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Agreement for Production, Supply and Purchase of Compound Feeds_CLEAN DRAFT.docx

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Agreement for Production, Supply and Purchase of Compound Feeds
This Agreement for Production, Supply and Purchase of Co...
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Article 1 Scope of Agreement
Subject to the terms and conditions to this Agreement, Party A agrees to produce, supply an...
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The Products to be supplied by Party A to Party B under this Agreement shall be produced
upon specifications and volume ...
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MANUFACTURING AGREEMENT
MANUFACTURING AGREEMENT
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Agreement for Production, Supply and Purchase of Compound Feeds_CLEAN DRAFT.docx

  1. 1. 1 Agreement for Production, Supply and Purchase of Compound Feeds This Agreement for Production, Supply and Purchase of Compound Feeds (hereinafter referred to as the “Agreement”) is entered into on this day ........., ...........of ................ 20_,_, (hereinafter referred to as the “Signing Date”), by and between: 1. _____________________ a company duly established and existing under the laws of________, having its factory located at ................................................................. (hereinafter referred to as the “Party A”); and 2. _____________________ a limited liability company duly established and existing under the laws of the Republic of Indonesia, having its address at ............................... (hereinafter referred to as the “Party B”). Hereinafter Party A and Party B are collectively referred to as the “Parties” and severally as the “Party”. WITNESSETH A. WHEREAS, Party A is a company that engaging in the field of production and supply of compound feeds (hereinafter referred to as the “Products”); B. WHEREAS, the Party A is desires to produce, supply and sell the Products with special terms and conditions of the Products as attached in the Attachment A and as specified with the Specification in the Attachment B of this Agreement to Party B and Party B is desires to purchase of such Products from Party A as stipulated under this Agreement. NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Parties hereby agree to enter into this Agreement with the following terms and conditions:
  2. 2. 2 Article 1 Scope of Agreement Subject to the terms and conditions to this Agreement, Party A agrees to produce, supply and sell the Products to Party B and Party B agrees to purchase the Products from Party A. Article 2 Purchase Order, Price of Products and Taxes a. Purchase Order Unless determines otherwise by Party B, Party A shall supply and sell the Products to Party B within not later than .............. (...........................) calendar days since the issuance date of any written purchase order which issued by Party B for every purchase of the Products (hereinafter referred to as the “Purchase Order”). b. Price of the Products Prices of the Products to be supplied to Party B by Party A shall be determined by a separate agreement. c. Taxes In connection with exportation, importation and distribution of the Products, each Party shall pay all taxes, custom duties and other imposts that may be required to be paid by each Party pursuant to any statute, ordinance or regulation of the government of the related Party. Article 3 Term of Agreement a. The term of this Agreement shall be effective, valid and continue to full force and effect for on ..................... and shall be expire on .......................... (hereinafter referred to as the “Term of Agreement”). b. Unless either Party sends a written notice on refusal of renewal of this Agreement within 3 (three) months before expiration of the Term of Agreement as mentioned above, this Agreement shall be automatically renewed for 1 (one) additional year with the same terms and conditions. Article 4 Products to be Supplied and Supply Volume
  3. 3. 3 The Products to be supplied by Party A to Party B under this Agreement shall be produced upon specifications and volume requested by Party B in its Purchase Order including without limitation to the mixture ratios (mixture ratios of ingredients of the Products), materials or textures, packaging methods and units and volume. Article 5 Delivery of the Products The Products under this Agreement shall be delivered from the factory of Party A upon a free- on-rail (FOR) in accordance with the date of delivery as stipulated in the respective Purchase Order. Article 6 OEM Products Party B shall request that Party A display or indicate Party B’s company name, trademark or product name on the Products that it will sell and Party A shall proceed with production and supply per such request. a. With respect to the Products that Party B commissions Party A to produce, Party A shall only serve as a producer and supplier and shall neither use Party B’s company name and/or trademark to