Sample Supply Agreement
THIS AGREEMENT is entered into this [___] day of [_________], 20[__], by and between_________, a _________corporation, with offices at _________________ (hereinafter referred to as “LICENSOR”) and [_________________], a [________________], with offices at [________________________________________] (hereinafter referred to as “LICENSEE”).
W I T N E S S E T H:
WHEREAS, LICENSOR is the owner and/or developer of certain methods, processes, equipment, and recipes used to create a specialized Product product for use in connection with the production, manufacture and sale of Product (hereinafter called “the Product”); and
WHEREAS, such methods, processes, equipment, and recipes are owned and/or developed by LICENSOR and constitute valuable trade secrets and proprietary assets of LICENSOR; and
WHEREAS, LICENSOR desires to grant a non-exclusive license to LICENSEE to manufacture and produce the Product for LICENSOR at LICENSEE’s factory located at [______________________] utilizing LICENSOR’s methods, processes, equipment, and recipes; and
WHEREAS, LICENSEE desires to obtain a non-exclusive license to use the LICENSOR’s methods, processes, equipment and recipes in order to manufacture and produce the Product for LICENSOR; and
WHEREAS, LICENSOR is willing to grant LICENSEE such a license upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the promises and agreements set forth herein, the parties, each intending to be legally bound hereby, do agree as follows:
Article 1: License Grants
(a) LICENSOR hereby grants to LICENSEE, for the Term of this Agreement as hereinafter defined, the non-exclusive right and license to use the LICENSOR’s methods, processes, equipment and recipes in connection with the manufacture and production of the Product for LICENSOR.
(b) The license granted hereunder does not pertain to any product or service other than the methods, processes, equipment and recipes used to manufacture and produce the Product.
(c) LICENSEE shall manufacture and produce the Product exclusively for LICENSOR in accordance with the terms of this Agreement.
(d) The license granted under this Agreement is specifically set forth herein, and no licenses are granted by LICENSOR to LICENSEE by implication or estoppel, and LICENSOR hereby reserves any and all rights not expressly and explicitly granted to LICENSEE in this Agreement.
Article 2: Term of the Agreement
This Agreement shall be in full force and effect commencing on [_____________], 20[_] (the “Commencement Date”) and shall extend through December 31, 2007 (the “Term”), subject to the expiration or earlier termination of this Agreement pursuant to its terms. The Term of this Agreement may be renewed or extended only upon the written agreement of the parties.
Article 3: The Product
The term “the Product” is defined as the Product used for Beard Papa cream puffs.
Article 4: Pricing
(a) In consideration for the license granted hereunder, LICENSEE shall produce the Product at its factory at the rate of [$__] per piece (the “Price”), except as such price may be adjusted or modified in accordance with the terms of this Agreement.
(b) LICENSOR and LICENSEE shall meet at least once during the Term, on or about September 30, 2007 to review LICENSEE’s costs in connection with the production, manufacture, storage and packaging of the Product. If there are significant changes to any DIRECT COSTS (whether by increase or decrease) incurred by the LICENSEE in connection with the production of the Product, and such changes are substantiated and verified by LICENSEE to LICENSOR, LICENSOR may, in its sole and absolute discretion, but is not obligated to, review the then current Price being paid by LICENSOR to LICENSEE, and to otherwise determine if an adjustment to the Price is warranted. While the LICENSOR acknowledges that the Price is intended to provide LICENSEE with a ten percent (10%) net profit in connection with the Product production and manufacture, the Price adjustment, if any, shall be determined solely at the discretion of the LICENSOR, and such adjustment may be either increase or decrease the Price.
Article 5: Invoicing and Payment Terms
(a) For purposes of this Agreement the Product shall be considered “sold” upon the date when the Product is received by LICENSOR or LICENSOR’S approved distributor, subject to acceptance by LICENSOR. Any rejection of the Product shall be in LICENSOR’s sole and absolute discretion and for any reason whatsoever.
(b) LICENSOR shall issue a weekly statement to LICENSEE setting forth all daily orders for the previous week. Such statement shall summarize all daily orders for the prior week and shall set forth the quality and cost of each item and amount due. LICENSEE shall make payment for each weekly invoice statement within approximately fourteen (14) days of receipt of the invoice statement, subject to LICENSOR’s standard accounting period.
(c) LICENSEE’s obligations for payment of fees shall survive expiration or earlier termination of this Agreement and will continue for so long as LICENSEE continues to produce the Product.
