FORM OF SUPPLY AGREEMENT by and between a ______________ as Supplier and _____________________, a _____________________, as Buyer Dated as of _______, 2010
by and between
_____________________,
a
______________
as Supplier
and
_____________________,
a _____________________,
a _____________________,
as Buyer
Dated as of _______,
2010
This SUPPLY AGREEMENT (this “Agreement”) is made as of _____________, 2010 by and
between _____________, a _____________ having its principal executive offices at
________________________ (“Supplier”), and _____________, a _____________, having
its principal executive offices at ________________________ (“Buyer”). Supplier and Buyer each may be referred to
herein as a “Party” and collectively, as the “Parties”.
WHEREAS, subject to the terms, conditions, commitments and undertakings
herein provided, Supplier is willing to manufacture and sell those products as
set forth on Exhibit A hereto (as the same may be modified from time
to time pursuant to the provisions hereof, the “Products”) to Buyer, and Buyer desires to purchase the
Products from Supplier, in such quantities as Buyer shall request , as provided
in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:
ARTICLE
I
DEFINITIONS
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings specified in this Article I:
“Affiliate” means, as applied to any Person, any other
Person that, directly or indirectly, controls, is controlled by, or is under
common control with that Person as of the date on which or at any time during
the period for when such determination is being made. For purposes of this
definition, “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
other interests, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Applicable Law” means any applicable law, statute, rule or
regulation of any Governmental
Authority, or any outstanding order, judgment, injunction, ruling or decree by
any Governmental Authority.
“Buyer” has the meaning set forth in the preamble of
this Agreement.
“Confidential Information” means all proprietary, design or operational
information, data or material including, without limitation: (a) specifications,
ideas and concepts for goods and services; (b) manufacturing specifications and
procedures; (c) design drawings and models; (d) materials and material
specifications; (e) quality assurance policies, procedures and specifications;
(f) customer, client, manufacturer and supplier information; (g) computer
software and derivatives thereof relating to design development or manufacture
of goods; (h) training materials and information; (i) inventions, devices, new
developments, methods and processes, whether patentable or unpatentable and
whether or not reduced to practice; (j) all other know-how, methodology,
procedures, techniques and Trade Secrets; (k) proprietary earnings reports and
forecasts; (l) proprietary macro-economic reports and forecasts; (m) proprietary
marketing, advertising and business plans, objectives and strategies; (n) proprietary general market evaluations and
surveys; (o) proprietary financing and credit-related information; (p) other
copyrightable or patented works; (q) the terms of this Agreement; and (r) all
similar and related information in whatever form; in each case, of one party
which has been disclosed by Supplier or members of its Group on the one hand, or
Buyer or members of its Group, on the other hand, in written, oral (including by
recording), electronic, or visual form to, or otherwise has come into the
possession of, the other Group.
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“Ex Works” has the meaning and usage assigned to such
words in the incoterms rules published by the International Chamber of Commerce.
“Firm Order” means Buyer’s non-cancelable purchase order
for Products to be purchased by Buyer from Supplier pursuant to this Agreement
for delivery.
“Forecast” means, with respect to any relevant period,
a good faith non-binding forecast, based on information available to Buyer at
the time of such forecast (which information, if reduced to writing, shall be
made available to Supplier upon reasonable request), of the Firm Order for each
Product that Buyer expects to deliver to Supplier for each calendar month during
such period.
“Governmental Authority” means any U.S. or non-U.S. federal, state,
local, foreign or international court, arbitration or mediation tribunal,
government, department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority.
“Group” means, with respect to any Person, each
Subsidiary of such Person and each other Person that is controlled directly or
indirectly by such Person.
“Intellectual
Property” means all domestic and foreign patents and patent applications,
together with any continuations, continuations-in-part or divisional
applications thereof, and all patents issuing thereon (including reissues,
renewals and re-examinations of the foregoing); design patents; invention
disclosures; mask works; all domestic and foreign copyrights, whether or not
registered, together with all copyright applications and registrations therefor;
all domain names, together with any registrations therefor and any goodwill
relating thereto; all domestic and foreign trademarks, service marks, trade
names, and trade dress, in each case together with any applications and
registrations therefor and all goodwill relating thereto; all Trade Secrets,
commercial and technical information, know-how, proprietary or Confidential
Information, including engineering, production and other designs, notebooks,
processes, drawings, specifications, formulae, and technology; computer and
electronic data processing programs and software (object and source code), data
bases and documentation thereof; all inventions (whether or not patented); all
utility models; all registered designs, certificates of invention and all other
intellectual property under the laws of any country throughout the
world.
“Last-Time Buy Order” has the meaning set forth in Section 4.5.
“Person” (whether or not initially capitalized) means
any corporation, limited liability company, partnership, firm, joint venture,
entity, natural person, trust, estate, unincorporated organization, association,
enterprise, government or political subdivision thereof, or Governmental
Authority.
“Product” has the meaning set forth in the preamble of
this Agreement.
“Product Warranty” has the meaning set forth in Section 6.1(a).
“Raw Materials Cost” means the direct cost of material used in a
finished Product, including the normal quantity of material wasted in the
production process, purchasing costs, inbound freight charges and any applicable
subcontractor charges.
“Six-Month Forecast” means a forward-looking Forecast for a
period of six consecutive calendar months, beginning on July 1 and January 1 of
each calendar year, or, if earlier with respect to any Product, the last day of
the Term for such Product.
“Subsidiary” of any Person means a corporation or other
organization whether incorporated or unincorporated of which at least a majority
of the securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such Person or by any one or more of its Subsidiaries, or
by such Person and one or more of its Subsidiaries; provided, however, that no Person that is not directly or
indirectly wholly-owned by any other Person shall be a Subsidiary of such other
Person unless such other Person controls, or has the right, power or ability to
control, that Person.
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“Supplier” has the meaning set forth in the preamble of
this Agreement.
“Supplier’s Other Manufacturing
Obligations” means the
manufacturing obligations and commitments of Supplier to Persons other than
Buyer, including Supplier’s Affiliates.
