SUPPLY AGREEMENT
Exhibit 10.3
This
Supply Agreement ("Agreement") is entered into as of November 20th,
2019 (the "Effective Date") between Canntab Therapeutics USA
(Florida), Inc., a Florida corporation (to be incorporated),
located at ____________ ("Buyer"), and EXACTUS, INC., a Nevada
corporation, located at 00 XX 0xx Xxx, Xxxxxx Xxxxx, XX 00000
("Supplier").
WHEREAS, Supplier
is a producer of Hemp-derived cannabinoid ingredients
("Hemp
Extracts");
WHEREAS, Buyer is
in the business of manufacturing tablets using Hemp Extracts;
and
WHEREAS, Buyer is
desirous of purchasing Hemp Extracts from the Supplier and the
Supplier is desirous of selling the Hemp Extracts to the
Buyer;
NOW
THEREFORE, in consideration of the foregoing, the parties agree as
follows:
1. Recitals. The Recitals are incorporated
herein by reference.
2. Scope. This Agreement sets forth the
terms and conditions under which Supplier will supply Hemp Extracts
to Buyer, in accordance with the specifications delivered by Buyer
to Suppliers. Purchases under this Agreement shall be made with
Purchase Orders (defined in Section 3F below) issued by Buyer to
Supplier. Supplier shall be liable under this Agreement to produce
the amounts set forth in all accepted Purchase Orders. All
purchases made by Buyer through Purchase Orders shall be subject to
this Agreement.
3. Purchase Terms.
A. Pricing.
The initial price for Hemp Extracts shall, at all times during the
Term, be at Tier 1 pricing levels of Supplier with the initial
pricing as set forth in Exhibit 1 which must be
competitive with market prices for similar Hemp Extracts.
Notwithstanding any other provision of this Agreement, in the event
for any reason the Supplier is unable to meet the production
requirements of Buyer, the Supplier agrees to source the required
supply of Hemp Extracts from third parties to be delivered to Buyer
at fair market prices. Alternatively, the Buyer will have the right
to purchase oil from alternate suppliers. In such event that
Supplier needs to source Hemp Extracts from third parties to meet
the requirements of Buyer, such event shall not modify the
exclusive nature of this Agreement.
B. Exclusivity.
Buyer agrees that, for the Initial Term or any Renewal Term(s) of
this Agreement, Buyer will purchase the Hemp Extracts from Supplier
provided that Supplier’s pricing for Hemp Extracts is
competitive with other supplies of the same quality of Hemp
Extracts and subject to the terms and conditions set forth herein.
Nothing contained in this Agreement shall prohibit Supplier from
selling any of its Hemp Extracts to any third parties.
C.
Forecasts. Buyer may provide Supplier with a non-binding,
rolling 12 month forecast or blanket purchase order for the
estimated quantities of Hemp Extracts that Buyer anticipates
purchasing ("Forecast") in order to ensure an uninterrupted supply
to meet demand. Any forecast or blanket purchase order provided by
Buyer shall be clearly labeled with the word "forecast" or any
other similar terms that identify the document as a forecast
instead of a firm purchase commitment. Supplier agrees to work with
Buyer to meet forecasted amounts and to accommodate fluctuations in
the Forecast. The Forecasts shall represent reasonable estimates
for planning purposes only and will not obligate Buyer in any way.
However, if at any time Buyer is aware of a change or a short fall
in the Forecast, it will immediately notify the Supplier in writing
of such deviation. The parties acknowledge that any such forecast
or blanket purchase order shall be considered as a non-binding
purchase commitment unless otherwise specified within the terms and
conditions of said blanket purchase order. If Buyer requests a
quantity of a Hemp Extracts in excess of the forecasted quantity,
Supplier shall use commercially reasonable efforts to accommodate
such request. In the event Supplier's commercially reasonable
efforts to accommodate Buyer's request would require additional
fees, Supplier shall promptly advise the Buyer of any and all
anticipated additional fees (including labor overtime, material
expedite fees and/or expedite shipping fees) for Buyer's
consideration and written approval. Upon written approval by Buyer,
Supplier shall proceed to accommodate Buyer's request, and the
approved additional fees shall be itemized as a separate line item
on the Supplier's invoice.
