Supply Agreement

Supply Agreement

This Supply Agreement is made on [AGREEMENT DATE] (the “Effective Date”) between [SUPPLIER NAME], a [CORPORATE JURISDICTION] corporation with its principal place of business at [SUPPLIER ADDRESS] (the "Supplier") and [COMPANY NAME], a [CORPORATE JURISDICTION] corporation with its principal place of business at [COMPANY ADDRESS] (the "Purchaser").

The parties agree as follows:

1. Definitions. In addition to the terms defined above, the following definitions apply:

1.1. "Confidential Information" means all [material] [non-public] [business-related] information, written or oral[, whether or not it is marked as confidential], disclosed or made available to the Purchaser,[ directly or indirectly,] through any means of communication by the Supplier or any of its representatives, but does not include information that

(a) is or becomes publicly known through no wrongful act of the Purchaser,

(b) the Purchaser received in good faith on a non-confidential basis from a source other than the Supplier or its representatives,

(c) was in the Purchaser's possession before its disclosure by the Supplier or its representatives,

(d) the Purchaser developed independently without breach of this agreement, or

(e) the Supplier has explicitly approved, by Notice to the Purchaser, for release to a third party.

1.2. "Governmental Authority" means

(a) the government of the United States or any other nation, or any of its or their geographical or political units or subdivisions, and

(b) any body, agency, tribunal, arbitrator, court, authority, or other entity that exercises executive, legislative, judicial, taxing, regulatory, or administrative powers or functions of, or relating to, government.

1.3. "Insolvency Event" means any of the following:

(a) Insolvency. The Purchaser admits in writing that it is insolvent or unable to pay its debts, or fails generally to pay its debts as they become due.

(b) Bankruptcy. The Purchaser files a voluntary petition, or one or more of its creditors file a petition, seeking its rehabilitation, liquidation, or reorganization under any Law relating to bankruptcy, insolvency, or other relief of debtors and the petition is not removed within [90] days of filing.

(c) Receivership. A receiver or other custodian is appointed to take possession of substantially all of the Purchaser's assets.

(d) Dissolution. The Purchaser takes any action toward the dissolution or winding up of its affairs or the cessation or suspension of its activities.

(e) Liquidation. A court of competent jurisdiction enters a decree or order directing the winding up or liquidation of the Purchaser or of all or substantially all of its assets.

(f) General Assignment. The Purchaser makes a general assignment for the benefit of its creditors.

(g) Attachment. Any attachment, execution, or other judicial seizure is levied against all or substantially all of the Purchaser's assets.

1.4. "Law" means

(a) any law (including the common law), statute, by-law, rule, regulation, order, ordinance, treaty, decree, judgment, and

(b) any official directive, protocol, code, guideline, notice, approval, order, policy, or other requirement of any Governmental Authority having the force of law.

1.5. ["Licensed Trademarks" means the trademarks owned now and in the future by the Purchaser in connection with any of the Products.]

1.6. "Non-Conforming Product" means a Product that does not conform in all material respects to the Supplier's warranties.

1.7. "Notice" means any notice, request, direction, or other document that a party can or must make or give under this agreement.

1.8. "Person" includes

(a) any corporation, company, limited liability company, partnership, Governmental Authority, joint venture, fund, trust, association, syndicate, organization, or other entity or group of persons, whether incorporated or not, and

(b) any individual.

1.9. "Products" means [DESCRIPTION OF PRODUCTS].

1.10. "Secondary Vendor" means a third party that sells products that are the same as or substantially similar to any of the Products.

1.11. "Supply Forecast" means the Purchaser's written forecast of its anticipated demand for all Products from the Supplier in the four calendar quarters next following the quarter in which the Supply Forecast is scheduled to be delivered.

1.12. ["Territory" means [DESCRIPTION OF TERRITORY].]

1.13. ["Trademark Use Policy" means the Supplier's Trademark Use Policy[, a copy of which is attached as Schedule B], currently in effect and as amended on one or more occasions.]

2. Supply and Purchase of Products. The Supplier shall supply, or cause to supply, to the Purchaser the Purchaser's requirements for Products in accordance with the terms of this agreement.