sell the Products nor produce/sell similar products without Party B’s prior written consent. b. Types of Party B’s Products shall be determined in advance, as applicable, in a manner that contributes to mutual benefits between the Parties. c. Party A shall be indicated as a producer in the Products’ registrations and on the Products. d. Party B shall purchase and sell the Products that Party B commissions Party A to produce. If any dispute arises out of issues subject to any applicable laws including, product registration, product management and such issues are attributable to Party B, Party B shall be responsible therefore. e. The Products’ name shall use the trademark that Party B exclusively selects and the title and license thereto shall belong to Party B. f. Party A shall indicate Party B’s trademark set forth Paragraph (a) above on the Products and the packages thereof. Party B shall determine the shape of
  4. 4. 4 the trademark and the indication method. g. Party A shall neither sell the Products with Party B’s trademark attached to a third party other than Party B nor use Party B’s trademark for whatsoever purpose other than performance of this Agreement. Article 7 Responsibility for Risk, Product Inspection and Warranty a. Responsibility for Risk Risks relating to loss of the title or damage of the Products sold by Party A to Party B shall be transferred to Party B or a purchaser designated by Party B at the time of the Products’ delivery in accordance with this Agreement. However, with respect to defects relating to the quantity, weight, quality, etc. of the Products that Party B or a purchaser designated by Party B failed to or was unable to detect at the time of the delivery, Party A shall make joint efforts with Party B to resolve such defects upon the complaints filed by Party B thereon. If there are conflicts of interest, in this case, the Parties shall resolve such defects upon legal interpretations in the light of commonly accepted commercial practices. If either Party requests the other Party’s cooperation for inspection, etc. for the purpose of finding a cause for a defect, the requested Party shall provide full support. b. Product Inspection Regardless of whether the Products have passed a product inspection and whether Party B has sold the Products to a third party, if there is a production defect in the Products (spoilage, poor hygiene, failure to meet specifications, quantity shortfall, etc.), Party B may claim replacement, supplementation, replenishment or reimbursement to Party A and Party A shall be responsible immediately to fix such defect as requested by Party B. c. Warranty 1) If a third party files a complaint regarding the Products’ quality, Party B shall immediately notify Party A of such complaint and it shall be determined whether such defect constitutes a production defects set forth in Paragraph b above in the present of the Parties. If it is determined that it is a production defect, Party A shall immediately
  5. 5. 5 replace the defective Products with new ones at its own cost and Party B may claim damage to Party A for its subsequent losses. 2) Party A hereby warrants and guarantees to Party B that any and all Products which will be and/or have been sold, provided and/or exported by Party A to Party B are: a) subject in accordance with the Spesification as set forth in the Attachment B of this Agreement; b) free from defects and/or faults in material and/or lack of workmanship and/or whatsoever reason caused by negligence of Party A to the Products, then the Party A shall be responsible and give its best endeavour to solve the problems including but not limited to replace of such Products without the imposition of additional cost. c) Party A hereby agrees to be responsible for any damages, losses, costs and/or expenses which incurred by Party B, and/or to claim indemnity instead of performance to Party A, as the result of or in connection with breach of the warranty and product liability by Party A. d. In case of a production defect attributable to Party A as stated above, Party A shall immediately notify Party B of the cause for such defect and measures to resolve such defect in writing. Article 8 Production Cost, Terms of Payment, Quality and Standards a. Production Cost Production cost based on the monthly sales and purchase volume shall be as shown below, and Party A shall include the following expenses into the sales revenue: 1) Production cost shall be, powder: KRW[............]/kg, and pellet and crumble: KRW[............], and production cost may be re-adjusted in case production volume exceeds [..............] tons per month. 2) The quality of material and design as decided by Party B shall apply to
