Product Supply Agreement

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Product Supply Agreement Powered By Docstoc
					This Product Supply Agreement is made between a manufacturer and a buyer whereby
the buyer purchases products from the manufacturer for distribution. The buyer agrees
to use its best efforts to promote the sale of the product and the agreement contains
provisions to protect the manufacturer's intellectual property rights in the product. This
document sets forth the material terms and conditions of the agreement including the
purchase price, the term of the agreement, renewal and termination. It contains
numerous standard provisions and may be customized to address the specific needs of
the parties. This should be used by product manufacturers and retailers that want to
sell their products.
                      PRODUCT SUPPLY AGREEMENT
             THIS PRODUCT SUPPLY AGREEMENT (the “Agreement”) is made as of
          rd
the ____3 day of ___________, 201___07 (the “Effective Date”).

B E T W E E N:

                             _______________________________
                                      (the “Supplier”)

                                             - and –

                             _______________________________
                                       (the “Buyer”)

BACKGROUND:

               WHEREAS, the Supplier manufacturers and distributes ___________________
(the “Product”) to buyers; [DESCRIBE ITEMS/PRODUCTS]

              AND WHEREAS, the Buyer is desirous to purchase the Product and to obtain the
Product from the Supplier pursuant to the terms and conditions contained herein.

               IN CONSIDERATION of the premises and the mutual covenants and
agreements contained in this Agreement and other good and valuable consideration (the receipt
and sufficiency of which are hereby acknowledged by each party), the parties hereby covenant
and agree as follows:

INTERPRETATION

1.00           DEFINITIONS

1.1            In this Agreement:

“Business Day” means any day of the week other than a Saturday, Sunday or any statutory or
civic holiday observed in __________________; [PROVIDE LOCATION OR LOCATIONS
OF SUPPLIER AND BUYER]

”Buyer” includes ________________________ [NAME OF BUYER] or any affiliate;

“Default” has the meaning ascribed thereto in Section 5.01;

“Disputes” includes all disputes, controversies, claims, counterclaims or similar matters:



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       (a)     that relate to or arise out of or in connection with this Agreement including the
               validity, construction, meaning, performance or effect of this Agreement or the
               rights and liabilities of the parties to this Agreement; or

       (b)     in respect of any defined legal relationship associated with this Agreement or
               derived from it; whether it arises during the term of this Agreement or thereafter;

       (c)     “Governmental Authority” means (i) any court or legislative, executive,
               regulatory or administrative authority or agency of ______________ [PROVIDE
               COUNTRY OF EITHER PARTY, IF NOT AMERICAN]Canada or the
               United States or any province or state thereof and (ii) any federal, provincial,
               state, local, municipal or other political subdivision of ______________
               [PROVIDE COUNTRY OF EITHER PARTY, IF NOT AMERICAN] the
               United States or any province or state thereof; {Instruction: Delete or cross out
               all references to foreign countries/territories, if this agreement is between
               parties entirely within the United States.}

       (d)     “Initial Term” has the meaning set forth in Section 2.01;

       (e)     “Negotiation Period” has the meaning set forth in Section 6.01;

       (f)      “Person” shall be broadly interpreted and includes an individual, body corporate,
               partnership, joint venture, trust, association, unincorporated organization, any
               Governmental Authority or any other entity;

       (g)      “Agreement” means this Product Supply Agreement, the Background and any
               agreement or schedule supplementing or amending this Agreement, as the same
               may be supplemented, amended or restated from time to time; and

       (h)     “Term” has the meaning set forth in Section 2.00; and

1.2            STATUTES

                Unless specified otherwise, reference in this Agreement to a statute refers to that
statute as it may be amended, or to any restated or successor legislation of comparable effect.

1.3            GENDER AND NUMBER

             In this Agreement, words importing the singular include the plural and vice versa,
words importing one gender include all genders and words importing individuals include
persons, firms, bodies corporate, partnerships, joint ventures, associations, trusts and
governments and vice versa.

1.4            HEADINGS


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               The division of this Agreement into articles, sections, subsections and schedules
and the insertion of headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement. The article, section, subsection and schedule
headings in this Agreement are not intended to be full or precise descriptions of the text to which
they refer and are not to be considered part of this Agreement. All uses of the words “hereto”,
“herein,” “hereof,” “hereby” and “hereunder” and similar expressions refer to this Agreement
and not to any particular section or portion of it. References to an Article, Section, Subsection or
Schedule refer to the applicable article, section, subsection or schedule of this Agreement.