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E. Purchase
Orders. Supplier shall deliver Hemp Extracts in accordance
with the quantities, delivery dates, and delivery location
specified in written and signed purchase orders delivered by Buyer
or its affiliates ("Purchase
Orders"). Supplier shall use commercially reasonable efforts
to deliver Hemp Extracts to Buyer based upon the delivery dates set
forth in any Purchase Order. Buyer shall have the right to cancel
any unshipped portion of a Purchase Order, in whole or in part, at
any time until shipment, in which event Buyer shall be liable to
Supplier for the actual amount of Supplier's reasonable costs
incurred in contemplation of performance of the canceled portion,
less any amount saved by Supplier as a result of such
cancellation.
F. Packing
and Shipping: All Hemp Extracts shall be packaged, marked
and otherwise prepared in accordance with good commercial practices
and all applicable state and federal laws of the United States and
Buyer's written instructions that are included on any Purchase
Orders, if any. Upon Buyer's written request which shall be
included in the Purchase Order, the Supplier will include a
material safety data sheet (MSDS) and/or certificate of analysis
with each shipment. In the event the Buyer’s manufacturing of
its CBD tablets is not occurring at Supplier’s premises, then
Supplier shall ship the Hemp Extracts by shipping agents designated
by Buyer, FOB Buyer's designated location. Buyer shall pay all
shipping costs in such event.
G. Risk
of loss: Risk of loss and damage to the Hemp Extracts shall
remain with the Supplier until delivery to Buyer, FOB Buyer’s
designated location. The risk of loss shall pass to Buyer upon
delivery of the Hemp Extracts to Buyer at Buyer’s designated
location.
4.
Supplier's
Obligations and Representations.
A. Performance
& Savings Reviews. The parties shall conduct regular
meetings in person at a mutually convenient location or via video
conferencing means to discuss and review the following: (i)
delivery, service and quality performance evaluation; (ii)
continuous improvement goals and objectives; (iii) market
conditions and forecasts; (iv) future budgeting; and (v) business
growth opportunities. Buyer reserves the right to audit Supplier,
at its sole expense, to ensure compliance to pricing and other
provisions of this Agreement with at least 3 business days prior
notice, at the Supplier's facility. During such audit, the Buyer
shall at all times comply with the Suppliers' policies in relation
to entrance and access to the manufacturing facility, including but
not limited to health &safety and security requirements and
policies of the Supplier.
B. Notification
Requirement. If, for any reason, with the exception of an
event of force majeure, at any time, Supplier shall refuse or be
unable, or should reasonably anticipate being unable to deliver any
part or all of the Hemp Extracts in accordance with the terms
hereof, Supplier shall verbally notify Buyer of such refusal or
inability at the earliest possible time and immediately confirm
such notification in writing. Such notification shall not be deemed
to operate as a release of Supplier from its obligations under a
Purchase Order, Buyer shall have the right to replace, modify
and/or cancel any delayed open Purchase Orders free from liability
to Supplier.
C. Records.
Supplier shall provide Buyer with complete and accurate copies of
any quality control documents maintained by Supplier for Hemp
Extracts, including any raw material procurement and/or testing
documents, upon Buyer's written request.
D. Supplier’s
Representations and Warranties. Supplier represents and
warrants to Buyer as follows:
(a)
Supplier shall
deliver to Buyer good and merchantable title to the
Product.
(b)
Supplier represents
and warrants to the Buyer that the execution and delivery of this
Agreement by and the performance by the obligations hereunder, will
not conflict with or result in any breach or violation of any of
the provisions of or constitute a default under any indenture,
mortgage, charter instrument, bylaw or other agreement or
instrument to which it is a party or by which it may be bound, nor
will any consents or authorizations of any party other than those
hereto be required.