  6. 6. 6 packaging materials. 3) Party A shall purchase and use packaging materials, and such packaging expenses shall be settled at the time of calculation of production cost in each month by applying the market price of packaging materials, in addition to the production cost. b. Terms of Payment Payment shall be made for the sales of the relevant month within 10th day of next month, with a bill due in sixty (60) days from the date of tax invoice, in principle. If Party B needs to separately supply to Party A raw materials (premix or concentrated feeds) for the purpose of maintaining the quality of the OEM Products, Party A shall agree thereto and make the payments for such raw materials to either Party B or the suppliers designated by Party B, as applicable, under a separate agreement thereon. In this case, Party B shall guarantee quality of premixes that Party B supplies. c. Quality and Standards In case of changes in the list of the Products, quality and standards shall be adjusted by mutual agreement of the Parties. Article 9 Technological Support If deemed necessary to determine whether the Products that Party A has been commissioned to produce are being produced in accordance with the characteristics of the Products, Party B may request that Party A provide relevant materials regarding raw material costs, applicable mixture ratios, production statuses, raw material stocks, inventories, etc. a. Party B shall provide Party A with the mixture ratios for the Products that Party A has been commissioned to produce and Party A shall produce the Products by using such ratios. b. All material costs, production costs, production technology costs, etc. for the Products to be paid by Party B to Party A shall be separately determined and
  7. 7. 7 be included in Party A’s sales. Article 10 Transfer and/or Assignment of the Agreement Neither Party shall assign, transfer, provide as security or dispose of their statuses, rights and/or obligations in whole or in part to a third party without the other Party’s prior written consent. In the event the other Party accepted such assignment and/or transfer, the relevant assignee and/or transferee (if any) shall be bound by and fulfill the obligations or duties as stipulated in this Agreement. Neither Party shall not, without the other Party’s prior written consent, disclose to a third party or use for whatsoever purpose other than performance of this Agreement the other Party’s trade secrets that it comes to know in the course of performing this Agreement. Article 11 Amendment Any other terms and conditions not specified and/or insufficient in this Agreement shall be discussed mutually and agreed upon by the Parties at later stage, as the amendment or addendum to this Agreement. Any amendment, addendum, supplements and/or alteration to the terms and conditions of the Agreement shall not become binding unless made in written form, signed by authorized representatives of the Parties and approved by respective authorities if required. Article 12 Termination a. This Agreement shall only be expired or terminated because of the following events: 1) Automatically expired when the Term of Agreement as stipulated in Article 3 has been occur and the Parties have failed to extend the Term of Agreement; or 2) Terminated by the either Party pursuant to Article 14 paragraph e of the Agreement, in the event Force Majeure has been occurs; or 3) Terminated by the either Party in the event that the other Party violates this Agreement or the agreement(s) hereto by sending a 1 (one) month prior written notice to the other Party.; or
  8. 8. 8 4) Terminated by mutual agreement between the Parties. b. The Parties agree in the event the Agreement is terminated pursuant to Article 12 paragraph a sub paragraph 2) or 3) or 4) above does not eliminate the Parties’ obligations which have not been resolved prior to the termination of the Agreement. However, the Purchase Order, bonds, liabilities and delivery and receipt of the Products which are made, received and/or agreed before the date of termination of this Agreement shall continue unabated and shall be subject to this Agreement. c. In case of termination of this Agreement, the Parties hereby waive the provisions set forth in Article 1266 of the Indonesian Civil Code with regard to the requirement for court pronouncement, decision or decree to effect termination of this Agreement. Article 13 Governing Laws and Dispute Resolution a. This Agreement is governed by and shall only be construed in accordance with the laws of the Republic of Indonesia. b. Any dispute, controversies, conflicts, claims and/or any other matters of whatsoever nature arising out of or in connection with this Agreement, including any question regarding its exercise, validity and/or terminations shall be decided as they occur, and upon consultation between the Parties and as far as possible shall be firstly settled amicably by the Parties hereto. c. In the event the Parties failed to settle and/or make amicable settlement of any dispute, controversies, conflicts, claim and/or other matters of whatsoever nature arising out of or in connection with this Agreement within 30 (thirty) calendar days since the first official negotiation meeting is conducted, then such dispute, controversies, conflicts, claim and/or other matters of whatsoever nature shall be finally settled by arbitration in Seoul, Korea in accordance with the Domestic (International) Arbitration Rules of
