Purchase Order Terms & Conditions
TERMS OF AGREEMENT
The Purchase Order issued by MPL Brands NV, Inc. or MPL Brands, Inc. (“Buyer”) is made expressly subject to this purchase agreement (this “Agreement”). This Agreement, together with the Purchase Order, constitutes the entire and exclusive agreement between Buyer and the supplier (the “Seller”) identified in the Purchase Order. Buyer’s submission of the Purchase Order is conditioned on Seller’s agreement that any terms different from or in addition to the terms of this Agreement or the Purchase Order, whether communicated orally or contained in any purchase order confirmation, invoice, acknowledgement, release, acceptance, or other written correspondence issued by Seller, irrespective of the timing, shall not form a part of this Agreement, even if Seller purports to condition its acceptance of the Purchase Order on Buyer’s agreement to such different or additional terms. Seller’s electronic acceptance, acknowledgement of the Purchase Order, or commencement of performance constitutes Seller’s acceptance of this Agreement. Notwithstanding the foregoing, if a master agreement covering procurement of the Goods described in the Purchase Order exists between Seller and Buyer, the terms of such master agreement shall prevail over any inconsistent terms herein. No revisions to the Agreement shall be valid unless in writing and signed by an authorized representative of the Buyer.
1. Manufacture, Purchase and Sale of Goods.
1.1 Purchase and Sale. Subject to the terms and conditions of this Agreement, during the Term, Seller agrees to manufacture, supply and sell such quantity Goods as may be set forth in the Purchase Order placed by Buyer in accordance with this Agreement. The Purchase Order shall contain: (a) a description of the Goods to be manufactured and sold hereunder; (b) the purchase price for the Goods; (c) the quantity of the Goods; and (d) the Delivery Date.
1.2 Terms of Agreement and Buyer’s Purchase Order Prevail; Order of Precedence. The Parties intend for the express terms and conditions contained in this Agreement (including any Purchase Order) that are consistent with the terms and conditions of this Agreement to exclusively govern and control each of the Parties’ respective rights and obligations regarding the manufacture, purchase, and sale of the Goods, and the Parties’ agreement is expressly limited to such terms and conditions. Any additional, contrary, or different terms contained in any Confirmation or any of Seller’s invoices or other communications, and any other attempt to modify, supersede, supplement or otherwise alter this Agreement or any Purchase Order, are deemed rejected by Buyer and will not modify this Agreement or any Purchase Order or be binding on the Parties unless such terms have been fully approved in a signed writing by authorized Representatives of both Parties.
1.3 Forecasts. Buyer makes no representations or promise as to the amount of business Seller can expect under this Agreement. This Agreement is non-exclusive, and Buyer may purchase similar or the same products and services from any other suppliers.
1.4 Materials; Inventory. Seller shall be solely responsible for obtaining, and shall store at no cost to Buyer, any and all raw materials required for the manufacture of the Goods, in reasonable quantities consistent with the terms set forth in in this Agreement.
1.5 Manufacture. Seller shall manufacture and supply Goods in accordance with the Specifications, and all applicable laws, rules and regulations, including the FD&C Act, all applicable labor and employment laws, and infrastructure, facilities and safety requirements. Seller shall not make any change or modification to its facility, the manufacturing process, raw materials, or tools that may impact the manufacturing activities related to the Goods without Buyer’s prior written consent. In the event Buyer notifies Seller of any new manufacturing requirements or specifications required by Buyer, the FDA or any other regulatory agency, or of any other new legal requirements, the Parties shall promptly confer with each other with respect to the best means to comply with such requirements and allocate any costs of implementing such changes on an equitable basis. Seller and Buyer shall cooperate in the development of a change management process mutually agreeable to the Parties, which shall include a monthly review of any changes proposed by either Party to the Specifications or the manufacturing process or the Equipment, facility or materials used in the manufacture of the Goods. Upon request, Seller will permit representatives of Buyer to observe such manufacture and to have access to any relevant records in connection with such manufacture. Upon Buyer’s written request, Seller shall supply Buyer with copies of Seller’s manufacturing records for the purposes of assuring product quality and compliance with the Specifications. Seller represents and warrants to Buyer that it has, and will maintain during the Term, all business certifications and government permits, including health, safety and environmental permits, necessary for the conduct of the actions and procedures that it undertakes pursuant to this Agreement. Seller covenants and agrees that it shall not utilize any subcontractors to perform any of its duties and obligations hereunder without first notifying Buyer in writing. Seller covenants, acknowledges and agrees that it shall be responsible for all acts and omissions of approved subcontractors hereunder.
2. Ordering Procedure.
2.1 Purchase Orders. Buyer shall issue Purchase Orders to Seller in written or electronic form via e-mail. For the avoidance of doubt, Buyer shall only be obligated to purchase from Seller, and Seller shall be obligated to sell to Buyer, the quantities of Goods listed on an accepted Purchase Order. A valid Purchase Order, authorized by the appropriate Buyer personnel, is the sole means to authorize any work. Any work performed by Seller without a valid Purchase Order is done at Seller’s risk. Any Purchase Orders for Goods submitted by Buyer to Seller shall be governed by the terms contained herein. The Parties hereby agree that any term or condition in any purchase order, confirmation or other document furnished by Seller that is in any way inconsistent with these terms and conditions shall be void and of no effect.
2.2 Acceptance, Rejection, and Cancellation of Purchase Orders.
(a) Seller shall confirm to Buyer the receipt of each Purchase Order issued hereunder (each, a “Confirmation“) within five (5) business days following Seller’s receipt thereof in written form via e-mail. Each Confirmation should either acknowledge receipt and acceptance of the Purchase Order or, solely if permitted under this Section, advise Buyer of Seller’s rejection of such Purchase Order, the date of acceptance or rejection, and the basis for rejection, if applicable. If Seller fails to issue a Confirmation within the time set forth in the first sentence of this Section or otherwise commences performance under such Purchase Order, Seller will be deemed to have accepted the Purchase Order. Buyer may withdraw any Purchase Order prior to Seller’s acceptance thereof. Seller may only reject a Purchase Order if (a) Seller does not have the Goods in stock or (b) the applicable Purchase Order includes terms and conditions that supplement those contained in this Agreement, which Seller is unwilling to accept. Seller may not cancel any previously accepted Purchase Order hereunder except pursuant to Seller’s rights under Section 5.2. Buyer may cancel, without payment or penalty, a previously accepted Purchase Order in the event of a Chronic Supply Delay, a Force Majeure, and/or otherwise pursuant to the exercise of Buyer’s rights under Section 5.1. Additionally, Buyer may, in its sole discretion and at any time and for any reason or no reason, cancel or postpone any accepted Purchase Order in its entirety or in part without liability by providing Seller written Notice (email sufficient) thereof, provided however that if Buyer cancels for any reason other than Chronic Supply Delay, Force Majeure, and/or otherwise pursuant to the exercise of Buyer’s rights under Section 5.1, except for any such Goods that are in Seller’s standard stock (i.e., “off-the-shelf”) or are otherwise readily marketable, Buyer shall remain responsible for payment of: (i) all non-cancellable raw material pre-approved by Buyer and actually purchased by Seller to support the cancelled Purchase Order (to the extent such costs are reasonable in amount and are properly allocable or apportionable under GAAP to the terminated Purchase Order), provided that the delivery date set forth in each such Purchase Order is not more than three (3) months after the date of such cancellation and Seller is unable to use such materials for its other customers; and (ii) any work in progress and finished Goods manufactured to support the cancelled Purchase Order, provided that the delivery date set forth in each such purchase order is not more than one (1) month after the date of such cancellation.
(b) Except as expressly provided in this Section, Buyer will not be liable for and will not be required to make payments to Seller, directly or on account of claims by Seller’s subcontractors, for loss of anticipated profit, unabsorbed overhead, interest on claims, product development and engineering costs, facilities and equipment rearrangement costs or rental, unamortized depreciation costs, and general and administrative burden charges.
3. Shipment, Delivery, Acceptance, and Inspection.
3.1 Shipment and Delivery Requirements. Unless stated in the applicable Purchase Order that Buyer will pickup and/or Buyer has agreed in writing otherwise, each shipment will be made FOB Buyer’s facility, freight prepaid, and Seller agrees to manage shipment of the Goods to third parties as requested by Buyer. Seller agrees to provide transparent freight charges (with no markup) on any freight charges that Buyer is required to reimburse Seller for. All such charges need to be approved by Buyer in advance in writing; if Seller has not obtained Buyer’s written approval over such freight charges, Buyer shall have no obligation to pay for and/or reimburse Seller. Delivery shall not constitute Acceptance of a Product. Time, quantity, and delivery to the Delivery Location are of the essence under this Agreement. Seller shall procure materials for, fabricate, assemble, pack, mark, and ship Goods strictly in the quantities, by the methods, to the Delivery Locations, and by the Delivery Dates specified in this Agreement or if none are listed, as stated in an applicable Purchase Order issued by Buyer. Delivery times will be measured to the time that Goods are actually received at the Delivery Location.