3. [Exclusivity. The Purchaser shall purchase all its requirements for Products from the Supplier.]

4. No Other Obligations. The Supplier will not be obligated to supply to the Purchaser, and the Purchaser will not be obligated to purchase from the Supplier, any items other than the Products.

5. Quality Standards

5.1. Supplier's Adherence to Standards. The Supplier shall supply the Products to the Purchaser in the same general manner and of the same general quality [as industry standards and] as with the Purchaser's current practice and product specifications.

5.2. Substitutions. The Supplier may substitute ingredients or components of similar or better quality for specified ingredients or components so long as the substitution does not materially alter the quality of the Product into which the ingredient or component is incorporated.

6. Availability of Products

6.1. No Guarantee of Availability. The Supplier shall make reasonable efforts to supply all Products ordered in conformity with this agreement. The Supplier does not, however, guarantee the availability of any Products.

6.2. Shortages of Products. If shortages of any ordered Products arise for any reason, the Supplier may allocate any of its products among its customers, including the Purchaser, on any reasonable basis of its choice.

7. Delivery. The Supplier shall deliver the ordered Products no more than [NUMBER] days after the delivery date noted in the applicable purchase order.

8. Non-Conforming Products

8.1. Notice to Supplier. The Purchaser shall immediately give Notice to the Supplier if the Purchaser becomes aware of having received any Non-Conforming Products.

8.2. Supplier's Options. The Supplier shall, in that case, either

(a) replace all Non-Conforming Products at its own expense (including transportation costs of getting replacement Products to the Purchaser), or

(b) credit the Purchaser account for the delivered price of the Non-Conforming Products plus transportation expenses.

8.3. Liability for Non-Conforming Products. The Supplier's replacement of or credit for a Non-Conforming Products in accordance with this agreement will be the Supplier's entire liability and the Purchaser's exclusive remedy in the matter.

9. Invoices

9.1. Invoice Terms. The Supplier shall invoice the Purchaser on [or after] the date of shipment.

9.2. Invoice Requirements. Each invoice will be in writing and contain (a) an invoice number, (b) an invoice date and accounting period, and (c) a detailed accounting of the Products shipped and any other item submitted for payment.

10. Supply Forecasts. On or before the Effective Date, and thereafter on or before the last day of each calendar quarter, the Purchaser shall send the Supplier a Supply Forecast. The Supply Forecast will be a binding commitment on the Purchaser's behalf to purchase during the first quarter included in each Supply Forecast at least [MINIMUM PRODUCT PURCHASE PERCENTAGE]% of the quantity of the listed Product.

11. Purchase Orders

11.1. Use of Standard Form. The Purchaser shall submit Product purchase orders on the Supplier's standard form.

11.2. Contents of Order. The purchase order will

(a) identify the items requested and their price, and

(b) state the quantity, date, time, and mode and place of delivery.

11.3. Acceptance of Order. The Supplier shall respond promptly to the Purchaser's purchase order, advising the Purchaser whether it accepts the order. Purchase orders will only become binding on the parties when the Supplier gives the Purchaser Notice of its acceptance. The Supplier will be deemed to have waived any objection to the terms of a purchase order upon its delivery of the Products detailed in the order..

11.4. Rejection of Order. The Supplier's Notice of rejection shall state the specific grounds for rejection.

11.5. Order Adjustments. Supplier acknowledges that Purchaser may be required to modify Orders from time to time.

12. Restrictions on Sales. The Purchaser shall not resell or use any Products supplied under this agreement in a manner that is inconsistent with

12.1. applicable Laws or industry guidelines affecting the safety and quality of such products, or

12.2. any reasonable instructions that the Supplier provides to its clients, on one or more occasions, for maintaining the quality and safety of the Products.

13. Trademarks

13.1. [Grant of Trademark License. In order to enable the Purchaser to properly sell the Products, the Supplier grants to the Purchaser, and the Purchaser accepts, a limited, non-exclusive, non-transferable, and revocable license to use the Licensed Trademarks in the Territory in association with the Products.]