  9. 9. 9 the Korean Commercial Arbitration Board and under the Law of Korea. The arbitral tribunal consists of three arbitrators, each party shall appoint one arbitrator and the two arbitrators chosen by them shall appoint a third arbitrator, as a presiding arbitrator.”and the language of such arbitration shall be Korean. d. Pending submission of a dispute or arbitration under this Article 12 and until publication of the arbitral award, each Party must continue to perform its obligations under this Agreement, without prejudice to a final adjustment in accordance with the arbitral award. Article 14 Force majeure a. Neither Party shall be responsible or liable for or deemed in default or in breach for failure to perform its part or whole of its obligation under or pursuant to this Agreement and/or each individual contract under this Agreement due solely to one or more events of Force Majeure or its or their effects or by any combination thereof. b. The Force Majeure as referred to in Article 13 paragraph a above shall means, including with limitation to fire, flood, tsunami, earthquake, striking by lightning, typhoon, whirlwind, epidemic disease, exploding, mechanical accident, war (declared or undeclared), rebellion, punishing, laborer’s dispute or troubles or other industrial relation disturbances, embargoes, legal restrictions, riots, insurrections, act or policy action of government or any other reason or causes beyond the control of the Party or the Parties hereto. c. The affected Party shall promptly notify the other Party related of such cause or circumstances of the Force Majeure not later than 7 (seven) calendar days since the occurrence date of Force Majeure and the Parties will consult and determine what action should be taken to best protect their respective interests. Provided, however, the affected Party shall promptly resume performance upon cessation thereof and that the above shall not relieve either Party from its obligations to perform its part of this Agreement at such time.
  10. 10. 10 d. Neither Party shall be responsible or liable for or deemed to be responsible for any losses incurred by the non-affected Party and the non-affected Party shall not have any rights to claim for any compensation as the result of the Force Majeure. e. Either Party shall be entitled to terminate this Agreement forthwith by a termination notice to the other Party if one or more event(s) of Force Majeure render it impossible for the affected Party to fulfill its obligations in accordance with this Agreement and such event of Force Majeure is permanent, or if temporary, latest uninterruptedly for a continuous period of 60 (sixty) days or more. Article 15 Miscellaneous a. Severability If any one or more of the provisions contained in this Agreement becomes or is deemed to be void, invalid, illegal or unenforceable in any respect under any applicable laws, the validity, legality and enforceability of the remaining provisions contained in this Agreement and/or the rest of this Agreement under the aforesaid applicable laws or any other law shall not in any way be affected or impaired. The Parties shall, in any such event, agree on any new provision(s) that would replace such provision(s) in order to affect the intention of the Parties. b. Costs All costs and expenses in relation to the preparation, modification, revision or any other matter related to this Agreement shall be paid by the each respective Party. c. Entire Agreement This Agreement together with any documents which executed in connection with this Agreement constitutes the entire agreement between the Parties, and supersedes all prior negotiations and/or, representations in connection with or arising out of this Agreement, whether in writing or verbal. d. Language The Parties have executed this Agreement in the English language, which
  11. 11. 11 shall serve as the governing language of the Agreement. If requested by a Party, the Parties will sign a Bahasa Indonesia version of this Agreement. In the absence of a Bahasa Indonesia version, the Parties hereby disclaim any benefit from, or any right to cancel or declare this Agreement as null and void because of, the absence of a Bahasa Indonesia version pursuant to the Indonesian Law No. 24 of 2009. e. Any and all attachments, appendixes, addendum and/or amendment to the Agreement and/or any documents referred herein and/or any specification as agreed by the Parties from time to time (if any) shall be regarded as an integral and inseparable part of this Agreement. IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed by their duly authorized representatives in 2 (two) originals and each party has retained one original thereof, respectively, as of the date and year first written-above. Party A ____________________________ Name: ................................. Title: ................................... Party B ____________________________ Name: .................................. Title: ....................................