1.5            PERFORMANCE ON HOLIDAYS

               If any action is required to be taken pursuant to this Agreement on or by a
specified date which is not a Business Day, then such action shall be valid if taken on or by the
next succeeding Business Day.

1.6         CURRENCY

              Unless specified otherwise, all statements of or references to dollar amounts in
this Agreement are to lawful money of __________________ [SPECIFY CURRANCY TO BE
USED--e.g, U.S. DOLLARS, EUROS, etc.]. {Instruction: This entire clause may be deleted,
if Agreement is between parties entirely within the United States.}

1.7         THIRD PARTY BENEFICIARIES

              Nothing in this Agreement is intended expressly or by implication to, or shall,
confer upon any Person other than the parties, any rights or remedies of any kind.

1.8         BUYER’S OBLIGATIONS

               The Buyer and its Affiliates will comply with all of its respective covenants and
obligations to purchase the Product from the Supplier and/or its Affiliates as set forth in this
Agreement.

2.00          TERM

2.1            The term of this Agreement (the “Initial Term”) shall commence on
______________, 201__ and shall end on_________________ 20____, unless renewed pursuant
to Section 2.02 or terminated earlier pursuant to Section 5.1 or Section 5.3

2.2         RENEWAL

               If the Buyer is not in default under the terms of this Agreement on the expiry of
the Initial Term, the term of this Agreement shall be automatically renewed for an additional
term of _______ (___) _________ [months/years] [SPECIFY WHICH] so that it will expire


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on______________, 20___. The Initial Term and any renewal term as provided in this Section
2.02 is herein called the “Term.”

3.00            SUPPLY AND PURCHASE OBLIGATIONS

3.1             SUPPLIER’S OBLIGATIONS

               Subject to the terms and conditions of this Agreement, during the Term, the
Supplier shall supply the Buyer and its Affiliates, with the Product and Accessories that Buyer
and such Affiliates may require from time-to-time. Delivery for any orders by the Buyer shall be
made within normal time frames and generally similar to the time frames for all other customers
of the Supplier.

3.2          BUYER’S RESTRICTION

                 Any purchases made by the Buyer shall be for its own personal use or the use of
any of its affiliated entities and the Buyer shall not be entitled to resell the Product so purchased
to any arms-length third party purchasers until a period of _____ years has passed from the date
the Buyer takes delivery.

3.3           WARRANTY AND LIABILITY

               The Supplier hereby represents and warrants that the Product sold by it to the
Buyer or any affiliate shall meet prevailing industry standards for quality and shall be fit for the
purpose of its intended use. The other terms and conditions of sale shall be governed by the
standard terms and conditions contained in the Supplier’s invoices or bills of sale used by it in
connection with the sale of the Product at that time.


4.00             PURCHASE PRICE AND TERMS

4.1        Prices for the Product for the Year _201___ are set forth in Schedule 1. Commencing
      January 1, _201___, the prices for the Product shall be the best price available to the best
      customers of the Supplier from time-to-time. If the Supplier produces price lists, the
      Supplier shall provide copies of the same from time to time to the Buyer.

4.2          TERMS OF PAYMENT

               Purchase of the Product by the Buyer from the Supplier must be paid on or before
the last Business Day of the month after the month in which the Product was shipped and an
invoice therefor is given by the Supplier to the Buyer.




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{Instruction: This clause above may be modified, to reflect any other payment terms the
parties want. One such example: "Purchase of the Product by the Buyer from the Supplier
must be paid on or before the _____ day of the month after the month in which Product was
shipped and in which an invoice was given by Supplier to Buyer."}

5.00           TERMINATION

5.1            DEFAULT

              The occurrence of any one or more of the following events with respect to the
Buyer or the Supplier (for the purposes of this Section 5.01 only, a “party”) shall constitute a
default (“Default”) of that party under this Agreement:

