SUPPLY CHAIN AGREEMENT
This Supply Chain Agreement (the "Agreement") is made and entered into as of [DATE] (the "Effective Date")
BETWEEN:
[SUPPLIER NAME], a [ENTITY TYPE] organized and existing under the laws of [JURISDICTION], with its principal place of business at [ADDRESS] (hereinafter referred to as the "Supplier"),
AND
[BUYER NAME], a [ENTITY TYPE] organized and existing under the laws of [JURISDICTION], with its principal place of business at [ADDRESS] (hereinafter referred to as the "Buyer").
(Each a "Party" and collectively the "Parties")
RECITALS:
WHEREAS, Supplier is engaged in the business of [BRIEF DESCRIPTION OF SUPPLIER'S BUSINESS];
WHEREAS, Buyer wishes to purchase certain products and/or services from Supplier; and
WHEREAS, the Parties desire to establish the terms and conditions under which Supplier will supply such products and/or services to Buyer.
NOW, THEREFORE, in consideration of the mutual covenants, terms, and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions. In this Agreement, the following terms shall have the meanings set forth below:
"Acceptance" means Buyer's acceptance of Products or Services in accordance with Section 4.3 of this Agreement.
"Acceptance Criteria" means the criteria set forth in the applicable Purchase Order, Specification, or as otherwise agreed upon in writing by the Parties, against which the Products or Services will be evaluated for Acceptance.
"Affiliate" means, with respect to any entity, any other entity that directly or indirectly controls, is controlled by, or is under common control with such entity, where "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract, or otherwise.
"Business Day" means any day other than a Saturday, Sunday, or a public holiday at the location of the recipient.
"Confidential Information" means all non-public information disclosed by or on behalf of a Party (the "Disclosing Party") to the other Party (the "Receiving Party"), whether orally, in writing, or by any other means, that is designated as confidential or that reasonably should be understood to be confidential given the nature of the information and the circumstances of disclosure, including but not limited to business plans, financial information, technical information, specifications, designs, processes, procedures, formulas, algorithms, know-how, trade secrets, research and development, pricing, customer and supplier information, and marketing plans.
"Defect" means any failure of a Product or Service to conform to the Specifications, warranties, or other requirements set forth in this Agreement or the applicable Purchase Order.
"Delivery Date" means the date specified in the applicable Purchase Order for delivery of Products or completion of Services.
"Delivery Location" means the location specified in the applicable Purchase Order for delivery of Products or performance of Services.
"Force Majeure Event" has the meaning set forth in Section 16.1.
"Intellectual Property Rights" means all intellectual property rights throughout the world, whether existing under statute or at common law or equity, now or hereafter in force or recognized, including: (a) trademarks, service marks, trade names, trade dress, logos, domain names and other identifiers of source or origin, including all registrations and applications for registration of, and all goodwill associated with, the foregoing; (b) patents, utility models, and other rights with respect to inventions or discoveries; (c) copyrights and database rights; (d) trade secrets and other confidential or proprietary information (including concepts, ideas, designs, know-how, processes, methods, techniques, research and development information, data, formulas, algorithms and databases); (e) industrial designs and other rights in designs; and (f) all other intellectual property and proprietary rights, and all rights in and to applications and registrations for the foregoing.
"Key Performance Indicators" or "KPIs" means the performance metrics and standards set forth in Exhibit A attached hereto.
"Products" means the goods, materials, equipment, or other items to be provided by Supplier to Buyer as specified in a Purchase Order.
"Purchase Order" means a written order issued by Buyer to Supplier for Products or Services under this Agreement.
"Services" means the services to be performed by Supplier for Buyer as specified in a Purchase Order.
"Specifications" means the technical and functional specifications, requirements, standards, and other criteria for the Products or Services as set forth in the applicable Purchase Order, any documentation referenced therein, or as otherwise agreed upon in writing by the Parties.
"Subcontractor" means any third party engaged by Supplier to perform any portion of Supplier's obligations under this Agreement.
"Term" has the meaning set forth in Section 3.1.
1.2 Interpretation. In this Agreement, unless the context requires otherwise:
1.2.1 References to Sections, Exhibits, and Schedules are to sections of, and exhibits and schedules to, this Agreement.
1.2.2 The headings of Sections are for convenience only and do not affect the interpretation of this Agreement.
1.2.3 Words importing the singular include the plural and vice versa, and words importing gender include all genders.
1.2.4 The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation."
1.2.5 References to any statute, regulation, or other legal requirement include references to such legal requirements as amended, supplemented, or replaced from time to time.
1.2.6 References to a "day" or "days" refer to calendar days unless otherwise specified as a "Business Day."
1.2.7 If there is any conflict or inconsistency between the terms of this Agreement and any Purchase Order, the terms of this Agreement shall prevail unless the Purchase Order expressly states that a specific provision is intended to supersede this Agreement.
2. SCOPE OF AGREEMENT
2.1 Products and Services. During the Term, Supplier shall provide to Buyer the Products and Services as specified in Purchase Orders issued by Buyer and accepted by Supplier in accordance with the terms and conditions of this Agreement.
2.2 Product Specifications. All Products supplied under this Agreement shall conform to the Specifications set forth in the applicable Purchase Order or as otherwise agreed upon in writing by the Parties. The Specifications may include, without limitation, descriptions, drawings, components, performance requirements, technical standards, quality requirements, and testing procedures.
2.3 Service Specifications. All Services performed under this Agreement shall conform to the Specifications set forth in the applicable Purchase Order or as otherwise agreed upon in writing by the Parties. The Specifications may include, without limitation, scope of work, deliverables, performance standards, timelines, acceptance criteria, and reporting requirements.
2.4 Purchase Orders.
2.4.1 Buyer may issue Purchase Orders to Supplier from time to time during the Term. Each Purchase Order shall specify, at a minimum: (a) a description of the Products or Services; (b) the quantity of Products or scope of Services; (c) the price; (d) the Delivery Date; (e) the Delivery Location; and (f) any special instructions or requirements.
2.4.2 Supplier shall accept or reject each Purchase Order in writing within [NUMBER] Business Days after receipt. If Supplier fails to respond within such period, the Purchase Order shall be deemed accepted. Supplier may only reject a Purchase Order if it materially deviates from the terms of this Agreement.
2.4.3 Upon acceptance (or deemed acceptance) of a Purchase Order, Supplier shall be obligated to provide the Products or Services in accordance with the terms of this Agreement and the Purchase Order.
2.5 Exclusivity. [SELECT ONE OPTION:]
[OPTION 1: Non-Exclusive] This Agreement is non-exclusive, and neither Party is obligated to purchase or supply any minimum quantity of Products or Services. Buyer may purchase similar products or services from third parties, and Supplier may provide similar products or services to third parties.
[OPTION 2: Exclusive] During the Term, Buyer agrees to purchase the Products and Services exclusively from Supplier, and Supplier agrees not to supply the same or substantially similar Products or Services to any of Buyer's direct competitors identified in Exhibit B attached hereto within the following territories: [SPECIFY TERRITORIES]. This exclusivity provision shall not prevent Buyer from purchasing products or services from third parties if: (a) Supplier is unable to meet Buyer's requirements; (b) Supplier is in breach of this Agreement; or (c) the products or services are not covered by this Agreement.