Article 6: Inspection and Audit
(a) LICENSOR shall have the right to inspect LICENSEE’s books and records and all other documents and material in the possession of or under the control of LICENSEE, with respect to the subject matter of this Agreement, on reasonable notice to LICENSEE. LICENSEE shall retain all records , including, but not limited to, correspondence, invoices, purchase orders, sales orders, ingredients used, financial statements, books of account, all costs of production, and any such other records related to the production, manufacture, storage, shipment, sale, pricing, and cost related to the Product.
(b) During the Term of the Agreement and for a period of two (2) years after expiration or earlier termination of this Agreement (or for such longer period of time if requested by LICENSOR) such records shall be open to inspection and audit by LICENSOR during LICENSEE’s normal business hours, or LICENSEE shall otherwise make such records available at such time and place as is reasonably requested by LICENSOR.
(b) LICENSOR shall have the right to inspect without advance notice (1) the facilities and premises used by LICENSEE to produce the Product; (2) all of LICENSEE’s facilities and equipment (including all components) used in connection with the production, manufacture, storage and delivery of the Product; and (3) the Product product, prior to its shipment to or on behalf of LICENSOR or its approved distributor.
Article 7: Production and Distribution
(a) LICENSEE shall sell the Product under this Agreement ONLY to LICENSOR, or as directed by LICENSOR. LICENSEE shall not sell or distribute the Product to any other person or entity without the express written permission of LICENSOR. LICENSEE is also prohibited from any sales or distributions of the Product to any Beard Papa franchises or franchisees, or any other of LICENSOR’s franchises or franchisees unless expressly consented to in writing by LICENSOR. Any failure by LICENSEE to comply with the provisions of this paragraph shall be a material breach of the Agreement.
(b) LICENSEE must use the methods, processes, equipment, ingredients and recipes as directed by LICENSOR in connection with the production and manufacture of the Product. LICENSEE is expressly prohibited from altering or modifying any of the methods, processes, equipment, ingredients and recipes without the prior written consent of LICENSOR. In the event any modifications (whether with or without the consent of LICENSOR) are made to the methods, processes, equipment, ingredients or recipes, such modifications shall be owned by and shall be the exclusive property of LICENSOR even if developed, suggested or recommended by LICENSEE.
Article 8: Warranties and Obligations
(a) LICENSOR represents and warrants that it has the right and power to grant the license granted herein and that there are no other agreements with any other party in conflict herewith.
(b) LICENSOR represents and warrants that the methods, recipes and processes used to produce the Product does not, to the best of its knowledge and belief, infringe any valid right of any third party.
(c) LICENSEE represents and warrants that it will use its best efforts to produce and distribute the Product in accordance with the terms and conditions of this Agreement.
(d) LICENSEE shall be solely responsible for the production and distribution of the Product and will bear all related costs associated therewith, except as otherwise provided in this Agreement.
Article 9: Distribution of Costs and Quality
(a) Immediately following the full execution of this Agreement, LICENSOR shall, at its sole cost and expense, procure and install all necessary specialized machinery, equipment and tools required for the manufacture and production of the Product at LICENSEE’s factory in [_________]. All such machinery and equipment shall remain the sole and exclusive property of LICENSOR, and shall be removed by LICENSOR upon the expiration or earlier termination of this Agreement.
(b) LICENSOR shall further, at its sole cost and expense, train LICENSEE’s employees, as needed, in the use of the machinery, equipment and tools, methods and processes required in the production of the Product.
(c) LICENSEE shall bear all costs and expenses of production of the Product including, but not limited to, utilities, ingredients, supplies and other consumables, and all labor required in connection therewith.
(d) LICENSOR shall at it its sole cost and expense, maintain and repair as necessary, the machinery, equipment and tools used for the production of the Product at the LICENSEE’s factory that LICENSOR has installed. Notwithstanding the foregoing, LICENSEE shall indemnify LICENSOR for all costs and expenses of repair and maintenance due to LICENSEE’s negligent, willful, or intentional misuse of the machinery and equipment.
(e) LICENSEE shall maintain the highest standard of quality in the Product production process. LICENSEE shall follow and abide by all directions, requests, suggestions or instructions of LICENSOR regarding the quality standards required by LICENSOR in connection with the manner of production, manufacture, storage and delivery of the Product.
(f) LICENSEE agrees to permit LICENSOR or its agent to inspect the facilities where the Product is being produced and packaged at all times, without prior notice, and in Licensor’s sole discretion.
(g) At delivery, LICENSOR in its sole discretion may reject any Product produced or manufactured by LICENSEE for any reason, including, but not limited to defects, improper refrigeration, or failure to meet LICENSOR’s quality standards, etc.