(i)     if a party fails to make any payment, or fails to cause an Affiliate to make any payment,
        of any amount due to another party and such default continues un-remedied for a period
        of thirty (30) days following notice thereof from the non-defaulting party to the
        defaulting party; or
(ii)    if a party fails to perform or observe any of its material obligations or covenants under
        this Agreement and such failure continues un-remedied for a period of sixty (60) days
        following notice thereof (giving particulars of the failure in reasonable detail) from the
        non-defaulting party to the defaulting party, or for such longer period as may be
        reasonably necessary to cure such failure; provided, in the latter case, that the defaulting
        party has demonstrated to the satisfaction of the non-defaulting party, acting reasonably,
        that it is proceeding, and continues to proceed, with all due diligence to cure or cause to
        be cured such failure; or
(iii)   its proceeding cannot be reasonably expected to cure or cause to be cured such failure
        within a reasonable period of time acceptable to the non-defaulting party, acting
        reasonably; or
(iv)    if a party makes a voluntary assignment in favour of its creditors under any bankruptcy,
        insolvency, moratorium, reorganization or analogous law of any applicable jurisdiction or
        if a decree or order of a court having jurisdiction is issued or entered adjudging a party
        bankrupt or insolvent, ordering the winding-up or liquidation of such party or approving
        any reorganization, arrangement, compromise, composition, compounding, extension of
        time, moratorium or adjustment of liabilities of such party or any other bankruptcy,
        insolvency, moratorium, reorganization or analogous law of any applicable jurisdiction;
        or
(v)     if a trustee, receiver, receiver and manager, interim receiver, custodian, liquidator,
        provisional liquidator, agent for a secured creditor or other Person with similar powers is
        appointed in any manner in respect of a party or in respect of all or a substantial portion
        of its property or assets; or
(vi)    if a party passes any resolution for its liquidation, winding up or dissolution; or
(vii)   if any party fails to comply with the award of any arbitrator made by the later of (i) the
        time limit specified in such award or (ii) within 30 days after the date the award is
        granted; or


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(viii) if any part of this Agreement is declared to be invalid, contrary to law or unenforceable,
       in whole or in part, by any court of competent jurisdiction or any other regulatory
       authority having jurisdiction.

5.2           REMEDIES OF NON-DEFAULTING PARTY

                Upon the occurrence of a Default by a party hereto, (i) the Buyer, in the case of a
Default by the Supplier, or (ii) the Supplier, in the case of a Default by the Buyer, may by notice
to the defaulting party declare the defaulting party to be in default and may do any or all of the
following as the non-defaulting party, in its sole and absolute discretion, shall determine:

       (i)      the non-defaulting party may terminate its rights and obligations under this
                Agreement by giving thirty (30) days’ prior notice to defaulting party and the
                other non-defaulting parties; or
       (ii)     the non-defaulting party may seek specific performance, injunction or other legal
                or equitable remedies in respect of such Default.

No such remedy may be exercised by a non-defaulting party during the pendency of any dispute
resolution process with respect the particular Default which is alleged to have occurred.

6.00            DISPUTE RESOLUTION

6.1             AMICABLE NEGOTIATIONS

                Notice of a Dispute by a party must be delivered to the other party in accordance
with the notice provisions of this Agreement. Within ten (10) days after delivery of a notice of
Dispute, the receiving party shall deliver a response (“Response”) to the first party. The notice
of Dispute and the Response shall include a statement of that party’s position and a summary of
the arguments supporting that position. As soon as possible after the Response has been given,
the chief executive officers of each of the parties to the Dispute, who have full authority to settle
the Dispute, shall meet at mutually acceptable times and places as often as they consider
necessary, to make efforts in good faith to resolve the Dispute by amicable negotiations, within
fifteen days (the “Negotiation Period”) after the Response was given. Each party shall provide
to each other any information and documents relating to the Dispute reasonable requested by the
other party. Each party shall provide frank, candid and timely disclosure of all relevant facts,
information and documents to facilitate the negotiations and the settlement of the Dispute. The
negotiations shall be construed as settlement discussions, shall be confidential and shall be
conducted on a “without prejudice” basis. If one of the parties refuses or neglects to participate
in the amicable negotiations, the other party may refer the Dispute immediately to arbitration.

6.2           ARBITRATION

6.02(a)          If a Dispute is not resolved pursuant to Section 6.01 within the Negotiation Period
or if either party neglects or refuses to participate in the amicable negotiations such Dispute shall
be submitted to arbitration in accordance with the provisions of the Arbitration Rules. Neither

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party shall have the right to stay or seek postponement of any arbitration hereunder because
either or both parties have failed to comply with their obligations under Section 6 et seq..