  12. 12. 12 Attachment A Special Terms And Conditions of the Products Article 1 Product Type The type of the Products hereunder shall be the Products to be purchased by Party B that Party B orders Party A to produce under Party B’s trademark. a. Product type: Livestock compound feeds b. Product name: To be determined by separate agreement c. Others: If a product item changes, relevant matters shall be determined upon mutual agreement by the Parties. Article 2 Production and Supply Capacity Party A’s supply capacity of the Products shall be based upon volumes ordered by Party B. a. In order for Party A to plan its production, Party A shall present its expectations on a monthly production volume that it will order in the following month within 15 (fiveteen) calendar days prior to commencement of such month. b. If an accident occurs at Party A’s factory to the extent that it shall suspend its production and supply, Party A shall immediately notify Party B of such accident and find another factory to continue such production by entering into an agreement therefore upon mutual cooperation and negotiations with Party B. Article 3 Sales Promotion and Sales Activities of the Products In case of sale of Party B’s OEM Products, Party B shall have the sole power and authority thereto, including any and all business activities, such as distribution, sales promotion and sales activities. Article 4 Statutory Registration of the Products Party A shall be responsible for the registration of the Products and ingredients under the Control of Indonesian Livestock and Fish Feed Act, etc. as the producer of the Products.
  13. 13. 13 Article 5 Quality Control of the Products Party A shall produce the Products according to the mixture ratio provided by Party B. If Party A discovers any legal defects prior to blending, it may review such legal defects and refuse to produce the Products, and if the Products that Party A has agreed to produce have quality defects due to failure to comply with the mixture ratio, Party A shall be liable for such quality defects. Article 6 Decision of Raw Material Cost for the Products Relating to the Products that Party A has produced, supplied and sold to Party B, the raw material case shall be determined as follows: a. Raw Material Cost Calculation - Party A shall purchase any and all necessary raw materials for processing compound feeds through the supply lines home and abroad under its own responsibility and power. - The raw materials to be used according to the mixture ratio shall be calculated based on the cash purchase price. (imports: cash unit price/domestic raw materials: cash on delivery to factory) - The USANCE L/Cs of imports that are necessary for and used by Party A, financial expenses relating to purchase of domestic raw materials on credit, or gains and losses on foreign currency transactions, shall be decided for the interests of Party A’s management, or in order to control losses, and shall not be reflected on the raw material price to be provided to Party B; provided, however, that basic financial expenses, i.e. opening, wire and exchange commissions, are recognizable. - Party A shall seek its best managerial efforts to purchase quality raw materials at the lowest price, if possible, and may request that Party B confirm the above when necessary. - The foreign exchange rate on Party A’s books shall be generally applicable; provided, however, that if the foreign exchange rate is not determined, an average of the basic rate notified by the Korea Financial Telecommunications & Clearings Institute from the 25th
  14. 14. 14 day of the prior month to the 24th day of the relevant month plus the exchange commission shall be applicable to calculation. b. Decision of Raw Materials to Be Used The Parties shall hold a regular meeting (a joint meeting for purchasing raw materials) and discuss from time to time in order to decide raw materials to be used for processing quality the Products and maintaining nutrient ingredients. c. Provision of Raw Material Cost Party A shall record the evidence for calculating the raw material cost and notify Party B of the overdrawn raw material cost calculated prior to the 24th day of the relevant month, by the 25th day of such month. Party B shall determine the sale price of the finished Products and the managerial operation criteria based on the above raw material cost. Moreover, such raw material cost may serve as the basis for the sale price that Party A will apply to Party B. The difference of next month shall be calculated based on the production volume of relevant month. d. Party B shall finally determine the mixture ratio and notify Party A of such mixture ratio on the 27th day of each month. - The reduction of raw materials of 0.25% in the courses of production shall be considered; provided, however, that in case of packaging materials, 0.3% shall be permissible. - Changed mixture ratio shall be applicable from the 1st day of each month. Article 7 Production Cost Calculation The Parties shall mutually execute an agreement by calculating the floating production cost based on the monthly sale and purchase volume, and in case of necessity of adjustment in production cost, the Parties shall agree to such adjustment. a. An agreement based on volume shall constitute a separate agreement. b. Production cost shall be divided into packaging and non-packaging. c. Production cost shall cover any and all necessary expenses for loading paper bag and non-packaging feeds.
