Common use of Expansion of Production Clause in Contracts

Expansion of Production. In the event that the monthly market demand for Product exceeds the initial production capacity of 100,000 lbs of the ANP facility, then expansion of production will be considered and discussed. This expansion may be discussed and planned at any time between Customer and ANP, and the expansion may be initiated by ANP in its own discretion or by agreement between Customer and ANP. The financial and certification responsibility for the expansion of the facility will rest with ANP only. In the event expansion of the facility is agreed upon, ANP must use its commercially reasonable efforts to obtain capital necessary to fund such expansion so as to increase production capacity up to 1,000,000 lbs of Product per month; provided, that ANP shall be under no obligation to incur any debt obligation in connection with the expansion. 3.4.1. First Right of Refusal for Expansion. Customer agrees to provide ANP with the first right of refusal to build and operate further manufacturing plants for Customer up to a total capacity of 1,000,000 lbs of Product per month, under the same terms and conditions as set forth in this Agreement. 3.4.2. In the event Customer requires additional product beyond 100,000 lbs per month up to 1,000,000 lbs per month, Customer shall be required to provide ANP with written notice. The written notice (the “Notice”) shall specify forecast and product requirements. ANP shall have a period of seventy-five (75) days, from receipt of the Notice, within which to exercise its first right of refusal on the plant specified in the Notice. Exercise of the option shall be made by written notice delivered to Customer. Absent exercise of the option by ANP, Customer may then find manufacturing capacity elsewhere. 3.4.3. ANP will require Customer to sign a mutually agreed upon amendment to this contract to support any increased volumes as a result of the above described expansions.