(h) LICENSEE shall comply with all federal, state and local laws and regulations regarding the Product manufacture and production, shall obtain all necessary licensing for the operation of its business and the production and manufacture of the Product, and shall further comply with all quality control standards promulgated by LICENSOR from time to time.
(i) LICENSEE shall use only the ingredients authorized in writing by LICENSOR. Any proposed changes to ingredients by LICENSEE must be made in writing to LICENSOR and LICENSOR, in its sole and absolute discretion, may accept or reject any proposed ingredient changes.
Article 10: Product Withdrawal
If it is deemed necessary at any time by either LICENSOR or LICENSEE or any local, state, or federal governmental agency or other authority to recall or withdraw the Product produced by LICENSEE from the Beard Papa’s or LICENSOR’s franchise system, either as a result of failure of the Product or LICENSEE to strictly comply with LICENSOR’s quality standards or any governmental health rule or regulation, or shall fail to comply with any other governmental authority or agency having jurisdiction, LICENSEE shall bear all costs and expenses incurred by it and/or in complying with the recall or withdrawal procedures (including without limitation, costs of notifying customers, customer refunds, costs of returning product, loss profits, and other expenses incurred to meet obligations to third parties, unless (and only then to the extent) such recall or withdrawal is solely the result of the negligence or misconduct by customers. If LICENSEE fails or refuses to promptly comply with the recall or withdrawal of the Product upon request by the LICENSOR or any federal, state or local authority, LICENSOR shall take such action as it deems necessary to recall or withdraw the Product from the franchise system and LICENSEE shall immediately reimburse for the costs and expenses incurred, including reasonable attorneys’ fees.
Article 11: Product Allocation
In the event there is an emergency shortage of the Product product, as announced by LICENSOR or its designated representative, LICENSEE shall stand ready to allocate sales of the Product within the franchise system among other Licensees or otherwise, as reasonably directed by LICENSOR, or its designated representative.
Article 12: Product Information
LICENSEE represents and warrants that any and all Product “Product Information and Nutritional Data Sheet” or “Licensor Profile” or similar information request forms provided by the government have been and will be completed in full compliance by LICENSEE accurately and to the best of LICENSEE’s knowledge. LICENSEE shall immediately notify LICENSOR upon receipt of any such information requests, and shall promptly provide the information to the requesting party and simultaneously provide LICENSOR with a full and complete copy of the completed documents.
Article 13: Specifications
LICENSEE represents and warrants that it shall fully comply with all written quality assurance requirements or instructions of LICENSOR, and as they may be amended from time to time in the sole discretion of LICENSOR. LICENSEE further represents and warrants that the Product shall be produced, manufactured, stored and shipped by LICENSEE in strict compliance with all applicable federal, state and local laws.
Article 14: Trademarks
LICENSEE shall not, without prior written consent of LICENSOR use the trade marks or service marks or sales marks of LICENSOR in any manner whatsoever, unless, and then only to the extent, such use is authorized by LICENSOR in writing and then only in accordance with LICENSOR’s directions or specifications.
Article 15: Intellectual Property, Proprietary Knowledge and Confidential Information
(a) LICENSEE acknowledges that in connection with this Agreement, LICENSOR may disclose to LICENSEE, or LICENSEE may otherwise obtain or develop knowledge of certain confidential and proprietary information of LICENSOR, including, but not limited to, trade secrets, intellectual property, production methods and processes, patents, recipes, ingredients, know-how, future business plans and services, financial, sales, supplier, customer, employee, investor, or other business information related to the business and activities of LICENSOR including the production of the Product (the “Confidential and Proprietary Information).
(b) All such information is hereby designated by LICENSOR to be Confidential and Proprietary Information. LICENSEE acknowledges and agrees that Confidential and Proprietary Information shall not be disclosed by LICENSEE or any of LICENSEE’s employees, representatives, agents or contractor’s without the express written permission of LICENSOR. Notwithstanding the foregoing, LICENSEEE, during the term of this Agreement, and in order to carry out its obligations under this Agreement may disclose Confidential and Proprietary Information to its EMPLOYEES solely for the purpose of performing its obligations under this Agreement, and only on a “need to know” basis. LICENSEE agrees that all of its employees receiving any Confidential and Proprietary Information, shall enter into a separate written confidentiality agreement with LICENSEE that ensures the employee will comply with the confidentiality provisions of this Agreement. A copy of each such confidentiality agreement shall be provided to LICENSOR.
(c) All Confidential and Proprietary Information shall remain confidential until LICENSOR designates it as non-confidential or until the information becomes public through no fault of the LICENSEE.