3.2 Late Deliveries. Seller shall notify Buyer as promptly as practical if Seller is unable to make any scheduled Delivery of Goods or perform services as scheduled, state the reasons for such delay and provide an updated committed Delivery Date. Such notification by Seller shall not affect any of Buyer’s rights under this Agreement. If Seller does not comply with any of its delivery obligations under this Section, Buyer may, in Buyer’s sole discretion and at Seller’s sole cost and expense, (a) approve a revised Delivery Date, and require expedited or premium shipment at Seller’s sole cost and expense, (b) cancel the applicable Purchase Order and Buyer shall have no liability whatsoever to Seller. Unless otherwise expressly agreed to by Buyer in writing, Seller may not make partial shipments of Goods to Buyer. Partial deliveries are counted as late and will only be considered complete when all Goods have been Delivered.
3.3 Transfer of Title and Risk of Loss.
(a) Title to Goods shipped under any Purchase Order passes to Buyer upon the earliest to occur of (i) delivery of the Goods to Buyer, (ii) payment of any portion of the Price for such Goods by Buyer, (iii) Buyer’s acceptance of the Goods and (iv) Seller’s tender of the Goods to the carrier/delivery of the Goods to the Delivery Location. Title will transfer to Buyer even if Seller has not been paid for such Goods, provided that Buyer will not be relieved of its obligation to pay for Goods in accordance with the terms hereof.
(b) Notwithstanding any agreement between Buyer and Seller concerning transfer of title or responsibility for shipping costs, risk of loss to Goods shipped under any Purchase Order passes to Buyer upon receipt and acceptance by Buyer at the Delivery Location, and Seller will bear all risk of loss or damage with respect to Goods until Buyer’s receipt and acceptance of such Goods in accordance with the terms hereof.
3.4 Packaging and Labeling. Seller shall properly pack, mark, and ship Goods as instructed by Buyer and otherwise in accordance with applicable Law and industry standards in a manner designed to ensure safe shipment, and shall provide Buyer with shipment documentation showing the Purchase Order number, Seller’s identification number for the subject Goods, the quantity of pieces in shipment, the number of cartons or containers in shipment, Seller’s name, the bill of lading number, and the country of origin.
3.5 Ingredients and Materials Disclosure. Upon Buyer’s request, Seller shall promptly provide to Buyer, in such form and detail as Buyer requests, a list of all ingredients and materials incorporated in the Goods, the amount of such ingredients and materials, and information concerning any changes in or additions to such ingredients and materials.
(a) Without limitation of the foregoing, upon Buyer’s request, Seller shall provide to Buyer all information (in sufficient detail), with written certifications thereof, to enable Buyer to timely comply with all of Buyer’s and Buyer’s customers’ due diligence, disclosure and audit requirements under Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act“) and Rule 13p-1 and Form SD under the Securities Exchange Act of 1934, and all similar, applicable statutes and regulations, including due inquiry of Seller’s supply chain (and certifications by such suppliers) identifying conflict minerals (as defined in Section 1502(e)(4) of the Dodd-Frank Act) contained in each Product and the country of origin of such conflict minerals (or, following due inquiry, why such country of origin cannot be determined).
(b) For each shipment of Goods, Seller shall provide Buyer, in writing, sufficient advance warning and notice (in addition to including appropriate labels on Goods, containers, and packing) of any hazardous or restricted material that is an ingredient or a part of the shipment, together with such special handling instructions as may be necessary to advise logistics providers, handlers of the Goods and personnel of how to exercise that measure of care and precaution that will comply with any applicable Laws and prevent bodily injury or property damage in the handling, transportation, processing, use or disposal of the Goods, containers, and packing.
3.6 Inspection. Goods are subject to Buyer’s inspection and approval or rejection notwithstanding Buyer’s prior receipt of or payment for the Goods. Buyer shall have a reasonable period of time, not to be less than thirty (30) days following delivery of the Goods to the Delivery Location (“Inspection Period“), to inspect all Goods received under this Agreement and to inform Seller, in writing, of Buyer’s rejection of any Nonconforming Goods. Notwithstanding the foregoing, in the event it could not reasonably be determined upon initial inspection that any delivered Goods and Nonconforming Goods, Buyer shall have thirty (30) days from the date Buyer becomes aware of such defect to reject such Nonconforming Goods by written notice to Seller. Buyer may return to Seller (at Seller’s sole cost and expense) any or all units of rejected Goods that constitute Nonconforming Goods because they exceed the quantity stated in this Agreement or any Purchase Order. If Buyer rejects any other Nonconforming Goods, Buyer may elect to (a) require Seller, at Seller’s sole cost, to replace the rejected Goods (it being understood that if the Goods must be returned to Seller, that it will be at Seller’s sole expense) as promptly as possible at no additional cost, or (b) return the Nonconforming Goods to Seller at Seller’s sole cost and expense (if return is possible and required by Seller) and receive a refund for such Nonconforming Goods (if paid for) and Seller shall additionally be responsible for all costs and other damages incurred by Buyer related to the Nonconforming Goods; in each case without limiting the exercise by Buyer of any other rights available to Buyer under this Agreement or pursuant to applicable Law. All returns of Nonconforming Goods to Seller are at Seller’s sole risk and expense. Goods that are not rejected within the Inspection Period will be deemed to have been accepted by Buyer except with respect to Nonconforming Goods that could not reasonably be determined upon initial inspection; provided, however, that Buyer’s acceptance of any Goods will not be deemed to be a waiver or limitation of Seller’s obligations pursuant to this Agreement (or any breach thereof), including those obligations with respect to Seller’s Product Warranty and Seller’s duty to indemnify Buyer.
4. Price and Payment.
4.1 Price. Subject to Section 4.2, Buyer shall purchase the Goods from Seller at or below the prices set forth in the applicable Purchase Order (“Prices“). Unless otherwise stated on the applicable Purchase Order and/or agreed by Buyer in writing, all Prices include, and Seller is solely responsible for, all costs and expenses relating to packing, crating, boxing, transporting, loading and unloading, customs, Taxes, tariffs and duties, insurance, and any other similar financial contributions or obligations relating to the production, manufacture, sale, and delivery of the Goods.
4.2 Price Revisions. All Prices stated in the Purchase Order are firm and are not subject to increase for any reason, including changes in market conditions, increases in raw material, component, labor, or overhead costs or because of labor disruptions, changes in program timing or length, or fluctuations in production volumes. Only Buyer approved modification or specification changes of Goods that are above and beyond the performance requirements set forth in the Specifications will be considered as a basis for a price increase. Any such price increases shall be mutually agreed upon by the Parties. Except those provided for herein or specified in a Purchase Order, no additional costs or expenses, including non-recurring expenses, will be reimbursed without Buyer’s prior written approval. Seller may reduce the purchase price of any Good at any time during the term of this Agreement. Such revisions shall apply to all purchase orders submitted by Buyer after such price reduction and all open purchase orders that are unfulfilled and are scheduled to ship subsequent to the effective date of the price reduction.
4.3 Invoices. Seller shall issue an invoice for the Purchase Order to Buyer within seven (7) days of delivery of Goods. Each invoice for Goods must set forth in reasonable detail the amounts payable by Buyer under this Agreement and contain the following information, as applicable: Purchase Order number, amendment number, Buyer part number, line-item number; Seller’s name; Seller’s identification number; carrier name; ship-to address; weight of shipment; quantity of Goods shipped; number of cartons or containers in shipment; bill of lading number; country of origin; price per unit, freight costs, any other fees or charges, and any other information necessary for identification and control of the Goods. Buyer reserves the right to return and withhold payment due to any invoices or related documents that are inaccurate or incorrectly submitted to Buyer. The Parties shall seek to resolve any invoice disputes in good faith. Any payment by Buyer of an invoice is not an acceptance of any nonconforming element or terms on such invoice or the related Goods.