6.02(b)       Any arbitration hereunder shall be held in _______________ unless the parties
otherwise agree. [PROVIDE LOCATION]

6.02(c)  The law to be applied in connection with the arbitration shall be the law of the
     Province/State of _______________________, [PROVIDE COUNTRY, IF NOT THE
UNITED STATES] excluding its conflict of law rules.

7.00            CONFIDENTIALITY

7.1      All negotiations and arbitration conducted, and all information and documents (whether
in tangible, electronic or digital form) exchanged by the parties in connection therewith are
confidential. Such information and documents shall not be disclosed to any Person other than:

(i)       the parties, their legal counsel and any of their representatives who need to know such
          information and documents for the purposes of such negotiations or arbitration; and
(ii)      an arbitrator or arbitrators, if any; and
(iii)     except as may be required by applicable law or except in the course of any judicial
          proceeding.

If either party fails to comply with the provisions of this Section 7.01 before or prior to the
completion of any arbitration, the Arbitrator may enjoin further breaches by such party of this
provision, impose penalties on such party or deny to such party all or any of the defenses or
remedies sought by such party in the arbitration. On completion of any negotiations or
arbitration conducted under this Article 7, each party shall return to the other or destroy all
copies of such information or documents, whether in tangible, electronic or digital form.

7.2           SURVIVAL

                The provisions of this Article 7 shall survive any termination of this Agreement.
The provisions of this Article 7 shall continue in full force and effect notwithstanding any
determination by a court or the parties that one or more other provisions of this Agreement are
invalid, contrary to law or unenforceable.

8.00           GENERAL PROVISIONS

8.1           ENTIRE AGREEMENT

                This Agreement constitutes the entire agreement between the parties pertaining to
the subject matter hereof and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties and there are no representations, warranties or
other agreements between the parties in connection with the subject matter hereof except as
specifically set forth herein or therein. The parties acknowledge and agree that they have not

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relied on any representation, warranty, statement or understanding, except as expressly provided
herein, in entering into this Agreement.

8.2         APPLICABLE LAW

               This Agreement shall be governed by, and interpreted and enforced in accordance
with, the laws in force in the Province/State of __________________ (excluding any conflict of
laws rule or principle which might refer such construction to the laws of another jurisdiction).
Each party hereto irrevocably submits to the non-exclusive jurisdiction of the Courts of
____________, as applicable, with respect to any matter arising hereunder or related hereto.
{Instruction: Provide state and (if necessary) county/province/territory, and (if necessary)
country where parties agree a disputed matter will be heard.}

8.3         AMENDMENT

              This Agreement may only be amended, modified or supplemented by a written
agreement signed by each party.

8.4         WAIVER

                No waiver of or consent to departure from the requirements of any provision of
this Agreement shall be binding against any party unless the same is in writing and is signed by
such party and then such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it has been given. No failure on the part of any party to exercise,
and no delay in exercising any right under this Agreement shall operate as a waiver of such right.
No single or partial exercise of any such right shall preclude any other or further exercise of such
right or the exercise of any other right.

8.5        TIME

               Time shall be of the essence of this Agreement and of each of its provisions.

8.6         FURTHER ASSURANCES

               Each party agrees to make, execute, deliver or cause to be done, executed and
delivered all such further acts, documents and things as may be reasonably required for the
purpose of giving effect to this Agreement immediately upon the request of another party.

8.7         SUCCESSORS AND ASSIGNS

                This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective successors (including by way of amalgamation or statutory
arrangement of a party) and permitted assigns. The Supplier may assign this Agreement to an
Affiliate on condition that the Supplier continues to be liable for all its obligations hereunder and
that the Affiliate becomes a party to this Agreement. Subject to the foregoing, this Agreement is
not assignable by any party in whole or in part.

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8.8         AFFILIATES

               If requested by the Supplier, the Buyer shall cause any Affiliate of the Buyer
designated by the Supplier to enter into an agreement with the Supplier or one or more Affiliates
of the Supplier having substantially the same terms as this Agreement. The Buyer agrees to act
in good faith and to avoid structuring the business and affairs of the Buyer and its Affiliates in a
manner which will permit them to avoid having to fulfill the spirit of this Agreement.