2.6 Forecasts.
2.6.1 Buyer shall provide Supplier with a non-binding [NUMBER]-month rolling forecast of its anticipated requirements for Products on a [FREQUENCY] basis. The forecast shall be updated by Buyer and provided to Supplier no later than the [DAY] day of each [MONTH/QUARTER].
2.6.2 The first [NUMBER] months of each forecast shall be considered a firm commitment by Buyer to issue Purchase Orders for the quantities specified therein, subject to a variance of plus or minus [PERCENTAGE]%. The remainder of the forecast shall be for planning purposes only and shall not constitute a commitment by Buyer to purchase any specific quantity of Products.
2.6.3 Supplier shall use the forecasts to ensure adequate capacity, materials, and resources to meet Buyer's anticipated requirements.
3. TERM AND RENEWAL
3.1 Initial Term. This Agreement shall commence on the Effective Date and shall continue for a period of [NUMBER] years (the "Initial Term"), unless earlier terminated in accordance with the provisions of this Agreement.
3.2 Renewal. This Agreement shall automatically renew for successive [NUMBER]-year periods (each, a "Renewal Term," and together with the Initial Term, the "Term"), unless either Party provides written notice of non-renewal to the other Party at least [NUMBER] days prior to the expiration of the then-current Term.
3.3 Review and Renegotiation. The Parties shall meet at least [NUMBER] days prior to the expiration of the then-current Term to review the terms and conditions of this Agreement and discuss any proposed changes. Any changes to this Agreement must be made in writing and signed by authorized representatives of both Parties.
4. PERFORMANCE REQUIREMENTS
4.1 Quality Standards.
4.1.1 Supplier shall provide all Products and Services in accordance with the highest industry standards and practices, and in compliance with all Specifications, quality requirements, and performance standards set forth in this Agreement or the applicable Purchase Order.
4.1.2 Supplier shall maintain a quality management system that complies with [SPECIFY APPLICABLE STANDARD, e.g., ISO 9001:2015] or an equivalent standard acceptable to Buyer. Supplier shall provide Buyer with copies of its quality certifications upon request.
4.1.3 Supplier shall conduct quality control testing and inspection of all Products prior to delivery to ensure compliance with the Specifications and quality requirements. Supplier shall maintain complete and accurate records of all quality control activities and shall make such records available to Buyer upon request.
4.1.4 Buyer reserves the right to conduct quality audits of Supplier's facilities, processes, and quality management system upon reasonable notice. Supplier shall cooperate with such audits and promptly address any deficiencies identified.
4.2 Delivery Requirements.
4.2.1 Supplier shall deliver the Products or complete the Services on or before the Delivery Date specified in the applicable Purchase Order. TIME IS OF THE ESSENCE with respect to all Delivery Dates.
4.2.2 Unless otherwise specified in the applicable Purchase Order, all Products shall be delivered [INCOTERM AND LOCATION, e.g., DDP Buyer's facility at (address)]. Risk of loss and title to the Products shall pass to Buyer upon delivery in accordance with the specified Incoterm.
4.2.3 Supplier shall package all Products in accordance with good commercial practice, Buyer's packaging specifications (if any), and in a manner sufficient to ensure that the Products are delivered to the Delivery Location in undamaged condition. Each shipment shall be accompanied by a packing slip that includes the Purchase Order number, Product description, quantity, and any other information specified by Buyer.
4.2.4 If Supplier anticipates that it will not be able to meet a Delivery Date, Supplier shall promptly notify Buyer in writing, stating the reason for the delay and the expected delivery date. Such notification shall not relieve Supplier of its obligations to deliver on time or of any liability for late delivery.
4.2.5 If Supplier fails to deliver Products or complete Services by the Delivery Date, Buyer may, at its option: (a) extend the Delivery Date; (b) require expedited shipping at Supplier's expense; (c) cancel the Purchase Order without liability; or (d) pursue any other remedies available under this Agreement or applicable law.
4.2.6 Without limiting Buyer's other remedies, if Supplier fails to deliver Products or complete Services within [NUMBER] days after the Delivery Date, Supplier shall pay Buyer liquidated damages in the amount of [PERCENTAGE]% of the price of the delayed Products or Services for each day of delay, up to a maximum of [PERCENTAGE]% of the total price of the delayed Products or Services. The Parties agree that such liquidated damages are a reasonable estimate of the damages Buyer would incur due to late delivery and not a penalty.
4.3 Acceptance Procedures.
4.3.1 Buyer shall have [NUMBER] days from the date of delivery of Products or completion of Services (the "Inspection Period") to inspect and test the Products or Services for conformity with the Specifications and other requirements of this Agreement.
4.3.2 If Buyer determines that any Products or Services do not conform to the Specifications or other requirements of this Agreement (a "Nonconformity"), Buyer shall notify Supplier in writing within the Inspection Period, specifying the nature of the Nonconformity. If Buyer does not provide such notice within the Inspection Period, the Products or Services shall be deemed accepted.
4.3.3 Upon receipt of notice of a Nonconformity, Supplier shall, at Buyer's option: (a) promptly repair or replace the nonconforming Products or re-perform the nonconforming Services at Supplier's expense; (b) issue a credit or refund to Buyer for the price of the nonconforming Products or Services; or (c) reimburse Buyer for the cost of obtaining replacement products or services from a third party. Supplier shall be responsible for all costs associated with the return, repair, replacement, or disposal of nonconforming Products.
4.3.4 Buyer's inspection, testing, acceptance, or use of the Products or Services shall not relieve Supplier of its obligations under this Agreement or constitute a waiver of any rights or remedies available to Buyer.
4.4 Key Performance Indicators.
4.4.1 Supplier's performance under this Agreement shall be measured against the Key Performance Indicators (KPIs) set forth in Exhibit A attached hereto. The KPIs may include, without limitation, metrics related to quality, delivery, responsiveness, cost, and innovation.
4.4.2 Supplier shall track and report its performance against the KPIs on a [MONTHLY/QUARTERLY] basis in a format specified by Buyer. Supplier shall promptly address any performance deficiencies identified through the KPI reporting process.
4.4.3 The Parties shall meet on a [QUARTERLY/SEMI-ANNUAL] basis to review Supplier's performance against the KPIs and discuss opportunities for improvement. If Supplier fails to meet any KPI for [NUMBER] consecutive reporting periods, Buyer may require Supplier to develop and implement a corrective action plan.
4.4.4 If Supplier fails to meet any critical KPI (as identified in Exhibit A) for [NUMBER] consecutive reporting periods, or if Supplier fails to implement a corrective action plan to Buyer's reasonable satisfaction, Buyer may, in addition to any other remedies available under this Agreement or applicable law: (a) reduce the volume of Products or Services purchased from Supplier; (b) require Supplier to reimburse Buyer for any additional costs incurred as a result of Supplier's performance deficiencies; or (c) terminate this Agreement for cause pursuant to Section 15.2.
5. FINANCIAL TERMS
5.1 Pricing Structure.
5.1.1 The prices for Products and Services shall be as set forth in Exhibit C attached hereto or in the applicable Purchase Order. All prices are firm and fixed for the Initial Term, unless otherwise specified in Exhibit C or the applicable Purchase Order.
5.1.2 The prices include all costs and expenses associated with the production, packaging, and delivery of Products or performance of Services, including but not limited to materials, labor, overhead, insurance, taxes (except for sales, use, or value-added taxes, if applicable), duties, packaging, and shipping, unless otherwise specified in Exhibit C or the applicable Purchase Order.
5.1.3 Volume Discounts. Buyer shall be entitled to the volume discounts set forth in Exhibit C based on the aggregate quantity of Products purchased during each [QUARTER/YEAR]. Volume discounts shall be applied as a credit against future purchases or as a refund, at Buyer's option.
5.1.4 Most Favored Customer. Supplier represents and warrants that the prices, terms, warranties, and benefits provided to Buyer under this Agreement are at least as favorable as those provided to any other customer of Supplier purchasing similar volumes of the same or substantially similar Products or Services. If Supplier offers more favorable prices, terms, warranties, or benefits to any other customer, Supplier shall promptly notify Buyer and extend such more favorable prices, terms, warranties, or benefits to Buyer.
5.1.5 Price Adjustments. After the Initial Term, Supplier may request price adjustments no more than once per [YEAR] by providing written notice to Buyer at least [NUMBER] days prior to the proposed effective date of such adjustment. Any price adjustment shall be based on documented changes in Supplier's costs and shall not exceed the lesser of: (a) the percentage change in the [SPECIFY RELEVANT PRICE INDEX] over the preceding [NUMBER]-month period; or (b) [PERCENTAGE]%. Any price adjustment shall be subject to Buyer's written approval, which shall not be unreasonably withheld.
5.2 Payment Terms.
5.2.1 Supplier shall invoice Buyer for Products upon delivery and for Services upon completion and acceptance, unless otherwise specified in the applicable Purchase Order. Each invoice shall include: (a) the Purchase Order number; (b) a description of the Products delivered or Services performed; (c) the quantity of Products delivered; (d) the unit price and total price; (e) the date of delivery or completion; (f) Supplier's tax identification number; and (g) any other information reasonably requested by Buyer.
5.2.2 Buyer shall pay all undisputed amounts within [NUMBER] days after receipt of a correct and complete invoice. Payment may be made by check, wire transfer, or electronic funds transfer, at Buyer's option.
5.2.3 If Buyer disputes any portion of an invoice, Buyer shall notify Supplier in writing of the disputed amount and the basis for the dispute within [NUMBER] days after receipt of the invoice. Buyer shall pay the undisputed portion of the invoice in accordance with Section 5.2.2. The Parties shall seek to resolve any invoice disputes in accordance with the dispute resolution procedures set forth in Section 15.
5.2.4 Early Payment Discount. Buyer shall be entitled to a discount of [PERCENTAGE]% of the invoiced amount for payments made within [NUMBER] days after receipt of a correct and complete invoice.
5.2.5 Late Payment. Any undisputed amount not paid when due shall bear interest at the rate of [PERCENTAGE]% per month or the maximum rate permitted by applicable law, whichever is less, from the due date until paid.
5.3 Invoicing Procedures.
5.3.1 Supplier shall submit invoices to Buyer's accounts payable department at the address specified in the applicable Purchase Order or to the following email address: [EMAIL ADDRESS].
5.3.2 Buyer may reject any invoice that does not comply with the requirements of this Agreement or the applicable Purchase Order. Rejection of an invoice shall not excuse Supplier from performing its obligations under this Agreement.
5.3.3 Supplier shall maintain complete and accurate records of all charges incurred on behalf of Buyer under this Agreement. Such records shall be retained for a period of [NUMBER] years after the expiration or termination of this Agreement and shall be made available for inspection and audit by Buyer upon reasonable notice.
5.4 Tax Considerations.
5.4.1 Unless otherwise specified in the applicable Purchase Order, all prices are exclusive of sales, use, value-added, or similar taxes. Buyer shall be responsible for all sales, use, value-added, or similar taxes properly imposed on the sale of Products or Services to Buyer, provided that Supplier separately states such taxes on its invoices.
5.4.2 Supplier shall be responsible for all income taxes, employment taxes, and any other taxes imposed on Supplier's income, property, or employees.
5.4.3 Each Party shall provide the other Party with any tax forms, certificates, or other documentation reasonably requested to reduce or eliminate any applicable taxes, duties, or fees.
5.4.4 If Buyer is required by law to withhold any taxes from payments to Supplier, Buyer shall: (a) withhold the required amount and pay it to the appropriate taxing authority; (b) provide Supplier with an official receipt or other documentation evidencing the payment; and (c) pay Supplier the net amount after withholding.
6. RISK ALLOCATION
6.1 Warranties.
6.1.1 Product Warranties. Supplier warrants that all Products shall: (a) be new and of good quality; (b) conform to the Specifications and all requirements of this Agreement; (c) be free from defects in design, materials, and workmanship; (d) be fit for the particular purpose for which they are intended; (e) be free and clear of all liens, security interests, and other encumbrances; and (f) not infringe or misappropriate any Intellectual Property Rights of any third party.
6.1.2 Service Warranties. Supplier warrants that all Services shall: (a) be performed in a professional and workmanlike manner in accordance with the highest industry standards; (b) conform to the Specifications and all requirements of this Agreement; (c) be performed by qualified personnel with the requisite skills, experience, and qualifications; and (d) not infringe or misappropriate any Intellectual Property Rights of any third party.
6.1.3 Warranty Period. The warranties set forth in Sections 6.1.1 and 6.1.2 shall remain in effect for a period of [NUMBER] months from the date of Acceptance of the Products or Services (the "Warranty Period"). If any Product or Service does not conform to the warranties during the Warranty Period, Supplier shall, at Buyer's option: (a) promptly repair or replace the nonconforming Product or re-perform the nonconforming Service at Supplier's expense; (b) issue a credit or refund to Buyer for the price of the nonconforming Product or Service; or (c) reimburse Buyer for the cost of obtaining replacement products or services from a third party. The Warranty Period for any repaired or replaced Product or re-performed Service shall be the longer of: (i) the remainder of the original Warranty Period; or (ii) [NUMBER] months from the date of repair, replacement, or re-performance.
6.1.4 Epidemic Failure. If during the Warranty Period, the same or similar Defect appears in [PERCENTAGE]% or more of the Products delivered under this Agreement or any Purchase Order (an "Epidemic Failure"), Supplier shall: (a) promptly investigate and identify the root cause of the Epidemic Failure; (b) provide Buyer with a written corrective action plan; (c) implement the corrective action plan at Supplier's expense; (d) repair or replace all affected Products, including those that have not yet exhibited the Defect; and (e) reimburse Buyer for all costs and expenses incurred as a result of the Epidemic Failure, including but not limited to costs of investigation, testing, removal, repair, replacement, installation, and customer support.
6.1.5 Additional Warranties. Supplier further warrants that: (a) it has the full right, power, and authority to enter into and perform this Agreement; (b) it has all licenses, permits, and authorizations necessary to perform its obligations under this Agreement; (c) it shall comply with all applicable laws, regulations, and industry standards in performing its obligations under this Agreement; and (d) there are no pending or threatened legal proceedings that may adversely affect its ability to perform its obligations under this Agreement.
6.1.6 Disclaimer. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
6.2 Indemnification.
6.2.1 Supplier Indemnification. Supplier shall defend, indemnify, and hold harmless Buyer, its Affiliates, and their respective directors, officers, employees, agents, successors, and assigns (collectively, "Buyer Indemnitees") from and against any and all claims, demands, actions, causes of action, judgments, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and expenses) (collectively, "Losses") arising out of or relating to: (a) any actual or alleged infringement or misappropriation of any Intellectual Property Right by any Product or Service; (b) any actual or alleged defect in any Product; (c) any actual or alleged breach of this Agreement by Supplier; (d) any negligent act or omission or willful misconduct of Supplier or its personnel; or (e) any actual or alleged violation of any applicable law, regulation, or order by Supplier or its personnel.
