The following is a reasonable representation of a manufacturing service level agreement an electronics contract manufacturer would present to a technology OEM for the purpose of building a robust outsourcing hardware product program. (See, Top 10 EMS / ODM company rankings)
While some of the accompanying documents are not presented, readers should be able to develop a fairly good understanding of the effort that goes into framing a hardware outsourcing contract manufacturing service level agreement that can ultimately lead to helping executives save on cost and protect profits.
WHEREAS, Customer desires to purchase, and CONTRACT MANUFACTURER desires to manufacture and sell products as specified in this Agreement.
WHEREAS, CONTRACT MANUFACTURER has developed processes and practices for manufacturing products for different electronic applications and at Customer's request desires to manufacture Customer's products in accordance with Customer's specifications.
NOW THEREFORE, IN CONSIDERATION OF the mutual promises and covenants set forth in this Agreement, the parties agree as follows:
1 WORK, LICENSE
It is the intent of the parties that this Agreement and any attached Exhibits shall prevail over the terms and conditions of any Purchase Order or additional materials. In the event of a conflict between the terms of this Agreement and the terms contained in any such Purchase Order or additional materials, terms of this Agreement shall be controlling.
CONTRACT MANUFACTURER agrees to use best commercially reasonable efforts to perform the Work pursuant to Purchase Orders (as defined below) or changes thereto issued by Customer and accepted by PROVIDER. "Work" shall mean CONTRACT MANUFACTURER obligations to procure components, materials, equipment and other supplies and to manufacture, assemble, and test, Customer's products (hereinafter "Products") pursuant to Customer's specifications set forth in Exhibit D ("Specifications").
Subject to the terms and conditions of this Agreement, Customer hereby grants CONTRACT MANUFACTURER a non-exclusive, non-sublicensable, non-transferable limited license to internally use, at PROVIDER'S place of business, all of Customer's patents, trade secrets and other intellectual property solely to perform the Work.
2.0 FORECASTS, ORDERS, MATERIAL PROCUREMENT
2.1 Forecast
Customer shall provide PROVIDER, on a monthly basis, a non-binding, except as set forth in Section 2.3b and 3.4, rolling twelve (12) month Product order Forecast ("Forecast"). CONTRACT MANUFACTURER shall view all such Forecasts as Confidential Information (as defined in Section 11). Forecast will indicate which products are released to production and have upside flexibility as defined in Section 3.3.
2.2 Purchase Orders
Customer will issue orders for the Products in accordance with the order forms ("Purchase Orders") set forth in Exhibit E. Purchase Orders shall be deemed accepted by CONTRACT MANUFACTURER upon receipt, provided however that CONTRACT MANUFACTURER may reject any order that represents a 60% or more volume deviation from Customer's product Forecast delivered pursuant to CONTRACT MANUFACTURER pursuant to Section 2.1, for such month on the fourth month proceeding such forecasted month, shipment dates, or any Purchase Order that is modified outside the guidelines established in Section 3.2b. CONTRACT MANUFACTURER shall notify Customer of rejection of any Purchase Order within two (2) working days of receipt of such order.
The parties agree that the terms and conditions contained in this Agreement shall prevail over any terms and conditions of any Purchase Order, acknowledgment form or other instrument.
2.3a. Material Procurement
Subject to the notices set forth in Section 2.4, CONTRACT MANUFACTURER agrees to purchase any components and parts ("Materials") for the manufacture of the Products in accordance with Customer's approved manufacturer's list ("AML") set forth in Exhibit F. To use other vendors of Materials, CONTRACT MANUFACTURER must obtain Customer's prior written consent, which consent shall normally be provided within fourteen (14) days and, in any event, shall not be unreasonably withheld or delayed.
