Exhibit 10.2
SUPPLY
AGREEMENT
THIS SUPPLY AGREEMENT (this "Agreement"), dated as of the 15th
day of April, 2005 (the "Effective Date"), is between MOD-PAC CORP
("Seller"), a New York corporation with a principal place of
business at 1801 Elmwood Avenue, Buffalo, NY 14207, USA and
VISTAPRINT LIMITED ("Buyer"), a Bermuda corporation with a
registered office at Canon's Court, 22 Victoria Street, Hamilton,
HM 12 Bermuda.
When used herein, the term "Buyer" shall be deemed to include
Buyer and each of its Affiliates, including, without limitation,
VistaPrint USA, Incorporated ("VistaPrint USA"), and the term
"Seller" shall be deemed to include "Seller" and each of Seller's
Affiliates. For purposes hereof, the term "Affiliate" of a party
shall mean any person or entity that is directly or indirectly
controlling, controlled by or under common control with such party.
A person or entity shall be deemed to control another person or
entity if such person or entity possesses, directly or indirectly,
the power to direct or cause the direction of management and
policies of such other person or entity, whether through the
ownership of voting securities, by contract or otherwise.
Seller and Buyer agree as follows:
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PRODUCT .
1.1 The
word "Product" or "Products" as used herein shall mean the printed
products and accessories listed on Exhibit A (" Current
Products "), and any other products that Seller and Buyer
hereafter mutually agree in writing to be covered by the terms of
this Agreement (" New Products"). Subject to the terms and
conditions of this Agreement, Seller agrees to prepare, print,
package, and ship to Buyer and to Buyer's customers, and Buyer
agrees to purchase and take delivery of Products that Buyer orders
pursuant to this Agreement. Shipment of an order pursuant to
Buyer's instructions hereunder shall constitute delivery to Buyer.
Seller will physically ship orders for Buyer, F.O.B. Seller's plant
on Buyer's account number. Seller shall manufacture Products in
conformance with the specifications of such Product agreed to from
time-to-time in writing by Seller and Buyer (the "
Specifications "). Changes in Specifications for any
Products may result in a price increase. Seller is expressly
permitted hereunder from time to time to subcontract all or a part
of its production responsibilities hereunder to one or more third
parties to the extent that subcontracts are required, in the
reasonable and good faith judgment of Seller, to alleviate or avoid
capacity constraints on a temporary basis. Prior to subcontracting
any production, Seller shall notify Buyer in writing of its
intention to subcontract the production. Buyer may, within three
(3) days of receipt of such notice, elect to cancel some or all of
the orders for the Products to be subcontracted.
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TERM.
2.1 The
term of this Agreement (the " Term ") shall commence on
August 31, 2005 and expire on August 31, 2006, unless extended by a
written agreement signed by both parties, or unless earlier
terminated in accordance with the provisions hereof.
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PURCHASE AND SALE.
3.1 For
each Product order, Buyer shall specify the size, words, artwork,
designs and/or image requirements for the front and back of the
Product and the number of units ordered and give Seller such other
specifications as may be needed by Seller to produce the Product.
Buyer will assemble and submit to Seller a computerized artwork
file that is compatible with Seller's equipment and, at the same
time, submit to Seller a computer file containing the names and
shipping addresses of Buyer's individual customers, shipping
instructions including a ship by date, identification of carrier
and other requirements for each such Product order (the "
Shipping Files "). Buyer shall place orders by delivering
all artwork and the corresponding Shipping Files to Seller, on a
batch by batch basis. Seller will fill orders so received from
Buyer within a commercially reasonable time period, which shall
mean that orders are regularly ready for shipment within as short a
period as practicably possible (generally within 1-2 days); it
being understood that should Buyer exceed its forecasted amounts or
should the flow of orders placed by Buyer be erratic or
disproportionately sized at given times, Seller's normal turnaround
time may be affected. If Seller believes that it will be unable to
produce a Product order within two days of receipt, Seller shall
notify Buyer and Buyer may elect to cancel the order.
3.2 At the beginning of every calendar
month, Buyer shall submit a non-binding forecast of its estimated
requirements of the Products for the remainder of the Term. Buyer
agrees that all such forecasts shall be prepared in good faith in
order to facilitate Seller's timely manufacture and shipment of the
Products in accordance with the terms of this Agreement. In no
event, however, shall Buyer be required to purchase the quantities
set forth in said forecast unless and until firm orders are
submitted for the same.
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PRICING.
4.1
The prices at which
Seller shall sell the Current Products, and Buyer shall purchase
the Current Products, during the Term are set forth on Exhibit
B hereto. With respect to any New Product added to this
Agreement, the price shall be mutually agreed in writing to by
Seller and Buyer and set forth in an addendum to this Agreement.
Prices do not include the out-of pocket costs for third party
shipping and courier services (e.g., UPS, Federal Express, DHL,
etc.) incurred by Seller in shipping the Products to Buyer's
destination (" Third Party Shipping Costs "). Buyer shall
select the third party shipping and courier services to be utilized
and shall be responsible for payment of Third Party Shipping Costs
directly to the carrier.
4.2
Notwithstanding any other provision herein to the contrary, Buyer
acknowledges and agrees that the prices set forth on Exhibit
B hereto are based on a monthly purchasing volume equal to at
least $750,000. Accordingly, in the event that in any calendar
month during the Term (beginning with the calendar month September
2005), the total invoice amount for Buyer's aggregate purchases of
Products during that calendar month are less than $750,000
(exclusive of any Third Party Shipping Costs), Buyer shall be
required to pay a low volume surcharge (the "Low Volume Surcharge")
in accordance with the following schedule:
Monthly Product invoices $750K or
greater - no Low Volume Surcharge.
Product invoices less than 750K but at least $500K - 10% Low Volume
Surcharge.
Product invoices less than 500K but at least 250K - 15% Low Volume
Surcharge.
Product invoices less than 250K - 25% Low Volume Surcharge.
The Low Volume Surcharge shall be invoiced to Buyer at the
specified percentage of the calendar month's total invoiced amount
and shall be payable upon the same payment terms as Seller's other
invoices. By way of example, if total Product invoices for a given
calendar month equal $600,000, then Buyer would be billed for a
$60,000 Low Volume Surcharge in addition to the $600K due and owing
with respect to the Products ordered.
4.2 The prices set forth on Exhibit B shall be subject to
increase only in the event that Seller's actual cost of raw
materials (including paper) is increased. Seller shall provide
Buyer with thirty days prior written notice of any price increases
and reasonably detailed supporting documentation justifying such
increases. In the event that Buyer does not accept Seller's price
increase, Buyer may terminate this Agreement upon ten days prior
written notice to Seller. In the event of a termination by Buyer
due to a price increase, Buyer will not be subject to the Low
Volume Surcharge with respect to the calendar month in which the
termination occurs. In the event that Buyer does not terminate this
Agreement within ten days of the price increase notice, such price
increase shall be in effect. All orders submitted by Buyer prior to
the effective date of any price increase shall be filled at the
pre-increase price.
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PAYMENT TERMS.
5.1 Seller will invoice Buyer for all Products shipped by Seller
upon shipment. Invoices paid within ten days shall be entitled to a
one percent (1%) discount. All invoices shall be payable no later
than net 30 Days.
5.2 All
undisputed payments not made when due shall be subject to late
charges of one and one-half percent (1.5%) per month of the overdue
amount. If at any time during the term of this Agreement, Buyer is
in arrears with respect to any of its undisputed payment
obligations under this Agreement, Seller will not be obligated to
fulfill its obligations under this Agreement.
5.3 Buyer
agrees to indemnify, defend and hold harmless Seller, its parent
company, subsidiaries, affiliates, successors and assigns and their
respective officers, directors, shareholders, agents and employees,
from and against any and all losses, liabilities, damages, actions,
claims, expenses and costs including reasonable attorneys' fees,
which result or arise from or are based on any claims for customs
duties, VAT taxes and any other taxes not measured on Seller's
income that Seller may have to pay as a result of fulfilling its
obligations under this Agreement; provided however that, in the
event Seller fails to provide any notice it receives regarding any
such duties or taxes or fails to pay any such duties or taxes of
which it has actual knowledge that it is required to pay, Buyer
shall be obligated to pay the actual amount of any such duties or
taxes but shall not be responsible for any penalties, fines,
interests costs or expenses arising from such failure to pay.
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QUALITY CRITERIA.
6.1 Seller must maintain a quality standard at least comparable to
those furnished by Seller to Seller's preferred customers and at
least equivalent to those offered to Seller's preferred customers
as of Effective Date.
6.2 If
any Product sold and delivered hereunder is determined to be
defective, Seller shall credit Buyer's account for the full invoice
price associated with the defective customer order. Buyer and
Seller will mutually agree on a detailed sampling and quality
criteria plan to determine what Products are considered to be
defective. Regardless of whether buyer and Seller have agreed to
the foregoing sampling and quality criteria, Seller shall credit
Buyer's account for t
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