8.9          NOTICES

               Any notice or other communication required or permitted to be given hereunder
or for the purposes hereof (hereinafter in this Section 8.09 called a “notice”) to any party shall be
in writing and shall be sufficiently given if delivered personally to such party, or if sent by
prepaid registered mail or if transmitted by facsimilie to such party:

if to the Buyer, to it at:




                         Attention: _______________
                         Fax            No:                        (____)             ___________




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if to the Supplier, to it at:




                         Attention: _______________
                         Fax No: (___) ____________

or at such other address as the party to whom such notice is to be given shall have last notified
the party giving such notice. Any notice delivered to the party to whom it is addressed as
provided herein shall be deemed to have been given and received on the day it is so delivered at
such address, provided that if such day is not a Business Day, then the notice shall be deemed to
have been given and received on the next Business Day. Any notice mailed as provided herein
shall be deemed to have been given and received on the third Business Day following the date of
its mailing provided that no postal strike is then in effect or comes into effect within two
Business Days after such mailing. Any notice transmitted by facsimile shall be deemed given
and received on the day of its transmission if such day is a Business Day and has been received
by 3:00 p.m., and if not, shall be deemed received as of 9:00 a.m. on the next Business Day.

8.10             COUNTERPARTS

              This Agreement may be executed in several counterparts, each of which shall be
deemed to be an original, but all such counterparts together shall constitute one agreement.

8.11             INDEPENDENT CONTRACTOR

                The Buyer shall not, by virtue of this Agreement, constitute or be deemed to be an
agent or representative of the Supplier for any purpose whatsoever and the Buyer shall perform
all of its obligations under this Agreement as an independent contractor using its own officers
and employees or those retained by it. Nothing contained by this Agreement shall be construed
to create an association, trust, partnership or joint venture or impose a trust or partnership duty,
obligation or liability or, except as expressly provided herein, an agency relationship on or with
regard to any party. Except as expressly provided herein, each party shall be individually and
severally liable for its own obligations under this Agreement.

8.12            CONFIDENTIALITY

                Each party shall keep confidential and not disclose to third parties, without the
prior written consent of the other party, any confidential information relating to the other party or
to this Agreement. Confidential information shall not include information that (a) is or becomes
publicly available as a result of no act or omission of the receiving party; (b) is known to or is in
rightful possession of the receiving party at the time of disclosure; (c) is thereafter disclosed by a
third party that the receiving party reasonably believes is not under any obligation of
confidentiality and is lawfully in the possession of such information; (d) is independently
developed by the receiving party; or (e) is required to be disclosed by order of a court of
competent jurisdiction, administrative agency or governmental body, or by subpoena, summons


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or other process, or by applicable law, provided that prior to such disclosure by the receiving
party, the disclosing party is given reasonable advance notice of such order and an opportunity to
object to such disclosure. Each party will carry out these obligations of confidentiality using the
same degree of care that it uses in protecting its own proprietary material and information, but at
least a reasonable degree of care.

8.13           SEVERABILITY

                In the event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of any such provision in such jurisdiction in
any other respect and of the remaining provisions herein shall not be affected or impaired
thereby.

               IN WITNESS WHEREOF the parties hereto have duly executed this
Agreement.

                                                       (SUPPLIER)
                                                        Per:


                                                       Name: ______________
                                                       Title: _________________
                                                       I have authority to bind the Company.

                                                       (BUYER)
                                                       Per:


                                                       Name: __________________
                                                       Title: ________________
                                                       I have authority to bind the Company.




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                                SCHEDULE 1
                           PRICES FOR YEAR 2_____




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DOCUMENT INFO
Description: This Product Supply Agreement is made between a manufacturer and a buyer whereby the buyer purchases products from the manufacturer for distribution. The buyer agrees to use its best efforts to promote the sale of the product and the agreement contains provisions to protect the manufacturer's intellectual property rights in the product. This document sets forth the material terms and conditions of the agreement including the purchase price, the term of the agreement, renewal and termination. It contains numerous standard provisions and may be customized to address the specific needs of the parties. This should be used by product manufacturers and retailers that want to sell their products.
This document is also part of a package Product Development Starter Kit 9 Documents Included