VIEWS: 522 PAGES: 20 CATEGORY: Purchase and Sale Agreements POSTED ON: 7/20/2010
A Product Supply Agreement is an agreement between a buyer and a supplier whereby the buyer agrees to purchase and receive certain products from the supplier pursuant to certain terms and conditions. The agreement is for a certain term with an option to renew for a further five years on the termination date of the agreement.
PRODUCT SUPPLY AGREEMENT THIS AGREEMENT is made as of the _____ day of ___________, 2______. B E T W E E N: ______________________________________ a corporation incorporated under the laws of the State of ____________, (“Buyer”) - and - ________________________________________ a corporation incorporated under the laws of the State of _____________, (“Supplier”) BACKGROUND: 1. The Buyer wishes to enter into this Product Supply Agreement to receive the supply of Products from the Supplier. 2. The Supplier wishes to enter into this Product Supply Agreement to supply Products to the Buyer and its Affiliates. IN CONSIDERATION of the premises and the mutual covenants and agreements contained in this Product Supply 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: ARTICLE 1 INTERPRETATION 1.1 Definitions etc. In this Product Supply Agreement: “Affiliate”, means in the case of Supplier, any subsidiary of Supplier; “Arbitration Rules” means the rules of procedure for arbitration of the governing jurisdiction; “Business Day” means any day of the week other than a Saturday, Sunday or any statutory or civic holiday observed in ______________________(enter city and state); “Default” has the meaning ascribed thereto in Section 6.2; “Disputes” includes all disputes, controversies, claims, counterclaims or similar matters: (a) which relate to or arise out of or in connection with this Product Supply Agreement including the validity, construction, meaning, performance or effect of this Product Supply Agreement or the rights and liabilities of the parties to this Product Supply Agreement; or (b) in respect of any defined legal relationship associated with this Product Supply Agreement or derived from it; whether they arise during the term of this Product Supply Agreement or thereafter; “Force Majeure” has the meaning set forth in Section 5.3; “Governmental Authority” means (i) any court or legislative, executive, regulatory or administrative authority or agency of Canada or the United States or any province or state thereof and (ii) any federal, provincial, state, local, municipal or other political subdivision of Canada or the United States or any province or state thereof; “Initial Term” has the meaning set forth in Section 2.1; “Negotiation Period” has the meaning set forth in Section 7.2; “Person” shall be broadly interpreted and includes an individual, body corporate, partnership, joint venture, trust, association, unincorporated organization, the Crown, any Governmental Authority or any other entity; “Price Period” means the period commencing when the Supplier institutes a price change and ending when the Supplier institutes the next following price change; “Products” means ___________________________(enter description of Product to be supplied), which meet industry specifications at the relevant time, which are produced or sold by Supplier or its Affiliates at the relevant time; “subsidiary” and “body corporate” have the respective meanings set forth in the laws of the governing jurisdiction; “Product Supply Agreement” means this Product Supply Agreement, the Background and any agreement or schedule supplementing or amending this Product Supply Agreement, as the same may be supplemented, amended or restated from time to time; “Term” has the meaning set forth in Section 2.2; “Year” means a calendar year commencing January 1. 1.2 Statutes Unless specified otherwise, reference in this Product Supply 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 Product Supply 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 The division of this Product Supply 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 Product Supply Agreement. The article, section, subsection and schedule headings in this Product Supply 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 Product Supply Agreement. All uses of the words “hereto”, “herein,” “hereof,” “hereby” and “hereunder” and similar expressions refer to this Product Supply 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 Product Supply Agreement. 1.5 Performance on Holidays If any action is required to be taken pursuant to this Product Supply 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 Calculation of Time In this Product Supply Agreement, a period of days shall be deemed to begin on the first day after the event which began the period and to end at 5:00 p.m. on the last day of the period. If, however, the last day of the period does not fall on a Business Day, the period shall terminate at 5:00 p.m. on the next Business Day. 1.7 Currency and Units of Measurement Unless specified otherwise, all statements of or references to dollar amounts in this Product Supply Agreement are to lawful money of the United States. 