(c)
Supplier represents
that it has obtained all necessary licenses necessary to make the
deliveries required hereunder. It is Supplier’s sole
responsibility to obtain all necessary permits required to
effectuate the terms and conditions of this agreement.
(d)
The
representations, warranties and indemnities contained herein will
survive the termination of this Agreement.
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5.
Term;
Termination.
The
term of the contract is for two (2) years (the “Initial Term”). Without prejudice to the
above, this Agreement can at any time be terminated (i) by either
party in case of a material breach of this Agreement, upon written
notice by the non-defaulting party to the breaching party providing
specific description of any such breach and then providing the
breaching party with a 30 period to cure; (ii) upon mutual
agreement of the parties; (iii) automatically at the end of the
Term, which Term will be renewed automatically for additional two
year periods unless either party provides written notice to the
other party of its intent to terminate this Agreement at least 60
days prior to the end of the Term.
6.
Quality
Assurance.
A.
Specifications.
"Specification(s)" means written specifications or designs provided
by Buyer. Collectively, the Buyer's Specifications and Supplier's
Specifications may be referred to as the "Specifications". The Hemp Extracts shall
comply with all applicable laws and regulations and conform to the
Specifications. No change in the Specifications shall be made by
the other party except with prior written approval of the party
providing the Specification. Any changes that affect form, fit or
function of the Hemp Extracts will be reflected in updated Purchase
Orders. Supplier shall not ship any Hemp Extracts that have had
such changes made until new Purchase Orders have been
issued.
B.
Raw Materials.
Supplier agrees to maintain all documentation/records regarding its
procurement of all raw materials ("Materials") for a period of 5 years.
Supplier shall not amend, change or supplement any of the following
without Buyer's prior written consent: (i) the Specifications; (ii)
the Materials; or (iii) the process for manufacturing the Hemp
Extracts. Any change in any of the foregoing shall, in each case,
comply with all applicable laws, regulations and agency
requirements. In the event that Supplier desires to change any of
the foregoing, Supplier agrees to immediately notify Buyer of such
change in writing, and if Buyer agrees to such change, Supplier
shall be responsible, at its sole expense, for ensuring that all
Hemp Extracts manufactured following such change strictly conform
to the change in Specifications, Materials or the manufacturing
process.
C.
Inspection. All
Hemp Extracts shall be received subject to Buyer's right of
inspection and rejection. Defective Hemp Extracts or Hemp Extracts
not in strict conformance with a Purchase Order or Supplier's and
Buyer’s specifications, will be held for receipt of
instructions, at Supplier's risk, and if Supplier so directs, will
be returned, at Supplier's expense. If Buyer does not receive such
written instructions within 45 days of Buyer's request therefore,
Buyer may, without liability or any financial obligation to
Supplier, sell, transfer or otherwise legally dispose of the Hemp
Extracts, in any way that Buyer deems appropriate. Buyer may, by
written notice to Supplier, and without limiting any other remedies
available to Buyer under applicable law, demand replacement or
correction of rejected Hemp Extracts. Payment for Hemp Extracts on
a Purchase Order prior to inspection shall not constitute
acceptance thereof or a waiver of a breach of warranty and is
without prejudice to any claim(s) of Buyer. Supplier shall inspect
all Hemp Extracts prior to shipment to ensure conformance with all
Specifications and requirements of a Purchase Order.
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D. Audit.
