SUPPLY AGREEMENT
This Supply Agreement is made the 30th day of January, 1996 by
and between XXXXXX XXXXXX MEDICAL PRODUCTS, a trading division of
XXXXXX XXXXXX PACKAGING UK LTD. (a company registered in England
with registered number 409295), whose trading address is at Moresby
Xxxxx, Xxxxxxxxxx, Xxxxxxx, Xxxxxxx XX00 0XX and whose registered
office is situate at Xxxxxxxx, Xxxxxxx Xxxx, Xxxxxxx XX0 0XX,
Xxxxxxx ("the Supplier"), and MEDICAL ACTION INDUSTRIES INC., a
Delaware corporation whose registered office is situate at 000
Xxxxx Xxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 ("the Purchaser").
WHEREAS, the Supplier carries on the business of manufacturing
and selling medical packaging products, including the Pouches,
Special Items and Products (as hereinafter defined); and
WHEREAS, the Purchaser is a supplier of medical products in
the United States of America; and
WHEREAS, the Purchaser wishes to purchase from the Supplier
and the Supplier wishes to supply the Purchaser with the Pouches,
Special Items and Products on the terms set out in this Agreement.
1. INTERPRETATION. In this Agreement, unless the context
otherwise requires, the following words and expressions shall have
the following meanings:
(a) Commencement Date shall mean 30 January, 1996.
(b) Force Majeure shall mean, in relation to either
party, any circumstances beyond the reasonable control of that
party (including, without limitation, strike, industrial action,
shortage of raw material supplies and transportation delays).
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(c) Goods shall mean Pouches, Products and Special Items
or any of them collectively.
(d) Pouches shall mean the pouches produced by the
Supplier using the Products, details of which are set out in
Schedule 1.
(e) Products shall mean printed paper medical grade and
laminated polyester/polypropylene suitable for the manufacture of
standard heat seal and self-seal pouches, as supplied by the
Supplier, details of which are set out in Schedule 2.
(f) Special Items shall mean reels of tubing and
gusseted pouches to be supplied in accordance with clause 2.1 and
2.2, details of which are set out in Schedule 3.
(g) Year shall mean the period of twelve (12) months
from the Commencement Date and each consecutive period of twelve
(12) months thereafter during the continuation of this Agreement.
2. SALE OF POUCHES, SPECIAL ITEMS AND PRODUCTS.
2.1. During the first Year of this Agreement, the
Supplier will supply and the Purchaser shall buy such quantities of
the Pouches and Special Items as specified in Schedule 5. The
Purchaser shall issue purchase orders for the quantity of Pouches
and Special Items as per Schedule 5. Subject to the terms of this
Agreement, the Supplier shall manufacture and deliver in accordance
with such purchase orders.
2.2. During the second year and all subsequent Years, the
Purchaser and the Supplier shall discuss the Purchaser's
requirements for Special Items, and where agreed, the Supplier
shall supply and the Purchaser shall purchase these Special Items.
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The Supplier shall not be obliged to supply any Pouches in the
second or subsequent years.
2.3. During the second year and all subsequent Years, the
Purchaser shall purchase and, provided that the Purchaser complies
with the terms of the agreement, the Supplier shall supply such
quantities of the Products as may from time to time be ordered by
the Purchaser, subject to the terms of this Agreement.
2.4. In the second and all subsequent Years, the
Purchaser shall purchase 100% of its requirements for the Products
from the Supplier, where agreed.
2.5. Subject to clauses 2.1 and 2.4 above, there is no
minimum guaranteed quantities of Products, but the Purchaser
acknowledges that the Supplier shall not be obliged to ship any
order for Products which is less than a complete 20 or 40 foot
container.
2.6. Save in the cases of Pouches and Special Items to be
supplied in the first Year, which shall be ordered in accordance
with clause 2.1, all orders for Products and Special Items shall be
submitted in writing by the Purchaser as a firm commitment to the
Supplier. The orders shall specify the Products and Special Items
required and the required delivery date. The delivery date shall
be discussed with the Supplier and shall be acknowledged with an
agreed shipment date.
2.7. The Purchaser shall also notify the Supplier in
writing of:
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2.7.1. the estimated orders of the Products
for each Year, within three months prior to that
Year; and
2.7.2. the estimated orders for the
Products for each quarter within eight weeks prior
to each quarter.
2.8 The Purchaser acknowledges that normal lead time for
shipment of Goods is eight (8) weeks from order and four (4) weeks
from call off of existing stock and that shipment is unlikely to be
capable of being made in any shorter period unless otherwise agreed
by the Supplier in advance.
3. SPECIFICATION
3.1. The Goods sold by the Supplier shall comply with the
applicable British Standard Specifications from time to time. A
copy of the relevant British Standard Specifications as at the date
hereof is attached as Schedule 4.
3.2. The Purchaser shall be entitled to reject, in
accordance with the terms of clause 5, any part of an order for
Goods which does not comply with the specification referred to in
clause 3.1.
3.3. The Supplier's liability is limited to supply of
Goods which comply with the applicable British Standard
Specifications from time to time. The Supplier's liability is
limited in the event of breach to the value of the Goods supplied.
4. PRICE AND PAYMENT TERMS.
4.1. The price for the Pouches shall be as specified in
the last column of Schedule 1. Payment shall be made in U.S.
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Dollars to the Supplier's bank account at Credit Suisse, X.X. Xxx
0000, Xxxxxx Xxxxxx Xxxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 (Dollar
Account No. 00000000) or such other account as specified from time
to time.
4.2.1. Subject to adjustment in accordance with
the remaining provisions of clause 4, the price for the Products
and the Special Items shall be as agreed between the Supplier and
the Purchaser at the start of each Year and the first such prices
shall be as specified in Schedule 2 and Schedule 3. Such prices
shall apply for the duration of the relevant Year unless adjusted
due to raw material price adjustment as in accordance with the
following sub-clause.
4.2.2. During the course of each Year, the
Supplier shall adjust at any time prices for the Products and
Special Items in the event that the prices for plastic resin, paper
pulp or the raw material at any date have changed by 10% or more
when compared to the prices for such raw materials as at 3 January,
1996. For the avoidance of doubt there shall be no adjustment in
prices until the price of raw materials has changed by 10% or more
when compared to the prices as at 3 January, 1996, but that
thereafter, any adjustment in such prices, however small, shall, if
the Supplier so chooses, entitle the Supplier to change the prices
charged for the Products and Special Items by the same amount.
Reference price for pulp is the Paper and Pulp Index and Platts
Polymerscan for plastic.
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4.3. The Supplier shall notify the Purchaser in writing
of any proposed price change arising as a result of the operation
of clause 4.2.1 and such increase shall take effect on all
shipments starting ninety (90) days after the sending of such
notification.
4.4. Prices charged by the Supplier for Goods are CIF
East Coast USA port. Duty shall be paid by the Purchaser.
4.5. Payment for Pouches and Special Items for the first
Year shall be made against an agreed usage schedule as attached in
Schedule 5. Payment for Products and Special Items for the second
and subsequent years shall be made by the Purchaser thirty (30)
days from date of receipt by Purchaser in its facility.
4.6. In the event of late payment of any invoice for
whatever reason, interest at a rate of 1% per annum above the Base
Rate of Lloyds Bank Plc from time to time shall be charged on the
amount outstanding from the date payment was due until the date
payment is received.
4.7. The Supplier retains title and property to the Goods
until full payment is received in cleared funds for all Goods for
which payment is outstanding. Until such time, the Supplier shall
ensure that they are clearly marked as the Supplier's Goods.
5. INSPECTION AND REJECTION.
5.1. In the event that any item does not comply with the
specification referred to in clause 3.1, or is damaged in transit,
the Purchaser shall be entitled to reject such item. The Purchaser
shall notify the Supplier in writing within seven (7) days of
delivery at the Purchaser's facility of any Goods that are damaged
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in transit in order to enable the Supplier to replace such items
and maintain continuity of supply.
5.2. The Supplier shall, at no additional cost to the
Purchaser, replace items which are defective or do not conform to
specification as soon as practicable if needed by emergency
shipment to replenish stock outage. The Supplier will have no
further liability to the Purchaser. When such replacement is not
sufficient to cover stock outage at the Purchaser, the Purchaser
may, after it has received confirmation from the Supplier that it
is unable to replenish stock outage in sufficient time, obtain
emergency supply of Goods from other sources of standard items in
the open market, and provided prior notification of price has been
given to the Supplier, charge to the Supplier the excess cost,
where the "market price" for the item purchased exceeds that
normally charged under this Agreement.
5.3. Except as provided in clauses 3.3 and 5.2, the
Supplier shall not be liable for any costs, claims, damages,
expenses or losses, either direct or indirect (including
consequential losses) arising out of or in connection with this
Agreement or the Goods so supplied.
6. MANUFACTURE AND DELIVERY.
6.1. The Supplier shall use best endeavors to manufacture
and maintain sufficient stocks of the Products to fulfill its
obligations under this Agreement.
6.2. Except to the extent otherwise provided in this
Agreement, the Supplier and the Purchaser shall agree to the date
for shipment of the Goods purchased by the Purchaser, but in all
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cases the time of shipment or of delivery shall not be of the
essence.
6.3. Delivery of the items purchased by the Purchaser
shall take place at the East Coast port in the USA. Risk shall
pass to the Purchaser upon the shipment being landed at the East
Coast port in the USA.
6.4 The packaging of the Goods and the pallets shall not
be returnable to the Supplier.
7. FORCE MAJEURE. If either party is affected by Force
Majeure in respect of any of its obligations hereunder, it shall
promptly notify the other party of the nature and extent of the
circumstances in question. Notwithstanding any other provision in
this Agreement, neither party shall be deemed to be in breach of
this Agreement, or otherwise be liable to the other, for any delay
in performance or non-performance of any of its obligations under
this Agreement, to the extent that the delay or non-performance is
due to any Force Majeure of which it has notified the other party
and the time for performance of that obligation shall be extended
accordingly.
8. DURATION AND TERM.
8.1. This Agreement shall come into force on the
Commencement Date and subject to the following provisions shall
continue in force for a period of two (2) years and thereafter
unless and until terminated by either party giving to the other
party no less than twelve (12) months prior written notice to
expire at any time on or after the end of that period.
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8.2. Either party shall be entitled to forthwith
terminate this Agreement by written notice to the other if:
8.2.1. that party commits any continuing or
material breach of any of the
provisions of this Agreement and in
the case of such a breach which is
capable of remedy, fails to remedy
the same within thirty (30) days
after receipt of a written notice
giving full particulars of the
breach and requiring it to be
remedied;
8.2.2. an encumbrancer takes possession or
a receiver or liquidator of
administrator or equivalent in any
jurisdiction or similar person is
appointed over any of the property
or assets of that other party;
8.2.3. that other party makes any voluntary
agreement with its creditors or
becomes subject to an administration
order or similar in any
jurisdiction;
8.2.4. that other party goes into
liquidation (except for the purposes
of amalgamation, reconstruction or
other reorganisation and in such
manner that the company resulting
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from the reorganisation effectively
agrees to be bound by or to assume
the obligations imposed on that
other party under this Agreement);
or
8.2.5. that other party ceases, or
threatens to cease, to carry on
business.
8.3 The rights to terminate this Agreement given by this
clause shall not prejudice any other right or remedy of either
party in respect of the breach concerned (if any) or any other
breach.
9. GENERAL PROVISIONS.
9.1. The standard terms and conditions of sale of the
Supplier (attached as Schedule 6) shall apply to the relationship
between the parties except to the extent specifically provided in
this Agreement, and where there is a conflict between the terms,
the terms of this Agreement shall apply.
9.2. The Supplier shall be entitled to perform any of its
obligations undertaken by it and to exercise any of the rights
granted to it under this Agreement through any other company within
the Xxxxxx Xxxxxx group of companies.
9.3. The Supplier shall be entitled to carry out its
obligations under this Agreement through any agents or sub-
contractors appointed by it for which consent must be given by the
Purchaser, which will not be unreasonably withheld or delayed.
Those sub-contractors and agents are bound by the same
specifications.
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9.4. Except as provided in clauses 9.2 and 9.3, this
Agreement is personal to the parties hereto and neither of them
may, without the prior written consent of the other party, assign,
mortgage, charge or dispose of any of its rights hereunder or sub-
contract or otherwise delegate any of its obligations under this
Agreement.
9.5. Nothing in this Agreement shall create or be deemed
to create, a partnership between the parties.
9.6. This Agreement contains the entire agreement between
the parties with respect to the subject matter and supersedes all
previous agreements and understandings between the parties and may
not be modified or varied except by an instrument in writing signed
by the duly authorized representatives of each of the parties.
9.7. Each party acknowledges that, in entering into this
Agreement, it does not do so on the basis of or relying on any
representation, warranty or other provisions except as expressly
provided in this Agreement and accordingly, all conditions,
warranties or other terms implied by statute or common law are
hereby excluded to the fullest extent permitted by law.
9.8. If any provision of this Agreement is held by any
court or other competent authority to be void or unenforceable in
whole or in part, the other provisions of this Agremeent and the
remainder of the affected provisions shall continue to be valid.
9.9. Any waiver by either party of a breach of any
provision of this Agreement shall not be considered as a waiver of
any subsequent breach of the same or any other provision.
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10. NOTICES.
10.1. Any notice or other information required or
authorised by this Agreement to be given by either party to the
other may be given by hand or sent by first class pre-paid air mail
post or facsimile transmission to the other party at the following
address or such other address as may be notified for this purpose
from time to time.
Xxxxxx Xxxxxx Medical Products
Xxxxxxx Xxxxx
Xxxxxxxxxx
Xxxxxxx
XX00 0XX
Telephone: 0000 0000 00000
Facsimile: 0044 1946 66445
For the attention of Xxxxxx Xxxxxx
Medical Action Industries Inc.
000 Xxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Telephone: 000 000 000 0000
Facsimile: 001 516 231 3075
For the attention of Xxxx Xxxxxxxxx 000 000 0000 xxx.
225.
10.3. Any notice served by hand shall be deemed to
have been served immediately, any notice served by post shall be
deemed to have been served seven (7) days after posting it to the
correct address and any notice served by facsimile transmission
shall be deemed to have been served upon receipt of a valid
transmission, provided it is transmitted on a business day in the
relevant country, and if not, then on the next business day in the
relevant country.
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11. LAW AND JURISDICTION.
11.1. This Agreement shall be read and construed in
accordance with the laws of England and Wales.
11.2. The parties submit to the non-exclusive
jurisdiction of the English courts.
IN WITNESS WHEREOF, this Agreement has been signed by the duly
authorised representatives of the parties hereto the day and year
first above written.
XXXXXX XXXXXX MEDICAL PRODUCTS, a trading
division of XXXXXX XXXXXX PACKAGING UK LTD.
By: /s/ Xxxxxxxx Xxxxxx
------------------------------------
MEDICAL ACTION INDUSTRIES INC.
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------
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