6.2.2 Buyer Indemnification. Buyer shall defend, indemnify, and hold harmless Supplier, its Affiliates, and their respective directors, officers, employees, agents, successors, and assigns (collectively, "Supplier Indemnitees") from and against any and all Losses arising out of or relating to: (a) any actual or alleged infringement or misappropriation of any Intellectual Property Right resulting from Supplier's compliance with Buyer's specific written instructions or Buyer-provided specifications, provided that such infringement or misappropriation would not have occurred but for such compliance; (b) any negligent act or omission or willful misconduct of Buyer or its personnel; or (c) any actual or alleged violation of any applicable law, regulation, or order by Buyer or its personnel.
6.2.3 Indemnification Procedures. The indemnified Party shall: (a) promptly notify the indemnifying Party in writing of any claim for which indemnification is sought; (b) give the indemnifying Party sole control over the defense and settlement of the claim; and (c) provide the indemnifying Party, at the indemnifying Party's expense, with all reasonable assistance in connection with the defense and settlement of the claim. The indemnifying Party shall not settle any claim in a manner that adversely affects the indemnified Party's rights without the indemnified Party's prior written consent, which shall not be unreasonably withheld, conditioned, or delayed. The indemnified Party may participate in the defense of the claim at its own expense with counsel of its choosing.
6.2.4 Infringement Remedies. If any Product or Service becomes, or in Supplier's opinion is likely to become, the subject of an infringement or misappropriation claim, Supplier shall, at its option and expense: (a) procure for Buyer the right to continue using the Product or Service; (b) replace or modify the Product or Service to make it non-infringing while maintaining substantially equivalent functionality; or (c) if neither (a) nor (b) is commercially reasonable, refund to Buyer all amounts paid for the infringing Product or Service and reimburse Buyer for the cost of obtaining replacement products or services from a third party.
6.3 Limitation of Liability.
6.3.1 EXCEPT AS PROVIDED IN SECTION 6.3.3, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, INCLUDING WITHOUT LIMITATION DAMAGES FOR LOSS OF PROFITS, REVENUE, GOODWILL, USE, DATA, OR OTHER INTANGIBLE LOSSES, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
6.3.2 EXCEPT AS PROVIDED IN SECTION 6.3.3, EACH PARTY'S TOTAL CUMULATIVE LIABILITY TO THE OTHER PARTY FOR ALL CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT, WHETHER IN CONTRACT, TORT, OR OTHERWISE, SHALL NOT EXCEED THE GREATER OF: (A) [AMOUNT] OR (B) THE TOTAL AMOUNT PAID OR PAYABLE BY BUYER TO SUPPLIER UNDER THIS AGREEMENT DURING THE [NUMBER] MONTHS IMMEDIATELY PRECEDING THE EVENT GIVING RISE TO LIABILITY.
6.3.3 THE LIMITATIONS OF LIABILITY SET FORTH IN SECTIONS 6.3.1 AND 6.3.2 SHALL NOT APPLY TO: (A) EITHER PARTY'S INDEMNIFICATION OBLIGATIONS UNDER SECTION 6.2; (B) EITHER PARTY'S CONFIDENTIALITY OBLIGATIONS UNDER SECTION 8; (C) SUPPLIER'S WARRANTY OBLIGATIONS UNDER SECTION 6.1; (D) DAMAGES ARISING FROM EITHER PARTY'S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD; OR (E) SUPPLIER'S OBLIGATIONS UNDER SECTION 10.4 (RECALL).
6.4 Insurance Requirements.
6.4.1 During the Term and for a period of [NUMBER] years thereafter, Supplier shall maintain, at its own expense, the following insurance coverage with insurers having a minimum A.M. Best rating of A-VII:
(a) Commercial General Liability Insurance with limits of not less than [AMOUNT] per occurrence and [AMOUNT] in the aggregate, including coverage for products liability, completed operations, contractual liability, bodily injury, and property damage;
(b) Workers' Compensation Insurance as required by applicable law and Employer's Liability Insurance with limits of not less than [AMOUNT] per accident for bodily injury and [AMOUNT] per employee for disease;
(c) Automobile Liability Insurance with limits of not less than [AMOUNT] per accident, covering all owned, non-owned, and hired vehicles;
(d) Professional Liability Insurance (if Supplier is providing professional services) with limits of not less than [AMOUNT] per claim and [AMOUNT] in the aggregate; and
(e) Umbrella/Excess Liability Insurance with limits of not less than [AMOUNT] per occurrence and in the aggregate, providing coverage in excess of the Commercial General Liability, Employer's Liability, and Automobile Liability policies.
6.4.2 Supplier shall provide Buyer with certificates of insurance evidencing the required coverage within [NUMBER] days after the Effective Date and upon renewal of any policy. All policies except Workers' Compensation and Professional Liability shall: (a) name Buyer and its Affiliates as additional insureds; (b) be primary and non-contributory with respect to any insurance maintained by Buyer; and (c) include a waiver of subrogation in favor of Buyer and its Affiliates. Supplier shall provide Buyer with at least [NUMBER] days' prior written notice of any cancellation or material change in coverage.
6.4.3 Supplier's compliance with the insurance requirements set forth in this Section 6.4 shall not relieve Supplier of its indemnification obligations or other liabilities under this Agreement.
7. INTELLECTUAL PROPERTY
7.1 Ownership of Intellectual Property.
7.1.1 Pre-Existing Intellectual Property. Each Party shall retain all right, title, and interest in and to its pre-existing Intellectual Property Rights. Nothing in this Agreement shall be construed as granting any ownership rights in one Party's pre-existing Intellectual Property Rights to the other Party.
7.1.2 Buyer Materials. All materials, including but not limited to specifications, drawings, designs, patterns, tools, dies, molds, fixtures, and equipment, provided by Buyer to Supplier for use in connection with this Agreement ("Buyer Materials") shall remain the exclusive property of Buyer. Supplier shall use the Buyer Materials only for the purpose of performing its obligations under this Agreement and shall return all Buyer Materials to Buyer upon the earlier of: (a) Buyer's request; or (b) the expiration or termination of this Agreement.
7.1.3 Developed Intellectual Property. Unless otherwise agreed in writing by the Parties, all Intellectual Property Rights in any works, inventions, improvements, discoveries, or innovations developed, conceived, or reduced to practice by or on behalf of Supplier in connection with the performance of this Agreement ("Developed Intellectual Property") shall be owned as follows:
(a) Intellectual Property Rights in any Developed Intellectual Property that is specifically created for Buyer pursuant to this Agreement shall be owned exclusively by Buyer. Supplier hereby irrevocably assigns to Buyer all right, title, and interest in and to such Developed Intellectual Property. Supplier shall execute all documents and take all actions reasonably requested by Buyer to effectuate such assignment and to enable Buyer to protect, perfect, and enforce its Intellectual Property Rights in such Developed Intellectual Property.
(b) Intellectual Property Rights in any Developed Intellectual Property that is not specifically created for Buyer pursuant to this Agreement, but rather represents an improvement to Supplier's pre-existing Intellectual Property Rights or is generally applicable to Supplier's business, shall be owned by Supplier, subject to the license granted to Buyer under Section 7.2.1.
7.2 Licenses.
7.2.1 License to Buyer. Supplier hereby grants to Buyer and its Affiliates a perpetual, irrevocable, worldwide, non-exclusive, royalty-free, fully paid-up license, with the right to sublicense, to use, reproduce, modify, distribute, display, perform, import, make, sell, offer to sell, and otherwise exploit Supplier's pre-existing Intellectual Property Rights and any Developed Intellectual Property owned by Supplier under Section 7.1.3(b) to the extent necessary or useful for Buyer and its Affiliates to use, sell, offer for sale, import, export, modify, and otherwise exploit the Products and Services.
7.2.2 License to Supplier. Buyer hereby grants to Supplier a non-exclusive, non-transferable, non-sublicensable, royalty-free license to use Buyer's pre-existing Intellectual Property Rights and any Developed Intellectual Property owned by Buyer under Section 7.1.3(a) solely to the extent necessary for Supplier to perform its obligations under this Agreement. Such license shall automatically terminate upon the expiration or termination of this Agreement.
7.3 Intellectual Property Representations and Warranties.
7.3.1 Supplier represents and warrants that: (a) it has all necessary rights, licenses, and permissions to grant the licenses and assignments set forth in this Section 7; (b) the Products, Services, and Developed Intellectual Property do not and will not infringe, misappropriate, or otherwise violate any Intellectual Property Rights of any third party; and (c) there are no claims, actions, suits, or proceedings pending or threatened against Supplier that may affect Supplier's ability to grant the licenses and assignments set forth in this Section 7.
7.3.2 If any Product, Service, or Developed Intellectual Property becomes, or in Supplier's opinion is likely to become, the subject of an infringement or misappropriation claim, Supplier shall, at its option and expense: (a) procure for Buyer the right to continue using the Product, Service, or Developed Intellectual Property; (b) replace or modify the Product, Service, or Developed Intellectual Property to make it non-infringing while maintaining substantially equivalent functionality; or (c) if neither (a) nor (b) is commercially reasonable, refund to Buyer all amounts paid for the infringing Product, Service, or Developed Intellectual Property and reimburse Buyer for the cost of obtaining replacement products, services, or intellectual property from a third party.
8. CONFIDENTIALITY
8.1 Confidential Information.
8.1.1 Each Party acknowledges that it may have access to Confidential Information of the other Party in connection with this Agreement. Each Party shall: (a) maintain the confidentiality of the other Party's Confidential Information using at least the same degree of care that it uses to protect its own confidential information of a similar nature, but in no event less than reasonable care; (b) not use the other Party's Confidential Information except as necessary to perform its obligations or exercise its rights under this Agreement; and (c) not disclose the other Party's Confidential Information to any third party except as expressly permitted under this Agreement or with the other Party's prior written consent.
8.1.2 Each Party may disclose the other Party's Confidential Information to its employees, directors, officers, legal advisors, financial advisors, and contractors who have a need to know such information for purposes of performing the Party's obligations or exercising the Party's rights under this Agreement, provided that such persons are bound by confidentiality obligations at least as restrictive as those set forth in this Agreement.
8.1.3 The obligations set forth in this Section 8 shall not apply to any information that: (a) is or becomes generally available to the public through no fault of the Receiving Party; (b) was in the Receiving Party's possession or known by it prior to receipt from the Disclosing Party; (c) was rightfully disclosed to the Receiving Party by a third party without restriction; or (d) is independently developed by the Receiving Party without use of or reference to the Disclosing Party's Confidential Information.
8.1.4 If the Receiving Party is required by law, regulation, or court order to disclose any of the Disclosing Party's Confidential Information, the Receiving Party shall: (a) promptly notify the Disclosing Party in writing prior to making any such disclosure, to the extent permitted by law; (b) cooperate with the Disclosing Party's reasonable efforts to protect the confidentiality of the information; (c) disclose only that portion of the Confidential Information that the Receiving Party is legally required to disclose; and (d) use reasonable efforts to obtain reliable assurances that confidential treatment will be accorded to the disclosed information.
8.2 Duration of Confidentiality Obligations.
8.2.1 The confidentiality obligations set forth in this Section 8 shall remain in effect during the Term and for a period of [NUMBER] years thereafter, except that with respect to any Confidential Information that constitutes a trade secret under applicable law, such obligations shall continue for as long as such information remains a trade secret.
8.3 Return or Destruction of Confidential Information.
8.3.1 Upon the expiration or termination of this Agreement, or upon the Disclosing Party's request at any time, the Receiving Party shall promptly return to the Disclosing Party all copies of the Disclosing Party's Confidential Information in the Receiving Party's possession or control, or destroy such copies and certify such destruction in writing to the Disclosing Party.
8.3.2 Notwithstanding Section 8.3.1, the Receiving Party may retain: (a) Confidential Information that it is required to retain by applicable law or regulation, for only as long as required; and (b) one copy of the Disclosing Party's Confidential Information for archival purposes or to enforce its rights under this Agreement, subject to the continuing confidentiality obligations set forth in this Section 8.
8.4 Equitable Relief.
8.4.1 Each Party acknowledges that a breach of this Section 8 may cause the other Party irreparable harm for which monetary damages would be inadequate. Accordingly, in addition to any other remedies available under this Agreement or applicable law, the non-breaching Party shall be entitled to seek injunctive or other equitable relief to prevent or remedy a breach of this Section 8, without the necessity of posting a bond.
9. TRADEMARKS AND BRANDING
9.1 Use of Trademarks.
9.1.1 Neither Party shall use the other Party's name, logo, trademarks, service marks, or trade names (collectively, "Trademarks") in any advertising, publicity, promotion, press release, or other public disclosure without the other Party's prior written consent.
9.1.2 If Buyer provides Supplier with written permission to use Buyer's Trademarks, Supplier shall: (a) use such Trademarks only in accordance with Buyer's trademark usage guidelines and instructions; (b) not alter, modify, or otherwise change such Trademarks; (c) not use such Trademarks in any manner that would diminish their value or harm Buyer's reputation; and (d) not use such Trademarks in any manner that would suggest an endorsement by Buyer of Supplier or Supplier's products or services, except as expressly authorized by Buyer.
9.1.3 Any goodwill generated by the use of a Party's Trademarks shall inure solely to the benefit of that Party. Each Party acknowledges that the other Party's Trademarks are the exclusive property of that Party, and neither Party shall acquire any right, title, or interest in or to the other Party's Trademarks by virtue of this Agreement or any use of such Trademarks.
9.2 Product Branding.
9.2.1 If specified in a Purchase Order or otherwise agreed in writing by the Parties, Supplier shall apply Buyer's Trademarks to the Products in accordance with Buyer's specifications and trademark usage guidelines.
9.2.2 Supplier shall not apply its own Trademarks or any third-party Trademarks to the Products without Buyer's prior written consent.
9.2.3 Supplier shall not remove, alter, or obscure any Trademarks, patent numbers, labels, serial numbers, product identifications, warnings, instructions, or other markings applied to the Products or their packaging.
10. COMPLIANCE AND GOVERNANCE
10.1 Regulatory Compliance.
10.1.1 Supplier shall comply with all applicable laws, regulations, and industry standards in the performance of its obligations under this Agreement, including but not limited to those relating to: (a) the manufacture, packaging, labeling, and distribution of Products; (b) the performance of Services; (c) employment and labor; (d) health and safety; (e) environmental protection; (f) data privacy and security; (g) anti-corruption and anti-bribery; (h) export controls and economic sanctions; and (i) antitrust and competition.
10.1.2 Supplier shall obtain and maintain all licenses, permits, approvals, and authorizations required to perform its obligations under this Agreement. Upon Buyer's request, Supplier shall provide Buyer with copies of such licenses, permits, approvals, and authorizations.
10.1.3 Supplier shall promptly notify Buyer of any actual or potential violation of applicable laws, regulations, or industry standards that may affect Supplier's performance under this Agreement or the Products or Services provided hereunder.
10.1.4 If the Products or Services are subject to specific regulatory requirements (e.g., FDA regulations for medical devices, REACH regulations for chemicals, etc.), Supplier shall: (a) ensure that the Products or Services comply with such requirements; (b) provide Buyer with all information and documentation necessary to demonstrate compliance; and (c) cooperate with Buyer in responding to any regulatory inquiries or investigations.
10.2 Ethical Standards and Code of Conduct.
10.2.1 Supplier shall conduct its business in an ethical manner and in accordance with Buyer's Supplier Code of Conduct, a copy of which has been provided to Supplier and is incorporated herein by reference. Supplier shall ensure that its employees, agents, and Subcontractors comply with the Supplier Code of Conduct.
10.2.2 Supplier represents and warrants that it and its directors, officers, employees, agents, and Subcontractors shall not, directly or indirectly, offer, promise, give, or authorize the giving of anything of value to any government official, political party, party official, or candidate for political office, or any other person or entity, with the intent to: (a) improperly influence any act or decision of such person or entity; (b) induce such person or entity to do or omit to do any act in violation of their lawful duty; (c) secure any improper advantage; or (d) induce such person or entity to use their influence to affect or influence any act or decision of any government or governmental instrumentality, in order to assist Supplier or Buyer in obtaining or retaining business.
10.2.3 Supplier shall not engage in any form of human trafficking, slavery, forced labor, or child labor in the performance of its obligations under this Agreement or in its supply chain. Supplier shall comply with all applicable laws and regulations relating to human trafficking, slavery, forced labor, and child labor, including but not limited to the California Transparency in Supply Chains Act, the UK Modern Slavery Act, and the U.S. Trafficking Victims Protection Act.
10.2.4 Supplier shall implement and maintain policies and procedures designed to ensure compliance with the ethical standards and requirements set forth in this Section 10.2. Upon Buyer's request, Supplier shall provide Buyer with copies of such policies and procedures and evidence of their implementation.
10.3 Audit Rights.
10.3.1 Upon reasonable notice, Buyer or its authorized representatives may audit Supplier's facilities, processes, books, and records to verify Supplier's compliance with this Agreement, including but not limited to: (a) the quality and safety of Products; (b) Supplier's performance against KPIs; (c) Supplier's compliance with applicable laws, regulations, and industry standards; and (d) Supplier's compliance with the ethical standards and requirements set forth in Section 10.2.
10.3.2 Supplier shall cooperate with any audit conducted pursuant to Section 10.3.1 and shall provide Buyer or its authorized representatives with access to all relevant facilities, personnel, books, and records. Supplier shall promptly address any deficiencies or non-compliance identified during an audit.
10.3.3 Buyer shall conduct audits during normal business hours and in a manner that minimizes disruption to Supplier's operations. Buyer shall bear its own costs and expenses associated with conducting an audit, unless the audit reveals a material breach of this Agreement by Supplier, in which case Supplier shall reimburse Buyer for its reasonable costs and expenses.
10.3.4 Buyer's audit rights shall not extend to Supplier's cost information, except to the extent necessary to verify compliance with any cost-plus or similar pricing arrangement.
10.4 Recall.
10.4.1 If either Party becomes aware of any defect, non-conformity, or other issue that may require a recall, field correction, market withdrawal, or other similar action with respect to any Product (a "Recall"), such Party shall immediately notify the other Party in writing.
10.4.2 Buyer shall have the right to initiate a Recall in its sole discretion. Supplier shall cooperate with Buyer in connection with any Recall, including by providing all information and assistance requested by Buyer.
10.4.3 If a Recall is required due to a defect, non-conformity, or other issue caused by Supplier's breach of this Agreement or Supplier's negligence or willful misconduct, Supplier shall: (a) reimburse Buyer for all costs and expenses incurred in connection with the Recall, including but not limited to costs of notifying customers, customer refunds, costs of retrieving Products, costs of repairing or replacing Products, shipping costs, and media costs; and (b) indemnify and hold harmless Buyer Indemnitees from and against any and all Losses arising out of or relating to the Recall.
10.4.4 Supplier shall maintain complete and accurate records of all manufacturing lots or batches of Products for a period of at least [NUMBER] years after delivery, or such longer period as may be required by applicable law or regulation. Such records shall include all information necessary to trace the manufacturing history of each lot or batch and to identify all components, materials, and processes used in the manufacture of the Products.
10.5 Data Protection and Privacy.
10.5.1 Each Party shall comply with all applicable data protection and privacy laws and regulations in the performance of its obligations under this Agreement.
10.5.2 If Supplier processes personal data (as defined under applicable law) on behalf of Buyer in connection with this Agreement, the Parties shall enter into a separate data processing agreement that complies with the requirements of applicable data protection and privacy laws and regulations.
10.5.3 Supplier shall implement and maintain appropriate technical, organizational, and physical safeguards to protect any personal data or other confidential information provided by Buyer from unauthorized access, use, disclosure, alteration, or destruction. Such safeguards shall be consistent with industry standards and best practices and shall comply with all applicable data protection and privacy laws and regulations.
10.5.4 Supplier shall promptly notify Buyer of any actual or suspected unauthorized access, use, disclosure, alteration, or destruction of personal data or other confidential information provided by Buyer. Supplier shall cooperate with Buyer in investigating and remedying any such incident and in making any required notifications to individuals, regulators, or other third parties.
11. OPERATIONAL PROVISIONS
11.1 Communication Protocols.
11.1.1 Each Party shall designate one or more individuals to serve as primary points of contact for matters relating to this Agreement. The initial points of contact are:
For Buyer: [NAME, TITLE, CONTACT INFORMATION]
For Supplier: [NAME, TITLE, CONTACT INFORMATION]
Either Party may change its designated point(s) of contact by providing written notice to the other Party.
11.1.2 All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed given: (a) when delivered personally; (b) when sent by confirmed email or facsimile; (c) three (3) Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) Business Day after being sent by a nationally recognized overnight courier service, with written confirmation of receipt. All communications shall be sent to the addresses set forth below or to such other address as may be designated by a Party by giving written notice to the other Party:
If to Buyer:
[NAME]
[ADDRESS]
[EMAIL]
[FACSIMILE]
Attention: [NAME/TITLE]
If to Supplier:
[NAME]
[ADDRESS]
[EMAIL]
[FACSIMILE]
Attention: [NAME/TITLE]
11.1.3 The Parties shall hold regular review meetings to discuss performance, issues, and opportunities for improvement. Such meetings shall be held [MONTHLY/QUARTERLY] or as otherwise agreed by the Parties. Each Party shall ensure that appropriate personnel attend such meetings.
11.1.4 Supplier shall promptly notify Buyer of any actual or potential problems or delays that may affect Supplier's ability to meet its obligations under this Agreement or any Purchase Order. Such notification shall not relieve Supplier of its obligations or liability for delays or problems.
11.2 Business Continuity Requirements.
11.2.1 Supplier shall develop, implement, and maintain a comprehensive business continuity and disaster recovery plan (the "BC/DR Plan") designed to: (a) ensure the continuous operation of Supplier's business and the uninterrupted supply of Products and Services to Buyer; (b) mitigate the risks associated with potential disruptions; and (c) enable prompt recovery from any disruption that may occur.
11.2.2 The BC/DR Plan shall address, at a minimum: (a) identification of critical business functions, systems, and dependencies; (b) risk assessment and mitigation strategies; (c) emergency response procedures; (d) alternate production facilities and capabilities; (e) backup systems and data recovery; (f) communication protocols during a disruption; and (g) testing and updating of the plan.
11.2.3 Supplier shall test the BC/DR Plan at least [ANNUALLY/SEMI-ANNUALLY] and shall provide Buyer with a summary of the test results. Supplier shall update the BC/DR Plan based on the results of such tests and any changes in Supplier's business or operations.
11.2.4 Upon Buyer's request, Supplier shall provide Buyer with a copy of the BC/DR Plan and any updates thereto. Buyer may review the BC/DR Plan and provide recommendations for improvement, which Supplier shall consider in good faith.
11.2.5 In the event of a disruption that affects or may affect Supplier's ability to supply Products or Services to Buyer, Supplier shall: (a) promptly notify Buyer of the disruption; (b) implement the relevant provisions of the BC/DR Plan; (c) provide Buyer with regular updates on the situation and Supplier's response; and (d) use all commercially reasonable efforts to minimize the impact of the disruption on Buyer.
11.3 Inventory Management.
11.3.1 Supplier shall maintain sufficient inventory of raw materials, components, and finished Products to meet Buyer's forecasted requirements and to fulfill Purchase Orders in accordance with the delivery requirements set forth in this Agreement.
11.3.2 If specified in a Purchase Order or otherwise agreed in writing by the Parties, Supplier shall maintain a safety stock of Products equal to [NUMBER] [DAYS/WEEKS] of Buyer's average requirements based on the most recent [NUMBER]-month period. The safety stock shall be stored in a manner that ensures its quality and availability.
11.3.3 Supplier shall implement and maintain an inventory management system that enables tracking of raw materials, components, work-in-process, and finished Products. Upon Buyer's request, Supplier shall provide Buyer with reports on inventory levels, turnover, and other relevant metrics.
11.3.4 Supplier shall implement appropriate inventory rotation practices (e.g., first-in, first-out) to minimize the risk of obsolescence and to ensure that Products delivered to Buyer have the maximum possible shelf life.
11.3.5 If Buyer provides Supplier with a forecast pursuant to Section 2.6, and Supplier purchases raw materials, components, or other items specifically for the production of Products for Buyer based on such forecast, and such items become obsolete due to changes in Buyer's requirements, Buyer shall be responsible for the cost of such obsolete items, provided that: (a) Supplier has used commercially reasonable efforts to mitigate such costs; (b) the items cannot be used for other customers or returned to Supplier's vendors; and (c) the items were purchased in reasonable quantities based on Buyer's forecast.
11.4 Change Management Procedures.
11.4.1 Either Party may propose changes to the Products, Services, or terms of this Agreement by submitting a written change request to the other Party. The change request shall include a detailed description of the proposed change, the reason for the change, and the expected impact on the Products, Services, schedule, and price.
11.4.2 The receiving Party shall review the change request and respond in writing within [NUMBER] Business Days, either accepting the change, rejecting the change, or requesting additional information or modifications to the change request.
11.4.3 If the Parties agree to a change, they shall execute a written amendment to this Agreement or the applicable Purchase Order reflecting the agreed-upon change. No change shall be effective until such amendment has been executed by authorized representatives of both Parties.
11.4.4 Supplier shall not make any changes to the Products, Services, manufacturing process, materials, components, suppliers, or facilities used to produce the Products or perform the Services without Buyer's prior written consent. If Supplier wishes to make such a change, Supplier shall submit a change request in accordance with Section 11.4.1 and shall not implement the change until it has been approved in accordance with Section 11.4.3.
11.4.5 If a change is required to comply with applicable law or regulation, the Parties shall work together in good faith to implement the required change as promptly as possible. The costs of such change shall be allocated as follows: [SPECIFY COST ALLOCATION, e.g., equally between the Parties, or based on which Party's operations necessitated the change].
12. TERMINATION AND DISPUTE RESOLUTION
12.1 Termination Rights.
12.1.1 Termination for Convenience. Buyer may terminate this Agreement or any Purchase Order, in whole or in part, for convenience upon [NUMBER] days' prior written notice to Supplier. In the event of such termination, Buyer shall pay Supplier for: (a) Products delivered and Services performed prior to the effective date of termination; (b) work-in-process for Products that cannot be reasonably repurposed for other customers, provided that such work-in-process is completed and delivered to Buyer within [NUMBER] days after the effective date of termination; and (c) reasonable and documented costs incurred by Supplier as a direct result of the termination, including costs of cancelling orders for materials and components that cannot be cancelled without penalty or repurposed for other customers. Supplier shall use commercially reasonable efforts to mitigate such costs.
12.1.2 Termination for Cause. Either Party may terminate this Agreement or any Purchase Order, in whole or in part, for cause if the other Party materially breaches this Agreement and fails to cure such breach within [NUMBER] days after receiving written notice of the breach from the non-breaching Party. If the breach is not capable of being cured within such period, the non-breaching Party may terminate this Agreement immediately upon written notice.
12.1.3 Termination for Insolvency. Either Party may terminate this Agreement immediately upon written notice if the other Party: (a) becomes insolvent or admits its inability to pay its debts generally as they become due; (b) becomes subject to a voluntary or involuntary proceeding under any bankruptcy or insolvency law, which proceeding is not dismissed within [NUMBER] days after filing; (c) is dissolved or liquidated or takes any corporate action for such purpose; (d) makes a general assignment for the benefit of creditors; or (e) has 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.
12.1.4 Termination for Change of Control. Buyer may terminate this Agreement upon [NUMBER] days' written notice if Supplier undergoes a change of control, where "change of control" means: (a) the acquisition by any person or entity of more than 50% of the voting securities of Supplier; (b) the sale, lease, transfer, or other disposition of all or substantially all of Supplier's assets; or (c) the merger, consolidation, or reorganization of Supplier with or into another entity, where Supplier is not the surviving entity.
12.2 Effect of Termination.
12.2.1 Upon the expiration or termination of this Agreement for any reason:
(a) Supplier shall immediately cease all work under this Agreement or the terminated Purchase Order(s), except as otherwise directed by Buyer;
(b) Buyer shall pay Supplier for all Products delivered and Services performed prior to the effective date of termination, subject to Buyer's right to withhold payment for any Products or Services that do not conform to the requirements of this Agreement;
(c) Supplier shall promptly deliver to Buyer all Products, work-in-process, and materials for which Buyer has paid;
(d) Supplier shall promptly return to Buyer all Buyer Materials, Buyer Confidential Information, and other property of Buyer in Supplier's possession or control;
(e) Buyer shall promptly return to Supplier all Supplier Confidential Information in Buyer's possession or control, except as necessary for Buyer to exercise its rights under Section 12.2.2;
(f) Each Party shall promptly pay all undisputed amounts owed to the other Party; and
(g) Supplier shall provide transition assistance in accordance with Section 12.4.
12.2.2 The expiration or termination of this Agreement shall not affect any Purchase Orders that were issued prior to such expiration or termination and were not themselves terminated. Such Purchase Orders shall continue to be governed by the terms of this Agreement as if this Agreement had not expired or been terminated.
12.2.3 The expiration or termination of this Agreement shall not affect any rights or obligations that expressly or by implication are intended to survive expiration or termination, including but not limited to Sections 6 (Risk Allocation), 7 (Intellectual Property), 8 (Confidentiality), 10.3 (Audit Rights), 10.4 (Recall), 10.5 (Data Protection and Privacy), 12 (Termination and Dispute Resolution), 13 (Force Majeure), and 14 (Miscellaneous Provisions).
12.3 Dispute Resolution.
12.3.1 Negotiation. The Parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiation between executives who have authority to settle the dispute. Either Party may give the other Party written notice of any dispute not resolved in the normal course of business. Within [NUMBER] days after delivery of such notice, executives of both Parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to attempt to resolve the dispute. All reasonable requests for information made by one Party to the other shall be honored. All negotiations pursuant to this Section 12.3.1 are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence.
12.3.2 Mediation. If the dispute has not been resolved by negotiation within [NUMBER] days after delivery of the initial notice of negotiation, or if the Parties failed to meet within [NUMBER] days after delivery of such notice, the Parties shall endeavor to settle the dispute by mediation under the [SPECIFY MEDIATION RULES, e.g., CPR Mediation Procedure, JAMS Mediation Rules, etc.] then in effect. Unless otherwise agreed, the Parties shall select a mediator from the [SPECIFY PANEL, e.g., CPR Panels of Distinguished Neutrals, JAMS panel, etc.].
12.3.3 Arbitration. If the dispute has not been resolved by mediation within [NUMBER] days after the appointment of a mediator, or if the Parties failed to appoint a mediator within [NUMBER] days after delivery of the notice of mediation, the dispute shall be settled by binding arbitration administered by [SPECIFY ARBITRATION ORGANIZATION, e.g., the American Arbitration Association, JAMS, etc.] in accordance with its [SPECIFY ARBITRATION RULES] then in effect. The arbitration shall be conducted by [NUMBER] arbitrator(s) appointed in accordance with such rules. The arbitration shall be conducted in [CITY, STATE/COUNTRY]. The language of the arbitration shall be English. The arbitrator(s) shall have no authority to award punitive damages or any other damages excluded under this Agreement. The arbitration award shall be final and binding on the Parties and may be entered and enforced in any court having jurisdiction.
12.3.4 Injunctive Relief. Notwithstanding the foregoing, either Party may seek injunctive or other equitable relief in any court of competent jurisdiction to prevent or stop a breach of this Agreement, including but not limited to breaches of Section 7 (Intellectual Property) or Section 8 (Confidentiality), without first complying with the dispute resolution procedures set forth in this Section 12.3.
12.3.5 Governing Law. This Agreement and all disputes arising out of or relating to this Agreement shall be governed by and construed in accordance with the laws of the [STATE/COUNTRY], without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.
12.3.6 Venue. Subject to Sections 12.3.1 through 12.3.4, any legal action or proceeding arising out of or relating to this Agreement shall be brought exclusively in the [SPECIFY COURT AND LOCATION, e.g., state or federal courts located in (City, State)], and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such action or proceeding.
12.4 Transition Assistance.
12.4.1 Upon the expiration or termination of this Agreement for any reason, Supplier shall provide reasonable transition assistance to Buyer to facilitate an orderly transition to a new supplier or to Buyer's internal operations. Such transition assistance shall include, but not be limited to:
(a) Continuing to supply Products and perform Services in accordance with this Agreement for a period of up to [NUMBER] months after the effective date of expiration or termination, at Buyer's request and at the prices in effect immediately prior to expiration or termination;
(b) Providing Buyer with all information and documentation necessary to manufacture the Products or perform the Services, including but not limited to specifications, formulations, processes, procedures, and supplier information, to the extent such information and documentation is not Supplier's Confidential Information;
(c) Transferring to Buyer or its designee any Buyer-owned tooling, equipment, or materials in Supplier's possession or control;
(d) Assisting Buyer in identifying and qualifying alternative suppliers for components, materials, or services used in the manufacture of the Products or performance of the Services;
(e) Providing training to Buyer's personnel or the personnel of a new supplier regarding the manufacture of the Products or performance of the Services; and
(f) Providing such other assistance as reasonably requested by Buyer to ensure a smooth transition.
12.4.2 Buyer shall reimburse Supplier for its reasonable costs and expenses incurred in providing transition assistance under Section 12.4.1, except to the extent that this Agreement was terminated by Buyer for cause pursuant to Section 12.1.2 or 12.1.3.
13. FORCE MAJEURE
13.1 Force Majeure Events.
13.1.1 Neither Party shall be liable for any failure or delay in performing its obligations under this Agreement (other than obligations to make payments when due) to the extent such failure or delay is caused by circumstances beyond its reasonable control, including but not limited to acts of God, natural disasters, war, terrorism, riots, civil unrest, government action, labor strikes or lockouts, and power, telecommunication, or network failures (each, a "Force Majeure Event").
13.1.2 The following shall not be considered Force Majeure Events: (a) financial difficulties of a Party or its suppliers or Subcontractors; (b) changes in market conditions or economic hardship; (c) changes in applicable laws or regulations; or (d) any event that a Party could reasonably have been expected to take into account at the time this Agreement was entered into or that could have been avoided or overcome by a Party exercising reasonable diligence and foresight.
13.2 Force Majeure Procedures.
13.2.1 A Party affected by a Force Majeure Event shall:
(a) Promptly notify the other Party in writing of the nature, extent, and expected duration of the Force Majeure Event and its impact on the affected Party's ability to perform its obligations under this Agreement;
(b) Use commercially reasonable efforts to mitigate the effects of the Force Majeure Event, to continue performing its obligations under this Agreement to the extent possible, and to remedy its inability to perform as quickly as possible; and
(c) Provide regular updates to the other Party regarding its efforts to resume performance and the expected date of such resumption.
13.2.2 If a Force Majeure Event continues for more than [NUMBER] consecutive days, or for more than [NUMBER] days in the aggregate during any [NUMBER]-month period, the Party not affected by the Force Majeure Event may terminate this Agreement or any affected Purchase Order upon written notice to the affected Party.
13.2.3 If Supplier is affected by a Force Majeure Event, Buyer may, in addition to its other rights under this Agreement:
(a) Purchase substitute products or services from other sources during the period of Supplier's inability to perform and reduce its purchase obligations under this Agreement accordingly, without liability to Supplier;
(b) Require Supplier to allocate its available supply of Products among its customers, including Buyer, on a fair and equitable basis; and
(c) Require Supplier to deliver Products from its inventory to Buyer at the prices set forth in this Agreement.
14. MISCELLANEOUS PROVISIONS
14.1 Assignment and Subcontracting.
14.1.1 Neither Party may assign or transfer this Agreement, in whole or in part, without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed. Notwithstanding the foregoing, either Party may, without the consent of the other Party, assign or transfer this Agreement to: