REASONS TO USE SUCH
SUPPLIER.
PURCHASER MAY ACCEPT OR REJECT THE PROPOSAL, WHICH ACCEPTANCE OR
REJECTION SHALL NOT BE UNREASONABLY WITHHELD.
IF PURCHASER ACCEPTS THE
PROPOSAL, THE PROPOSED SUPPLIER WILL BE SUBJECT TO EVALUATION AND APPROVAL
PROCESSES APPROVED BY PURCHASER.
SUPPLIER WILL NOT ORDER ANY MATERIALS OR
COMPONENTS FOR THE PRODUCTS FROM SUCH SUPPLIER UNTIL PURCHASER HAS PROVIDED
WRITTEN APPROVAL TO MAKE SUCH ORDERS.
ANY INCREASED COSTS ASSOCIATED WITH A
COMPONENT THAT MUST BE PURCHASED FROM A SUPPLIER ON THE APPROVED SUPPLIER LIST,
WHETHER FOR A
6
CONFIDENTIAL
CERTAIN INFORMATION HAS BEEN REDACTED
CONFIDENTIAL TREATMENT REQUESTED
REGULATED COMPONENT OR NOT, WILL BE PAID BY PURCHASER (I.E.
A SUBSTANDARD
QUALITY COMPONENT CAUSES INCREASED SCRAP RATES, INSPECTIONS, AND EXTRA LABOR FOR
WHICH SUPPLIER WILL NOT BE LIABLE); PROVIDED THAT (I) SUPPLIER DOCUMENTS AND
REASONABLY DEMONSTRATES TO PURCHASER THE CAUSE OF THE INCREASED COST AND HOW
SUPPLIER'S USE OF AN ALTERNATE QUALIFIED SUPPLIER ("ALTERNATE SUPPLIER") FOR
SUCH COMPONENT WOULD ELIMINATE SUCH COST, (II) PURCHASER DETERMINES IN ITS
REASONABLE DISCRETION THAT THE ALTERNATE SUPPLIER IS QUALIFIED TO MANUFACTURE
THE COMPONENT IN ACCORDANCE WITH THE APPLICABLE SPECIFICATIONS AND ALL
REGULATORY REQUIREMENTS, AND (III) PURCHASER CHOOSES NOT TO INCLUDE THE
ALTERNATE SUPPLIER ON THE APPROVED SUPPLIER LIST FOR SUCH COMPONENT DESPITE SUCH
DETERMINATION.
3.8
QUARTERLY REVIEW.
THE PARTIES AGREE TO ESTABLISH A QUARTERLY
BUSINESS REVIEW PROCESS PURSUANT TO WHICH THE PARTIES WILL REVIEW (EITHER IN
PERSON, BY TELEPHONE, VIDEO CONFERENCE OR OTHER MUTUALLY AGREEABLE MEANS)
PRODUCT QUALITY, CYCLE TIME, MANUFACTURING CAPACITY, DELIVERY, MARKET
CONDITIONS, AND ANY OTHER MATTERS OR CONCERNS RELEVANT TO THIS AGREEMENT.
EACH
PARTY SHALL BEAR ITS OWN COSTS AND EXPENSES RELATED TO THE QUARTERLY BUSINESS
REVIEW.
3.9
EXCESS AND OBSOLETE INVENTORY.
3.9.1.
IF PURCHASER CANCELS A PRODUCT ORDER SPECIFIED IN THE DELIVERY
SCHEDULE LESS THAN THIRTY (30) DAYS PRIOR TO THE APPLICABLE DELIVERY DATE,
PURCHASER SHALL BE RESPONSIBLE FOR THE PURCHASE PRICE OF THE PRODUCTS SPECIFIED
IN SUCH ORDER UNLESS OTHERWISE AGREED BY THE PARTIES.
3.9.2.
PURCHASER SHALL BE RESPONSIBLE FOR ANY NON-RETURNABLE INVENTORY
(INCLUDING FINISHED PRODUCTS, WORK-IN-PROCESS, COMPONENTS, OR RAW MATERIAL) OR
NON-CANCELABLE ORDERS FOR COMPONENTS OR RAW MATERIAL THAT ARE RENDERED EXCESS OR
OBSOLETE (AS DETERMINED IN SUPPLIER'S REASONABLE DISCRETION) (COLLECTIVELY,
"EXCESS INVENTORY") TO THE EXTENT SUCH EXCESS INVENTORY IS CAUSED BY
(A) PURCHASER'S CANCELLATION OF ORDERS WITH SHIPMENT DATES SPECIFIED IN THE
DELIVERY SCHEDULE BETWEEN THIRTY (30) AND ONE-HUNDRED AND TWENTY (120) DAYS FROM
THE DATE OF CANCELLATION, (C) ENGINEERING CHANGE ORDERS AGREED BY THE PARTIES,
(D) THE END OF A PRODUCT'S LIFE, OR (E) THE TERMINATION OR EXPIRATION OF THIS
AGREEMENT (EXCLUDING TERMINATION OF THE AGREEMENT BY PURCHASER IN ACCORDANCE
WITH SECTION 5.2 OR SECTION 13.1, IN WHICH CASE PURCHASER SHALL NOT BE
RESPONSIBLE FOR ANY EXCESS INVENTORY), PROVIDED THAT IN EACH CASE (A) THROUGH
(E) ABOVE THE EXCESS INVENTORY CANNOT REASONABLY AND WITHOUT MATERIAL COST TO
THE SUPPLIER BE UTILIZED ON OTHER SUPPLIER PRODUCTS OR RETURNED TO ITS
SUPPLIERS.
THE COST TO PURCHASER OF THE EXCESS INVENTORY DESCRIBED ABOVE SHALL
BE THE PURCHASE PRICE FOR FINISHED PRODUCTS