4.4 Payment. Except for any amounts disputed by Buyer in good faith, and except as otherwise stated on any Purchase Order, Seller’s accurate and correctly submitted invoices will be payable within forty five (45) days following the later of (a) Buyer’s receipt of Seller’s invoice or (b) Buyer’s receipt of the applicable Goods. Buyer may withhold payment pending receipt of evidence, in such form and detail as Buyer may reasonably direct, of the absence of any Encumbrances on the Goods. Any payment by Buyer for Goods will not be deemed acceptance of the Goods or waive Buyer’s right to inspect. Buyer will be entitled to any discounts allowable by Seller for prompt payment even though Buyer is unable to make payment within the time limits set by Seller if such failure is due to Seller’s actions or other circumstances or events beyond Buyer’s reasonable control. Buyer shall make all payments in US dollars.
4.5 Setoff; Contingent or Disputed Claims. All amounts due from any Buyer Party to Seller are net of any indebtedness of Seller to any Buyer Party. In addition to any right of set-off, deduction or recoupment provided or allowed by Law, any Buyer Party may, without notice to Seller, set off against, and deduct and recoup from, any amounts due or to become due from any Buyer Party to Seller, any amounts due or to become due from Seller to any Buyer Party, including for damages resulting from breaches by Seller of its obligations under this Agreement or any other agreement between such parties. If an obligation of Seller is disputed, contingent, or unliquidated, payment by any Buyer Party of all or any portion of the amount due may be deferred until such dispute contingency is resolved or the obligation is liquidated. In the event of Seller’s bankruptcy, if all of the contracts (including this Agreement) between Buyer and Seller have not been promptly assumed by Seller (under applicable Law), Buyer may withhold payment to Seller for Goods previously delivered (via administrative hold or otherwise) until the risk of potential rejection and other losses is eliminated.
4.6 Taxes. Buyer shall make all payments to Seller under this Agreement without deduction or withholding except to the extent that any such deduction or withholding is required by applicable laws to be made on account of taxes, which deduction or withholding shall promptly be paid by Buyer on behalf of Seller to the appropriate governmental authority, and Buyer will furnish Seller with proof of payment of such taxes. Seller shall not invoice Buyer for any excise and/or value-added tax incurred by Seller in performing the obligations under this Agreement unless approved in advance in writing by Buyer.
5. Termination For Cause.
5.1 Buyer’s Right to Terminate for Cause. Buyer may terminate this Agreement (including all Purchase Order(s)) by providing written Notice (e-mail sufficient) to Seller:
(a) if Seller repudiates or threatens to repudiate, any of its obligations under this Agreement or any Purchase Order;
(b) except in the case of breaches detailed under subsections (c) of this Section where no Notice is required, if Seller is in breach of, or threatens to breach, any representation, warranty, obligation, agreement or covenant of Seller under this Agreement or any Purchase Order and either the breach cannot be cured or, if the breach can be cured, it is not cured by Seller within a commercially reasonable period of time under the circumstances, in no case exceeding thirty (30) days following Seller’s receipt of written Notice of such breach;
(c) notwithstanding the generality of on (b), if Seller fails to, indicates they will not be able to, or threatens not to, timely deliver Goods by the Delivery Date and/or that otherwise do not conform to the Specifications (including without limitation if there are quality issues with any samples or delivered Goods) and/or requirements of, and otherwise in accordance with, the terms and conditions of this Agreement or the Purchase Order;
(d) if Seller (i) becomes insolvent or is generally unable to pay, or fails to pay, its debts as they become due, (ii) files or has filed against it, a petition for voluntary or involuntary bankruptcy or otherwise becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency Law, (iii) makes or seeks to make a general assignment for the benefit of its creditors, or (iv) applies for or has appointed a receiver, trustee, custodian or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business;
(e) if Seller fails to provide Buyer, within a commercially reasonable time after Buyer’s request (but in no case exceeding thirty (30) days after such request) with adequate and reasonable assurance of Seller’s financial and operational capability to perform timely any of Seller’s obligations under this Agreement or any Purchase Order;
(f) if, as a result of any breach by Seller of any of its obligations under this Agreement or otherwise, Buyer’s customer requires that Buyer obtain another supplier of Goods;
(g) if Seller takes any action, or fails to take any action, required under this Agreement or any other agreement between Buyer and Seller, or as reasonably requested by Buyer, the result of which is an imminent interruption or delay, or the threat of an imminent interruption or delay, in any production at any of Buyer’s or its customer’s manufacturing facilities;
(h) if without obtaining Buyer’s prior written consent, (i) Seller sells, leases, or exchanges a material portion of Seller’s assets, (ii) Seller merges or consolidates with or into another Person, or (iii) a change in Control of Seller occurs, or
(i) upon the occurrence of any other event constituting grounds for termination set forth in any other sections of this Agreement.
Any termination under this Section will be effective on Seller’s receipt of Buyer’s written Notice of termination or such later date (if any) set forth in such termination Notice. Upon the occurrence of any of the events described under this Section, Buyer may, in addition to any of its other rights to suspend performance under this Agreement and any outstanding Purchase Order(s) or applicable Law, immediately suspend its performance under all or any part of this Agreement and any outstanding Purchase Order(s), without any liability of Buyer to Seller, and, notwithstanding anything to the contrary contained in this Agreement Buyer may, at its election, recover any and all damages, costs, expenses and losses incurred by Buyer as a result of any event described under this Section, or any breach by Seller.
5.2 Seller’s Right to Terminate for Cause. Seller may terminate this Agreement, by providing written Notice to Buyer:
(a) except as otherwise specifically provided under this Section, if Buyer is in material breach of any representation, warranty or covenant of Buyer under this Agreement, and either the breach cannot be cured or, if the breach can be cured, it is not cured by Buyer within a commercially reasonable period of time (in no case exceeding sixty (60) days) after Buyer’s receipt of written Notice of such breach; or
(b) if Buyer (i) becomes insolvent or is generally unable to pay, or fails to pay, its debts as they become due, (ii) files or has filed against it, a petition for voluntary or involuntary bankruptcy or otherwise becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency Law, (iii) makes or seeks to make a general assignment for the benefit of its creditors, or (iv) applies for or has appointed a receiver, trustee, custodian or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business.
Any termination under this Section will be effective on Buyer’s receipt of Seller’s written Notice of termination or such later date (if any) set forth in such Notice.
5.3 Effect of Expiration or Termination.
(a) Immediately upon the effectiveness of a Notice of termination delivered by Buyer to Seller hereunder (as stated in such Notice), Seller shall, unless otherwise directed by Buyer, and subject to Seller’s obligation provide resourcing cooperation under Section 5.4: (i) promptly terminate all performance under the Purchase Order; (ii) transfer title and deliver to Buyer all finished Goods completed prior to effectiveness of the Notice of termination; and (iii) return to Buyer all Bailed Property and any other property furnished by or belonging to Buyer or any of Buyer’s customers, or dispose of such Bailed Property or other property in accordance with Buyer’s instructions (provided that Buyer will reimburse Seller for the actual, reasonable costs associated with such disposal);
(b) Expiration or termination of the Term will not affect any rights or obligations of the Parties that: (i) come into effect upon or after termination or expiration of this Agreement; or (ii) otherwise survive the expiration or earlier termination of this Agreement and were incurred by the Parties prior to such expiration or earlier termination.
(c) Upon the expiration or earlier termination of this Agreement, each Party shall: (i) return to the other Party or destroy (at the other Party’s election) all documents and tangible materials (and any copies) containing, reflecting, incorporating, or based on the other Party’s Confidential Information; (ii) permanently erase all of the other Party’s Confidential Information from its computer systems, except for copies that are maintained as archive copies on its disaster recovery and/or information technology backup systems; and (iii) upon the other Party’s written request, certify in writing to such other Party that it has complied with the requirements of this Section.
5.4 Resourcing Cooperation. Upon termination of a Purchase Order for any reason, to the extent requested by Buyer in writing, Seller will take the following actions and such other actions as may be reasonably required by Buyer to transition production of Goods from Seller to an alternative seller without production disruptions: (a) for any non-standard (i.e., not “off-the-shelf”) Goods, promptly provide to Buyer all requested information and documentation regarding and access to Seller’s manufacturing process, including on-site inspections, bill-of-material data, tooling and process detail and samples of supplies and components; (b) sell to Buyer, at Seller’s actual cost, any or all work-in-process and any raw-materials inventory relating to the Purchase Order; and (c) sell to Buyer any or all finished Goods.