13.2. Use of Licensed Trademarks. The Purchaser shall use and display the Licensed Trademarks only

(a) in association with the marketing and sale of the Products,

(b) in the manner and form that they are registered under the US Trademark Act of 1946, and

(c) in accordance with the terms of this agreement.

13.3. Advertising. The Purchaser may, in the Territory,

(a) indicate to the public that it is an authorized supplier of the Products, and

(b) use the Licensed Trademarks to advertise the Products.

13.4. Notice on Licensed Trademarks. The Purchaser shall place the following notice (or any other notice that the Supplier may request[ in writing] on one or more occasions) in a legible manner on each licensed product that forms part of the Products and on any Promotional Materials (including any content posted on any Internet site):

"Mark(s) of [SUPPLIER NAME]; used under license by [COMPANY NAME]."

13.5. Reservation of Rights. Any rights not expressly granted to the Purchaser in this agreement are reserved to the Supplier. The Purchaser does not acquire any rights other than the right to use the Licensed Trademarks in accordance with the terms of this agreement.]

13.6. Use of Licensed Trademarks

(a) Trademark Use Policy. The Purchaser shall abide strictly by the guidelines set out in Trademark Use Policy. The Supplier shall give reasonable Notice to the Purchaser of any changes to the Trademark Use Policy.

(b) Benefit of Use of Licensed Trademarks. The Purchaser acknowledges that any use by it of the Licensed Trademarks accrues to the benefit of the Supplier.

(c) Documenting Use of Licensed Trademarks. The Purchaser shall assist the Supplier, if requested, by providing documentation of its use of the Licensed Trademarks in connection with any trademark application.

(d) No Removal of Trademarks. The Purchaser shall not alter or remove any of the Licensed Trademarks that have been applied to the Products.

(e) No Use in Business Name. The Purchaser shall not use any of the Licensed Trademarks as part of its business name or as part of prominent signage displaying its business name.

(f) No Registrations based on Licensed Trademarks. The Purchaser shall not create or register any new service or trademarks or tradenames based in whole or in part on any of the Licensed Trademarks.

(g) No Rebranding. The Purchaser shall not rebrand or private label any of the Licensed Trademarks.]

14. Price and Payment

14.1. Product Prices. The initial prices for all Products are set forth in Schedule A. All prices are FOB the Supplier's designated shipping point.

14.2. Updated Price List. The Supplier shall update its price list each calendar quarter and give Notice of the updated list to the Purchaser no later than [15] days before the end of each calendar quarter.

14.3. Payment Terms. Payments are due and payable in full within [30] days after the date of the Product shipment or the date on which any other charge accrues, as applicable.

14.4. Payment Net of Taxes. All payments are exclusive of taxes. The Purchaser shall pay, and the Supplier shall collect and remit, any taxes payable.

14.5. Late Payments. Any amount not paid when due will bear interest from the due date until paid at a rate equal to [1]% per month ([12.68]% annually) or the maximum allowed by law, whichever is less.

15. Term

15.1. Initial Term. The initial term of this agreement will begin on [TERM START DATE] and end on [TERM END DATE], unless terminated earlier.

15.2. Renewal Terms. Following the initial term, this agreement will automatically renew for successive [RENEWAL TERM PERIODS] terms, unless terminated earlier. If a party elects not to renew this agreement, that party shall provide Notice of that intention to the other party at least [NON-RENEWAL NOTICE PERIOD] days' before the renewal date.

16. Parties' Representations

16.1. No Conflicts. Each party states that it under no restriction or obligation that may affect the performance of its obligations under this agreement.

17. Supplier Warranty. The Supplier warrants to the Purchaser that, at the time and place of delivery to the Purchaser, all Products will

(a) be fit for the purpose intended, merchantable, and free from all defects, and

(b) comply with all Laws relating to the production, distribution, and sale of the Products.

18. Purchaser' Acknowledgements

18.1. Allocation of Risk. The Purchaser acknowledges that the prices that the Supplier sets for the Products reflect the allocation of risk between them and that, accordingly, the Supplier would not enter into this agreement without the limitations of its liability and the warranty disclaimers contained in this agreement.

18.2.  [Material Inducement. The Purchaser's agreement to source all of its Product requirements exclusively from the Supplier is a material inducement to the Supplier entering into this agreement.]

