You (referenced here as the “Supplier”, “you” or “your”) agree that your acceptance of any purchase order as submitted by either Sipco Bioengineering Inc. or Sipco Formulations Inc. (the “Company) is governed by these general terms and conditions.  For clarity, any reference to “the purchase order”, “any purchase order”, “any purchase orders” or “this purchase order” shall include by reference these general terms and conditions.

1               Order Fulfillment 

1.1           Purchase Orders:  The Company shall submit purchase orders to the Supplier by e-mail or facsimile at the address listed on the first page of the purchase order. Unless the Supplier objects to the purchase order within 3 days of receipt of such purchase order, the purchase order shall be accepted by the Supplier and shall constitute a firm and binding order for the production of the products ordered thereby (the “Committed Order”). Upon your acceptance of the purchase order, you shall supply the products in accordance with the specifications set out in the purchase order (the “Specifications”) and sell the product to the Company in the quantity specified in the purchase order, on the standard terms and prices as established by the purchase order. The parties agree that the delivery date for the products will be the delivery date as set out in the purchase order.

1.2           Cancellation by Company. Any Committed Order may be cancelled at any time by the Company giving the Supplier notice in writing.

1.3           Shipping. The parties understand and agree that the obligations as between the parties in terms of shipping the product and when ownership and all risk of loss or damage shall pass to the Company shall be as specifically set out in the purchase order between the Company and the Supplier.

1.4           Non-fulfillment of Purchase Order.  As soon as the Supplier becomes aware that it will be unable to fulfill a purchase order or meet the delivery date, you must notify the Company in writing of the date that it will be able to fulfill the purchase order and deliver the products. Except where the delay in delivery is caused or contributed to by the Company, if the new date for delivery is unacceptable to the Company, the Company may in its sole discretion:

(a)               terminate the purchase order;

(b)               purchase the products in substitution for the purchase order from an alternate supplier and any reasonable expense incurred by the Company in the acquisition of such alternative products which is in excess of the price payable under this purchase order for such products shall be payable by the Supplier;

1.5           Liability of Company.  The Company shall not be liable to the Supplier for any cost, loss or expense incurred by the Supplier due to the Company exercising its rights under section 1.4 above.

1.6           Records.  TheSupplier must keep accurate records of production, shipments, purchased materials, rejected materials, rejected product and any other records legally required to be kept or reasonably requested by the Company.  The Supplier must keep these records for:

(a)               at least 2 years after the delivery date of the products; or

(b)               in the event that the product has a mutually agreed upon shelf life,  then at least 2 years after the mutually agreed upon shelf (or longer if required by law); or

(c)               in the event that the product being supplied is equipment, then as long as the equipment is under warranty or 2 years from the delivery date, whichever is later.

2               Prices

2.1          Amount. The Company shall pay the Supplier the prices set out in the purchase order for the products.

2.2          Price Changes.   The Supplier shall provide the Company with at least 45 days notice of any proposed price change in addition to such documentation and/or information as may reasonably be required to support such price change.

3               Controls and Obligations

3.1       The Supplier agrees and understands that the products manufactured or supplied by the Supplier must be of a high and consistent quality and must meet all applicable federal, state, provincial and local laws and regulations, if applicable, and be in strict compliance with the Specifications and such other standards as may be set out in the purchase order.

3.2       The Company shall have the right to send, with not less than 3 days advance written notice, one or more of its authorized employees and/or representatives to observe and inspect, during the Supplier’s regular business hours, all areas, including without limitation, manufacturing, warehousing and other facilities (collectively the “Facility”), used to produce, package, store and ship product or used to store raw materials, ingredients and packaging materials (collectively the “Supplies”).

3.3       If any portion of the Facility, or any of the processes, inventories or equipment are in an unsanitary condition or do not otherwise comply with the Specifications, all applicable laws and regulations or with the other terms and conditions of the purchase order, then the Supplier shall promptly take such action as will correct the deficiencies and bring such processes, inventories and/or equipment into compliance with the Specifications, applicable laws and regulations and with the terms and conditions of the purchase order.