6. Certain Obligations of Seller.
(a) Seller shall meet or exceed the Specifications. At Buyer’s request, Seller shall furnish to Buyer test samples of Goods as reasonably required by Buyer to determine if their manufacture is in accordance with the Specifications. Seller shall perform quality inspections of Goods before delivery and shall certify inspection results in the manner requested by Buyer. Seller shall provide reasonable support as requested by Buyer to address and correct quality concerns at Seller’s sole expense. In addition to its other rights and remedies, Buyer may hold Seller responsible for costs associated with quality-issue investigation and containment and other costs incurred related to quality issues.
(b) The Parties agree that, should Buyer wish to implement any amendment to the Specifications, Buyer shall provide written notice thereof to Seller for Seller’s review and approval, which approval shall not be unreasonably withheld, delayed or conditioned. The Parties acknowledge that the Specifications may need to be refined and modified as the Parties gain experience with the manufacture, testing and use of the Goods. Accordingly, Buyer and Seller agree to negotiate in good faith to modify the Specifications from time to time as the Parties’ experience with the manufacture, testing and use of the Goods warrants. Seller further agrees that it will facilitate changes to the Specifications that are necessary or appropriate in light of FDA or other regulatory requirements. The Parties agree to allocate on an equitable basis any special costs of developing and implementing revised procedures requested by Buyer.
(c) Seller shall keep complete, accurate and authentic accounts, notes, data and records of the development and manufacturing activities performed under this Agreement. Without limiting the generality of the foregoing, Seller shall maintain complete and adequate records pertaining to the equipment, materials, methods and facilities used by it for the manufacture, testing, packaging, and labeling of the Goods in accordance with the Specifications and applicable laws, rules and regulations. Seller shall maintain all records required to be maintained hereunder in a professional manner so as to permit Buyer to review such records. Designated representatives of Buyer shall, upon reasonable notice to Seller, have access to and shall be permitted to review all such records during the Term and for a period of five (5) years thereafter.
(d) Any recalls of Buyer’s finished product(s) that use or incorporate the Goods shall be the sole responsibility of Buyer. In the event Buyer shall be required or requested by any of Buyer’s customers or governmental authority (or shall voluntarily decide in good faith) to recall any finished product(s) that use or incorporate the Goods, Seller shall use best efforts to timely cooperate with Buyer in the investigation and conduct of such recall. If a recall arises primarily out Defective Goods, a Latent Defect, or due to Seller’s gross negligence, willful misconduct or breach of this Agreement, then Seller shall reimburse Buyer for (a) the purchase price paid by Buyer for such Goods, and (b) all of Buyer’s other direct and indirect reasonable costs and expenses actually incurred by Buyer in connection with the recall. The foregoing will apply even if the Product Warranty and any other product warranty applicable to the Goods have expired.
6.2 Duty to Advise. Seller shall promptly provide written Notice (email sufficient) to Buyer of any of the following events or occurrences, or any facts or circumstances reasonably likely to give rise to any of the following events or occurrences: (a) any failure by Seller to perform any of its obligations under this Agreement; (b) any delay in delivery of Goods; (c) any defects or quality problems relating to Goods; (d) any change in Control of Seller; (e) any deficiency in Buyer specifications, samples, prototypes or test results relating to this Agreement; (f) incident or accident experienced by Seller that Seller in its reasonable judgment believes may affect the quality of the Goods or (g) any failure by Seller, or its subcontractors or common carriers, to comply with Law. In addition, Seller shall promptly notify Buyer in writing of any change in Seller’s authorized Representatives, insurance coverage, or professional certifications.
6.3 Certain Changes.
(a) Seller shall promptly make any changes Buyer directs in writing with respect to the Goods, which may include changes in the design, drawings, specifications, processing, inspection, testing, quality control, methods of packing and shipping, or the date or place of delivery. Any changes pursuant to this Section will not affect the Price or time for delivery of Goods unless (i) within seven (7) days after Buyer’s notice to Seller of the change, Buyer receives from Seller written Notice of a claim for adjustment with all sufficient information and documentation regarding Seller’s costs and production timing resulting from such changes to allow Buyer to perform an audit and verify such claim, and (ii) after auditing and verifying such claim, the results of such audit indicate that, in order to implement such Buyer-requested changes, Seller’s actual out-of-pocket costs increased by a material amount or that implementing such changes reasonably and appropriately caused a delay in the Delivery Date of any affected Goods. Seller may increase the Prices hereunder in a per-unit amount solely to the extent necessary to compensate Seller for such commercially reasonable cost increases (but not to allow for any additional margin). If Buyer’s audit and verification results indicate that Seller’s costs have or should have actually decreased, the Prices hereunder shall be deemed decreased on a per-unit basis to reflect the amount of any such cost savings. Nothing in this Section, including any disagreement with Buyer as to any adjustment in price or time for performance, will excuse Seller from proceeding with this Agreement as changed.
(b) Except for any Goods that are part of Seller’s standard stock (i.e., “off-the-shelf”), Seller may not make any changes with respect to the Goods or scope of this Agreement without Buyer’s advance written approval, which may be given or withheld in Buyer’s sole discretion, including without limitation (i) the location at which Goods are manufactured, (ii) any subcontractors to Seller with respect to Goods, (iii) the processes or procedures used by Seller in the production of Goods, (iv) the composition, fit, form, function or appearance of Goods, or (v) chemicals, raw materials or any components or ingredients used in the production of Goods.
6.4 Extended Terms. Seller shall extend to Buyer’s third-party manufacturers, suppliers, or approved buyers (as may be identified by Buyer) those terms and conditions set forth in this Agreement (including pricing terms) that are identified and requested by Buyer.
6.5 Epidemic Failure shall be deemed to have occurred if more than one half of one percent (0.5%) of the then-current total in-use Goods during such Goods’ applicable Warranty Period should fail in substantially the same manner. In the case of Epidemic Failure, Seller and Buyer shall cooperate to implement the following procedure: (a) Within two (2) Business Days of discovery of the Epidemic Failure Seller shall give an initial written response indicating its plan for diagnosing the problem; (b) Seller shall undergo a failure analysis process to diagnose the problem and create a plan for a permanent solution and, if necessary, a work-around for temporary use until the solution is implemented. Seller and Buyer shall mutually agree on a recovery plan, including the implementation of the work-around and the permanent solution. Where appropriate, Seller shall apply its engineering change order procedure for problems originating the manufacturing process; (c) Seller shall promptly provide conforming Goods to replace all defective Goods, as well as all Goods which may be susceptible to the same failure mode; and (d) Seller shall be responsible for all costs incurred in rectifying any Epidemic Failure including for any solutions, work-arounds, recovery plans, replacements and other changes, as well as all costs incurred by Buyer arising from or related to the Epidemic Failure.
7. Compliance with Laws.
7.1 Compliance. Seller shall at all times comply with all Laws applicable to this Agreement, Seller’s operation of its business and the exercise of its rights and performance of its obligations hereunder. Without limitation of the foregoing, Seller shall ensure the Goods and any related packaging, conform fully to any applicable Law. Upon Buyer’s reasonable request, Seller shall provide Buyer with (a) written certification of Seller’s compliance with applicable Laws; (b) written certification of the origin of any ingredients or materials in the Goods; and (c) any additional information regarding the Goods requested by Buyer such that Buyer may comply in a timely manner with its obligations under Law. Failure to comply with this Section shall be deemed a material breach of a material provision of this Agreement.
7.2 Permits, Licenses, and Authorizations. Seller shall obtain and maintain all Permits necessary for the exercise of its rights and performance of Seller’s obligations under this Agreement, including any Permits required for the import of Goods or any raw materials and other manufacturing parts used in the production and manufacture of the Goods, and the shipment of hazardous materials, as applicable.
8. Representations and Warranties; Product Warranty.
8.1 Mutual Representations and Warranties. Each Party represents and warrants that (a) such Party is duly organized, validly existing, and in good standing under the laws of the place of its establishment or incorporation, (b) such Party has taken all action necessary to authorize it to enter into this Agreement and perform its obligations under this Agreement, (c) this Agreement will constitute the legal, valid and binding obligation of such Party, and (d) neither the execution of this Agreement nor the performance of such Party’s obligations hereunder will conflict with, result in a breach of, or constitute a default under any provision of the organizational documents of such Party, or of any law, rule, regulation, authorization or approval of any government entity, or of any agreement to which it is a Party or by which it is bound.
8.2 Seller Representations and Warranties. Seller hereby represents and warrants to Buyer that:
(a) The Goods shall be free from any (1) claims, demands, liens, security interests and encumbrances, and (2) defects in design, materials, workmanship and fabrication, will not infringe on or violate the rights of any third party, and will meet the Specifications;
(b) all of its and its Affiliates’ personnel are subject to and bound by written confidentiality and non-use obligations substantially similar to those provided for in this Agreement;
(c) Seller will perform all of its obligations under the Agreement in a professional and workmanlike manner, in accordance with industry standards and the terms of the Agreement;
(d) Seller has (and covenants that it will have throughout the Term) the capacity, infrastructure (including all appropriate security measures) and resources to manufacture and supply the minimum quantity of Goods to be manufactured by Seller during any specified time period;
(e) it is in material compliance with all applicable Laws and Seller Contracts relating to this Agreement, the Goods and the operation of its business (including all loan covenants and other financing obligations to which it is subject);
(f) it has obtained all licenses, authorizations, approvals, consents, or permits required by applicable Laws to conduct its business generally and to exercise its rights and perform its obligations under this Agreement; and
(g) it is not insolvent and is paying all of its debts as they become due
8.3 Product Warranty. Seller warrants to the Buyer Parties that (the “Product Warranty“):
(a) for the longer of either two (2) years from the date of acceptance by Buyer (unless a shorter period has been agreed to by Buyer in writing) or the period provided by applicable law, the Goods will: (i) conform, in all respects, to the Specifications (if any), and other specifications, standards, drawings, samples, descriptions, quality requirements, performance requirements, statements of work, and fit, form and function requirements furnished, specified or approved by Buyer for the Goods; (ii) conform with Buyer’s quality standards and be free from defects in design, workmanship and materials; (iii) be merchantable (as such term is defined in the UCC) and free from defects, latent or otherwise, in design, materials, and workmanship; (iv) not infringe upon, violate or misappropriate the Intellectual Property Rights of any Person; (v) be fit and sufficient for the particular purpose intended by Buyer and its customers, of which the Seller is aware (and Seller acknowledges that it knows of Buyer’s intended use of the Goods and that such Goods have been selected, designed, manufactured, or assembled by Seller based upon Buyer’s stated use and will be fit and sufficient for the particular purposes intended by Buyer); and; (vi) comply with all applicable Laws.
(b) each of the Goods will be new and conveyed by Seller to Buyer with good title, free and clear of all Encumbrances.
8.4 Additional Terms. The Product Warranty (a) is in addition to all other warranties, express, implied, statutory and common law, (b) extends to the Goods’ future performance, (c) survives Seller’s delivery of the Goods, Buyer’s receipt, inspection, acceptance, use of the Goods and payment for the Goods, and the termination or expiration of this Agreement, (d) inures to the benefit of the Buyer Parties, and (e) may not be limited or disclaimed by Seller. Buyer’s agreement to the Specifications and/or Buyer’s approval of Seller’s designs, materials, processes, drawings, specifications or similar requirements will not be construed to relieve Seller of any warranties. Seller shall transfer and assign to Buyer all of its rights (but not any obligations) under all warranties from equipment or material manufacturers or suppliers, permitted subcontractors, or other third parties. Any applicable statute of limitations on Buyer’s claims for breach of warranty will commence no earlier than the date on which Buyer discovers the breach.
9.1 Indemnification. Subject to the terms and conditions of this Agreement, Seller (as “Indemnifying Party“) shall indemnify, defend and hold harmless the Buyer Parties and their Representatives, successors, and permitted assigns (collectively, “Indemnified Parties“) against any and all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever kind, including reasonable attorneys’ fees, fees and the costs of enforcing any right to indemnification under this Agreement and the cost of pursuing any insurance providers, incurred by any Indemnified Party (collectively, “Losses“), relating to/arising out or resulting from any third-party Claim or any direct Claim against Indemnifying Party alleging:
(a) a breach or non-fulfillment of any of Indemnifying Party’s representations, warranties, or covenants set forth in this Agreement;
(b) any negligent or more culpable act or omission of Indemnifying Party or any of its Representatives (including any recklessness or willful misconduct) in connection with Indemnifying Party’s performance under this Agreement;
(c) any bodily injury, death of any Person or damage to real or tangible personal property caused by the acts or omissions of Indemnifying Party or any of its Representatives;
(d) any failure by Indemnifying Party or its Personnel to comply with any applicable Laws; or
(e) that any of Indemnifying Party’s Intellectual Property used in the design or production of the Goods, or that is embodied in the Goods, infringes any Intellectual Property Right of a third party.
9.2 Exceptions and Limitations on Indemnification. Notwithstanding anything to the contrary in this Agreement, Indemnifying Party is not obligated to indemnify or defend any Indemnified Party against any Claim or corresponding Losses resulting directly from Indemnified Party’s or its Personnel’s: (a) gross negligence or more culpable act or omission (including recklessness or willful misconduct); or (b) bad faith failure to comply with any of its obligations set forth in this Agreement.
10. Limitation Of Liability. The aggregate liability of Buyer for claims arising under or relating to this agreement, whether for breach or in tort, will not exceed the amount paid by Buyer to Seller in the twelve (12) month period preceding the date the claim arose.
11. Intellectual Property. Each of the Parties acknowledges and agrees that: (a) each Party retains exclusive ownership of its Background Intellectual Property Rights; (b) Buyer does not transfer to Seller any of its Background Intellectual Property Rights, and Seller may not use any of Buyer’s Background Intellectual Property Rights other than to produce and supply Goods to Buyer hereunder; (c) Seller does not transfer to Buyer any of Seller’s Background Intellectual Property Rights, except that Seller grants to Buyer and its customers the right to resell Goods or incorporate Goods purchased from Seller into finished goods and to sell such finished goods to its customers; (d) all Foreground Intellectual Property Rights will be owned by Buyer; (e) Seller assigns to Buyer all of Seller’s right, title, and interest in and to all Foreground Intellectual Property Rights, and, to the extent that any Foreground Intellectual Property Rights are copyrightable works or works of authorship, the Parties agree that such works are “works made for hire” for Buyer under the US Copyright Act; and (f) Seller waives any claim against Buyer, including any hold-harmless or similar claim, whether known or unknown, contingent or latent, in any way related to a claim asserted against Seller or Buyer for infringement of any Intellectual Property Rights.
12.1 Scope of Confidential Information. From time to time during the Term, Buyer (as the “Disclosing Party“) may disclose or make available to Seller (as the “Receiving Party“) information about its business affairs, goods and services (including any Forecasts), confidential information and materials comprising or relating to Intellectual Property Rights, trade secrets, third-party confidential information, and other sensitive or proprietary information. Such information, whether orally or in written, electronic or other form or media, and whether or not marked, designated or otherwise identified as “confidential” constitutes “Confidential Information” hereunder. Confidential Information does not include information that at the time of disclosure and as established by documentary evidence: (a) is or becomes generally available to and known by the public other than as a result of, directly or indirectly, any breach of this Section by the Receiving Party or any of its Representatives; (b) is or becomes available to the Receiving Party on a non-confidential basis from a third-party source, provided that such third party is not and was not prohibited from disclosing such Confidential Information; (c) was known by or in the possession of the Receiving Party or its Representatives prior to being disclosed by or on behalf of the Disclosing Party; (d) was or is independently developed by the Receiving Party without reference to or use of, in whole or in part, any of the Disclosing Party’s Confidential Information; or (e) is required to be disclosed pursuant to applicable Law.
12.2 Protection of Confidential Information. The Receiving Party shall, for the longer of: (i) as long as the Confidential Information remains Confidential Information; or (ii) ten (10) years from disclosure of such Confidential Information: (a) protect and safeguard the confidentiality of the Disclosing Party’s Confidential Information with at least the same degree of care as the Receiving Party would protect its own Confidential Information, but in no event with less than a commercially reasonable degree of care; (b) not use the Disclosing Party’s Confidential Information, or permit it to be accessed or used, for any purpose other than to exercise its rights or perform its obligations under this Agreement; and (c) not disclose any such Confidential Information to any Person, except to the Receiving Party’s Representatives who need to know the Confidential Information to assist the Receiving Party, or act on its behalf, to exercise its rights or perform its obligations under this Agreement. The Receiving Party shall be responsible for any breach of this Section caused by any of its Representatives. On the expiration or earlier termination of this Agreement and/or at any time during the Term, at the Disclosing Party’s written request, the Receiving Party and its Representatives shall promptly return or destroy (at the Disclosing Party’s option) all Confidential Information and copies thereof that it has received under this Agreement.
12.3 Non Disclosure Agreement. The terms of any nondisclosure agreement entered into between the parties (the “NDA”) will remain in effect except as modified by this Agreement, and will continue in perpetuity notwithstanding the expiration or early termination of this Agreement.
13. Tangible Property.
(a) All Equipment, Tooling, and other tangible property of every description, including supplies, materials, machinery, equipment, drawings, photographic negatives and positives, artwork, copy layout, electronic data, and other items, furnished by Buyer (or Buyer’s agents, representatives, vendors, contractors and/or customers), either directly or indirectly, to Seller or to any supplier to Seller in connection with or related to this Agreement, or for which Seller has been at least partially reimbursed by Buyer (collectively, “Bailed Property“) is and will at all times remain the property of Buyer and be held by Seller on a bailment-at-will basis.
(b) Only Buyer has any right, title, or interest in and to Bailed Property, except for Seller’s limited right, subject to Buyer’s sole discretion, to use the Bailed Property in the performance of Seller’s obligations under this Agreement. Seller shall not use the Bailed Property for any other purpose. Seller shall not commingle Bailed Property with the property of Seller or with that of a Person other than Buyer or Seller and shall not move any Bailed Property from Seller’s premises without the prior written approval by Buyer. Buyer may, at any time, for any reason and without payment of any kind, retake possession of any Bailed Property without the necessity of payment or notice to Seller, or a hearing or a court order, which rights, if any, are waived by Seller. Upon Buyer’s request, Bailed Property will be immediately released to Buyer or delivered to Buyer by Seller. Seller’s continued holding of Bailed Property after demand has been made by Buyer for delivery will substantially impair the value thereof, and, accordingly, Buyer will be entitled to a court order of possession without any need of proving damages or posting of a bond. To the fullest extent permitted by law, Seller shall not allow any Encumbrance to be imposed on or attach to the Bailed Property through Seller or as a result of Seller’s action or inaction, and Seller hereby waives any Encumbrance that it may have or acquire in the Bailed Property.
(c) Seller acknowledges and agrees that (a) Buyer is neither the manufacturer of the Bailed Property nor the manufacturer’s agent, (b) Buyer is bailing Bailed Property to Seller for Seller’s benefit, (c) Seller has inspected the Bailed Property and is satisfied that the Bailed Property is suitable and fit for its intended purposes, of which Seller is aware, and (d) BUYER HAS NOT MADE AND DOES NOT MAKE ANY REPRESENTATION OR WARRANTY WHATSOEVER, EITHER EXPRESS OR IMPLIED, AS TO THE FITNESS, CONDITION, MERCHANTABILITY, DESIGN OR OPERATION OF THE BAILED PROPERTY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE. Notwithstanding the foregoing, if the bailment relationship described in this Section is deemed to be a secured financing transaction, Seller grants to Buyer a continuing security interest in any rights or interests it may have in the Bailed Property.
13.2 Tooling Orders.
(a) Seller may not charge Buyer for the cost of manufacturing or procuring any Tooling or other materials used in the production and sale of the Goods unless Buyer agrees in writing to reimburse Seller for Seller’s actual reasonable costs of manufacturing or procuring such Tooling or other materials (a “Reimbursement Authorization“). Payment for such Tooling or materials will be due only after (a) Buyer has successfully completed all testing of such Tooling or materials required by Buyer, which will be conducted at Seller’s sole cost and expense, (b) Buyer has successfully conducted a tooling audit in accordance with its customer’s requirements, and (c) Seller has provided to Buyer detailed invoices documenting the actual costs incurred by Seller for such Tooling or materials, including copies of any invoice issued to Seller by any third party with respect thereto, and other any other information reasonably requested by Buyer with respect to such Tooling or materials (which may include CAD models and drawings). Buyer shall pay Seller only the actual cost of such Tooling or materials, not to exceed the authorized amount, if any, stated in the applicable Reimbursement Authorization.
(b) Such Tooling or other materials that are subject to a Reimbursement Authorization provided by Buyer will become Bailed Property (and title thereto will vest in Buyer) immediately upon completion of all testing required by Buyer (provided that Buyer will not be relieved of its obligation to pay for such Tooling or materials in accordance with the terms of this Agreement) or if earlier, any payment by Buyer to Seller therefor. Any payments made by Buyer for Bailed Property are expressly intended by Buyer to be held in trust for the benefit of any subcontractors or suppliers used by Seller to fabricate the Bailed Property that relates to such payments, and Seller agrees to hold such payments as trustee in express trust for such subcontractors or suppliers until Seller has paid the subcontractors or suppliers in full for the Bailed Property. Buyer will not pay for any Tooling necessary for the production of sample products unless otherwise provided in the applicable Reimbursement Authorization.
13.3 Maintenance; Risk of Loss. Seller shall bear all risk of loss of and damage to Bailed Property. Seller shall, at its own expense, for the benefit of Buyer, insure all Bailed Property with full and extended coverage for all losses, for its full replacement value, in accordance with the terms herein. As and when it is commercially reasonable to do so, Seller shall, at its sole cost and expense, maintain, repair, refurbish and replace Bailed Property. All replacement parts, additions, improvements, and accessories for such Bailed Property will automatically become Buyer’s property upon their incorporation into or attachment to the Bailed Property. All replacements of Bailed Property will also be Buyer’s property. Seller shall replace any missing components of or inserts to any Bailed Property.
13.4 Inventory. Seller will maintain a written inventory of all Bailed Property that sets forth a description and the location of all Bailed Property, and provide a copy of this inventory to Buyer upon request. Seller shall mark all Bailed Property permanently and conspicuously to identify it as the property of Buyer, and indicate Buyer’s name and address. Seller shall immediately sign any documents reasonably requested by Buyer to evidence all of Buyer’s rights to and interests in Bailed Property. Seller grants to Buyer a limited and irrevocable power of attorney, coupled with an interest, to execute and record on Seller’s behalf any documents with respect to Bailed Property that Buyer determines are reasonably necessary to reflect Buyer’s interest in the Bailed Property.
13.5 Seller’s Property. Unless otherwise agreed to by Buyer in writing, Seller, at its sole expense, shall furnish, keep in good condition, and replace when necessary all Equipment, Tooling and other items necessary or helpful for the production of the Goods (excluding Bailed Property, “Seller’s Property“). Seller shall insure Seller’s Property with full and extended coverage for all losses, for its full replacement value. Unless otherwise agreed buy Buyer in writing, all Equipment, including Tooling, and materials required for the performance of Seller’s obligations hereunder will be manufactured or procured by Seller at its sole expense, and Seller, at its sole expense, shall furnish, keep in good condition, and replace when necessary all Equipment, materials and other items necessary or helpful for the production of the Goods. The Parties acknowledge and agree that Seller shall be responsible for all payments to third parties for any materials, Equipment purchased from, or other products or services provided by, third parties in connection with the manufacture and supply of the Goods hereunder.
14. Inspection and Audit Rights. Seller hereby grants to Buyer, and its authorized Representatives, access to Seller’s premises (including Seller’s manufacturing operations used in production of the Goods) and all pertinent documents and other information, whether stored in tangible or intangible form, including any books, records, and accounts, in any way related to Seller’s performance under this Agreement (including Sellers’ processes and procedures), Goods, Bailed Property or any payment or other transaction occurring in connection with this Agreement, for the purpose of auditing Seller’s compliance with the terms of this Agreement, including Seller’s charges for Goods, or inspecting or conducting an inventory of finished Goods, work-in-process or raw-material inventory or Bailed Property. Seller agrees to cooperate fully with Buyer in connection with any such audit or inspection. Seller shall maintain, during the Term and for a period of three (3) years after the Term, complete and accurate books and records and any other financial information in accordance with GAAP. Seller shall segregate its records and otherwise cooperate with Buyer so as to facilitate any audit by Buyer. Seller shall reimburse Buyer for all amounts associated with errors discovered during an audit. In addition, Seller shall reimburse Buyer for the amount of Buyer’s costs and expenses incurred in conducting the audit if the results of such audit indicate that such discrepancy is greater than three (3%) percent of the total amount actually payable by Buyer for the period examined. If requested by Buyer, Seller shall use its best efforts to permit Buyer and its Representatives to obtain from subcontractors or other suppliers to Seller the information and permission to conduct the reviews specified with respect to Seller in this Section.
15. Insurance. Seller shall at all times during the Term and for a period of three (3) years thereafter, at its own expense, maintain with financially sound and reputable insurers the coverage needed to secure its obligations and potential liabilities under this Agreement including: (a) commercial general liability insurance (including coverage for product liability resulting in property damage and bodily injury, and product recall coverage) with minimum coverage limits of $5,000,000 per single occurrence and $5,000,000 general aggregate; (b) business automobile liability insurance for owned, scheduled, non-owned and hired automobiles, with a combined single limit of no less than $1,000,000 per accident, (c) workers compensation insurance for all employees as statutorily defined by state and federal law, and (d) property insurance in an amount sufficient to cover all Goods and other personal property while in transit to Buyer and Bailed Property, for its full replacement value. Seller shall provide a certificate of insurance evidencing such coverage to Buyer upon request. Seller shall provide Buyer with thirty (30) days’ advance written notice in the event of a cancellation or material change in such insurance policy. The certificate of insurance shall name Buyer as an additional insured and loss payee. Seller waives and Seller shall cause its insurers to waive, any right of subrogation or other recovery against Buyer, its Affiliates, and their insurers.
16.1 Further Assurances. Upon Buyer’s reasonable request, Seller shall, at its sole cost and expense, execute and deliver all such further documents and instruments, and take all such further acts, necessary to give full effect to this Agreement.
16.2 Relationship of the Parties. The relationship between Seller and Buyer is solely that of vendor and vendee and they are independent contracting parties. Nothing in this Agreement creates any agency, joint venture, partnership, or other form of joint enterprise, employment, or fiduciary relationship between the Parties. Neither Party has any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other Party or to bind the other Party to any contract, agreement, or undertaking with any third party.
16.3 Entire Agreement. This Agreement, any NDA and/or Specifications entered into by the parties (if applicable), and including and together with any related exhibits, schedules, and the applicable terms of any Purchase Orders, constitutes the sole and entire agreement of the Parties with respect to the subject matter contained herein and therein and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter.
16.4 Survival. Subject to the limitations and other provisions of this Agreement: (a) the representations and warranties of Seller contained herein will survive the expiration or earlier termination of this Agreement; and (b) any provision that, in order to give proper effect to its intent, should survive such expiration or termination, will survive the expiration or earlier termination of this Agreement.
16.5 Interpretation. For purposes of this Agreement: (a) the words “include,” “includes” and “including” is deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole; (d) words denoting the singular have a comparable meaning when used in the plural, and vice-versa; and (e) words denoting any gender include all genders. Unless the context otherwise requires, references in this Agreement: (x) to sections, exhibits, schedules, attachments, and appendices mean the sections of, and exhibits, schedules, attachments and appendices attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof; and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. The Parties drafted this Agreement without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted. The exhibits, schedules, attachments, and appendices referred to herein are an integral part of this Agreement to the same extent as if they were set forth verbatim herein.
16.6 Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability does not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon a determination that any term or provision is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement to effect the original intent of the Parties as closely as possible in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
16.7 Amendment and Modification; Order of Precedence. No amendment to this Agreement is effective unless it is in writing and signed by an authorized Representative of each Party.
16.8 Waiver. No waiver under this Agreement is effective unless it is in writing and signed by an authorized representative of the Party waiving its right. Any waiver authorized on one occasion is effective only in that instance and only for the purpose stated, and does not operate as a waiver on any future occasion. None of the following constitutes a waiver or estoppel of any right, remedy, power, privilege, or condition arising from this Agreement: (a) any failure or delay in exercising any right, remedy, power or privilege or in enforcing any condition under this Agreement; or (b) any act, omission, or course of dealing between the Parties.
16.9 Cumulative Remedies. All rights and remedies provided in this Agreement are cumulative and not exclusive, and the exercise by either Party of any right or remedy does not preclude the exercise of any other rights or remedies that may now or subsequently be available at law, in equity, by statute, in any other agreement between the Parties or otherwise.
16.10 Assignment. Seller may not assign any of its rights or delegate any of its obligations under this Agreement without the prior written consent of Buyer. In the event of any approved assignment by Seller, Seller shall at all times be responsible for the payment of its permitted delegatees and subcontractors, and for the compliance of its permitted delegatees and subcontractors with the terms and conditions of this Agreement, and shall remain liable and responsible to Buyer for the performance and observance of all such duties and obligations by such party. Buyer may assign any of its rights or delegate any of its obligations to any Affiliate or to any Person acquiring all or substantially all of Buyer’s assets without consent. Any purported assignment or delegation in violation of this Section is null and void. No assignment or delegation relieves the assigning or delegating Party of any of its obligations under this Agreement.
16.11 Successors and Assigns. This Agreement is binding on and inures to the benefit of the Parties and their respective permitted successors and permitted assigns.
16.12 No Third-Party Beneficiaries. Except as expressly set forth in the second sentence of this Section, this Agreement benefits solely the parties to this Agreement and their respective permitted successors and permitted assigns, and nothing in this Agreement, express or implied, confers on any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
16.13 Dispute Resolution. Any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach, termination or invalidity hereof (each, a “Dispute“), shall be submitted for negotiation and resolution by delivery of written Notice (each, a “Dispute Notice“) from either of the Parties to the other Party. If the Parties are unable to resolve any Dispute within fifteen (15) days after delivery of the applicable Dispute Notice, either Party may file suit in a court of competent jurisdiction.
16.14 Governing Law. This Agreement, including all exhibits, schedules, attachments and appendices attached hereto and thereto, and all matters arising out of or relating to this Agreement, are governed by and construed in accordance with, the Laws of the State of California, United States of America, without regard to the conflict of laws provisions thereof. The Parties agree that the United Nations Convention on Contracts for the International Sale of Goods does not apply to this Agreement.
16.15 Choice of Forum. Each Party irrevocably and unconditionally agrees that it shall not commence any action, litigation or proceeding of any kind whatsoever against the other Party in any way arising from or relating to this Agreement, including all exhibits, schedules, attachments and appendices attached hereto and thereto, and all contemplated transactions[, including contract, equity, tort, fraud, and statutory claims], in any forum other than California Northern District or, if such court does not have subject-matter jurisdiction, the courts of the State of California sitting in San Francisco, and any appellate court from any thereof. Each Party irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees to bring any such action, litigation or proceeding only in California Northern District or, if such court does not have subject-matter jurisdiction, the courts of the State of California sitting in San Francisco. Each Party agrees that a final judgment in any such action, litigation, or proceeding is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.
16.16 Counterparts. This Agreement may be executed in counterparts, each of which is deemed an original, but all of which together is deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail, or other means of electronic transmission is deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
16.17 Force Majeure. No Party shall be liable or responsible to the other Party, or be deemed to have defaulted under or breached this Agreement, for any failure or delay in fulfilling or performing any term of this Agreement, when and to the extent such party’s (the “Impacted Party”) failure or delay is caused by or results from the following force majeure events (“Force Majeure Event(s)”): (a) acts of God; (b) flood, fire, earthquake, pandemics, epidemics, or explosion; (c) war, invasion, hostilities (whether war is declared or not), terrorist threats or acts, riot or other civil unrest; (d) government order, law, or action; (e) embargoes or blockades in effect on or after the date of this Agreement; and (f) national or regional emergency; (g) labor strikes; (h) telecommunication breakdowns, power outages or shortages; and (i) other similar events beyond the reasonable control of the Impacted Party. The Impacted Party shall give notice within three (3) days of the Force Majeure Event to the other Party, stating the period of time the occurrence is expected to continue. The Impacted Party shall use diligent efforts to end the failure or delay and ensure the effects of such Force Majeure Event are minimized. The Impacted Party shall resume the performance of its obligations as soon as reasonably practicable after the removal of the cause. In the event that the Impacted Party’s failure or delay remains uncured for a period of ten (10) days following written notice given by it under this Section, the other Party may thereafter terminate this Agreement upon written notice without liability to the Impacted Party; provided that payment for Goods delivered prior to the date of termination shall be remitted in accordance with the terms and conditions of this Agreement. For the avoidance of doubt, supply chain disruptions and delays that can be managed through the reasonable diligence of the Impacted Party shall not be considered a Force Majeure Event.
16.18 No Public Announcements or Trademark Use. Unless expressly permitted under this Agreement, Seller shall not: (a) make any statement (whether oral or in writing) in any press release, external advertising, marketing, or promotion materials regarding the subject matter of this Agreement, Buyer or its business unless it has received the express written consent of Buyer; or (b) use any of Buyer’s Trademarks without the prior written consent of Buyer.
