (" Supplier ").
WITNESSETH:
WHEREAS, Supplier is a wholesaler of granite and marble slabs and
related products, with first-right relationships with stone
quarries around the world;
WHEREAS, Customer is
a producer of granite and marble countertops;
WHEREAS, Supplier is
currently the exclusive supplier of certain products to Customer,
pursuant to that certain Exclusive Supply Agreement between
Customer and Supplier, as amended February 14, 2005 (the "
Existing Agreement ");
WHEREAS, Customer
and Supplier desire to amend and restate the Existing Agreement
with this Agreement, which shall supersede the Existing Agreement
in its entirety, and clarify the terms under which Supplier shall
provide Customer with the products set forth herein.
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants and undertakings contained herein, and of other
good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties to this Agreement hereby agree
as follows:
ARTICLE
I
SUPPLY OF
PRODUCTS
1.01 Retention and Appointment
. Customer hereby retains and appoints Supplier as its
exclusive supplier of all raw granite and marble slabs, sinks,
tiles, and hardware, cabinet refaced products, and fabrication
supplies used in the installation of granite and marble countertops
(collectively, the " Products "), and Supplier hereby
accepts such retention and appointment and assumes all obligations
associated herein.
1.02 Order Procedure; Delivery
Timeframe . Customer shall submit orders to purchase
Products to Supplier on Customer's standard purchase order form,
which must first be approved in writing and initialed by an
authorized officer of Customer, a list of which shall be provided
to Supplier and updated as necessary by Customer. Supplier
shall supply the ordered Products to Customer within the time
specified in the applicable purchase order, but Customer shall give
Supplier at least seven business days to deliver the
Products. Customer shall have the right to accumulate
supplies of Products as needed in order to have sufficient
quantities for manufacturing.
1.03 Shipping . Supplier shall
suitably package and ship the Products to Customer's Fort Myers,
Florida location, or such other location as directed by Customer,
and the risk of loss during transit shall be borne solely by
Supplier until Products are unloaded at Customer's facility and
accepted by Customer. Supplier agrees, from time to time, to
open additional warehouses as requested by Customer to support the
geographical growth of Customer.
1.04 Quality Audits . Customer
shall have the right, upon three days prior notice to Supplier, to
inspect any of Supplier's facilities and operations to determine
whether Supplier is producing or supplying the Products in
accordance with this Agreement.
1.05 Right to Purchase Products from
Other Sources. In the event that, for any reason,
Supplier cannot supply Customer with Products ordered by Customer
within the timeframes requested by Customer, Customer may obtain
such Products from another source; provided, however, that once
Supplier can demonstrate that Supplier is again able to supply the
Products to Customer on a timely basis, Customer shall return to
purchasing the Products exclusively from Supplier under the terms
of this Agreement.
ARTICLE
II
PRICING AND
QUANTITIES
2.01 Product Pricing .
The Products shall be priced to Customer at Supplier's necessary,
documented out-of-pocket costs of obtaining (direct costs of
purchases and shipping only, including foreign currency conversion,
excluding any overhead costs of Supplier) and shipping the Products
to Customer, plus a 20.0% mark-up; provided however Supplier
assures Customer of its lowest pricing. In the event Supplier
offers a lower price to any customer, it shall immediately notify
Customer and extend such price to Customer so long as any other
customer of Supplier has such lower pricing. Supplier shall
notify Customer at time of Purchase Order of any factor that
Supplier expects to cause an increase or decrease of at least 15%
in the cost of any Products or delivery thereof.
2.02 Terms of Payment .
Customer shall pay Supplier within 45 days of receiving Supplier's
invoice for Products delivered to and accepted by Customer.
Customer shall have 150 days from the Effective Date to bring all
amounts currently owed to Supplier that exceed 45 days to within
the 45 days required by this Section 2.02. All amounts
invoiced by Supplier, and amounts paid by Customer, shall be in
U.S. currency.
2.03 Minimum Quantities
Purchased . Customer hereby agrees to purchase at least
$325,000 per month of Products from Supplier during the Term.
Customer will not be obligated to pay Supplier for any shortfall of
this minimum purchase requirement, but Customer will make Supplier
whole by purchasing the aggregate shortfall of product from
Supplier every 2 months. Customer shall notify Supplier as
soon as possible of any factor that Supplier expects to cause an
increase or decrease of at least 10% in the historical quantities
of Products purchased.
2.04 Record Keeping.
(a) Monthly
Accounting . Supplier shall maintain complete and correct
records containing all data required for Customer to verify the
costs of Products for purposes of calculating and verifying the
prices for Products as set forth in Section 2.01.
(b) Audit
. Customer shall have the right, during normal business hours
and upon 10 days' prior notice, to audit the records described in
Section 2.04(a) hereof to verify Supplier's compliance with this
Agreement. Any such audit shall be conducted at Customer's
expense unless the results of such audit establish inaccuracies
that have resulted in any overpayment by Customer to
Supplier. If Customer establishes any such overpayment,
Supplier shall pay all costs of the audit and shall pay all amounts
determined by Customer to have been overpaid to Supplier, plus 2%
interest on any such overpaid amounts, and such interest shall
accrue from the date such amounts were paid by Customer through the
date of Supplier's repayment to Customer. Supplier shall pay
all such amounts overpaid by Customer, including the interest
thereon, and Customer's costs of the audit, no later than 45 days
following written notice by Customer setting forth the calculation
of such amounts. In the event that Supplier does not pay such
amounts to Customer within such 45-day timeframe, Customer shall
have the right to offset future amounts owed to Supplier by such
amounts.
ARTICLE
III
TERM AND
TERMINATION
3.01 Expiration; Renewal
. This Agreement shall have an initial term of 20 years
commencing on the date hereof and expiring on the 20th anniversary
thereof (the " Initial Term "). On or before the
expiration of the Initial Term, Customer and Supplier shall
negotiate in good faith to renew this Agreement, and any such
renewal period that is agreed to shall constitute the " Renewal
Term ". For the purposes of this Agreement, the term "
Expiration Date " shall refer to (a) the last day of the
Initial Term if the term of this Agreement is not timely renewed,
or (b) the last day of the Renewal Term in the event that the
parties hereto renew the Initial Term of this Agreement.
3.02 Termination . This
Agreement may be terminated prior to the Expiration Date (a) by
both parties hereto at any time upon the mutual written agreement
of both parties hereto; (b) by the non-breaching party to this
Agreement upon a material breach of any term or provision of this
Agreement by the other party hereto, that is not cured by the
breaching party within 90 days of written notice by the
non-breaching party specifically describing such breach; or (c) by
either party at any time in the event (i) all or a substantial
portion of the other party's assets have been transferred or are
subject to transfer for the benefit of creditors; (ii) a pr