1.8 Schedules The following Schedules form part of this Product Supply Agreement: Schedule Description of Schedule 1 Prices for Period January 1, 2_________ to ___________ 2 Rules of Procedure for Arbitration 1.9 Third Party Beneficiaries Nothing in this Product Supply 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. 1.10 Including etc. Whenever the words “include”, “includes” or “including” are used in this Product Supply Agreement, they shall be deemed to be followed by the words “without limitation”, unless the context otherwise requires. ARTICLE 2 TERM 2.1 Term The term of this Product Supply Agreement (the “Initial Term”) shall commence on ________________ and shall end on ________________, unless renewed pursuant to Section 2.2 or terminated earlier pursuant to Section 6.1 or Section 6.3 2.2 Renewal If Supplier is not in default under the terms of this Product Supply Agreement on the expiry of the Initial Term, the term of this Product Supply Agreement shall be automatically renewed for an additional term of five (5) years so that it will expire on the December 31, 2_____. The Initial Term and any renewal term as provided in this Section 2.2 is herein called the “Term”. ARTICLE 3 SUPPLY AND PURCHASE OBLIGATIONS 3.1 Supplier’s Obligation Subject to the terms and conditions of this Product Supply Agreement, during the Term, Supplier shall supply Buyer, with all the Products that Buyer and such Affiliates may require from time to time to manufacture or produce the goods manufactured or produced by Buyer and such Affiliates from time to time. 3.2 Buyers’ Obligation Buyer shall cause its Affiliates to, purchase from Supplier or its Affiliates, (i) all the Products that they require to manufacture or produce the goods manufactured or produced by them which require the Products and (ii) all Products that any of them wishes to resell to third parties. Buyer agrees not to and Hargest shall cause his Affiliates not to, purchase any Product (or any substitute or replacement therefor) from any Person other than Supplier or an Affiliate, unless such purchase is expressly permitted by this Product Supply Agreement. 3.3 Warranty and Liability Supplier hereby represents and warrants that any Products sold by it to the Buyer or an Affiliate shall meet prevailing industry standards for quality and shall be fit for the purpose for what they were intended, as they are then manufactured by the Buyer. 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 Products at that time. ARTICLE 4 PURCHASE PRICE AND TERMS 4.1 Price (a) Prices for the Year 2______ broken down by Product for the period, January 1, 2_____ to ___________ are set forth in Schedule 1. Commencing ___________, the parties shall negotiate in good faith to determine the prices by Product for the balance of the year 2_____ commencing _________. If the parties have not agreed on such prices by _________, either party may submit the determination of such prices directly to arbitration pursuant to Section 7.3. The Supplier shall continue to supply Products to the Buyer on and after ___________ at the then current prices while such matter is arbitrated, but upon the determination of the prices by the arbitrator, there shall be an adjusting payment by the Supplier to the Buyer or the Buyer to the Supplier as the case may be, to reflect the difference in prices between those in effect on ___________ and those determined by the arbitrator. (b) On or before ____________ in each Year, Supplier shall provide to the Buyer a certificate of its auditor as to the Customer Average for each Price Period which occurred during the immediately preceding Year. 4.2 Terms of Payment Purchases of Products by the Buyer from Supplier must be paid on or before the last Business Day of the month after the month in which an invoice therefor is given by Supplier to a Buyer. ARTICLE 5 SPECIAL CIRCUMSTANCES 5.1 Inability of Supplier to Supply If Supplier is unable to supply the Buyer with enough Products to satisfy the Buyer’s production needs at any time during the Term such that the Buyer will, as a result, have to shut down or curtail production, and provided that such inability is not due to such Buyer failing to follow Supplier’s standard order procedures or due to the Buyer requiring delivery otherwise than on such Supplier’s usual delivery terms, the Buyer may purchase Products from other suppliers but only in quantiti
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