DRAFT

THIS AGREEMENT, dated ________________, is by and between the CITY OF SUNNYVALE, a municipal corporation ("CITY"), and ALLSTAR FIRE EQUIPMENT, INC., a California corporation ("SUPPLIER").

WHEREAS, CITY is in need of gloves to support City's fire-fighting activities; and

WHEREAS, on April 7, 2003, CITY issued Invitation for Bids No. F0202-70 to which SUPPLIER submitted a timely response; and

WHEREAS, CITY has determined that SUPPLIER is capable of providing the required goods at a reasonable price in a timely manner;

  NOW, THEREFORE, THE PARTIES ENTER INTO THIS AGREEMENT.

1. Intent of Agreement - This Agreement sets forth the rules under which SUPPLIER will provide fire fighter gloves to CITY. It does not, of itself, constitute authority to ship goods. That authority shall be established by individual orders placed by CITY on an "as required" basis throughout the contract term. Confirming documents will be faxed to SUPPLIER for individual orders.

2. Goods to be Provided - SUPPLIER will provide to CITY the goods listed on Exhibit "A" attached and incorporated by reference. Substitutions will not be permitted except upon specific written authorization of CITY. All unauthorized substitutions will be returned to SUPPLIER at SUPPLIER's risk and expense.

3. Term of Agreement - This Agreement shall be continuous until cancelled.

4. Pricing - Prices for contract Goods shall be those set forth on Exhibit "A". Prices shall remain firm throughout the first year of this Agreement. Beginning on the first Agreement anniversary date, pricing shall remain firm unless the manufacturer increases or decreases the price to SUPPLIER. Should a price decrease occur, SUPPLIER shall immediately notify CITY, and price to CITY shall decrease in a like amount. Should a price increase occur, SUPPLIER's price to CITY may increase in a like amount. To affect a price change, SUPPLIER shall submit to CITY's Electronic Catalog Administrator a copy of the manufacturer's price change notice. CITY reserves the right to cancel this Agreement, in whole or in part, following review of SUPPLIER's price change request.

 5. Stocking - SUPPLIER shall regularly stock each item listed on Exhibit "A" in sufficient quantity to keep stock-outs at a minimum. Out-of-stock goods shall be provided to CITY with minimum delays. However, under these circumstances, CITY is free to use other sources of supply to secure out-of-stock goods.

6. Transfer of Title; Delivery - Purchases under this Agreement shall be FOB destination with shipping charges included in the unit prices set forth on Exhibit "A". Time shall be of the essence in this Agreement. Goods shall be delivered within two (2) work days following SUPPLIER's receipt of order. If delivery of goods cannot be made within two (2) work days, SUPPLIER shall promptly notify CITY of the earliest possible date for delivery. Notwithstanding such notice, if SUPPLIER, for any reason whatsoever, fails to deliver goods within the required time, CITY may terminate the order without liability except for goods previously delivered and accepted.

7. Quantities - There shall be no minimum order quantity requirements except on items in sealed packages. SUPPLIER shall deliver the exact quantities ordered by CITY. CITY reserves the right to reject incomplete deliveries and to return at SUPPLIER's risk and expense excess quantities delivered.

8. Inspection - Goods shall be received subject to CITY inspection, testing, approval and acceptance notwithstanding any prior payment for such goods. Goods rejected by CITY as nonconforming may be returned to SUPPLIER at SUPPLIER's risk and expense and shall not be replaced by SUPPLIER without written authorization from CITY.

9. Exchanges - SUPPLIER shall accept product exchanges, dollar for dollar, provided that the returned merchandise is in a resaleable condition.

10. Payment - Payment will be by Mastercard. The applicable Mastercard number will be provided to SUPPLIER when each order is placed. Charges shall be made against the applicable Mastercard number when goods are shipped. SUPPLIER shall take all reasonable steps to ensure that Mastercard information is held confidential and is not available to persons not directly involved in a sales transaction between CITY and SUPPLIER. If CITY finds goods to be nonconforming, defective or otherwise unacceptable, SUPPLIER shall process a Mastercard refund promptly upon receipt of returned goods.