19. Compliance with Laws. Each party shall comply with all Laws applicable to the production, distribution, and sale of the Products.

20. Confidentiality

20.1. Confidentiality Obligations. The Purchaser shall hold all Confidential Information in confidence in accordance with the terms of this agreement.

20.2. Use Solely for Purpose. The Purchaser shall use the Confidential Information solely for the purpose intended under this agreement.

20.3. Permitted Disclosure. The Purchaser may disclose Confidential Information to its representatives but only

(a) to the extent necessary to carry out the purpose,

(b) if the Purchaser first informs them of, and directs them to maintain, its confidential nature in accordance with the terms of this agreement[, and

(c) upon the Supplier's request in connection with any of its representatives, if they each first enter into separate written agreements to that effect[ in a form acceptable to the Supplier.

20.4. Required Disclosure. The Purchaser may disclose Confidential Information to a third party if it is required to do so by Law but only if, before that disclosure, the Purchaser, to the extent permitted by Law,

(a) gives the Supplier Notice to allow it a reasonable opportunity to either seek a protective order or other appropriate remedy or waive the Purchaser's compliance with this section,

(b) reasonably cooperates with the Supplier[, at the Supplier's expense,] in its reasonable efforts to obtain a protective order or other appropriate remedy,

(c) discloses only that portion of the Confidential Information that[, having consulted with its counsel,] it is legally required to disclose, and

(d) uses reasonable efforts to obtain reliable written assurance from the third party that the Confidential Information will be kept confidential.

20.5. Value and Nature of Confidential Information. The parties acknowledge that the Confidential Information is proprietary and has competitive value. Accordingly, any disclosure to the Supplier's competitors or to the public would be detrimental to the best interests of the Supplier, which may incur losses, costs, and damages as a result.

20.6. Burden of Proof. The Purchaser will have the burden of proof relating to all exceptions to the definition of Confidential Information.[ The Purchaser may rely on its own written records in support of its position.]

21. Purchase from Secondary Vendor. The Purchaser may purchase Products from a Secondary Vendor in any of the following situations:

21.1. if the Supplier is unable to fill all or any part of a purchase order for a Product within [30] days after the delivery date noted in the order, the Purchaser may purchase the unfilled portion of the order from a Secondary Vendor, until such time as the Supplier is able to supply the quantity of the ordered Product to the Purchaser, at which time the Purchaser will once again be obligated to purchase its Product requirements only from the Supplier,

21.2. if the Supplier elects to discontinue producing a Product, the Purchaser may purchase the discontinued Product from a Secondary Vendor, or

21.3. if the Supplier elects not to produce any new product desired by the Purchaser, the Purchaser may purchase the new product from a Secondary Vendor.

22. Inspection

22.1. Right to Inspect Supplier's Facility. The Purchaser may, on reasonable advance Notice, no more than twice during any [12] month period, and with the Supplier's consent (such consent not to be unreasonably withheld), inspect that part of the Supplier's facility engaged in the manufacture of the Products.

22.2. Conduct of Inspection. The Purchaser shall conduct any inspection at a time during normal business hours when production for the Purchaser is taking place and in a manner so as not to unreasonably disrupt the Supplier's business. During its inspection the Purchaser may view and audit the production logs for the Products. The Purchaser shall otherwise restrict the scope, manner, and duration of its inspection to what is reasonably necessary to achieve its purpose. Any costs associated with the inspection will be for the Purchaser's account.

22.3. Quality Control Checks. The Supplier shall conduct regular quality control checks of its Product production process to ensure that quality standards are upheld. The Supplier shall also provide commercially reasonable reports based on these checks to the Purchaser upon request, but no more than [two] times a year.

23. Termination

23.1. Termination upon Notice. Either party may terminate this agreement for any reason upon [TERMINATION FOR CONVENIENCE NOTICE] business days' Notice to the other party.

23.2. Termination upon Breach

(a) Failure to Pay. If the Purchaser fails to pay when due any amount owing under this agreement and that failure continues for [five] business days, the Supplier may terminate this agreement, with immediate effect, by giving Notice to the other party.