All notices, requests, consents, claims, demands, waivers, and other communications under this Agreement (each, a “Notice”) must be in writing and addressed to the other Party at its address set forth below if to Buyer, and the address set forth on the Purchase Order if to Seller (or to such other address that the receiving Party may designate from time to time in accordance with this Section) unless otherwise specified herein that e-mail notice is sufficient. Unless otherwise agreed herein, all Notices must be delivered by personal delivery, nationally recognized overnight courier, or certified or registered mail (in each case, return receipt requested, postage prepaid). Except as otherwise provided in this Agreement, a Notice is effective only (a) on receipt by the receiving Party, and (b) if the Party giving the Notice has complied with the requirements of this Section.
|Notice to Buyer:|
71 Liberty Ship Way,
Sausalito, CA 94965
16.20 Certain Definitions. Capitalized terms not otherwise defined have the meanings set forth or referred to below:
“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory, or other, whether at law, in equity or otherwise.
“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Person.
“Background Intellectual Property Rights” means Buyer’s Intellectual Property or Seller’s Intellectual Property, as applicable, except for any Foreground Intellectual Property Rights.
“Business Day” means any day except Saturday, Sunday, or any other day on which commercial banks located in New York are authorized or required by Law to be closed for business.
“Buyer Parties” means Buyer, its Affiliates, customers, subcontractors and successors and assigns, and each of their respective Representatives.
“Buyer’s Intellectual Property” means all Intellectual Property Rights owned by or licensed to Buyer, including all Foreground Intellectual Property Rights and any of Buyer’s Background Intellectual Property Rights used in the design, production, and manufacturing of the Goods.
“cGMP” shall mean Good Manufacturing Practices as promulgated under the FD&C Act, as well as any other applicable regulations, policies or guidelines, as then in effect, of the FDA and other United States or foreign governmental or regulatory agencies with jurisdiction over the manufacture, use, distribution or sale of the Goods.
“Claim” means any Action brought against a Person entitled to indemnification under 10.
“Control” (and with correlative meanings, the terms “Controlled by” and “under common Control with”) means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of another Person, whether through the ownership or voting securities, by contract, or otherwise.
“Defective” means not conforming to the Product Warranty under ection 9.3.
“Defective Goods” means goods shipped by Seller to Buyer pursuant to this Agreement that are Defective.
“Delivery Date” means the delivery date for Goods ordered hereunder that is set forth in Schedule 1 or in a Purchase Order.
“Delivery Location” means the street address within the Territory for delivery of the Goods specified in the applicable Purchase Order.
“Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.
“Equipment” means, collectively, “equipment” (as that term is defined in UCC Section 9-102(a)(33)) that is used in the manufacture, production, or assembly of Goods by Seller, and all machinery, equipment, Tooling, furnishings, and fixtures (as such terms are defined in UCC Section 9-102) now owned or hereafter acquired by Seller, of any kind, nature or description, as well as all (a) additions to, substitutions for, replacements of and accessions to any of the foregoing items, (b) attachments, components, parts (including spare parts) and accessories installed thereon or affixed thereto, and (c) Intellectual Property Rights in connection with the foregoing.
“FD&C Act” shall mean the U.S. Federal Food, Drug & Cosmetic Act, as in effect from time to time.
“FDA” shall mean the United States Food and Drug Administration and any successor agency thereto.
“Foreground Intellectual Property Rights” means the Work Product and any and all of the Intellectual Property Rights developed with respect to, or for incorporation into, the Goods, that are either developed by Buyer alone, by Buyer and Seller jointly or by Seller alone as requested by Buyer in connection with this Agreement.
“GAAP” means US generally accepted accounting principles in effect from time to time.
“Goods” means the goods purchased by Seller from Buyer that are identified on Schedule 1 (if any) and/or identified in a Purchase Order.
“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.
“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, award, or determination entered by or with any Governmental Authority.
“Intellectual Property Rights” means all industrial and other intellectual property rights comprising or relating to (a) Patents; (b) Trademarks; (c) internet domain names, whether or not Trademarks, registered by any authorized private registrar or Governmental Authority, web addresses, web pages, website, and URLs; (d) works of authorship, expressions, designs and design registrations, whether or not copyrightable, including copyrights and copyrightable works, software and firmware, data, data files, and databases and other specifications and documentation; (e) Trade Secrets; and (f) all industrial and other intellectual property rights, and all rights, interests and protections that are associated with, equivalent or similar to, or required for the exercise of, any of the foregoing, however arising, in each case whether registered or unregistered and including all registrations and applications for, and renewals or extensions of, such rights or forms of protection pursuant to the Laws of any jurisdiction throughout in any part of the world.
“Latent Defect” shall mean a defect that causes a Good to not conform to the Specifications and/or Product Warranty, which defect is not discoverable upon reasonable physical inspection.
“Law” means any statute, law, ordinance, regulation, rule, code, constitution, treaty, common law, Governmental Order, or other requirement or rule of law of any Governmental Authority.
“Nonconforming Goods” means any goods received by Buyer from Seller that: (a) do not conform to the make/model number/UPC/SKU/or other product identifier listed in the applicable Purchase Order; (b) do not fully conform to the Specifications and/or other agreed to specifications, designs and/or approved samples; (c) on visual inspection, Buyer reasonably determines are otherwise Defective; or (d) exceed the quantity of Goods ordered by Buyer pursuant to this Agreement or any Purchase Order. Where the context requires, Nonconforming Goods are deemed to be Goods for purposes of this Agreement.
“Patents” means all patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof), patent applications, and other patent rights and any other Governmental Authority-issued indicia of invention ownership (including inventor’s certificates, petty patents, and patent utility models).
“Permits” means permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances, and similar rights obtained or required to be obtained, from any Governmental Authority.
“Person” means any individual, partnership, corporation, trust, limited liability entity, unincorporated organization, association, Governmental Authority, or any other entity.
“Personnel” of a Party means any agents, employees, contractors, or subcontractors engaged or appointed by such Party.
“Purchase Order” means Buyer’s purchase order issued to Seller hereunder, which may, among other things, specify items such as (a) the Goods to be purchased; (b) the quantity of each of the Goods ordered; (c) the Delivery Date; (d) the unit Price for each of the Goods to be purchased; and (e) the Delivery Location; in each case, including all terms and conditions attached to, or incorporated into, such purchase order, issued by Buyer to Seller under the Purchase Order.
“Representatives” means a Party’s Affiliates and each of their respective Personnel, officers, directors, partners, shareholders, attorneys, third-party advisors, successors, and permitted assigns.
“Seller Parties” means Seller, its Affiliates, customers (other than Buyer), subcontractors and successors and assigns, and each of their respective Representatives.
“Seller’s Intellectual Property” means all Intellectual Property Rights owned by or licensed to Seller, including any of Seller’s Background Intellectual Property Rights used in the design, production, and manufacturing of the Goods.
“Specifications” means the standards contained in the cGMP, the Goods requirements documentation and/or the specifications and quality standards for the Goods as mutually agreed to by the parties in writing (if any). Upon completion and execution by the Parties, the Specifications shall be made a part of and incorporated into this Agreement. For clarity, any breach of the Specifications will be deemed a breach of this Agreement.
“Taxes” means any and all present and future sales, income, stamp, and other taxes, levies, imposts, duties, deductions, charges, fees or withholdings imposed, levied, withheld, or assessed by any Governmental Authority, together with any interest or penalties imposed thereon.
“Tooling” means, collectively, all tooling, dies, test and assembly fixtures, gauges, jigs, patterns, casting patterns, cavities, molds, and documentation (including engineering specifications and test reports) used by Seller in connection with its manufacture and sale of the Goods, together with any accessions, attachments, parts, accessories, substitutions, replacements and appurtenances thereto.
“Trademarks” means all rights in and to US and foreign trademarks, service marks, trade dress, trade names, brand names, logos, symbols, trade dress, corporate names and domain names, and other similar designations of source, sponsorship, association, or origin, together with the goodwill symbolized by any of the foregoing, in each case whether registered or unregistered and including all registrations and applications for, and renewals or extensions of, such rights and all similar or equivalent rights or forms of protection in any part of the world.
“Trade Secrets” means all inventions, discoveries, trade secrets, business and technical information and know-how, databases, data collections, patent disclosures, and other confidential and proprietary information and all rights therein.
“UCC” means the Uniform Commercial Code, as adopted in the applicable jurisdiction.
“US” means the United States of America.
“Work Product” shall mean any and all data, results and deliverables (interim and/or final) of the services performed by Seller pursuant to this Agreement, whether tangible or intangible, that are made, developed, perfected, designed, conceived or first reduced to practice by or on behalf of Seller’s employees, agents, consultants, subcontractors or other representatives, either solely or jointly with employees, agents, consultants or other representatives of Buyer, in the course and as a result of performing the services pursuant to this Agreement; but excluding the Goods manufactured by Seller.