“Specifications” means, with respect to any Product, the
design, composition, dimensions, other physical characteristics, chemical
characteristics, packaging, unit count and trade dress of such Product.
“Term” has the meaning set forth in Section 7.1.
“Trade Secrets” means information, including a formula,
program, device, method, technique, process or other Confidential Information
that derives independent economic value, actual or potential, from not being
generally known to the public or to other Persons who can obtain economic value
from its disclosure or use and is the subject of efforts that are reasonable,
under the circumstances, to maintain its secrecy.
“Wholly-Owned Subsidiary” of a Person means a Subsidiary of that
Person substantially all of whose voting securities and outstanding equity
interest are owned either directly or indirectly by such Person or one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries.
The terms “herein”, “hereof”, “hereunder” and like terms, unless otherwise specified,
shall be deemed to refer to this Agreement in its entirety and shall not be
limited to any particular section or provision hereof. The term “including” as used herein shall be deemed to mean
“including, but not limited to.” The term “days” shall refer to calendar days unless
specified otherwise. References herein to “Articles”, “Sections” and “Exhibits” shall be deemed to mean Articles, Sections
of and Exhibits to this Agreement unless otherwise specified.
ARTICLE
II
PURCHASE AND SALE OF PRODUCTS
PURCHASE AND SALE OF PRODUCTS
SECTION 2.1 Agreement to Purchase and Sell
Products. (a) During the
Term, Supplier shall manufacture and sell to Buyer, and Buyer shall purchase and
accept from Supplier, such amounts of Products, as from time to time shall be
ordered by Buyer.
(b) All Products to be sold to Buyer pursuant to
this Agreement shall be manufactured by Supplier or an Affiliate of Supplier;
provided, however, that Supplier may subcontract the
manufacture of any Product to a manufacturer that is not an Affiliate of
Supplier with Buyer’s prior written consent, which consent shall not be
unreasonably withheld, provided that any such subcontracting shall not relieve
Supplier of its obligations hereunder.
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SECTION 2.2 Product Specifications. (a) Supplier shall manufacture all Products
according to the Specifications in effect as of the date of this Agreement, with
such changes or additions to the Specifications of the Products related thereto
as shall be requested by Buyer in accordance with this Section or as otherwise
agreed in writing by the Parties. All other Products shall be manufactured with
such Specifications as the Parties shall agree in writing.
(b) Buyer may request changed or additional
Specifications for any Product by delivering written notice thereof to Supplier
not less than one hundred twenty (120) days in advance of the first Firm Order
for such Product to be supplied with such changed or additional Specifications.
Notwithstanding the foregoing, if additional advance time would reasonably be
required in order to implement the manufacturing processes for production of a
Product with any changed or additional Specifications, and to commence
manufacture and delivery thereof, Supplier shall so notify Buyer, and Supplier
shall not be required to commence delivery of such Product until the passage of
such additional time.
(c) Supplier shall be required to accommodate any
change of, or additions to, the Specifications for any Product, if and only if (i) in Supplier’s good faith judgment, such
changed or additional Specifications would not require Supplier to violate good
manufacturing practice, (ii) the representation and warranty of Buyer deemed
made pursuant to Subsection (e) below is true and correct, and (iii) Buyer
agrees to reimburse Supplier for the incremental costs and expenses incurred by
Supplier in accommodating the changed or additional Specifications, including
the costs of acquiring any new machinery and tooling. For the avoidance of
doubt, such costs and expenses shall be payable by Buyer separately from the
cost of Products at such time or times as Supplier shall request.
(d) Supplier shall notify Buyer in writing within
thirty (30) days of its receipt of any request for changed or additional
Specifications (i) whether Supplier will honor such changed or additional
Specifications, (ii) if Supplier declines to honor such changed or additional
Specifications, the basis therefor and (iii) if applicable, the estimated costs
and expenses that Buyer will be required to reimburse Supplier in respect of the
requested changes or additions, as provided in Subsection (c) above. Buyer shall
notify Supplier in writing within fifteen (15) days after receiving notice of
any required reimbursement whether Buyer agrees to assume such reimbursement
obligation.
(e) By its request for any changed or additional
Specifications for any Product, Buyer shall be deemed to represent and warrant
to Supplier that the manufacture and sale of the Product incorporating Buyer’s
changed or additional Specifications, as a result of such incorporation, will
not and could not reasonably be expected to (i) violate or conflict with any
contract, agreement, arrangement or understanding to which Buyer and/or any of
its Affiliates is a party, including this Agreement and any other contract,
agreement, arrangement or understanding with Supplier and/or its Affiliates,
(ii) infringe on any trademark, service xxxx, copyright, patent, trade secret or
other intellectual property rights of any Person, or (iii) violate any
Applicable Law. Buyer shall indemnify and hold Supplier and its Affiliates
harmless (including with respect to reasonable attorneys’ fees and
disbursements) from any breach of this representation and warranty.
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SECTION 2.3 New Products. If Buyer shall request in writing that
Supplier manufacture and sell to Buyer an item that is not at the time a
Product, Supplier shall consider such request in good faith, giving due
consideration to Supplier’s available manufacturing capacity, Supplier’s Other
Manufacturing Obligations, existing know-how, technical feasibility, cost,
profitability and other relevant factors. Supplier shall inform Buyer within a
reasonable time of Supplier’s determination in principle whether to manufacture
such Product, and if Supplier has determined not to manufacture such Product,
the reasons therefor. If Supplier shall inform Buyer that it is willing in
principle to manufacture and sell such Product, Buyer and Supplier shall
negotiate in good faith with respect to the terms of such manufacture and sale,
including pricing and the Exhibits to this Agreement shall be modified
accordingly; provided, however, that neither Party shall be bound with
respect to the manufacture and sale of any such Product unless the Parties shall
have so agreed in writing.