(b) Any Other Breach. If one party

(i) commits any material breach or material default in the performance of any obligation under this agreement (other than the Purchaser's obligation to pay money), and

(ii) the breach or default continues for a period of [CURE PERIOD] business days after the other party delivers Notice to it reasonably detailing the breach or default,

(iii) then the other party may terminate this agreement, with immediate effect, by giving Notice to the first party.

23.3. Termination upon Insolvency Event. This agreement will terminate immediately upon the occurrence of an Insolvency Event.

24. Effect of Termination

24.1. Return of Property. Upon termination[ or expiration] of this agreement, the Purchaser shall return to the Supplier all the Supplier property, both originals and copies, under its direct or indirect control.

24.2. Fulfillment of Certain Orders. Upon Termination upon Notice in accordance with section 23.1, the Company shall fulfill those purchase orders that the Company accepted before the termination date.

25. Third Party Infringement

25.1. Notice to Supplier. The Purchaser shall promptly give Notice to the Supplier when it becomes aware of any actual, suspected, or threatened Infringement of the Licensed Trademarks by a third party in the Territory. The Supplier may, in that case, take any steps it considers appropriate to enforce its rights in the Licensed Trademarks. The Purchaser[, at its own expense,] shall cooperate with the Supplier to the fullest possible extent.

25.2. Purchaser's Rights. If, within [10] business days of receipt of the Purchaser's Notice, the Supplier either fails to respond to the Purchaser's Notice or gives Notice to the Purchaser that it elects not to take any steps to enforce its rights, the Purchaser may, upon Notice to the Supplier, take any steps it considers appropriate in the circumstances in the name and on behalf of the Supplier. The Purchaser may then keep any damages or proceeds of settlement it obtains as a result.

26. Claim of Infringement against Purchaser

26.1. Notice to Supplier. The Purchaser shall promptly give Notice to the Supplier of any action, claim, or demand brought or threatened by a third party against it arising out of its use of the Licensed Trademarks in accordance with this agreement. The Supplier shall, in that case, take all steps it considers appropriate, at its own expense, to defend the Purchaser and the Licensed Trademarks (including settling any legal actions in the Purchaser's name). The Purchaser shall, at its own expense, cooperate with the Supplier to the fullest possible extent.

26.2. Claims Resulting from Purchaser's Breach. If it is established that the third party's action, claim, or demand resulted from a material breach of the Purchaser's obligations under this agreement, the Purchaser shall reimburse the Supplier for all costs and expenses (including legal fees) incurred in defending the Purchaser and the Licensed Trademarks.

27. Indemnification

27.1. Supplier Indemnity. The Supplier shall indemnify the Purchaser[ and its directors, officers, employees, shareholders, partners, agents, and affiliates,] against all claims, liability, and expenses (including legal fees) arising from any third party claim or proceeding brought against the Purchaser arising out or relating any defects or irregularities in any of the Products sold under this agreement that exist upon delivery to the Purchaser, except to the extent any the claims arise out of or are related to the Purchaser's negligence.

27.2. Notice of Claim. The Purchaser shall give prompt Notice to the Supplier of any claim or potential claim for indemnification under this section.

28. Limited Liability

28.1. Limitation of Liability. Neither party will be liable for breach-of-contract damages that the breaching party could not reasonably have foreseen on entering into this agreement. In no event will the Supplier be liable to the Purchaser for any compensation arising from the expiration or termination of this agreement.

28.2. No Liability towards Customers. This agreement does not create any liability of the Supplier towards any customer.

28.3. Liability for Defects, etc. The Supplier will not be liable for any defects caused after delivery of the Products to the Purchaser under this agreement, or for any variation not caused by or beyond the control of the Supplier.

28.4. Maximum Amount of Supplier Liability. In no event will the Supplier's aggregate, cumulative liability arising out of or related to this agreement exceed the sum of all amounts that the Purchaser has actually paid to it during the six month period immediately preceding the first event giving rise to liability.

29. General

29.1. Entire Agreement. This agreement contains all the terms agreed to by the parties relating to its subject matter. It replaces all previous discussions, understandings, and agreements.