2.3b Inventory
Customer's accepted Forecast and Purchase Orders will constitute authorization for CONTRACT MANUFACTURER to procure, using standard purchasing practices, the components, materials and supplies necessary for the manufacture of Products ("Inventory") covered by such Purchase Orders and Forecast. Following release to production (Rev A), customer authorizes CONTRACT MANUFACTURER to build an additional five (5) unit buffer stock to be used for unplanned demand or the replacement of failed units per Sections 6.1 and 6.2.
In addition, Customer authorizes CONTRACT MANUFACTURER to purchase, in amounts beyond the amount necessary to fill accepted Purchase Orders, the components, materials, and supplies: (i) with lead times greater than ninety (90) days at the time the order is placed ("Long Lead Time Components") plus 30 days to account for the order, shipment, receipt and manufacturing time and, (ii) purchased in quantities above the required amount in order to achieve price targets ("Economic Order Inventory"), and (iii) purchased in excess of requirements because of minimum lot sizes available from manufacturers ("Minimum Order Inventory"). Together these are called "Special Inventory". Special inventory shall be limited to the greater of Minimum Order Inventory or the next 45 calendar days of requirements.
CONTRACT MANUFACTURER may purchase Long Lead Time Components sufficient to meet all deliveries under the Purchase Orders and Product Forecast in effect at the time the order with the supplier is placed, and may reasonably purchase Minimum Order Inventory even if greater than the amount necessary to meet Purchase Orders and Product Forecast and terms defined in Section 3.3. Economic Order Inventory shall be purchased by CONTRACT MANUFACTURER at its discretion based on generally accepted industry practices. CONTRACT MANUFACTURER may, from time to time, hold Long Lead Time Components and finished goods in inventory to increase customer flexibility. The components and quantities of all such inventory, including all Non-Cancelable, Non-returnable Items, will be documented in a separate letter and signed by both CONTRACT MANUFACTURER and Customer.
Customer will be responsible for all Inventory and Special Inventory purchased by CONTRACT MANUFACTURER under this Agreement. PROVIDER' destination factory will utilize all its commercially reasonable efforts to minimize the material exposure. The maximum WIP material exposure for released product shall be less than or equal to 100% of the unshipped monthly forecast.
2.4a Lead Time Report
CONTRACT MANUFACTURER will purchase specified quantities of long lead time material and Customer unique material as authorized by Customer in advance and in writing. CONTRACT MANUFACTURER will compile and maintain (and provide an updated version to Customer on a monthly basis that reflects Customer's current requirements) a report concerning this long lead time material.
2.4b Capacity Report
CONTRACT MANUFACTURER shall define manufacturing capacity for each Customer unique step in the manufacturing process and total manufacturing capacity for each Product and/or family of Products. CONTRACT MANUFACTURER will also provide component supplier supply capacity information (collectively "Capacity Information") for unique, custom parts as mutually agreed. Capacity Information along with up-to-date information on CONTRACT MANUFACTURER' manufacturing capacity model and cycle time plan will be provided to Customer on the first day of each month in a monthly report or as requested by Customer. Component supplier capacity information will be provided on an as-needed basis.
2.4c Operation Reports
During the term of this Agreement, CONTRACT MANUFACTURER agrees to aggressively monitor lead times and cycle times for the various Products as broken down into the following major categories: Order processing cycle time, Material lead time, Manufacturing cycle time, and Pack out and shipping cycle time
The information and reports in Section 2.4 a-c will be reported to Customer on a monthly basis, or as otherwise requested by Customer ("Lead time Reports"). CONTRACT MANUFACTURER agrees to use it best efforts work with Customer to develop strategies which will lead to ongoing reductions in lead times and cycle times for the various categories. The Lead time Reports will include the details and results of the implementation of such strategies.
3.0 SHIPMENTS, SCHEDULE CHANGE, CANCELLATION
3.1 Shipments
CONTRACT MANUFACTURER agrees that all Products delivered pursuant to the terms of this Agreement shall be packaged and prepared for shipment in a manner which (i) follows the requirements set forth in Customer's Product Documentation, or (ii) follows good commercial practice, (iii) is acceptable to common carriers for shipment, and (iv) is adequate to ensure safe arrival. Each shipment shall be accompanied by a packing slip that includes Customer's part numbers, Purchase Order number and the quantity shipped.