SECTION 2.4 Supplier’s Supply
Obligations. Supplier
shall be obligated to manufacture and sell Products to Buyer, in accordance with
Buyer’s Firm Orders, to the extent of Supplier’s then existing manufacturing
capacity, taking into account Supplier’s Other Manufacturing Obligations;
provided, however, the Supplier shall give equal priority to
the orders of Buyer, on the one hand, and Supplier’s Other Manufacturing
Obligations, on the other.
SECTION 2.5 Product Changes. Supplier shall communicate any change in the
Specifications for any Product or its manufacture in accordance with Supplier’s
product change notification process. Buyer shall be deemed to have accepted such
change unless, within thirty (30) days after receipt of notice from Supplier,
Buyer informs Supplier that such change is not acceptable. If Buyer informs
Supplier that such change is not acceptable, Supplier may by notice to Buyer
either (x) continue to supply the Product in accordance with the original
Specifications and manufacturing procedures or (y) terminate this Agreement with
respect to such Product on a date specified by Supplier in a notice of
termination, which date shall not be earlier than the earlier of (I) one (1)
year from the date of Buyer’s information that it does not accept the change
proposed by Supplier and (II) if such notice of termination is delivered more
than ninety (90) days before the end of the then current Term, the end of such
Term; subject to the right of the Buyer to submit a Last-Time Buy Order in
accordance with Section 4.5.
SECTION 2.6 Product Discontinuation. At any time Supplier may notify Buyer that
Supplier is discontinuing the manufacture and sale of a Product. Such
discontinuation shall take effect on a date specified by Supplier in a notice of
discontinuation, which date shall not be earlier than the earlier of (I) one (1)
year from the date of the notice of discontinuation and (II) if such notice of
discontinuation is delivered more than ninety (90) days before the end of the
then current Term, the end of such Term; subject to the right of the Buyer to
submit a Last-Time Buy Order in accordance with Section 4.5.
SECTION 2.7 Consultation and Support. At either Party’s reasonable request, the
Parties shall meet and discuss the nature, quality and level of supply services
contemplated by this Agreement. In addition, Supplier will make available on a
commercially reasonable basis and at commercially reasonable times qualified
personnel to provide knowledgeable support service with respect to the Products.
The Parties shall negotiate in good faith with respect to any fees and other
charges incurred by Supplier in providing other than routine product support.
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ARTICLE
III
FORECASTS
FORECASTS
SECTION 3.1 Forecasts. (a) As soon as possible, but in no event
later than __________, 2010,
Buyer shall provide to Supplier an initial Forecast for the period beginning
____________, 2010 and ending on December 31, 2010. Beginning on December 1,
2010, and thereafter, on May 31 and December 1 of each calendar year, Buyer
shall provide to Supplier a Six-Month Forecast for the 6-month period beginning
on the immediately following July 1 and January 1, respectively.
(b) If it is commercially impracticable for Buyer
to deliver a Six-Month Forecast for a particular Product, Buyer shall deliver
Forecasts to Supplier at such intervals and for such periods as reasonable under
the circumstances, and Supplier shall in good faith consider such Forecasts
delivered by Buyer.
(c) Supplier shall use all Forecasts delivered by
Buyer under this Agreement for capacity and raw material planning purposes only,
and such Forecasts will not constitute a commitment of any type by Buyer to
purchase any Product.
SECTION 3.2 Forecasts in Excess of
Capacity. Upon receipt of
each Forecast, Supplier shall determine whether it will have the capacity to
manufacture and sell to Buyer the Products in the forecasted amounts. If
Supplier determines that it will not have the capacity to manufacture and
deliver any Product to Buyer as forecasted, Supplier shall so notify Buyer as
promptly as practicable. Supplier and Buyer shall thereafter negotiate in good
faith in order to match Supplier’s manufacturing capacity with Buyer’s
requirements for the specified Product, such as by advancing or deferring the
delivery of the Product to other periods. In the event that Supplier and Buyer
shall agree to accommodate Buyer’s forecasted requirements in a manner that will
require the expenditure by Supplier of unbudgeted costs and expenses in addition
to the costs and expenses that Supplier would otherwise be required to expend in
order to fulfill its obligations under this Agreement, Buyer shall be obligated
to reimburse Supplier for such costs and expenses as have actually been expended
by Supplier, notwithstanding that the manufacture and sale of Products in
accordance with the Firm Orders subsequently delivered by Buyer for the relevant
periods do not require such expenditure.
SECTION 3.3 Firm Orders in Excess of
Forecasts. In the event
that the Firm Order for any Product shall exceed the Forecast contained in the
most recent prior Forecast for such Product (as such Forecast may have been
modified by agreement of the Parties in the manner contemplated in Section 3.2; such excess being referred to as the
“Excess Order”), Supplier shall notify Buyer, as promptly
as reasonably practicable after receipt of such Firm Order, whether Supplier has
sufficient available capacity to accommodate the Excess Order, taking into
consideration Supplier’s manufacturing capacity for such Product and Supplier’s
Other Manufacturing Obligations. If Supplier shall not have sufficient available
capacity to accommodate the Excess Order, Supplier and Buyer shall negotiate in
good faith in order to match Supplier’s available manufacturing capacity with
Buyer’s requirements for the specified Product, such as by advancing or
deferring the delivery of the Product to other periods.
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ARTICLE
IV
ORDERS AND PAYMENT
ORDERS AND PAYMENT
SECTION 4.1 Purchase Orders. (a) Buyer may place a Firm Order for the
Products with Supplier at any time and from time to time.
(b) Each Firm Order shall specify (i) number of
units of the Product to be purchased and (ii) the requested delivery date,
provided that Buyer shall not request a delivery date with a lead delivery time
that is less than the minimum time specified with respect to the applicable
Product in Exhibit A, unless otherwise agreed upon by the Parties.
Supplier agrees to provide Buyer prompt notice if it knows it cannot meet a
requested delivery date.
(c) If Buyer requires a Product on an
emergency basis and so informs Supplier, and Supplier has the Product available
in its uncommitted inventory, Supplier agrees to use reasonable commercial
efforts to fill the emergency order as promptly as practicable. Buyer agrees to
pay reasonable incremental expenses related to any emergency order.
SECTION 4.2 Shipment.
(a) The Products sold to Buyer shall be deemed
delivered upon tender of the product Ex Works Supplier’s factory unless
otherwise agreed by the Parties.
(b) Supplier shall package all Products so as to
protect them from loss or damage during shipment, in conformity with good
commercial practice, the Specifications and Applicable Law. Buyer shall be
responsible, at its own cost and expense, for the shipment (including, among
other fees, costs and expenses, transit and casualty insurance and third party
fees) of all processed materials by Buyer. Supplier shall cooperate with Buyer
in assembling and coordinating shipments, as reasonably requested by Buyer.
(c) For the avoidance of doubt, title to and risk
of loss or damage will pass to Buyer upon Buyer’s pick up for transfer of the
Products ordered.
SECTION 4.3 Prices. Pricing for the Products shall be as set
forth on Exhibit A, as such Exhibit may be modified from time to
time by agreement of the Parties. At least thirty (30) days prior to the
beginning of each calendar year, the parties shall negotiate in good faith
changes to the pricing of the Products to be applicable in the ensuing year.
Such pricing shall take into account changes in the cost of manufacturing the
Products, including labor, manufacturing, utility and other direct costs, and
other ascertainable market inputs. If the Parties cannot in good faith agree on
pricing for the Products, until such time as the Parties do so agree, Supplier
shall have no obligation to honor any Firm Orders submitted by Buyer to the
extent that such Firm Orders are placed following expiration of the then current
calendar year.
SECTION 4.4 Payment Terms. Unless otherwise agreed to by the Parties in
writing, Buyer shall make payment separately for each Firm Order. Buyer shall
pay the net amount of all invoice amounts within sixty (60) days of the date of
Supplier’s invoice unless the terms of Supplier’s invoice permits later payment
or allows for prepayment with a discount. Invoices shall not be sent earlier
than the date on which the Products related thereto are delivered to Buyer.
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SECTION 4.5 Last-Time Buy Order.
(a) Buyer shall have a right to place a written
last-time Firm Order for a Product (a “Last-Time Buy Order”) if (i) Supplier delivers to Buyer notice of
its intention not to renew the Term pursuant to Section 7.2; (ii) Supplier terminates this Agreement in
respect of such Product in connection with Buyer’s choice not to accept a change
in such Product under Section 2.5; (iii) Supplier delivers to Buyer a notice of
discontinuation of such Product; or (iv) Buyer terminates this Agreement in
connection with a material breach by Supplier pursuant to Section 7.3. The right of the Buyer to submit a Last-Time
Buy Order shall entitle Buyer to purchase the Products at the price in effect
for the products as of the time of Buyer’s exercise such right.
(b) A Last-Time Buy Order shall specify (i) number
of units of the Product to be purchased and (ii) the requested delivery date or
dates for such units. If Supplier informs Buyer that it cannot honor the
requested delivery dates because of capacity restraints or otherwise, the
Parties shall negotiate in good faith with respect to delivery dates mutually
acceptable to Supplier and Buyer.
(c) The Parties hereby agree to use commercially
reasonable efforts to coordinate forecasting and ordering during the period
between the date the Last-Time Buy Order is delivered to Supplier and the final
delivery date to allow for regular supply of Products during such
period.
ARTICLE
V
CONFIDENTIALITY
CONFIDENTIALITY
SECTION 5.1 Confidentiality. Each Party acknowledges that Confidential
Information of the other Party and/or its Affiliates from time to time may be
furnished to the first Party and/or its Affiliates in connection with the
exercise by the Parties of their respective rights and the fulfillment of their
respective obligations under this Agreement. Each Party acknowledges that its
access to the Confidential Information of the other Party is being granted for
the purpose of exercising and protecting the first Party’s rights and interests
under this Agreement (the “Permitted Purposes”) and for no other purposes.
SECTION 5.2 Permitted Disclosure. Each Party agrees that its use of the
Confidential Information of the other Party will be solely for the Permitted
Purposes and that such information will be kept confidential and disclosed to no
other Person; provided, that each Party may disclose, or may permit
disclosure of, Confidential Information (i) to its respective auditors,
attorneys, financial advisors, bankers and other appropriate consultants and
advisors who have a need to know such Confidential Information in furtherance of
effecting the Permitted Purposes, who have been informed of the confidential
nature of such information and who have been directed, and who shall have
agreed, to treat such information confidentially and to use such information
only for the Permitted Purposes and in respect of whose failure to comply with
such obligations, such Party will be responsible, (ii) if such Party or any of
the members of such Party’s respective Group is compelled to disclose any such
information by judicial or administrative process or, in the opinion of
independent legal counsel, by other requirements of Applicable Law, (iii) if any
such information is or becomes generally available to the public other than as a
result of a disclosure in violation of this Agreement or (iv) if such
information was or becomes available to
either Party or any member of its respective Group on a non-confidential basis
and from a source (other than the other Party or any Affiliate, director,
officer, employee, agent, consultant, advisor and other representative of such
Party) that is not known after actual inquiry to be bound by a confidentiality
obligation. Notwithstanding the foregoing, in the event that any demand or
request for disclosure of Confidential Information is made pursuant to clause
(ii) above, the first Party shall promptly notify the other of the existence of
such request or demand and shall provide the other a reasonable opportunity to
seek an appropriate confidentiality agreement, protective order or other remedy
at the reasonable cost and expense of the disclosing party and which both
Parties will cooperate in obtaining. In the event that such appropriate
protective order or other remedy is not obtained, the Party whose Confidential
Information is required to be disclosed shall, or shall cause to be, furnished,
only that portion of the Confidential Information that is legally required to be
disclosed.
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SECTION 5.3 Standard of Care. Notwithstanding anything herein to the
contrary, each Party and the members of its respective Group, shall be deemed to
have satisfied their obligations hereunder with respect to Confidential
Information if they exercise the same degree of care (but no less than a
reasonable degree of care) as they take to preserve confidentiality for their
own similar information.