29.2. Further Assurances. Each party, upon receipt of Notice from the other party, shall sign (or cause to be signed) all further documents, do (or cause to be done) all further acts, and provide all assurances as may reasonably be necessary or desirable to give effect to the terms of this agreement.

29.3. Amendment. This agreement may only be amended by a written document signed by both parties.

29.4. Assignment. The Purchaser may not assign this agreement or any of its rights or obligations under this agreement without the Supplier's prior written consent. The Supplier may assign this agreement or any of its rights or obligations under this agreement, effective upon Notice to the Purchaser.

29.5. No Partnership. Nothing contained in this agreement creates a partnership, joint venture, principal-and-agent, or any similar relationship between the parties.

29.6. Third Party Beneficiaries. The Indemnification terms of this agreement confer rights and remedies upon the Supplier's directors, officers, employees, shareholders, partners, agents or affiliates. No Person other than the parties themselves and those beneficiaries has any rights or remedies under this agreement.

29.7. Notices

(a) Form of Notice. All notices and other communications between the parties must be in writing.

(b) Method of Notice. Notices must be given by (i) personal delivery, (ii) a nationally-recognized, next-day courier service, (iii) first-class registered or certified mail, postage prepaid[, (iv) fax][ or (v) electronic mail] to the party's address specified in this agreement, or to the address that a party has notified to be that party's address for the purposes of this section.

(c) Receipt of Notice. A Notice given in accordance with this agreement will be effective upon receipt by the party to which it is given or, if mailed, upon the earlier of receipt and the fifth business day following mailing.

29.8. Remedies Cumulative. The rights and remedies available to a party under this agreement are cumulative and in addition to, not exclusive of or in substitution for, any rights or remedies otherwise available to that party.

29.9. Survival. Sections 7 (Confidentiality), 8 (Non-Competition), 9 (Non-Solicitation), and 10.4 (Effect of Termination) survive the termination[ or expiration] of this agreement.

29.10. Severability. If any part of this agreement is declared unenforceable or invalid, the remainder will continue to be valid and enforceable.

29.11. Waiver. A party's failure or neglect to enforce any of rights under this agreement will not be deemed to be a waiver of that party's rights.

29.12. Equitable Relief. The Purchaser acknowledges that its breach or threatened breach of any its obligations under sections 7 (Confidentiality), 8 (Non-Competition), or 9 (Non-Solicitation) would not be susceptible to adequate relief by way of monetary damages only. Accordingly, the Supplier may, in that case, apply to court for any applicable equitable remedies (including injunctive relief), without the need to post any security.

29.13. Governing Law. This agreement will be governed by and construed in accordance with the laws of the State of [GOVERNING LAW STATE], without regard to its conflict of laws rules.

29.14. Waiver of Jury Trial. Each party irrevocably waives its rights to trial by jury in any action or proceeding arising out of or relating to this agreement or the transactions relating to its subject matter.

29.15. Attorney Fees. If either party brings legal action to enforce its rights under this agreement, the prevailing party will be entitled to recover its costs and expenses (including reasonable attorneys' fees) incurred in connection with the action and any appeal.

29.16. Interpretation

(a) Currency. Unless otherwise specified, all dollar amounts expressed in this agreement refer to American currency.

(b) Statutes, etc. Unless specified otherwise, any reference in this agreement to a statute includes the rules and policies made under that statute and any provision that amends, supplements, supersedes, or replaces that statute or those rules or policies.

(c) Number and Gender. Unless the context requires otherwise, words importing the singular number include the plural and vice versa, words importing gender include all genders.

(d) Headings. The headings used in this agreement and its division into sections,[ schedules, exhibits, appendices,] and other subdivisions do not affect its interpretation.

(e) Internal References. References in this agreement to articles, sections, and other subdivisions are to those parts of this agreement.

29.17. Counterparts. This agreement may be signed in any number of counterparts, each of which is an original and all of which taken together form one single document.

29.18. Effective Date. This agreement is effective as of the Effective Date, even if any signatures are made after that date.

[SUPPLIER NAME]

By:   ___________________________________

Name:

Title:

Date:

[PURCHASER NAME]

By:   ___________________________________

Name:

Title:

Date: