Sample of Basic Purchase and Sale Agreement

Basic Purchase and Sale Agreement

●● Co., Inc. (hereinafter called “Party A”) and ●● Co., Inc. (hereinafter called “Party B”) enter into the following Basic Agreement on Sales and Purchase Transactions (hereinafter referred to as the “Agreement”) in order to define the basic matters concerning ongoing sales and purchase transactions between Party A and Party B.

Article 1 (Purpose)

1. This Agreement sets forth the basic matters concerning the sale by Party B to Party A and the purchase by Party A of the goods handled by Party B (hereinafter called “the Goods”), and shall apply to all individual transactions between Party A and Party B under this Agreement (hereinafter called “Individual Agreements”), unless otherwise provided for.

2. Party A and Party B may exclude the application of some of the provisions of this Agreement or stipulate matters different from this Agreement in the Individual Agreements. In this case, the provisions of the Individual Agreement shall take precedence over this Agreement.

Article 2 (Formation of Individual Contracts)

1. Individual terms and conditions regarding the name, quantity, unit price, delivery date, place of delivery, method of payment, acceptance inspection, etc. of the Goods to be sold by Party B to Party A shall be stipulated in the Individual Agreement.

2. An individual contract shall be formed when Party A applies by delivering an order form (including e-mail and fax) describing the terms and conditions of the preceding paragraph, and Party B accepts such application.

Article 3 (Delivery)

1. Party B shall deliver the Goods in accordance with the terms and conditions set forth in the Individual Agreement. If Party B determines that there is a possibility that the Goods may not be delivered by the delivery date specified in the Individual Agreement, Party B shall immediately report such fact to Party A and follow Party A’s instructions. The report by Party B shall not preclude Party A from claiming compensation for any damage caused by the failure to deliver the Goods by the delivery date.

Article 4 (Inspection and Acceptance)

1. Party A shall inspect the delivered Goods within ● days of receipt of the Goods, and shall promptly notify Party B of any defects or shortage of quantity. In the absence of notification from Party A, the inspection shall be deemed to have been passed and the acceptance inspection shall be deemed complete.

2. If any item fails the inspection in the preceding paragraph, Party B shall, in accordance with Party A’s instructions, deliver a substitute item, reduce the price, or repair the defect by the deadline specified by Party A.

Article 5 (Liability for Defects and Product Liability)

1. If any hidden defect is found in the Goods within ● months after the completion of acceptance inspection as specified in the preceding Article, Party A shall notify Party B of such fact without delay, and if Party B confirms the existence of such defect, Party B shall, in accordance with Party A’s instructions, deliver substitute goods, reduce the price, repair the defect, etc., and shall compensate for any damages (including the cost of investigation, replacement of parts, administration costs of Party A’s suppliers and other reasonable expenses) incurred by Party A as a result of such defects.

2. Party B shall carry product liability insurance at its own expense and shall maintain such insurance during the term of this Agreement and after termination of this Agreement.

3. If a defect in the Product causes damage to the life, body, or property of a third party, Party B shall follow Party A’s instructions and settle the matter at its own expense. If Party A suffers any damage as a result of such action (including attorney’s fees, etc. paid by Party A), Party A shall compensate Party B for such damage.

Article 6 (Ownership and Risk Assumption)

1. Ownership of the Goods shall be transferred from Party B to Party A upon completion of acceptance inspection as stipulated in Article 4.

2. If the Goods are lost, damaged, or altered in whole or in part prior to delivery, Party B shall bear the loss or damage, except for reasons attributable to Party A.

Article 7 (Warranty of Quality)

1. Party B warrants that the Goods to be delivered to Party A shall meet the specifications and inspection standards specified by Party A, all laws and regulations applicable to the Goods, and any other conditions separately agreed upon by Party A and Party B.

2. In order to investigate Party B’s quality assurance system, Party A may request Party B to submit a report on any matter that Party A deems reasonably necessary, or may, upon prior notice, enter Party B’s place of business or factory or other facilities during Party B’s business hours and conduct any necessary investigation.

Article 8 (Payment of Price)

1. Party A shall pay Party B the price for the Goods as stipulated in the Individual Agreement.

2. The payment in the preceding paragraph shall be due at the end of each month based on the delivery of the Goods, and shall be paid by wire transfer to the bank account designated by Party B by the end of the following month. Party A shall bear the handling charges for the bank transfer.

Article 9 (Confidentiality)

1. Party A and Party B (hereinafter referred to as “Recipient”) shall not disclose or divulge to any third party any business or other business information (hereinafter referred to as “Confidential Information”) of the other party (hereinafter referred to as “Discloser”) obtained through this Agreement, not only during the term of this Agreement but also after termination of this Agreement. However, this shall not apply to information that falls under any of the following items.
（1）Items that are already in the possession of the Company at the time of disclosure;
（2）That which was already in the public domain or in the public domain at the time of disclosure;
（3）which became public knowledge or publicly available after the disclosure for reasons not attributable to the Discloser.

2. The confidential information disclosed or provided by the Discloser includes the following information, and the recipient of the information shall confirm in advance that such confidential information belongs to the Discloser and that its leakage would result in loss to the Discloser.
（1）Information concerning the types, specifications, and formulations of all ingredients of the products manufactured and sold by the Discloser;
（2）Information on suppliers of all raw materials for products manufactured and sold by the disclosing party;
（3）Manufacturing conditions and know-how (including, but not limited to, manufacturing flow) of the products manufactured and sold by the disclosing party;
（4）Information on the formulation of prototypes of the products manufactured and sold by the disclosing party;
（5）Facts and information found or inferred based on any of the preceding items.

3. Upon request of the Discloser, or if there is no longer a need to retain the Confidential Information, or if this Agreement is terminated due to termination of this Agreement or for any other reason, the Recipient shall promptly destroy or return the materials, recording media, and any copies thereof, including all or part of the Confidential Information, in accordance with the Discloser’s instructions, or erase them from any and all recording media, in accordance with the instructions of the Discloser.

Article 10 (Matters to be Notified in Advance)

Party A and Party B shall notify the other party in writing in advance of the occurrence of any of the following matters, and shall submit the relevant documents;
（1）Change of representative, trade name, address, capital or business purpose;
（2）Change in corporate organization due to merger, business transfer, corporate split, etc.;
（3）Changes in shareholders holding a majority of outstanding shares or other significant changes in capital structure;
（4）Other matters that may materially affect the management of the company.

Article 11 (Cancellation)

Party A or Party B may immediately terminate this Agreement and any unexecuted individual agreement, in whole or in part, without any notice, if the other party falls under any of the following items;
（1）If the counterparty violates any of the provisions of this Agreement or any individual contract, and the violation is not corrected within two weeks despite a demand notice;
（2）When the business license has been revoked or suspended by the regulatory authorities;
（3）When there has been gross negligence or breach of trust;
（4）When there is a petition for commencement of bankruptcy proceedings, civil rehabilitation, corporate reorganization proceedings, or special liquidation, or a resolution for dissolution;
（5）When the entity of the corporation has changed due to a change in its organization, capital structure, representatives, officers, shareholders, employees, etc., and the continuation of this Agreement is deemed inappropriate;
（6）When the transaction is suspended by a bill clearing house;
（7）When the corporation is in arrears with respect to taxes and public dues;
（8）When there are other serious reasons that make it difficult to continue the Agreement or individual contracts.

Article 12 (Exclusion of Antisocial Forces)

1. Party A and Party B represent and warrant that neither they nor their officers and employees fall under any of the following items, and will not fall under any of the following items in the future.
（1）Organized Crime Group, Organized Crime Group-member, a person for whom five years have not passed since he/she ceased to be an Organized Crime Group-member, a quasi-organized Organized Crime Group member, an Organized Crime Group-related company, a general meeting house, a socially motivated group, a special intelligence group, or other similar person (hereinafter referred to as “Organized Crime Group-member, etc.”);
（2）Having a relationship whereby the Organized Crime Group-member, etc. is recognized as controlling the management of the company;
（3）Having a relationship whereby the Organized Crime Group-member etc. is deemed to be substantially involved in the management;
（4）To have a relationship that is deemed to be an unjustified use of Organized Crime Group-in etc., such as for the purpose of pursuing unjust profits for oneself, one’s own company, or a third party, or for the purpose of inflicting damage on a third party;
（5）To have a relationship that is recognized as being involved in providing funds, etc. or benefits to Organized Crime Group-member, etc.;
（6）To have a socially reprehensible relationship with an Organized Crime Group-member, etc., in which an officer or a person substantially involved in the management of the company.

2. Party A or Party B may terminate this agreement without any notice if the other party violates any of the items of the preceding paragraph.

3. If this Agreement is terminated pursuant to the preceding paragraph, the terminated party may not make any claim against the other party for damages caused by the termination.

Article 13 (Prohibition of Assignment of Rights)

Neither party shall assign its rights or obligations under this Agreement or offer them as security without the prior written consent of the other party.

Article 14 (Compensation for Damages)

Party A or Party B may demand compensation for damages from the other party if Party A or Party B suffers damages as a result of the other party’s breach of this Agreement or individual agreement.

Article 15 (Partial Change of Contents of this Agreement)

Partial modification of the contents of this Agreement may be made only by written agreement.

Article 16 (Effective Period)

The term of validity of this Agreement shall be ● years from the date of execution. However, if the other party does not request non-renewal at least ● months prior to the expiration of the term, this Agreement shall be renewed for a period of ● years under the same terms and conditions, and the same shall apply thereafter.

Article 17 (Governing Law and Jurisdiction)

This Agreement or any separate agreement shall be governed by the laws of Japan, and any dispute arising between the parties in connection with this Agreement or any separate agreement shall be subject to the exclusive jurisdiction of the Tokyo District Court as the court of first instance.

Article 18 (Consultation)

If any matter is not stipulated in this Agreement, or if any question arises concerning this Agreement, KT and the SUPPLIER shall settle such question in good faith through consultation.

IN WITNESS WHEREOF, Party A and Party B have executed this Agreement, have caused this Agreement to be executed in duplicate, and each party shall retain one copy thereof.

Date: ●●, ●●, 20●●