SECTION 5.4 General. (a) Each Party shall be entitled to obtain,
without posting any bond and without proof of actual damages, a restraining
order, injunction, specific performance or other form of equitable or
extraordinary relief for breach of the provisions of this Article V by the other Party, in addition to all other
remedies available at law or in equity. The Parties further agree that no
failure or delay by a Party in exercising any right, power or privilege under
this Article V will operate as a waiver thereof, nor will any single
or partial exercise preclude any other or further exercise of any right, power
or privilege.
(b) Each Party shall be entitled, from time to
time, to receive from the other Party reasonable assurances and verification of
compliance with the provisions of this Article V.
(c) The provisions of this Article V shall survive any termination or expiration
of this Agreement, in whole or in part, or the expiration or termination of the
Term.
ARTICLE
VI
PRODUCT WARRANTY; LIMITATION OF LIABILITY
PRODUCT WARRANTY; LIMITATION OF LIABILITY
SECTION 6.1 Product Warranty; Merchantability
Warranty. Supplier
warrants to Buyer that the Products shall, at the time of delivery to Buyer in
accordance with Section 4.3: (i) conform to the Specifications therefor,
as provided in Section 2.2; (ii) be free from material defects; and
(iii) be manufactured in accordance with good manufacturing practice and
Applicable Law (such warranty being referred to as the “Product Warranty”).
EXCEPT AS SPECIFICALLY PROVIDED IN
THIS AGREEMENT, NO WARRANTIES,
OTHER THAN THE PRODUCT WARRANTY, ARE EXPRESSED OR IMPLIED IN RESPECT OF THE
PRODUCTS, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
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SECTION 6.2 Defective or Non-Conforming
Products. (a) Claims by
Buyer relating to the quantity of or damage to any Product or the failure of any
Product to conform to its Specifications must be made within one (1) year of
receipt of such Product and must be in writing, specifying in reasonable detail
the nature and basis of the claim and citing relevant control or lot numbers or
other information to enable identification of the Product in question.
Supplier’s liability for damages to Buyer for any such claim shall be limited to
a refund for the price of the defective Product plus shipping costs or, at
Buyer’s option, prompt replacement thereof with Product that complies with the
Product Warranty. Such refund and shipping costs or a replacement shall
constitute Supplier’s sole and exclusive liability for such claims. For the
avoidance of doubt, nothing shall limit the obligations of Supplier to Buyer in
respect of third party claims against Buyer arising from the failure of any
Product to conform to its Specifications.
(b) Any notifications to either Party pursuant to
this Section 6.2 shall be subject to the confidentiality
provisions of Article V above.
SECTION 6.3 Indemnification. (a) Subject to Section 6.4, Supplier shall indemnify and hold Buyer
harmless from and against any damage or expense, including reasonable attorney’s
fees and disbursements, arising out of any third party claim for death, injury
or damage to property resulting from (i) Supplier’s breach of this Agreement;
(ii) any claim that a Product purchased from Supplier infringes any intellectual
property right of a third party; or (iii) any taxes imposed on the supply of the
Products other than taxes on the income of Buyer.
(b) Buyer shall indemnify and hold harmless
Supplier from and against any damage or expense, including reasonable attorneys’
fees and disbursements, arising out of any third party claim for death, injury
or damage to property resulting from use of any of the Products based upon (i)
Buyer’s breach of this Agreement; or (ii) any change in condition of the
Products caused by Buyer other than any change in Specifications requested by
Supplier and deemed accepted by Buyer under Section 2.5.
(c) Any Party seeking indemnification pursuant to
this Section 6.3 shall promptly notify the other Party of the
claim as to which indemnification is sought, shall afford the other Party, at
the other Party’s sole expense, the opportunity to defend or settle the claim
(in which case the indemnifying Party shall not be responsible for the
attorneys’ fees of the indemnified Party with respect such claim) and shall
cooperate to the extent reasonably requested by the other Party in the
investigation and defense of such claim; provided, however, that any settlement of any such claim that
would adversely affect the rights of the indemnified Party shall require the
written approval of such indemnified Party; and provided further that an indemnified Party shall not settle
any such claim without the written approval of the indemnifying Party.
(d) The foregoing indemnification obligations
shall survive any termination or expiration of this Agreement, in whole or in
part, or the expiration or termination of the Term.
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SECTION 6.4 Limitation of Liability. In no event shall any Party be liable for
any special, consequential, indirect, collateral, incidental or punitive damages
or lost profits or failure to realize expected savings or other commercial or
economic loss of any kind, arising out of any breach of this Agreement,
including breach of the Product Warranty, or any other obligations of any Party
hereunder, or any use of the Products, and each Party hereby knowingly and
expressly waives any claims or
rights with respect thereto; provided, however, that in the event a Party is required to pay
to a third-party claimant any special, consequential, indirect, collateral,
incidental or punitive damages or lost profits or failure to realize expected
savings or other commercial or economic loss on any claim with respect to which
such Party is indemnified by the other Party pursuant to this Agreement, such
Party shall be entitled to indemnification from the other Party with respect to
such third-party special, consequential, indirect, collateral, incidental or
punitive damages or lost profits or failure to realize expected savings or other
commercial or economic loss to the extent resulting from the indemnifiable acts
or omissions of the other Party.
SECTION 6.5 Insurance. Each of the Parties shall maintain general
liability insurance covering their activities under this Agreement in accordance
with prudent and customary commercial practices, in such amounts as shall be
agreed upon from time to time pay the Parties.
ARTICLE
VII
TERM OF AGREEMENT; RENEWAL TERM; TERMINATION
TERM OF AGREEMENT; RENEWAL TERM; TERMINATION
SECTION 7.1 Term of Agreement. Unless earlier terminated pursuant to
Section 7.3 or renewed pursuant to Section 7.2 with respect to any Product, this Agreement
shall commence on the date hereof and shall continue in effect until December
31, 2013 (such period, as it may be terminated or extended, being referred to as
the “Term”).
SECTION 7.2 Renewal. At any expiration of the Term, this
Agreement shall renew automatically for additional successive one-year periods,
unless a notice of intention not to renew is delivered by one Party to the other
Party no later than ninety (90) days prior to the end of the Term then in
effect.