3.2 Delivery
CONTRACT MANUFACTURER acknowledges and agrees that CONTRACT MANUFACTURER shall use its commercially reasonable efforts to meet the target goal of 100% on-time delivery to Customer's clients (defined as the shipment point of the Product in the applicable Purchase Order) based on the acknowledged delivery due date. This section, as appropriate, may be modified by an addendum to reflect specific Product requirements. All shipments shall be F.O.B. origin (CONTRACT MANUFACTURER' dock). Title and risk of loss shall pass to Customer upon CONTRACT MANFUACTURER' tendered delivery to the common carrier or Customer's designee.
3.2a Delays
Upon learning of any potential delivery delays, CONTRACT MANUFACTURER will notify Customer within one (1) business day as to the cause and extent of such delay. If CONTRACT MANUFACTURER fails to make deliveries at the specified time and such failure is caused by CONTRACT MANUFACTURER, CONTRACT MANUFACTURER will, at no additional cost to Customer, employ accelerated measures such as material expediting fees, premium transportation costs, or labor overtime required to meet the specified delivery schedule or minimize the lateness of deliveries.
3.3 Quantity Increases and Shipment Schedule Changes
Forecast changes must be received by Thursday to be entered into the weekend ERP/MRP run. Prior to the date that is 120 days before a shipment date set forth in any accepted Forecast, Customer may, in its sole discretion, make any changes to the items included in such Forecast, such changes including, without limitation, changes in shipment date or quantity. Thereafter, for products released to production with a monthly Forecast in excess of XXX systems per month, Customer may (i) increase the quantity of Products or (ii) reschedule the quantity of Products and their shipment date as TBD.
Any Purchase Order quantities increased or rescheduled pursuant to this Section may not be subsequently increased or rescheduled without the prior written approval of CONTRACT MANUFACTURER. CONTRACT MANUFACTURER shall use reasonable commercial efforts to meet any quantity increases requested by Customer. In the event, that CONTRACT MANUFACTURER is unable to meet any such increase requests, CONTRACT MANUFACTURER shall within two (2) days of receiving Customer request for quantity increase notify Customer, in writing, of CONTRACT MANUFACTURER inability to meet such quantity increase with key constraints defined. CONTRACT MANUFACTURER will consider all Forecast change requests, regardless of above constraints, to determine the solutions (normal commercial practices) available to meet the request and make these options available to the customer. In the event Customer reschedules deliveries and CONTRACT MANUFACTURER inventory exceeds a 45 day target supply, Customer will pay 1.5% carrying cost on the quantity greater than the 45 day supply.
3.4 Cancellation
Customer may not cancel any accepted Purchase order without CONTRACT MANUFACTURER' prior written approval, such approval not to be unreasonably withheld. If the parties agree upon a cancellation, Customer will pay CONTRACT MANUFACTURER for Products, Inventory, and Special Inventory affected by the cancellation as follows: (i) 100% of the contract price for all finished Products in CONTRACT MANUFACTURER' possession, (ii) 110% of the cost of all Inventory and Special Inventory in PROVIDER' possession and not returnable to the vendor or usable for other customers, whether in raw form or work in process, less the salvage value thereof, (iii) 105% of the cost of all Inventory and Special Inventory on order and not cancelable, (iv) any vendor cancellation charges incurred with respect to Inventory and Special Inventory accepted for cancellation or return by the vendor, and (v) expenses incurred by CONTRACT MANUFACTURER related to labor and equipment specifically put in place to support Customer's purchase orders. CONTRACT MANUFACTURER shall provide to Customer within twenty (20) business days a detailed invoice of the cost of cancellation. Customer shall pay the amount set fort in such invoice thirty (30) days after receipt of such invoice.
CONTRACT MANUFACTURER will use reasonable commercial efforts to return unused Inventory and Special Inventory and to cancel pending orders for such inventory, and to otherwise mitigate the amounts payable by Customer.
4.0 ENGINEERING CHANGES
Customer may request, in writing, that CONTRACT MANUFACTURER incorporate engineering changes into the Product. Such request will include a description of the proposed engineering change sufficient to permit CONTRACT MANUFACTURER to evaluate its feasibility and cost. CONTRACT MANUFACTURER' evaluation shall be in writing and shall state the costs and time of implementation and the impact on the delivery schedule and pricing of the Product. CONTRACT MANUFACTURER shall provide such evaluation within three (3) business days after receipt of Customer request for engineering change. Customer may request one (1) day response on critical ECO's to expedite response.
CONTRACT MANUFACTURER will not be obligated to proceed with the engineering change until the parties have agreed upon the changes to the Specifications, delivery schedule and Product pricing and upon the implementation costs to be borne by Customer including, without limitation, the cost of Inventory and Special Inventory on-hand and on-order that becomes obsolete.
4.1a ENGINEERING CHANGE IMPLEMENTATION COSTS
Following release to production (Rev A), Customer will be allowed up to three (3) ECOs per week effecting up to 20 line items (individual component part numbers) each as part of the product manufacturing cost. The implementation of greater than 3 ECOs per week will subject to charges TBD.
5.0 TOOLING, NON-RECURRING EXPENSES, SOFTWARE, AND SYSTEMS INFRASTRUCTURE
5.1 CONTRACT MANUFACTURER shall provide non-Product specific tooling at its expense, including, but not limited to assembly equipment, ICT testers, material handling equipment, general scopes and analyzers, and inspection equipment. Customer shall pay for or obtain and consign to CONTRACT MANUFACTURER any Product specific tooling and other reasonably necessary non-recurring expenses, to be set forth in CONTRACT MANUFACTURER' quotation, including, but not limited to functional test equipment and specialized test and measurement equipment. All software, which Customer provides to PROVIDER, is and shall remain the property of Customer. Customer grants CONTRACT MANUFACTURER a license to copy, modify and use such software required to perform CONTRACT MANUFACTURER' obligations under this Agreement. All software developed by CONTRACT MANUFACTURER to support the process tooling or otherwise shall be and remain the property of CONTRACT MANUFACTURER. CONTRACT MANUFACTURER shall hold Customer Property at its own risk and shall not modify the property without the written permission of Customer. CONTRACT MANUFACTURER will use customer property only for purposes of this Agreement. Upon Customer's request, CONTRACT MANUFACTURER shall redeliver the property to Customer in the same condition as originally received by CONTRACT MANUFACTURER with the exception of reasonable wear and tear. In the event the property is lost, damaged or destroyed, PROVIDER' liability for the property is limited to the book value of the property.
5.2 Systems Development, Deployment and Operations
CONTRACT MANUFACTURER agrees to work with CUSTOMER to support the development, deployment, and ongoing operations of computer systems at CONTRACT MANUFACTURER as required to support the manufacturing and product fulfillment processes. CONTRACT MANUFACTURER furthermore recognizes CUSTOMER intention to deploy an Oracle Enterprise Resource Planning System and associated Order Management System at CONTRACT MANUFACTURER to be operated by CONTRACT MANUFACTURER personnel. The specific requirements for this activity are set forth in Exhibit C.
6.0 PRODUCT ACCEPTANCE, WARRANTIES, AND RETURN SERVICES
6.1 Product Acceptance
The Products delivered by CONTRACT MANUFACTURER will be inspected and tested as required by Customer within twenty (20) days of Customers receipt of such Products. The Product test shall be based on, but is not limited to, (a) any material failure to meet any applicable specifications and/or written representations and warranties made by CONTRACT MANUFACTURER or (b) any repeated inability to perform, without interruption, in material compliance with the performance characteristics described in the Specifications. If the Products are found to be defective in material or workmanship, Customer has the right to reject such Products during said period. Products not rejected during said period will be deemed accepted. Customer may return defective Products, freight collect, after obtaining a return material authorization number from CONTRACT MANUFACTURER to be displayed on the shipping container and completing a failure report. Rejected Products will be either repaired or replaced at PROVIDER' option and cost within twenty (20) business days. CONTRACT MANUFACTURER will replace failed product within two (2) business days when possible using production or buffer inventory. If CONTRACT MANUFACTURER fails to repair or replace such Product within such twenty (20) business day period, then Customer shall have the right, without liability, to require expedited shipping of the conforming Product at CONTRACT MANUFACTURER' sole cost. Both parties agree to work in good faith to implement Returned Product Services per Section 6.3 such that the replacement time is set to two (2) days.
6.2 Express Limited Warranty
CONTRACT MANUFACTURER warrants that: (i) the Products will conform to Customer's applicable Specifications; (ii) the Products shall be free from material and workmanship defects for a period of ninety (90) days from the date of shipment; (iii) the Products shall be free and clear of all liens and encumbrances and that CONTRACT MANUFACTURER will convey good and marketable title to such Product. This express limited warranty does not apply to (a) materials consigned or supplied by Customer to CONTRACT MANUFACTURER; (b) defects resulting from Customer's Specifications or the design of the Products; or (c) Product that has been abused, damaged, altered or misused by any person or entity after title passes to Customer. With respect to first articles, prototypes, pre-production units or test units manufactured solely for Customer, CONTRACT MANUFACTURER makes no representations or warranties whatsoever. In the event that any Product manufactured shall not be in conformity with the foregoing warranties, CONTRACT MANUFACTURER shall, at PROVIDER' sole expense, replace, repair or correct such Product within twenty (20) business days of receipt of such defective Product. CONTRACT MANUFACTURER will replace failed product within two (2) business days when possible using production or buffer inventory. CONTRACT MANUFACTURER shall waive any charges to Customer in order to effect the replacement of such defective Products to Customer. CONTRACT MANUFACTURER agrees to maintain a repair capability for products under warranty. If CONTRACT MANUFACTURER is unable to repair, replace or correct such product, then CONTRACT MANUFACTURER shall credit Customer for the purchase price paid by Customer for such Product. To the extent that CONTRACT MANUFACTURER receives warranty coverage on failed components beyond the 90 day warranty period, this warranty will be extended to the Customer.
6.3 Returned Product Services
CONTRACT MANUFACTURER will work with CUSTOMER to establish returned product services including (but not limited to): (1) In-warranty repair, (2) out of warranty repair, (3) product upgrades, (4) field service spares depoting, (5) stock rotation programs, (6) and failure analysis. The specific scope of work and service level expectation for these service, as well as the pricing of these shall be set forth in Exhibit B.
CONTRACT MANUFACTURER MAKES NO OTHER WARRANTIES OR CONDITIONS ON THE PRODUCTS, EXPRESS, IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR COMMUNICATION WITH CUSTOMER, AND CONTRACT MANUFACTURER SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OR CONDITION OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
7.0 PAYMENT TERMS, ADDITIONAL COSTS AND PRICE
7.1 Price and Payment Terms
The price for Products to be manufactured will be set through Purchase Orders issued by Customer and accepted by CONTRACT MANUFACTURER. The current prices are set forth in Exhibit A and may be changed from time to time by PROVIDER. All prices quoted are exclusive of federal, state and local excise, sales, use and similar taxes, and any duties, and Customer shall be responsible for all such items. At the end of each month, CONTRACT MANUFACTURER will invoice "Customer" for any additional supplemental resource expenditures (including NRE, ECO, Overtime, Agreement Violations and other costs). An accounting of these costs will be provided to "Customer" for review at the time of invoicing. Payment for any Products, services or other costs to be paid by Customer hereunder are due thirty (30) days net from the date of shipment and shall be made in lawful U.S. currency. Customer agrees to pay 1.5% monthly interest on all late payments without regard to cause. Furthermore, if Customer is late with payments, or CONTRACT MANUFACTURER has reasonable cause to believe Customer may not be able to pay, CONTRACT MANUFACTURER may require prepayment or delay shipments or suspend work until assurances of payment satisfactory to CONTRACT MANUFACTURER are received.
7.2 Additional Costs
Customer is responsible for (a) any expediting charges reasonably necessary because of a change in Customer's requirements which charges are pre-approved, (b) any overtime or downtime charges incurred as a result of delays in the normal production or interruption in the workflow process and caused by: (1) Customer's change in the Specifications; or (2) Customer's failure to provide sufficient quantities or a reasonable quality level of consigned materials where applicable to sustain the production schedule. No expedite fees are to be charged in cases where CONTRACT MANUFACTURER is solely or jointly responsible for such delay.
7.3 Price Changes
The price of Products to Customer may be increased by CONTRACT MANUFACTURER if increase after good faith negotiation, the parties agree in writing to such. Pricing will be reviewed and updated quarterly.
7.4 Cost Reductions
CONTRACT MANUFACTURER agrees to seek ways to reduce the cost of manufacturing Products by methods such as elimination of components, obtaining alternate sources of materials, redefinition of specifications, and improved assembly or test methods. Customer would receive 100% of any cost reductions identified by Customer, implemented at the next quarterly price update. For cost reductions identified through CONTRACT MANUFACTUER' internal efforts, the savings would be split with 25% of the savings being retained by CONTRACT MANUFACTURER for a period of 6 months, and the remaining 75% being applied directly to Customer's production cost by way of a quarterly price reduction. After the initial 6 month period for a specific cost reduction, CUSTOMER will own 100% of the cost savings.
CONTRACT MANUFACTURER agrees to a non-binding target of 3.5% quarter-over-quarter cost reduction for turnkey materials, and a quarter-over-quarter cost reduction for labor and overhead of 3.0% per quarter once the product is in full production.
8.0 TERM AND TERMINATION
8.1 Term
The term of this Agreement shall commence on the Effective Date and shall continue until XXXXXXXX unless terminated as provided in Section 8.2 or 12.9. After the expiration of the initial term hereunder (unless this Agreement has been terminated) this Agreement shall automatically renew for separate but successive one-year terms.
8.2 Termination
This Agreement may be terminated by either party (a) for any reason upon ninety (90) days written notice to the other party, or (b) if the other party defaults in any payment to the terminating party and such default continues without a cure for a period of thirty (30) days after the delivery of written notice thereof by the terminating party to the other party, (c) if the other party defaults in the performance of any other material term or condition of this Agreement and such default continues un-remedied for a period of thirty (30) days after the delivery of written notice thereof by the terminating party to the other party, or (d) pursuant to Section 12.9. Termination of this Agreement for any reason shall not affect the obligations of either party that exist as of the date of termination. Upon termination due to a default by Customer or a breach by Customer of its obligations, Customer shall be responsible for the finished Products, Inventory, and Special Inventory in existence at the date of termination; otherwise Customer shall only be responsible for finished Products. Notwithstanding termination or expiration of this Agreement, Sections 6.2, 8.0, 9.0, 11, and 12.0 shall survive said termination or expiration.
9.0 LIABILITY LIMITATION
9.1 Patents, Copyrights, Trade Secrets, Other Proprietary Rights.
(a) CONTRACT MANUFACTURER shall defend or settle at its expense any claim or suit, including without limitation any third-party claim or suit against Customer or its affiliates, directors, officers, agents, employees to the fullest extent permitted by law arising out of or in connection with any claim that the CONTRACT MANUFACTURER manufacturing process violates the intellectual property rights of a third party
(b) Customer shall defend or settle at its expense any claim or suit ("Action"), including without limitation any third-party claim or suit against CONTRACT MANUFACTURER arising out of or in connection with any claim that the Product violates the intellectual property rights of a third party.
Each Party's ("Indemnitor") obligation to indemnify and hold harmless the other Party ("Indemnitee") from and against any and all damages, costs, liabilities and attorneys' fees, incurred in defending and/or resolving such Action; provided that: (i) the Indemnitor is promptly notified in writing of such Action, (ii) the Indemnitor shall have the sole control of the defense and/or settlement thereof, (iii) the Indemnitee furnishes to the Indemnitor, on request, information available to the Indemnitee for such defense, and (iv) the Indemnitee cooperates in any defense and/or settlement thereof as long as the Indemnitor pays all of the Indemnitee's reasonable out of pocket expenses and attorneys' fees. The Indemnitee shall not admit any such Action or any allegations made in such Action without the prior written consent of the Indemnitor.
THE FOREGOING STATES THE ENTIRE LIABILITY OF THE PARTIES TO EACH OTHER CONCERNING INFRINGEMENT OF PATENT, COPYRIGHT, TRADE SECRET OR OTHER INTELLECTUAL PROPERTY RIGHTS.
9.2 Product Liability
CONTRACT MANUFACTURER agrees that, if notified promptly in writing and given sole control of the defense and all related settlement negotiations, it will defend Customer from any claim or action and will hold Customer harmless from any loss, damage or injury, including death, which arises from any alleged manufacturing defect of any Products.
9.3 No Other Liability
EXCEPT FOR THE EXPRESS WARRANTIES CREATED UNDER THIS AGREEMENT AND EXCEPT AS SET FORTH IN THIS SECTION 9 AND A BREACH OF CONFIDENTIALLY IN SECTION 11, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES OF ANY KIND OR NATURE ARISING OUT OF THIS AGREEMENT OR THE SALE OF PRODUCTS, WHETHER SUCH LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT, TORT (INCLUDING THE POSSIBILITY OF NEGLIGENCE OR STRICT LIABILITY), OR OTHERWISE, EVEN IF THE PARTY HAS BEEN WARNED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE, AND EVEN IF ANY OF THE LIMITED REMEDIES IN THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE.
10. CONFIDENTIALITY.
Each party ("Receiving Party") agrees to keep confidential and not disclose or use except in performance of its obligations under this Agreement, confidential or proprietary information related to the other party's ("Disclosing Party") technology or business that the Receiving Party learns in connection with this Agreement and any other information received from the other, including without limitation, to the extent previously, currently or subsequently disclosed to the Receiving Party hereunder or otherwise: information relating to products or technology of the Disclosing Party or the properties, composition, structure, use or processing thereof, or systems therefor, or to the Disclosing Party's business (including, without limitation, computer programs, code, algorithms, schematics, data, hard ware design, part list, vendor lists, know-how, processes, ideas, customer information, inventions (whether patentable or not), names and expertise of employees and consultants, all information relating to customers and customer transactions and other technical, business, financial, customer and product development plans, forecasts, strategies and information (all of the foregoing, "Confidential Information"). Neither party shall disclose the terms of this Agreement to any third party, without the prior written consent of the other party. Each party shall use reasonable precautions to protect the other's Confidential Information and employ at least those precautions that such party employs to protect its own confidential or proprietary information. "Confidential Information" shall not include information the Receiving Party can document (a) is in or (through no improper action or inaction by the Receiving Party or any affiliate, agent or employee) enters the public domain (and is readily available without substantial effort), or (b) was rightfully in its possession or known by it prior to receipt from the Disclosing Party, or (c) was rightfully disclosed to it by another person without restriction, or (d) was independently developed by it by persons without access to such information and without use of any Confidential Information of the Disclosing Party. Each party, with prior written notice to the Disclosing Party, may disclose such Confidential Information to the minimum extent possible that is required to be disclosed to a governmental entity or agency in connection with seeking any governmental or regulatory approval, or pursuant to the lawful requirement or request of a governmental entity or agency (including a court order or subpoena), provided that reasonable measures are taken to guard against further disclosure, including without limitation, seeking appropriate confidential treatment or a protective order, or assisting the other party to do so.
11.0 MISCELLANEOUS
11.1 Entire Agreement
This Agreement constitutes the entire agreement between the Parties with respect to the transactions contemplated hereby and supersedes all prior agreements and understandings between the parties relating to such transactions. Customer shall hold the existence and terms of this Agreement confidential, unless it obtains PROVIDER' express written consent otherwise. In all respects, this Agreement shall govern, and any other documents including, without limitation, preprinted terms and conditions on Customer's Purchase Orders shall be of no effect.
11.2 Notice
Notices under this Agreement shall be sufficient only if in writing and transmitted via facsimile (with confirmation of receipt), personally delivered, delivered by a major commercial rapid delivery courier service or mailed, postage or charges prepaid, by certified or registered mail, return receipt requested to a party at its addresses set forth on the first page above (attn: Chief Legal Officer) or as amended by notice pursuant to this Section. If not received sooner, notice by mail shall be deemed received five (5) days after deposit in the U.S. mails.
11.3 Amendments
This Agreement may be amended only by written consent of both parties.
11.4 Independent Contractor
Neither party shall, for any purpose, be deemed to be an agent of the other party and the relationship between the parties shall only be that of independent contractors. Neither party shall have any right or authority to assume or create any obligations or to make any representations or warranties on behalf of any other party, whether express or implied, or to bind the other party in any respect whatsoever.
11.5 Expenses
In the event a dispute between the parties hereunder with respect to this Agreement must be resolved by litigation or other proceeding or a party must engage an attorney to enforce its right hereunder, the prevailing party shall be entitled to receive reimbursement for all associated reasonable costs and expenses (including, without limitation, attorneys fees) from the other party.
11.6 Severability
The parties intend this Agreement to be a legally enforceable instrument. If any provision of this Agreement is held invalid, such invalidity shall not affect other provisions, which can be given effect without the invalid provision, and to this end the provisions of this Agreement are declared severable.
11.7 Governing Law
This Agreement shall be governed by and construed under the laws of the State of XXXXX, excluding its choice of law principles. The parties consent to the exclusive jurisdiction of the state and Federal courts in XXXX County, XXXX.
11.8 Successors, Assignment
This Agreements shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and legal representatives. Neither party shall have the right to assign or otherwise transfer its rights or obligations under this Agreement except with the prior written consent of the other party, not to be unreasonably withheld.
11.9 Force Majeure
In the event that either party is prevented from performing or is unable to perform any of its obligations under this Agreement (other than a payment obligation) due to any Act of God, fire, casualty, flood, earthquake, war, epidemic, destruction of production facilities, riot, insurrection, material unavailability, or any other cause beyond the reasonable control of the party invoking this section, and if such party shall have used its commercially reasonable efforts to mitigate its effects, such party shall give prompt written notice to the other party, its performance shall be excused, and the time for the performance shall be extended for the period of delay or inability to perform due to such occurrences. Regardless of the excuse of Force Majeure, if such party is not able to perform within ninety (90) days after such event, the other party may terminate the Agreement. Termination of this Agreement shall not affect the obligations of either party which exist as of the date of termination.
11.10 Security Interest
Until the purchase price and all other charges payable to CONTRACT MANUFACTURER hereunder have been received in full, CONTRACT MANUFACTURER hereby retains and Customer hereby grants to CONTRACT MANUFACTURER a security interest in the Products delivered to Customer and any proceeds therefrom. Customer agrees to promptly execute any documents requested by CONTRACT MANUFACTURER to perfect and protect such security interest. In the event of a default by Customer, CONTRACT MANUFACTURER may exercise any or all remedies provided under the Uniform Commercial Code or similar statutes or laws enacted in the jurisdiction within which CONTRACT MANUFACTURER seeks to enforce its rights under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date. All signed copies of this Agreement shall be deemed originals.
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