 11. Warranties - In addition to any other express or implied warranties, SUPPLIER warrants that all goods delivered under this Agreement will be new; suitable for the use(s) intended; of the grade and quality specified; free from all defects in design, material and workmanship; in conformance with all samples, drawings, descriptions and specifications furnished by CITY; in compliance with all applicable federal, state, and local laws and regulations; and free of liens and encumbrances. These warranties shall not be deemed to exclude SUPPLIER's standard warranties or other rights or warranties which CITY may have or obtain. At its expense and option, SUPPLIER shall replace any goods not conforming to the foregoing warranties. If, after notice, SUPPLIER elects not to replace any such goods, SUPPLIER shall promptly issue a Mastercard refund for the full purchase price paid by CITY for such goods.

12. Compliance with Laws

a. SUPPLIER shall comply with all applicable governmental laws, ordinances, codes, rules, regulations, programs, plans and orders in the performance of this Agreement.

b. SUPPLIER shall be in full compliance with any and all permit or licensing requirements in connection with the manufacture, sale, or shipment of the goods specified in this Agreement.

13. Safety and Health Requirements - Goods supplied under this Agreement shall comply with all federal and state Occupational Safety and Health Administration requirements and with all California safety and health requirements.

14. Assignment - SUPPLIER shall not delegate or subcontract any duties or assign any rights or claims under this Agreement without CITY's prior written consent.

15. Notice of Material Change in Business - SUPPLIER agrees that, if it experiences a material change in its business during the term of this Agreement, including, without limitation, a reorganization, restructuring, leveraged buyout, bankruptcy, etc., SUPPLIER will immediately notify CITY of the change.

16. Waiver - Failure of CITY to enforce any provision of this Agreement shall not constitute a waiver or relinquishment by CITY of the right to such performance in the future nor of the right to enforce any other provision of the Agreement.

17. Severability - If any provision of this Agreement is declared by a court to be illegal or in conflict with any law, the validity of the remaining terms and conditions shall not be affected; and the rights and obligations of the parties shall be construed and enforced as if the Agreement did not contain the particular provision held to be invalid.

 18. Patents, Copyrights or Trademarks - SUPPLIER shall hold harmless and fully indemnify CITY and its officers, employees and agents from all damages or claims for damages, costs or expenses in law or equity that may arise for any infringement of the patent right, copyright or trademark of any person as a consequence of the use by CITY or any of its officers, employees or agents, of goods supplied under this Agreement.

19. Annual Review of Agreement - On an annual basis, CITY and SUPPLIER shall review this Agreement to determine if changes are required. If desirable and appropriate, the Agreement may be modified by issuance of a written Agreement Amendment executed by both parties. If the changes include the addition of items, SUPPLIER shall assist CITY in updating its electronic catalog by providing an electronic file in Excel format as specified by CITY's Electronic Catalog Administrator and a photograph of each new item in either .gif or .jpg format. No verbal revocations, amendments or modifications to this Agreement shall be held binding on CITY.

20. Termination - This Agreement may be terminated by mutual consent of both parties or by CITY at its discretion. CITY may cancel this Agreement at any time with written notice to SUPPLIER, stating the extent and effective date of termination. Upon receipt of this written notice, SUPPLIER shall stop performance under this Agreement.

21. Breach of Agreement - Should SUPPLIER breach any of the provisions of this Agreement, CITY reserves the right to cancel the Agreement upon written notice to SUPPLIER. SUPPLIER shall be liable for any and all damages incidental and consequential suffered by CITY as the result of SUPPLIER's breach of contract. CITY shall have any and all remedies provided under the Uniform Commercial Code in the event of a breach of this Agreement by SUPPLIER.

22. Governing Law; Public Records - This Agreement shall be governed by and construed in accordance with the laws of the State of California as interpreted by the California courts, and any litigation arising out of this Agreement shall be conducted in the courts of the State of California. California law requires that the contents of this Agreement be open to inspection and copying by the public.

23. Force Majeure - Neither party to this Agreement shall be held responsible for delay or default caused by fire, riot, acts of God, and/or war which is beyond that party's reasonable control. CITY may terminate the Agreement upon written notice after determining such delay or default will reasonably prevent successful performance of the Agreement.

 24. Entire Agreement - This Agreement, which includes any and all documents incorporated herein by reference, sets forth the entire agreement between SUPPLIER and CITY with respect to the authorized purchases.

IN WITNESS WHEREOF, the parties have executed this Agreement.

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