SECTION 7.3 Termination for Breach. Either Party may terminate this Agreement
after thirty (30) days’ prior written notice, if the other Party is in material
breach of a material obligation of such Party under this Agreement; provided, however, that a Party shall not terminate this
Agreement for breach pursuant to this Section 7.3 so long as such breach is capable of cure and
the breaching Party is diligently proceeding to cure such breach.
SECTION 7.4 Rights Upon Expiration or
Termination. Following the
expiration or termination of this Agreement, all further rights and obligations
of the Parties under this Agreement shall terminate. Notwithstanding the
foregoing, the expiration or termination of this Agreement shall not affect the
rights and obligations of the Parties arising prior to such expiration or
termination; and provided further that the Parties shall not be relieved of (i)
their respective obligations to pay monies due or which become due as of or
subsequent to the date of expiration or termination, and (ii) any other
respective obligations under this Agreement which specifically survive or are to
be performed after the date of such expiration or termination, including the
provisions of Sections 5.1 and 6.3. Any Firm Order, including a Last-Time Buy
Order, submitted prior to the expiration or termination of this Agreement shall
be filled by Supplier pursuant to the terms hereof even if the delivery date is
after expiration or termination.
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ARTICLE
VIII
DISPUTE RESOLUTION
DISPUTE RESOLUTION
SECTION 8.1 Agreement to Resolve
Disputes. The procedures
for discussion, negotiation and dispute resolution set forth in this
Article VIII shall apply to all disputes, controversies or
claims (whether sounding in contract, tort or otherwise) that may arise out of
or relate to or arise under or in connection with this Agreement or the
transactions contemplated hereby (including all actions taken in furtherance of
the transactions contemplated hereby on or prior to the date hereof), or the
commercial or economic relationship of the parties relating hereto or thereto,
between or among any member of one Party’s Group on the one hand and the other
Party’s Group on the other hand. Each party agrees on behalf of itself and each
member of its respective Group that the procedures set forth in this
Article VIII shall be the sole and exclusive remedy in
connection with any dispute, controversy or claim relating to any of the
foregoing matters and irrevocably waives any right to commence any action in or
before any Governmental Authority, except as otherwise required by Applicable
Law.
SECTION 8.2 Dispute Resolution;
Mediation.
(a) Either Party may commence the dispute
resolution process of this Section 8.2 by giving the other party written notice (a
“Dispute Notice”) of any controversy, claim or dispute of
whatever nature arising out of or relating to or in connection with this
Agreement or the breach, termination, enforceability or validity thereof (a
“Dispute”) which has not been resolved in the normal
course of business. The parties shall attempt in good faith to resolve any
Dispute by negotiation between executives of each Party (“Senior Party
Representatives”) who have
authority to settle the Dispute and, unless discussions between the Parties are
already at a senior management level, who are at a higher level of management
than the Persons who have direct responsibility for the administration of this
Agreement. Within fifteen (15) days after delivery of the Dispute Notice, the
receiving Party shall submit to the other a written response (the “Response”). The Dispute Notice and the Response shall
include (i) a statement setting forth the position of the Party giving such
notice and a summary of arguments supporting such position and (ii) the name and
title of such Party’s Senior Party Representative and any other Persons who will
accompany the Senior Party Representative at the meeting at which the Parties
will attempt to settle the Dispute. Within thirty (30) days after the delivery
of the Dispute Notice, the Senior Party Representatives 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. The Parties shall
cooperate in good faith with respect to any reasonable requests for exchanges of
Information regarding the Dispute or a Response thereto.
(b) If the Dispute has not been resolved within
sixty (60) days after delivery of the Dispute Notice, or if the Parties fail to
meet within thirty (30) days after delivery of the Dispute Notice as hereinabove
provided, the Parties shall make a good faith attempt to settle the Dispute by
mediation pursuant to the provisions of this Section 8.2 before resorting to arbitration contemplated
by Section 8.3 or any other dispute resolution procedure
that may be agreed by the Parties.
(c) All negotiations, conferences and discussions
pursuant to this Section 8.2 shall be confidential and shall be treated as
compromise and settlement negotiations. Nothing said or disclosed, nor any document produced, in the
course of such negotiations, conferences and discussions that is not otherwise
independently discoverable shall be offered or received as evidence or used for
impeachment or for any other purpose in any current or future arbitration.
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(d) unless the Parties agree otherwise, the
mediation shall be conducted in accordance with the CPR Institute for Dispute
Resolution Model Procedure for Mediation of Business Disputes in effect on the
date of this Agreement by a mediator mutually selected by the Parties.
(e) Within thirty (30) days after the mediator has
been selected as provided above, both Parties and their respective attorneys
shall meet with the mediator for one (1) mediation session, it being agreed that
each Party representative attending such mediation session shall be a Senior
Party Representative with authority to settle the Dispute. If the Dispute cannot
be settled at such mediation session or at any mutually agreed continuation
thereof, either Party may give the other and the mediator a written notice
declaring the mediation process at an end.
(f) Costs of the mediation shall be borne equally
by the parties involved in the matter, except that each Party shall be
responsible for its own expenses.
(g) Any Dispute regarding the following matters is
not required to be negotiated or mediated prior to seeking relief from an
arbitrator or, if applicable, from a court pursuant to Section 9.15: (i) breach of any obligation of
confidentiality or waiver of privilege; and (ii) any other claim where interim
relief is sought to prevent serious and irreparable injury to one of the
Parties. However, the parties to the Dispute shall make a good faith effort to
negotiate and mediate such Dispute, according to the above procedures, while
such arbitration is pending.
SECTION 8.3 Arbitration.