3.4       In the event that the Company purchases, supplies or provides to you any machinery or other equipment such as tooling equipment, plates or molds to be used for the manufacture, production or supply of the products which are the subject matter of the purchase orders (the “Company’s Equipment”) then the Supplier shall take such steps as may be necessary to maintain the Company’s Equipment and ensure that it is in good working condition throughout the life of the Company’s Equipment or such time as the Company demands the return of the Company’s Equipment.  The Company may demand the return of the Company’s Equipment at any time without notice.

3.5       The Supplier acknowledges and agrees that the Company’s Equipment shall be used exclusively in connection with the products ordered by the Company and shall not be used in the manufacture, production or supply of any other products either for the benefit of the Supplier or the benefit of for any other persons without the prior written consent of the Company.  

3.6       The Company, in addition to all other rights and remedies available to it under applicable laws and regulations, shall have the right at any time to reject product which has not been produced, packaged, stored or handled in compliance with the Specifications, or which is otherwise not in compliance with the terms and conditions of the purchase order or any purchase order (each product is a “Nonconforming Product”).  Specifically:

(a)            The Company may reject and refuse to pay for the Nonconforming Product which (i) has been damaged during the Supplier’s storage or handling; (ii) does not fully comply with the Specifications; (iii) does not fully comply with all of the other terms and conditions of the purchase order or (iv) is otherwise not in a first class merchantable condition when delivered to the Company or its designee;

(b)           Any Supplies, work in progress or product rejected by the Company and determined by the Company not to be reconditionable or salvageable will be disposed of by the Supplier at its own cost and expense in a manner approved by the Company, and if the Company has paid the Supplier for product which is rejected by the Company, the Company shall invoice the Supplier for the cost of such Nonconforming Product, and also for any freight, handling and other reasonable disposition costs or expenses incurred by the Company in connection with such Nonconforming Product, and the Supplier shall, at the Company’s election, either pay the Company or give the Company a credit in the sum of such invoice amount within thirty (30) days of such invoice.  In the event the Supplier has produced or shipped Nonconforming Product, the Supplier may have to recall the product, and the Company, at any time thereafter, may order the Supplier to suspend the production and packaging of the product until such time as the Supplier has corrected the nonconformity; and

(c)            The Supplier shall notify the Company’s representative immediately by phone upon becoming aware of any Nonconforming Product that has been shipped.

3.7       If the Supplier has a reasonable basis to believe that any act or occurrence related to any of the products presents or has presented any threat, or alleged threat, to public health or safety or is otherwise likely to draw negative attention from any federal, state, provincial or local governmental agency, consumer or environmental group, media or other organization or any individual (any of such occurrences being an “Adverse Event”), the Supplier shall immediately notify the Company upon becoming aware of the facts giving rise to such belief or suspicion.  In all such cases, the Supplier shall closely coordinate with the Company with respect to any actions the Supplier might take or permit and in respect to all public statements the Supplier might make regarding the Adverse Event, and shall, after consultation with the Company, follow all reasonable advice and instructions of the Company with respect thereto, subject to any actions which may be required by law or regulation.

3.8       The Supplier warrants and agrees that each and every product manufactured for or supplied to the Company shall, as of the date that the Company receives delivery of the product:

(i) not be misbranded within the meaning of any federal, provincial or local laws, ordinances, rules or regulations when bearing labels furnished by the Supplier, its subsidiaries, affiliates, divisions or units affixed to such product or repackaging by the Company in accordance with instructions furnished by the Supplier, its subsidiaries, affiliates, divisions or units;
(ii) be free from any foreign material, poisonous or injurious matter; and
(iii) be in compliance with all laws and regulations relating to labour, health, safety, environment, serial and identification numbers, labeling, country of origin designation, and all toxic substances, or any other safety statutes.

3.9       The Supplier shall manufacture, supply and ship products that comply with the Specifications and will be merchantable and fit for its stated purpose.

3.10    In the event that the Specifications are:

(a)            provided by the Supplier and not the Company; and
(b)           the Supplier proposes to make revisions to the Specifications (the “Revised Product”)

then the Supplier shall provide the Company with notice of the Revised Product and all documentation that it reasonably requires to assess the suitability of the Revised Product for the Company’s purposes including all documents and information relating to regulatory compliance, as applicable, such as Safety Data Sheets, GMO status and Country of Origin declarations (the “Documents”).  The Supplier shall provide the Documents to the Company at least 30 days prior to the launch of the Revised Product or such other amount of time as the Parties may otherwise mutually agree.

4               Recall Procedure

4.1           In the event that any of the products are subject to any seizure, destruction, recall (which includes safety notices) or withdrawal (any of such occurrences being a “Recall”) initiated by either one of the Parties to bring any of the products into compliance with any federal, state, provincial or local law or regulation or under a consumer protection or other similar agency, the Parties shall cooperate fully with each other in effecting the Recall, in accordance with such specifications and time-table as provided and adopted by the Company.  The Supplier shall reimburse the Company all losses, damages, costs and expenses incurred by the Company in connection with the Recall, unless the reason for the Recall is due to the negligence of the Company. In the event that the Recall is due to the negligence of the Company, then the Company shall be solely responsible for all losses, damages, costs and expenses associated with the Recall. 

5               Mutual Representations

5.1       The Company and the Supplier.  Each of the Parties represents, warrants, and covenants to the other party that:
(a)            it is organized and validly existing under the laws of its jurisdiction of formation, and has the full power and authority necessary to enter into this Purchase order and to carry out the provisions provided herein;

(b)           the purchase order has been duly authorized by all necessary action on the part of such party and has been duly executed and delivered by such party;

(c)            the Purchase order is legally binding upon such party and enforceable against such party in accordance with its terms;

(d)           it is not aware of any action, suit or inquiry or investigation instituted by any person that questions or threatens the validity of the purchase order; and

(e)            the execution, delivery and performance of the purchase order by such party does not conflict with any purchase order, instrument or understanding, oral or written, to which such party is a party.

6               Warranties by Supplier

6.1           The Supplier represents, warrants and covenants that all of the products supplied to the Company:

(a)             are new; 

(b)           are of merchantable quality;

(c)            are free from defects; 

(d)           are fit for their intended purpose;

(e)            are of good material and workmanship.

7               Confidential Information

7.1           Disclosure of Confidential Information. Each party acknowledges that in the course of the performance of the purchase order, it may obtain the Confidential Information of the other party (the “Receiving Party”). The Receiving Party will, at all times, both during the term of the purchase order and after the termination of the purchase order, keep in confidence and trust all of the Confidential Information disclosed to it by the other party (the “Disclosing Party”).

7.2           Use of Confidential Information.  The Receiving Party will not use the Confidential Information of the Disclosing Party other than as expressly permitted under the terms of the purchase order. The Receiving Party will take reasonable steps to prevent unauthorized disclosure or use of the Disclosing Party’s Confidential Information and to prevent it from falling into the public domain or into the possession of unauthorized persons. The Receiving Party will not disclose Confidential Information of the Disclosing Party to any person or entity other than its officers, employees, contractors, and consultants who need access to such Confidential Information in order to affect the intent of the purchase order and who have entered into non-disclosure agreements, which protect the Confidential Information of the Disclosing Party.

7.3           Notice of Unauthorized Use of Confidential Information. The Receiving Party shall immediately give notice to the Disclosing Party of any unauthorized use or disclosure of Disclosing Party’s Confidential Information. The Receiving Party agrees to assist the Disclosing Party to remedy such unauthorized use or disclosure of its Confidential Information

7.4           Confidential Information. Confidential Information shall include any and all information relating to the Disclosing Party’s products, technology, business affairs, methods, strategies, formulas, know-how, product formulations, concepts, techniques, processes, designs, trade secrets, methods, history, trade names, future planning, cost data, computer programs, software, scientific or technical know-how, financial, marketing and other business information, and any and all distributor and customer information, whether such information be tangible or intangible and any other information that is confidential to the Disclosing Party, non-public, proprietary and/or generally not known to the public.

7.5           Injunctive Relief. The Parties acknowledge that if a Party breaches the provisions of section 7, there may not be an adequate remedy at law in damages.  Accordingly, the Parties agree that a non-defaulting party shall have the right to seek temporary and permanent injunctive relief to restrain the violation of section 7 of these terms and conditions. The Parties acknowledge and agree that the provisions of section 5 are reasonable and are fully required to protect the legitimate interests of the other.

8               Insurance

8.1       Unless otherwise agreed to by the Parties, the Supplier shall obtain, at its own expense, provide and keep in full force and effect during the term of the purchase order the following insurance policies (having no less than the specified limits of liability):

9               Indemnification

9.1       The Company does hereby agree to indemnify, defend and hold harmless the Supplier and its affiliates and their respective shareholders, directors, officers, employees and agents (each a “Supplier Indemnified Party”) from and against any and all claims, costs, expenses, damages (including, but not limited to, treble damages), losses, judgments, settlements, actions and liabilities (including reasonable attorneys’ fees, witness fees and expenses actually incurred) a Supplier Indemnified Party becomes legally obligated to pay, whether the foregoing are based in contract, negligence, strict liability, warranty or any other legal theory, in connection with the activities contemplated or encompassed under the purchase order (including, without limitation, injury to or death of persons) alleged to be caused by (a) the product supplied by the Supplier provided that the product was manufactured, produced and/or supplied in accordance with the Specifications provided and/or approved by the Company; (b) directions for use or application provided or approved by the Company; (c) the negligence or willful misconduct of the Company or its agents or employees; or (d) any material breach or violation by the Company of any of its representations and warranties or any other term and provision of the purchase order.

9.2        The Supplier does hereby agree to indemnify, defend and hold harmless the Company and its affiliates and their respective shareholders, directors, officers, employees and agents (each a “Company Indemnified Party”) from and against any and all claims, costs, expenses, damages (including, but not limited to, treble damages), losses, judgments, settlements, actions and liabilities (including reasonable attorneys’ fees, witness fees and expenses actually incurred) a Company Indemnified Party becomes legally obligated to pay, whether the foregoing are based in contract, negligence, strict liability, warranty or any other legal theory, in connection with the activities contemplated or encompassed under the purchase order (including, without limitation, injury to or death of persons) alleged to be caused by (a) the product supplied by the Supplier provided that the product was not manufactured, produced or supplied in accordance with the Specifications provided and/or approved by the Company; (b)  the negligence or willful misconduct of the Supplier or its agents or employees; or (c) any material breach or violation by the Supplier of any of its representations and warranties or any other term and provision of the purchase order.

10            Miscellaneous

10.1    Independent Contractor.  Nothing in the purchase order is intended by the Parties to create a fiduciary relationship between them nor to make the Supplier an agent, legal representative, subsidiary, joint venturer, partner, employee, or servant of the Company for any purpose whatsoever.  It is understood and agreed that the Supplier is an independent contractor and is in no way authorized to make any contract, warranty or representation, or to create any obligation on behalf of the Company.

10.2    Notices.  Any notice or other written communication required or permitted to be given by the purchase order shall be deemed given when personally delivered, delivered by confirmed e-mail, delivered by confirmed facsimile or five (5) days after it has been sent (the date of posting being considered as the first day and any Sundays, legal holidays or other days upon which Canadian mail generally is not delivered not being counted in determining this period) by registered or certified mail, postage prepaid, properly addressed to the party to receive the notice at the address set out on the first page of this purchase order.

Nothing contained herein shall justify or excuse failure to give oral notice for the purpose of informing the other party hereto when prompt notification is required, but it is understood that such oral notice is only for the purpose of informing the other party hereto when prompt notification is required.

10.3    Interpretation of Purchase Order.  The purchase order, all questions relating to its validity, interpretation, performance and enforcement and all sales hereunder shall be governed by and construed in accordance with the laws of the Province of British Columbia.

10.4    Dispute Resolution.  In the event that any dispute between the Parties arising out of or relating to the purchase order occurs, then the Parties shall each appoint one senior executive from their respective companies (the “Senior Executive”) to meet and enter into good faith executive negotiations for the purpose of resolving the dispute

10.5    Arbitration Provision.  If the dispute cannot be resolved after 3 days despite the Senior Executives best efforts as contemplated by section above, and subject to the Parties mutually agreeing to extend the deadline for a negotiated settlement, then any controversy or claim arising out of or relating to the purchase order shall be fully and finally settled by arbitration conducted at the Commercial Arbitration Centre in Vancouver, British Columbia, Canada, (“BCICAC”) pursuant to the Rules governing domestic commercial arbitrations or such variation or modification as agreed to in writing by the parties, and judgment upon any award rendered in such arbitration may be entered in any court having jurisdiction thereof.  Either party requesting arbitration under this purchase order shall make a demand therefore on the other party by registered mail or personal delivery.  Neither party shall be precluded from bringing an action in any court of competent jurisdiction for injunctive or other provisional relief as necessary or appropriate.

10.6    Entire Purchase Order.  The purchase order including these general terms and conditions shall constitute the entire, full, and complete purchase order between the Company and the Supplier concerning the subject matter of the purchase order, and shall supersede all prior purchase orders.  The purchase order may only be modified by the mutual agreement of the Parties in writing.  

10.7    Severability.  If any provision of the purchase order is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable and the purchase order shall be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part of the purchase order; and the remaining provisions of the purchase order shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance here from.  Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of the purchase order a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable, provided such provision does not alter the intended benefits to the Parties as would have been achieved under the provision determined to be illegal, invalid or unenforceable.

10.8    Force Majeure.  Neither party shall lose any rights under the purchase order or be liable to the other party for damages or losses on account or failure of performance by the defaulting party if the failure is occasioned by war, fire, explosion, flood, strike or lock out, terrorist attacks, embargo, an Act of God, or any other similar cause to the extent beyond the reasonable control of the defaulting party, provided that the defaulting party claiming force majeure shall promptly notify the other party in writing setting forth the nature of the force majeure and shall use its best efforts to eliminate, remedy or overcome such force majeure and shall resume performance of its obligations as soon as reasonably practicable after such force majeure ceases.  Notwithstanding the previous sentence, if any force majeure continues for more than ninety (90) days, the other party may terminate the purchase order.

10.9    Waiver.  If any party waives any breach or default by another party, such waiver shall not constitute a waiver of any subsequent breach or default.  If a party hereto resorts to any remedy or remedies, such resort shall not limit such party’s right to resort to any and all other legal and equitable remedies that are available to him.  A party’s failure to enforce any provision of this purchase order or to exercise any of his rights or remedies shall not constitute a waiver of any of such party’s other rights or any of the other party’s obligations.

10.10 Applicable Law; Jurisdiction.  The purchase order and the legal relations between the Parties hereto shall be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada, if applicable.

10.11 Legal Counsel Fees.  In the event there are any legal proceedings between the Company and the Supplier arising out of the purchase order or any purchase order, the prevailing party shall be entitled to recover from the non-prevailing party all costs, expenses and reasonable legal counsel’s fees incurred in connection with such legal proceedings (and all appeals, if applicable).  

10.12 Survivability.  Notwithstanding anything to the contrary, sections 1.6, 4, 6, 7, 9 and 10 shall expressly survive the expiration or termination of the purchase order in addition to those sections surviving by operation of the law.