Exclusivity Fee Agreement

In return for the Buyer paying the Seller the sum of [Exclusivity Tax] confirmed and the Seller paying the Seller the fees, expenses and other charges related to its due diligence investigations regarding the subject matter and negotiation of the proposed transaction and using administrative time and resources, the Seller undertakes to the Buyer: that he is not a member of his group or of any of his senior managers, collaborators, representatives or consultants, directly or indirectly for the duration of the exclusivity period: a kind of exception to the “no shop” clause referred to above is called “agent”. This gives a seller an “out” of an exclusivity agreement when a better offer comes in favor of the seller`s shareholders. Sellers often claim that this exception is necessary to fulfill their fiduciary duties. If allowed, the buyer can negotiate a tax to be paid if the seller terminates the exclusivity agreement and enters into negotiations with another buyer. The downside is that it offers little protection to a buyer against a seller who changes their mind and sells it to another buyer at the end of the exclusivity period, but rather it is used as a tool for the seller to get comfort that the buyer is tied enough to the deal to present a sum of money. Where an investment broker or investment banker represents one of the parties, the exclusivity clause relates to the exclusive commitment between the banker/broker and the seller. However, if the broker no longer represents the seller and the business is sold within a set period of time, this may violate the terms of the exclusivity agreement. Apple has broken the form when it comes to wireless carrier software by precisely controlling the software installed on its product. AT&T took a big risk in taking this exclusivity deal, as it was losing a lot of control over the functionality and operation of the device. But the wireless company saw the success of the iPod and decided to give Apple control of the customer experience. AT&T took advantage of this since every customer who wanted an iPhone had to sign a two-year service contract with AT&T.

When establishing an exclusivity clause, the issuer of the contract should focus on the following: with an exclusivity clause, the seller is obliged to promote, resell and sell only the agreed products or services. The clause prevents the seller from entering into agreements with other companies considered to be competitors. By this agreement, the buyer undertakes not to solicit the goods made available to the selling party by others as long as it is in force. . . .