(a) Subject to Section 8.3(b), if for any reason a Dispute is not resolved
within one hundred eighty (180) days from delivery of the Dispute Notice in
accordance with the dispute resolution process described in Section 8.2, the Parties agree that such Dispute shall be
settled by binding arbitration before a single arbitrator under the auspices of
the American Arbitration Association (“AAA”) in Philadelphia, Pennsylvania pursuant to
the Commercial Rules of the AAA. The arbitrator selected to resolve the Dispute
shall be bound exclusively by the laws of the State of New York without regard
to its choice of law rules. Any decisions of award of the arbitrator will be
final and binding upon the parties and may be entered as a judgment by the
parties. Any rights to appeal or review such award by any court or tribunal are
hereby waived to the extent permitted by Applicable Law.
(b) Costs of the arbitration shall be borne
equally by the parties involved in the matter, except that each Party shall be
responsible for its own expenses, except as otherwise determined by the
arbitrator.
(c) The Parties agree to comply and cause the
members of their applicable Group to comply with any award made in any
arbitration proceeding pursuant to this Section 8.3, and agree to enforcement of or entry of
judgment upon such award in any court of competent jurisdiction, including any
federal or state court located in Philadelphia, Pennsylvania or the City of New
York, Borough of Manhattan. The arbitrator shall be entitled to award any remedy
in such proceedings, including monetary damages, specific performance and all
other forms of legal and equitable
relief; provided, however, that the arbitrator shall not be entitled to
award punitive, exemplary, treble or any other form of non-compensatory monetary
damages unless in connection with indemnification for a Third Party Claim, to
the extent of such claim.
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SECTION 8.4 Continuity of Service and
Performance. Unless
otherwise agreed in writing, the Parties will continue to provide service and
honor all other commitments under this Agreement during the course of dispute
resolution pursuant to the provisions of this Article VIII with respect to all matters not subject to
such Dispute.
SECTION 8.5 Limitation of Liability. The provisions of Section 6.2, this Article VIII and Section 9.16 shall be the Parties’ sole recourse for any
breach hereof.
ARTICLE
IX
MISCELLANEOUS
MISCELLANEOUS
SECTION 9.1 Assignment. This Agreement and the rights and
obligations of a Party hereunder shall be assignable or delegable, in whole or
in part, (i) by Supplier without the consent of Buyer, to a Wholly-Owned
Subsidiary of a Party that succeeds to the conduct of the foil resistor business
responsible for supplying the Products; (ii) by Buyer without the consent of
Supplier, to a Wholly-Owned Subsidiary of Buyer; or (iii) by either Party, to
any Person who is not a Wholly-Owned Subsidiary of a Party only with
the prior written consent of the other Party; provided, however, that no such assignment shall relieve the
assigning Party of liability for its obligations hereunder. The following
actions shall not be deemed an assignment of this Agreement: (1) assignment or
transfer of the stock of a Party, including by way of a merger, consolidation,
or other form of reorganization in which outstanding shares of a Party are
exchanged for securities, or (2) any transaction effected primarily for the
purpose of (A) changing a Party’s state of incorporation or (B) reorganizing a
Party into a holding company structure such that, as a result of any such
transaction, such Party becomes a Wholly-Owned Subsidiary of a holding company
owned by the holders of such Party’s securities immediately prior to such
transaction. Any attempted assignment other than as provided herein shall be
void. The provisions of this Agreement shall be binding upon, and shall inure to
the benefit of, the successors and permitted assigns of the
Parties.
SECTION 9.2 Force Majeure. The Parties shall not be liable for the
failure or delay in performing any obligation under this Agreement (except
pursuant to Section 7.4) if and to the extent such failure or delay
is due to (i) acts of God; (ii) weather, fire or explosion; (iii) war, invasion,
riot or other civil unrest; (iv) governmental laws, orders, restrictions,
actions, embargoes or blockages; (v) action by any regulatory authority which
prohibits the manufacture, sale or distribution of the Products, except to the
extent due to Supplier’s breach of its obligations hereunder; (vi) regional,
national or foreign emergency; (vii) injunction, strikes, lockouts, labor
trouble or other industrial disturbances; (viii) shortage of adequate fuel,
power, materials, or transportation facilities; or (ix) any other event which is
beyond the reasonable control of the affected Party; provided, however, that the Party affected shall promptly
notify the other Party of the force majeure condition and shall exert its
reasonable commercial efforts to eliminate, cure or overcome any such causes and
to resume performance of its obligations as soon as possible.
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SECTION 9.3 Intellectual Property. All Intellectual Property owned or
created by a Party shall remain its sole and exclusive property, and the other
Party shall not acquire any rights therein by reason of this Agreement.
SECTION 9.4 Entire Agreement. This Agreement and the Exhibits hereto
constitute the entire agreement between the Parties with respect to the subject
matter hereof and thereof and supersede all previous agreements, negotiations,
discussions, understandings, writings, commitments and conversations between the
parties with respect to such subject matter. No agreements or understandings
exist between the parties other than those set forth or referred to herein or
therein. If any provision of this Agreement or the application thereof to any
Party or circumstance shall be declared void, illegal or unenforceable, the
remainder of this Agreement shall be valid and enforceable to the extent
permitted by Applicable Law. In such event, the Parties shall use their best
efforts to replace the invalid or unenforceable provision with a provision that,
to the extent permitted by Applicable Law, achieves the purposes intended under
the invalid or unenforceable provision.
SECTION 9.5 Governing Law. This Agreement and the legal relations
between the parties shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the conflict of laws rules
thereof to the extent such rules would require the application of the law of
another jurisdiction.
SECTION 9.6 Consent to Jurisdiction. Subject to the provisions of Article VIII, each of the Parties irrevocably submits to
the jurisdiction of the federal and state courts located in Philadelphia,
Pennsylvania and the City of New York, Borough of Manhattan for the purposes of
any suit, action or other proceeding to compel arbitration, for the enforcement
of any arbitration award or for specific performance or other equitable relief
pursuant to Section 9.16. Each of the parties further agrees that
service of process, summons or other document by U.S. registered mail to such
parties address as provided in Section 9.10 shall be effective service of process for any
action, suit or other proceeding with respect to any matters for which it has
submitted to jurisdiction pursuant to this Section 9.6. Each of the parties irrevocably waives any
objection to venue in the federal and state courts located in Philadelphia,
Pennsylvania and the City of New York, Borough of Manhattan of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby for which it has submitted to jurisdiction pursuant to this Section 9.6, and waives any claim that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient
forum.