Buyer reserves the right to audit Supplier's facilities, as Buyer
deems necessary, subject to the following conditions: (a) Buyer
shall be entitled to conduct only one audit per year unless: (i)
otherwise agreed in writing; (ii) there is a significant or
recurrent quality control issues with the Hemp Extracts as
determined in Buyer’s sole discretion; (ii) and/or Buyer can
demonstrate that Supplier has materially breached this Agreement;
(b) Buyer audits shall be conducted only upon at least 3 business
days' advance written notice of the audit is provided by Buyer and
conducted within working hours ; (c) all information gathered and
data reviewed or exposed to the officers/employees of the Buyer
during any such audit shall be "Confidential Information" and shall
be treated as such in accordance with the provisions of this
Agreement; and (d) the scope of each such audit shall include the
systems and processes related to the quality, production and
delivery of the Hemp Extracts under this Agreement and all
documentation, data, and other records relating thereto, including,
without limitation, records and data relating to raw materials used
to manufacture the Hemp Extracts. Supplier shall cooperate with
Buyer in the performance of such audit. If Supplier does not
cooperate with the Buyer or is not prepared to host the audit
arranged by the Buyer, then Supplier shall reimburse Buyer for all
costs incurred by Buyer associated with the audit including travel,
lodging and other expenses that the Buyer had incurred at
Supplier's facility. Observations and conclusions of an audit will
be issued to, and promptly discussed with Supplier and Supplier
shall take into consideration such representations, but shall not
be obliged to implement them unless such representation is in
relation to a breach of the Specifications, requirements,
obligations or manufacturing qualities under this
Agreement.
E. Records
Retention. Supplier agrees to maintain complete and accurate
books and records regarding all matters hereunder including
Supplier's specifications, raw material procurement and/or testing
documents related to the Hemp Extracts, as well as Supplier's
production and other compliance with its obligations under this
Agreement. All such documents must be maintained for a minimum of 5
years beyond the termination or expiration of this Agreement. (the
"Retention Period"); provided, however, that in the event of any
dispute arising with respect to this Agreement, or in the event of
any claim, demand or lawsuit by Buyer or any third party with
respect to any Product produced by Supplier under this Agreement,
the Retention Period shall last until the resolution of the dispute
becomes final and non-appealable and all obligations of the Parties
are fully satisfied.
7.
Warranties. Except
for warranties related
to providing the Hemp Extracts in conformance with the
Specifications of the Buyer, the Supplier shall provide no other
warranties, express or implied to Buyer.
-4-
8.
Confidential Information.
The terms of this Agreement and any information or items marked
confidential or identified as confidential by written notice to the
receiving Party under or relating to this Agreement, including but
not limited to information concerning the information related to
either party such the business, formulas, pricing, financial
information, research data, sales and marketing information,
customer lists, supplier lists, Buyer's Specifications, the
Purchase Orders, the Forecast, the reports and any financial or
manufacturing and technical information provided by the Supplier to
the Buyer shall be treated as confidential information
("Confidential Information"). The receiving Party hereby undertakes
(i) to hold and keep in confidence any and all such Confidential
Information and not to disclose the Confidential Information or any
part thereof to any third party except to only such of their
directors, officers, employees and advisers (collectively,
"Representatives" and each a "Representative") whose duties require
them to possess or consider the Confidential Information and
strictly on a "need to know" basis; and who shall prior to such
disclosure agree to keep such information confidential and be bound
by this Agreement; (ii) to use the same degree of precaution as it
would use to protect its own confidential information of like
importance but in no event less than reasonable care; (iii) not to
use the Confidential Information, in whole or in part, for any
purpose other than to complete the obligations under this
Agreement; and (iv) not to use the Confidential Information in a
manner directly or indirectly causing damages to the other party or
use the Confidential Information to gain commercial benefit to
itself. Provided, however, that Confidential Information shall not
include information that (i) is already in, or subsequently comes
into, the public domain other than through a violation of this
Agreement, (ii) is received by the non-disclosing Party on a
non-confidential basis from a source which is not prohibited from
disclosing such information pursuant to any legal, contractual or
fiduciary obligation to the disclosing Party, (iii) was already
known by the receiving Party, as established by written
documentation only, at the time of receipt from the disclosing
Party, or (iv) is independently developed or (v) ordered to be
disclosed by a competent court or a regulatory or public body. In
such event, the receiving Party shall, where permitted under the
relevant jurisdiction, immediately inform the disclosing Party so
that the disclosing Party is given the opportunity to object to
such disclosure in due time. Should any such objection by the
disclosing Party be unsuccessful or should the disclosing Party
decide not to object to any such disclosure, the receiving Party or
its Representative so obligated or requested to disclose the
Confidential Information may disclose only such Confidential
Information to the extent required by the relevant court order or
governmental or regulatory authority. Upon the expiration or early
termination of this Agreement, each party shall return or destroy,
and certify to such destruction of, all confidential information of
the other Party. The covenants contained in this Section shall
survive the termination of this Agreement regardless of the cause
of the termination.