  15. 15. 15 d. Products cost shall cover any and all necessary expenses for measuring the actual weight of the Products. e. Production cost shall cover the expense for the standby place of transportation vehicles to be prepared by Party A for transportation of the Products. f. The production cost under the Agreement between the Parties shall mean Party A’s expenses incurred from the time when Party A receives the order of the Products requested by Party B, or placed by the purchaser designated by Party B, to until such Products get on board Party B’s transportation vehicle. Article 8 Method of Decision of Sales Invoice Amount The sales invoice shall be issued based on the sum of the raw material cost, the production cost and the production technology commission as set forth in Article 6 and Article 7 of this Special Terms and Conditions of the Product, and in accordance with the terms of payment stipulated by the Parties in the Agreement; provided, however, that value-added tax (VAT) shall be determined by the prevailing tax laws. Article 9 Sales Criteria The sales criteria shall be based on the sales of Party A’s factory. When Party B uses Party A’s alighting station and transportation vehicles for the convenience of logistics, payment thereof shall be made by Party B, or included into the sales price of the boarding and alighting locations, which is separately determined by the Parties. Article 10 Procedures Following Party A’s Issuance of Sales Invoice a. In accordance with the sales invoice issued by Party A, Party B shall be in charge of setting the sale prices of the Products, for transportation, sales activities, profit management, etc. after purchase of the Products. b. If end consumers file a complaint for the quality defect of the Products, as purchased by Party B after Party A’s sale, and request the return of such Products, the Parties shall mutually and closely discuss and jointly cope with such problem.
  16. 16. 16 Attachment B Specification Product name Age fed (days) Feed Type Pack Type CP (%) cFat (%) Ca (%) P (%) cFiber (%) Ash (%) Layer Starter 0-42 M B, C/B, K 19 2.5 0.68 1.2 6 9 Layer Grower 43-84 M B, C/B, K 16.5 2.5 0.68 1.2 6 10 Layer Developer 85-119 M B, C/B, K 16 2.5 0.68 1.2 6 10 Layer Peak 120-350 M B, C/B, K 17.5 2.5 0.9 0.5 7 15 Layer Peak2 350- M B, C/B, K 17 2.5 0.9 0.5 7 15 Broiler Breeder Starter 0-28 M B, C/B, K 19 2.5 0.68 1.2 6 9 Broiler Breeder Grower 28-174 M B, C/B, K 15 2.5 0.68 1.2 7 10 Broiler Breeder 174- M B, C/B, K 15.5 2.5 0.9 0.5 7 15 Broiler pre-starter 0-7 C B, C/B, K 22 2.5 0.68 1.2 6 8 Broiler starter 0-21 C B, C/B, K 21 2.5 0.68 1.2 6 9 Broiler Grower 21-35 P B, C/B, K 20 2.5 0.68 1.2 7 9 Broiler Finisher 35- P B, C/B, K 19 2.5 0.68 1.2 7 9 * Abbr. - M, Mash feed; P, Pelleted feed; B, Bag; C/B, container bag; K, Bulk

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