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Link2 Manufacturing Inc. agrees to use reasonable commercial efforts to perform the work pursuant to following purchase orders or changes thereto issued by the Customer and accepted by Link2 Manufacturing Inc. Work shall mean the labour, components, materials, equipment or other supplies to manufacture, assemble, or test to detailed written specifications for each such Product which are provided by the Customer and accepted by Link2 Manufacturing Inc. and to deliver such products. Unless otherwise specified, Link2 Manufacturing Inc. uses IPC ASNI/J-STD-001 and IPC-A-610 Class 2 workmanship standards on all assemblies. For each product or revision thereof, written specifications shall include but are not limited to bill of materials, designs, schematics, assembly drawings, process documentation, test specifications, current revision number, and approved vendor list.
The Customer’s accepted purchase orders will constitute authorization for Link2 Manufacturing Inc. to procure, using standard purchasing practices, the labour, components, materials and supplies necessary for the manufacture of Products (“Inventory”) covered by such purchase orders.
In addition, the Customer authorizes Link2 Manufacturing Inc. to purchase components, materials, and supplies: (i) with lead times exceeding the period covered by the accepted purchase orders for the Products to the extent necessary for the manufacture of additional Product covered by the Customer’s forecast (“ Long Lead Time Components”) and, (ii) purchased in quantities above the required amount for purchase orders to achieve price targets (“Economic Order Inventory”) and (iii) purchased in excess of requirements for purchase orders because of minimum lot sizes available from manufacturers (“Minimum Order Inventory”). Together these are called “Special Inventory”.
Link2 Manufacturing Inc. may be required to purchase Long Lead-Time Components sufficient to meet all deliveries under the purchase orders, and may reasonably purchase Minimum Order Inventory even if greater than the amount necessary to meet purchase orders.
The term “lead time” in this Section shall mean the lead-time recorded on Link2 Manufacturing Inc.’s MRP system at the time of procurement of Inventory and Special Inventory or at the time of the cancellation of the purchase order. At the time of quote, some components had minimum lead times of up to 7 weeks.
In addition upon the Customer’s written request, Link2 Manufacturing Inc. may, from time to time, hold Long Lead-Time Components and finished Products in inventory to increase the Customer’s sourcing flexibility. The components and quantities of all such inventory and the associated cost will be documented in a separate letter and signed by both Link2 Manufacturing Inc. and the Customer.
Link2 Manufacturing Inc. reserves the right to provide the Customer a list of all Special Inventory, of which the Customer agrees to immediately purchase such excess inventory from Link2 Manufacturing Inc. upon receipt of the notice form the Customer for its acceptance and approval in advance.
The Customer may not cancel any portion of the Product quantity of an accepted purchase order without Link2 Manufacturing Inc.’s prior written approval, not to be unreasonably withheld. If the parties agree upon cancellation, the Customer will pay Link2 Manufacturing Inc. for Products, Inventory, and Special Inventory affected by the cancellation as follows: (i) 100% of the current price for all finished Products in Link2 Manufacturing Inc.’s possession. (ii) 110% of the cost of all inventory and Special Inventory in Link2 Manufacturing Inc.’s possession and not returnable to the vendor or usable for other customers, whether in raw form or work in process, less the salvage value thereof. (iii) 105% of the cost of all Inventory and Special Inventory on order and not cancelable, (iv) any vendor cancellation charges incurred with respect to Inventory and Special Inventory accepted for cancellation or return by the vendor, and (v) expenses incurred by Link2 Manufacturing Inc. related to labour and equipment specifically put in place to support the Customer’s purchase orders and forecasts.
The term “cost” in this subsection shall mean the cost represented on the bill of materials supporting the most current Product Price at the time of cancellation or termination.
Link2 Manufacturing Inc. will use reasonable commercial efforts to return unused Inventory and Special Inventory and to cancel pending orders for such inventory, and to otherwise mitigate the amounts payable by the Customer.
The Customer may request, in writing, that Link2 Manufacturing Inc. incorporate engineering changes into the Product. Link2 Manufacturing Inc. may charge the Customer a standard flat fee of $175(USD) for administration and processing of any Engineering Change Orders. Any charges for Engineering Changes will be communicated to the Customer prior to implementation. Such requests will include a description of the proposed engineering changes into the Product. Such request will include a description of the proposed engineering change sufficient to permit Link2 Manufacturing Inc. to evaluate its feasibility and cost. Link2 Manufacturing Inc.’s evaluation shall be in writing and shall state the costs and time of implementation and the impact on the delivery schedule and pricing of the Product. Link2 Manufacturing Inc. will not be obligated to proceed with the engineering change until the parties have agreed upon the changes to the Product’s Specifications, delivery schedule and Product pricing and upon the implementation costs to be borne by the Customer including, without limitation, the cost of Inventory and Special Inventory on hand and on order that becomes obsolete.
Link2 Manufacturing Inc. warrants that the Products will have been manufactured in accordance with the Customer’s applicable Specifications and will be free from defects in workmanship for a period of ninety (90) days from the date of shipment. This warranty period is valid unless otherwise stated in a Manufacturing Agreement signed by the Customer and Link2 Manufacturing Inc. Materials are warranted to the same extent that the original manufacturer warrants the materials. This express limited warranty does not apply to (a) materials consigned or supplied by Customer to Link2 Manufacturing Inc.: (b) defects resulting from Customer’s Specifications or the design of the Products; (c) Product that has been abused, damaged, altered or misused by any person or entity after title passes to Customer. With respect to first articles, prototypes, pre-production units, test units or other similar Products, Link2 makes no representations whatsoever. Upon any failure of a Product to comply with the above warranty, Link2’s sole obligation and, Customer’s sole remedy, is for Link2 Manufacturing Inc., at its option to promptly repair or replace such unit and return it to Customer. Link2 Manufacturing Inc. makes no other warranties or conditions on the Products, express, implied, statutory, or in any other provision of this agreement or communication with Customer, and Link2 Manufacturing Inc. specifically disclaims any implied warranty or condition of merchantability or fitness for a particular purpose.
The Products delivered by Link2 Manufacturing Inc. will be inspected and tested as required by Customer within ten (10) days of receipt. If Products are found to be defective in material or workmanship, Customer has the right to reject such Products during said period. Products not rejected during said period will be deemed accepted.
Customer agrees that, if notified promptly in writing and given sole control of the defence and all related settlement negotiations, it will defend Link2 from any claim or action and will hold Link2 Manufacturing Inc. harmless from any loss, damage or injury, including death, which arises from any alleged defect of any Products. Customer shall name Link2 as an additional insured under Customer’s product liability policies for any Products.
In no event shall either party be liable to the other for any incidental, consequential, special or punitive damages of any kind or nature arising out of this agreement or the sale of the Products, whether such liability is asserted on the basis of contract, tort or otherwise, even if the party has been warned of the possibility of any such loss or damage, and even if any of the limited remedies of this agreement fail of their essential purpose.