9. Guaranty
of Supply. In the event the Supplier is unable or otherwise
fails or will fail, for any reason (including an event of force
majeure) to supply the Hemp Extracts in accordance with the
quantities and/or delivery dates specified by Buyer in a Purchase
Order, the Supplier shall promptly inform Buyer verbally with a
confirmation in writing. If Supplier is able to supply some but not
all of Buyer's orders for the Hemp Extracts, then Supplier shall
supply such partial quantities of the Hemp Extracts. Supplier will
use commercially reasonable efforts to source Hemp Extracts from
third parties to be delivered to Buyer, provided such Hemp Extracts
conforms to the Buyer’s Specifications. Alternatively, Buyer
may elect and shall have the sole right to obtain Hemp Extracts
itself from another supplier. If Supplier is unable to provide any
replacement Hemp Extracts or if Buyer elects to obtain Hemp
Extracts from a different supplier but only to the extent of
fulfilling the Purchase Order for which Supplier was unable to meet
the Purchase Order requirements. In such event, this Agreement
shall remain in full force and effect and the Supplier shall not be
liable to the Buyer for any additional costs, damages or fees of
any kind in connection with the Buyer seeking an alternative source
of supply.
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10. Limitation
of Liability. UNDER NO CIRCUMSTANCES SHALL THE PARTIES BE
OBLIGATED TO ONE ANOTHER FOR PUNITIVE DAMAGES.
11. Miscellaneous.
A.
Assignment and
Relationship of the Parties. The Parties may not assign or
subcontract this Agreement to a third party unless both parties
have agreed to such assignment or subcontracting in a writing
signed by an authorized representative. Supplier may not
subcontract any of its obligations under this Agreement without
Buyer's prior written approval. The parties are acting in
performance of this Agreement as independent contractors. Neither
Party shall have the power or authority to bind or obligate the
other Party.
B.
Entire Agreement;
Severability. This Agreement and the Exhibits attached
hereto and made a part hereof constitute the entire understanding
of the Parties with respect to the subject matter hereof,
superseding any and all previous understandings, contracts and
agreements, written and oral This Agreement may only be waived,
modified, or amended in a writing signed by the Parties. The terms
of this Agreement shall prevail over the terms of any other
documents or agreement between the parties, including without
limitation, any pre-printed terms in Supplier's invoices or the
Purchase Orders or other Product documentation. If any portion of
this Agreement is held to be unenforceable, the unenforceable
portion must be construed as nearly as possible to reflect the
original intent of the Parties, the remaining portions remain in
full force and effect, and the unenforceable portion remains
enforceable in all other contexts and jurisdictions.
C. Notices.
Unless otherwise specified herein, all notices under this Agreement
shall be in writing, and shall be effective when sent by fax,
electronic mail or Certified Mail, postage prepaid via a reputable
courier company, to the Parties' address as first written above.
Each Party may change its address which will be notified in writing
to the other Party.
D. No
Waiver. Any waiver by either Party of a breach of any
provision of this Agreement will not operate as or be construed to
be a waiver of any other breach of that or any other provision of
this Agreement. Any waiver must be in writing. Failure by either
Party to insist upon strict adherence to any provision of this
Agreement on one or more occasions will not deprive such Party of
the right to insist upon strict adherence to that or any other
provision of this Agreement. No remedy herein provided shall be
deemed exclusive of any other remedy allowed by law or in
equity.
12. Intellectual Property. During the
Term, Supplier hereby
grants a non-exclusive, non-sublicensable, non-transferable
perpetual, no royalty license to use any and all trademarks, logos
or other intellectual property in connection with the
Supplier’s Hemp Extracts.
13. Supplier's
IP. All intellectual property rights arising from or in
relation to the Hemp Extracts, its manufacture or production, and
any other property furnished to the Buyer by the Supplier, shall be
(i) the property of the Supplier, and (ii) can only be used within
the scope of the license provided by the Supplier to the Buyer
under the terms of this Agreement.
14. Force
Majeure. Neither party shall be liable or deemed to be in
default for any delay, interruption, or failure in performance
under this Agreement resulting from the following events: acts of
God, acts of civil or military authority; acts of the public enemy;
war; accidents, fires, explosions, power surges, earthquakes,
floods, or unusually severe weather; strikes or labor disputes;
delays in transportation or delivery outside the reasonable control
of the affected party; epidemics; and any similar event beyond the
affected party's reasonable control ("Force Majeure Event"), but only to the
extent the work of the party to be performed is affected by said
Force Majeure Event.
-6-
15. Governing
Law and Venue. This Agreement, the entire relationship
between Buyer and Supplier, and any litigation or other legal
proceeding between the parties shall be governed by and construed
in accordance with the laws of the State of Florida, without giving
effect to its choice of law rules. Any lawsuits or other
proceedings arising out of this Agreement shall be brought in the
state or federal courts located in Palm Beach County,
Florida.
16. Modification.
Except as otherwise provided in this document, this Agreement may
be modified, superseded, or voided only upon the written and signed
agreement of the parties. Further, the physical destruction or loss
of this document shall not be construed as a modification or
termination of this Agreement.
17. Rules
of Construction. The parties acknowledge that each party has
read and negotiated the language used in this Agreement. The
parties agree that, because all parties participated in negotiating
and drafting this Agreement, no rule of construction shall apply to
this Agreement which construes ambiguous language in favor of or
against any party by reason of that party's role in drafting this
Agreement. Headings. The headings in this Agreement are included
for ease of reference only and shall not control or affect the
meaning or construction of the provisions of this
Agreement.
18.
Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall constitute an
original but all of which when taken together shall constitute but
one Agreement. This Agreement shall become effective when it has
been executed by both of the Parties. Delivery of an executed
signature page of this Agreement by facsimile transmission or by
electronic messaging system shall be effective as delivery of a
manually executed counterpart hereof.
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IN
WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their duly authorized officers on the Effective
Date.
SUPPLIER:
By:
/s/
Xxxxxxxx Xxxx
Xxxxxxxx Xxxx,
CEO
BUYER:
Canntab
Therapeutics USA, Inc.
By:
/s/ Xxxx Xxxxxxx
Xxxx
Xxxxxxx, CEO
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EXHIBIT
1
Hemp
Extracts Specifications and Pricing
|
Ingredient
|
CBD Content
|
THC Content
|
Form
|
Unit
|
$/Unit
|
|
CBD Isolate
|
>99.5%
|
n/a
|
Crystalline powder
|
1Kg
|
$ 3,650.00
|
|
CBD FS Distillate
|
75%-85%
|
1%-2%
|
Oil
|
1L
|
$ 4,400.00
|
|
CBD THC-Free Distillate
|
>80%
|
n/a
|
Oil
|
1L
|
$ 5,500.00
|
|
CBD FS WS Emulsion
|
~10%
|
<0.3%
|
Emulsified powder
|
1Kg
|
$ 1,100.00
|
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