SECTION 9.7 Independent Contractor. Nothing contained in this Agreement shall
constitute a Party as a partner, employee or agent of the other Party, nor shall
any Party hold itself out as such. Neither Party shall have the right or
authority to incur, assume or create, in writing or otherwise, any warranty,
liability or other obligation of any kind, express or implied, in the name or on
behalf of the other Party, and each Party is and shall remain an independent
contractor, responsible for its own actions. Except as otherwise explicitly
provided herein, each Party shall be responsible for its own expenses incidental
to its performance of this Agreement.
SECTION 9.8 Set-Off. The obligation of Buyer to pay the purchase
price for Products shall be unconditional, except as provided in this Agreement,
and shall not be subject to any defense,
setoff, counterclaim or similar right against Supplier or any of its Affiliates
that could be asserted by Buyer or any of its Affiliates under any other
contract, agreement, arrangement or understanding or otherwise under Applicable
Law.
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SECTION 9.9 Waivers. No claim or right arising out of or relating
to a breach of any provision of this Agreement can be discharged in whole or in
part by a waiver or renunciation of the claim or right unless the waiver or
renunciation is supported by consideration and is in writing signed by the
aggrieved Party. Any failure by any Party to enforce at any time any provision
under this Agreement shall not be considered a waiver of that Party’s right
thereafter to enforce each and every provision of this Agreement.
SECTION 9.10 Notices. All notices, demands and other
communications required to be given to a Party hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered, sent by a
nationally recognized overnight courier, transmitted by facsimile, or mailed by
registered or certified mail (postage prepaid, return receipt requested) to such
Party at the relevant street address or facsimile number set forth below (or at
such other street address or facsimile number as such Party may designate from
time to time by written notice in accordance with this provision):
| If to Supplier, to: | ||
| [____________________] | ||
| [____________________] | ||
| Attention: | [____________________] | |
| Telephone: | [____________________] | |
| Facsimile: | [____________________] | |
| with a copy to: | ||
| [____________________] | ||
| [____________________] | ||
| Attention: | [____________________] | |
| Telephone: | [____________________] | |
| Facsimile: | [____________________] | |
|
If to Buyer, to:
|
||
| [____________________] | ||
| [____________________] | ||
| Attention: | [____________________] | |
| Telephone: | [____________________] | |
| Facsimile: | [____________________] | |
|
with a copy to:
|
||
| [____________________] | ||
| [____________________] | ||
| Attention: | [____________________] | |
| Telephone: | [____________________] | |
| Facsimile: | [____________________] | |
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Any notice, demand or
other communication hereunder shall be deemed given upon the first to occur of:
(i) the fifth (5th) day after deposit thereof, postage prepaid
and addressed correctly, in a receptacle under the control of the United States
Postal Service; (ii) transmittal by facsimile transmission to a receiver or
other device under the control of the party to whom notice is being given; or
(iii) actual delivery to or receipt by the party to whom notice is being given
or an employee or agent thereof.
SECTION 9.11 Headings. The headings contained herein are included
for convenience of reference only and do not constitute a part of this
Agreement.
SECTION 9.12 Counterparts. This Agreement may be executed in one or
more counterparts, each of which when so executed and delivered or transmitted
by facsimile, e-mail or other electronic means, shall be deemed to be an
original and all of which taken together shall constitute but one and the same
instrument. A facsimile or electronic signature is deemed an original signature
for all purposes under this Agreement.
SECTION 9.13 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination, the Parties shall
negotiate in good faith in an effort to agree upon such a suitable and equitable
provision to effect the original intent of the Parties.
SECTION 9.14 Waiver of Default. (a) Any term or provision of this Agreement
may be waived, or the time for its performance may be extended, by the party or
the parties entitled to the benefit thereof. Any such waiver shall be validly
and sufficiently given for the purposes of this Agreement if, as to any party,
it is in writing signed by an authorized representative of such party.
(b) Waiver by any party of any default by the
other party of any provision of this Agreement shall not be construed to be a
waiver by the waiving party of any subsequent or other default, nor shall it in
any way affect the validity of this Agreement or any party hereof or prejudice
the rights of the other party thereafter to enforce each and ever such
provision. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
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SECTION 9.15 Amendments. No provisions of this Agreement shall be
deemed amended, modified or supplemented by any Party, unless such amendment,
supplement or modification is in writing and signed by the authorized
representative of the Party against whom it is sought to enforce such amendment,
supplement or modification.
SECTION 9.16 Specific Performance. The Parties agree that the remedy at law for
any breach of this Agreement may be inadequate, and that, as between Supplier
and Buyer, any Party by whom this Agreement is enforceable shall be entitled to
seek temporary, preliminary or permanent injunctive or other equitable relief
with respect to the specific enforcement or performance of this Agreement. Such
Party may, in its sole discretion, apply to a court of competent jurisdiction
for such injunctive or other equitable relief as such court may deem just and
proper in order to enforce this Agreement as between Supplier and Buyer, or the
members of their respective Groups, or prevent any violation hereof, and, to the
extent permitted by Applicable Law, as between Supplier and Buyer, each Party
waives any objection to the imposition of such relief.
SECTION 9.17 Waiver of jury trial. Subject to Article VIII, each of the Parties
hereby waives to the fullest extent permitted by Applicable Law any right it may
have to a trial by jury with respect to any court proceeding directly or
indirectly arising out of and permitted under or in connection with this
Agreement or the transactions contemplated hereby. Each of the Parties hereby
(a) certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it has been induced to enter into this agreement and the transactions
contemplated by this agreement, as applicable, by, among other things, the
mutual waivers and certifications in this Section 9.17.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their respective duly authorized representatives as of the date first written
above.
| SUPPLIER: | |
| By: | |
| Name: | |
| Title: | |
| BUYER: | |
| By: | |
| Name: | |
| Title: | |
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