(d) LICENSEE shall not be liable for the disclosure of Confidential and Proprietary Information if made in response to a valid order of a court or authorized agency of government; provided that fifteen (15) days notice first be given to the LICENSOR so a protective order, if appropriate, may be sought by LICENSOR.
(e) LICENSEEE agrees that in the event LICENSEE or any of its employees, contractors, representatives, or agents breach the provisions of this Article, such breach or threatened breach would cause irreparable harm to LICENSOR, and in such instance, LICENSOR shall be entitled to injunctive and other equitable relief to prevent such breach or to remedy any actual breach.
(f) It is acknowledged and agreed that LICENSOR shall retain all right, title and interest in the intellectual property rights of the Product which include, but are not limited to, ingredients, recipes and production methods, as well as in any modifications made in connection with the production, manufacture, ingredients, recipes related to the Product by LICENSEE. LICENSEE shall not, at any time during or after the effective Term of the Agreement, dispute or contest, directly or indirectly, LICENSOR’s exclusive right and title to the intellectual property rights of the Product or the validity thereof.
(g) LICENSEE shall immediately notify LICENSOR of any infringement, or alleged infringement, of the intellectual property of LICENSOR by any third party, and shall otherwise immediately notify LICENSOR or any disclosure or suspected disclosure, or use or suspected use of any Confidential or Proprietary Information of LICENSOR to or by any party.
(h) LICENSEE, and its employees, representatives, agents, and contractors shall not utilize or apply Confidential and Proprietary Information, either in whole or in part, disclosed by LICENSOR. or obtained in connection with this Agreement, for any purpose whatsoever, including, but not limited to, the development or production of baked pastry goods, during or after the termination of the Term of this Agreement.
(i) Upon the expiration or earlier termination of this Agreement, all Confidential and Proprietary Information in possession of LICENSEE or its employees, in whatever form, shall be returned to LICENSOR.
(j) THE OBLIGATIONS OF LICENSEE UNDER THIS ARTICLE SHALL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS AGREEMENT.
Article 16: Termination
(a) LICENSOR’s Right to Terminate For Cause.
LICENSOR shall have the right to immediately terminate this Agreement by giving a written notice to LICENSEE in the event that LICENSEE does any of the following:
(1) fails to continuously produce and distribute the Product for two consecutive months; or
(2) files a petition in bankruptcy or is adjudicated bankrupt or insolvent, or makes an assignment for the benefit of creditors or an arrangement pursuant to any bankruptcy law, or LICENSEE discontinues its business or a receiver is appointed for LICENSEE or for LICENSEE’s business and such receiver is not discharged within thirty (30) days; or
(3) fails to make timely payment of royalties when due for two or more times during any 12-month period; or
(4) fails to obtain or maintain product liability insurance in the amount and type provided for herein; or
(5) breaches any provision of this Agreement, and fails to cure such breach within seven (7) days after it receives a written notice of breach from LICENSOR.
(b) LICENSOR’S Right to Terminate Without Cause.
LICENSOR shall have the right to terminate this Agreement upon sixty (60) days written notice to LICENSEE.
(c) LICENSEE’S Right to Terminate.
LICENSEE shall have the right to terminate this Agreement at any time after the first 12 months of the Term on one hundred twenty (120) days prior written notice to LICENSOR.
Article 17: Termination of Production Upon Expiration or Earlier Termination
(a) Immediately upon the expiration or earlier termination of this Agreement, all of the rights of LICENSEE under this Agreement shall forthwith cease and terminate, and LICENSEE shall immediately discontinue all production of the Product and shall immediately return to LICENSOR all material relating to the production of the Product, including, but not limited to, machinery, tools and equipment.
(b) LICENSEE shall further represent and warrant to LICENSOR in writing that LICENSEE has ceased production of the Product and the date upon which such production ceased. LICENSOR shall be entitled to visit LICENSEE’s production facilities to verify that LICENSEE has stopped production.
Article 18: Insurance
LICENSEE shall, throughout the Term of the Agreement and for a period of _______________ thereafter, obtain and maintain at its own cost and expense from a qualified insurance company licensed to do business in [_____________] and having a Moody’s Rating of at least B+, standard Product Liability Insurance naming LICENSOR as an additional named insured. Such policy shall provide protection against any and all claims, demands and causes of action arising out of any defects or failure to perform, alleged or otherwise, of the Product or any material used in connection therewith or any use thereof. The amount of coverage shall be [_________________________]. The policy shall provide for thirty (30) days notice to LICENSOR from the insurer by Registered or Certified Mail, return receipt requested, in the event of any modification, cancellation or termination thereof. LICENSEE agrees to furnish LICENSOR a certificate of insurance evidencing same within ten (10) days after execution of this Agreement and, in no event, shall LICENSEE manufacture, distribute or sell the Product prior to receipt by LICENSOR of such evidence of insurance.
Article 19: Indemnity
(a) LICENSEE agrees to indemnify, defend and hold LICENSOR and its officers, directors, employees, agents, its parent, partially or wholly owned subsidiaries, franchisees, successors and assigns harmless from and against any and all liability, losses, damages, claims, liens, expenses or causes of action including, but not limited to reasonable legal fees and expenses that may be incurred by LICENSOR, arising directly or indirectly out of, or in connection with, LICENSEE’s violation or breach of any of the terms of this Agreement or any act or omission to act by LICENSEE in violation of this Agreement. LICENSOR shall provide LICENSEE with prompt written notice of any claim for which indemnification is sought and shall have the right to participate in the defense of any such claim.
(b) LICENSOR agrees to indemnify, defend and hold LICENSEE and its officers, directors, employees, agents, its parent, partially or wholly owned subsidiaries, franchisees, successors and assigns harmless from and against any and all liability, losses, damages, claims, liens, expenses or causes of action including, but not limited to reasonable legal fees and expenses that may be incurred by LICENSEE, arising directly or indirectly out of, or in connection with, LICENSOR’s violation or breach of any of the terms of this Agreement or any act or omission to act by LICENSOR in violation of this Agreement. LICENSEE shall provide LICENSOR with prompt written notice of any claim for which indemnification is sought and shall have the right to participate in the defense of any such claim.
Article 20: Infringements
(a) LICENSOR shall have the sole and exclusive right, in its discretion, to institute and prosecute lawsuits against third persons for infringement of the rights licensed in this Agreement. All sums recovered in any such lawsuits, whether by judgment, settlement or otherwise shall be retained solely by LICENSOR.
(b) LICENSEE agrees to fully cooperate with LICENSOR in the prosecution of any such suit against a third party and shall execute all papers, testify on all matters, and otherwise cooperate in every way necessary and desirable for the prosecution of any such lawsuit. The LICENSOR shall reimburse the LICENSEE for any reasonable expenses incurred as a result of such cooperation.
Article 21: Governing Law; Dispute Resolution
(a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflict of law principles.
(b) Any controversy or claim as to this Agreement and its enforcement or interpretation shall be settled by final and binding arbitration administered by the American Arbitration Association (AAA) sitting in City, State under the AAA’s Commercial Dispute Resolution Rules (one arbitrator mutually agreed upon by the parties), and the award rendered by the arbitrator shall be enforceable in any court of competent jurisdiction. The Arbitrator shall have the sole authority to determine the nature and extent of any discovery. The prevailing party at any such arbitration shall be entitled to have its reasonable attorneys’ fees and expenses reimbursed by the other.
Article 22: Assignment or Sublicensing
(a) The license granted hereunder is personal to LICENSEE and shall not be assigned to any third party by any act of LICENSEE or by operation of law, unless with the express written consent of LICENSOR, which consent may be refused in LICENSOR’s sole discretion.
(b) LICENSEE shall have no right to sublicense its rights under this Agreement without the express written consent of LICENSOR, which consent may be refused in LICENSOR’s sole discretion.
Article 23: Agreement Binding on Successors
The obligations under this Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of the parties hereto.
Article 24: Notice
(a) Any notice required to be given pursuant to this Agreement shall be in writing and delivered personally or by a nationally recognized overnight courier service, or mailed by certified or registered mail, return receipt requested, to the other party at its address as set forth at the top of this Agreement.
(b) All such notices shall be effective upon delivery or upon refusal to accept delivery.
(c) Either party may change the address to which notice is to be sent by written notice to the other in accordance with the provisions of this paragraph.
Article 25: Miscellaneous
(a) The parties to this Agreement are independent contractors. Nothing contained herein shall constitute this arrangement to be employment, a joint venture, a partnership, a franchise or an agency between the parties. Neither party has the authority to bind the other or to incur any obligation on its behalf.
(b) No waiver by either party of any default shall be deemed as a waiver of prior or subsequent default of the same or other provisions of this Agreement.
(c) If any term, clause or provision hereof is held invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the validity or operation of any other term, clause or provision, and such invalid or unenforceable term, clause or provision shall be deemed to be severed from the Agreement.
(d) This Agreement constitutes the entire understanding of the parties, and revokes and supersedes all prior agreements between the parties, and is intended as a final expression of their agreement. It shall not be modified or amended except in writing signed by the parties hereto and specifically referring to this Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto executed this Agreement by their respective duly authorized representatives as of the day and year first above written.