Tooling Services Agreement

TOOLING SERVICES AGREEMENT

This Tooling Services Agreement (the Agreement) is made and entered into as of Effective Date: by and between Client Name: with principal address: and Service Provider Name: with principal address: .

RECITALS

WHEREAS, Client requires the design, fabrication, modification and/or maintenance of production tooling, jigs, molds, fixtures and related prototypes for use in Client's manufacturing processes (collectively, the Tooling); and

WHEREAS, Provider has the technical capability, facilities and personnel to perform tooling services and to fabricate, maintain and deliver the Tooling in accordance with the specifications and schedule set forth in this Agreement; and

WHEREAS, the parties desire to set forth their respective rights and obligations with respect to the design, fabrication, testing, delivery, ownership and use of the Tooling.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:

1. DEFINITIONS

1.1 "Tooling" means all dies, molds, jigs, fixtures, patterns, gauges, programs, drawings, specifications and related items created, acquired or paid for under this Agreement for use in Client's manufacture of parts and products.

1.2 "Services" means the design, engineering, fabrication, inspection, testing, modification, maintenance and delivery activities to be performed by Provider as set forth in Section 2 and in any Statement of Work.

2. SCOPE OF SERVICES

Provider shall perform Services described in one or more written Statements of Work (each, an SOW), which when executed by both parties shall be incorporated into this Agreement. Each SOW shall identify the Tooling description, technical specifications, acceptance criteria, schedule and price. A principal SOW description is provided below:

3. SCHEDULE, DELIVERY AND TITLE

Provider shall commence work within days after receipt of a fully executed SOW and any required deposits. Estimated completion/delivery date: .

Unless otherwise agreed in writing, legal title to the Tooling shall transfer to Client upon final payment in full; provided, however, that Provider shall retain a security interest in the Tooling until such payment and shall have the right to retain possession if payment is overdue in accordance with Section 12.

4. ACCEPTANCE AND TESTING

Upon notification by Provider that Tooling is ready for acceptance testing, Client shall commence acceptance testing within days. Acceptance shall be deemed granted if Client fails to provide written rejection specifying non-conformities within such period. Rejected Tooling shall be corrected by Provider at Provider's expense, unless rejection arises from Client-directed changes.

5. CHANGES

Any change to the scope, specifications, quantities, schedule or price shall be documented and authorized in a written Change Order signed by both parties. Provider shall not be required to proceed with changed work without a signed Change Order. Change Orders may adjust the price and schedule equitably.

6. FEES, PAYMENT AND TAXES

Client shall pay Provider the amounts set forth in each SOW. The base tooling price for the primary SOW is $. Unless otherwise provided, payment terms are: Deposit of $ due within days of SOW execution; balance due upon acceptance.

Provider shall invoice Client in accordance with the SOW. Unless otherwise agreed, invoices are due net days from invoice date. Late payments shall accrue interest at the lesser of 1.5% per month or the maximum rate permitted by law.

All prices are exclusive of taxes. Client shall be responsible for sales, use, VAT and other taxes applicable to the transaction, except taxes based on Provider's net income.

7. INTELLECTUAL PROPERTY AND TOOLING OWNERSHIP

Unless expressly stated otherwise in an SOW, Provider shall retain ownership of Provider's preexisting intellectual property, tooling designs and manufacturing know-how. Client shall own the physical Tooling upon payment in full, subject to Provider's security interest described in Section 3. To the extent Provider creates new designs or drawings specifically for Client and Client has paid for such work, Provider assigns to Client all right, title and interest in and to such custom designs, subject to Provider's right to retain copies for its records and to use general manufacturing techniques that are not Client-specific.

Provider grants Client a non-exclusive, worldwide, perpetual license to any Provider-owned proprietary software or machine programs embedded in the Tooling solely to operate the Tooling for Client's internal production of parts. The license does not permit sublicensing or commercialization of Provider's software.

8. CONFIDENTIALITY

Each party shall keep confidential and not disclose the other party's Confidential Information. "Confidential Information" includes tooling designs, sample parts, specifications, engineering drawings, cost and pricing data and business information. Confidential Information excludes information that is or becomes publicly available without breach, is rightfully received from a third party, or is independently developed. Each party shall take reasonable measures to protect Confidential Information and shall use it only to perform obligations under this Agreement.

9. WARRANTIES

Provider warrants that the Tooling and Services will materially conform to the specifications set forth in the applicable SOW for a period of months from acceptance. Provider's sole obligation under this warranty is, at Provider's option, to repair or replace non-conforming Tooling or re-perform non-conforming Services. This warranty does not cover damage resulting from misuse, modification by others, improper maintenance, or normal wear and tear.

EXCEPT FOR THE EXPRESS WARRANTY STATED ABOVE, PROVIDER DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

10. LIMITATION OF LIABILITY

NEITHER PARTY SHALL BE LIABLE FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING LOSS OF PROFITS OR PRODUCTION DOWNTIME, WHETHER BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EXCEPT FOR LIABILITY ARISING FROM A PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. EXCEPT AS PROVIDED BELOW, THE AGGREGATE LIABILITY OF EITHER PARTY FOR CLAIMS ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT SHALL NOT EXCEED THE TOTAL AMOUNTS PAID OR PAYABLE BY CLIENT TO PROVIDER UNDER THE APPLICABLE SOW DURING THE TWELVE (12) MONTHS PRECEDING THE CLAIM.

11. INDEMNIFICATION

Each party shall indemnify, defend and hold harmless the other party from and against claims, liabilities, losses, damages and expenses (including reasonable attorneys' fees) arising out of the indemnifying party's breach of this Agreement, its negligence, or willful misconduct. Provider shall also indemnify Client against third-party claims alleging that the Tooling, as delivered and used for its intended purpose, infringes a third party's issued patent, provided Client gives Provider prompt written notice and reasonable control of the defense and settlement of such claim.

12. INSURANCE

Provider shall maintain commercial general liability insurance, employer's liability, and property insurance covering Provider's operations and Tooling while in Provider's possession. Upon Client's reasonable request, Provider shall provide certificates evidencing such coverage.

13. TERM AND TERMINATION

This Agreement shall commence on the Effective Date and continue until completion of all Services and final payment, unless earlier terminated as provided herein. Either party may terminate for material breach upon thirty (30) days' written notice if the breach remains uncured. Either party may terminate for bankruptcy or insolvency of the other party upon written notice.

Upon termination, Client shall pay Provider for Services performed and Tooling completed through the date of termination. Sections concerning ownership, confidentiality, indemnification, limitation of liability, payment, and remedies shall survive termination.

14. NOTICES

Notices under this Agreement shall be in writing and delivered by hand, overnight courier, or certified mail, return receipt requested, to the addresses set forth above, or as updated by written notice.

15. AMENDMENT; WAIVER; COUNTERPARTS

No amendment or modification of this Agreement shall be effective unless in writing and signed by authorized representatives of both parties. The failure of either party to enforce any provision shall not constitute a waiver of that provision. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together constitute one instrument.

16. GOVERNING LAW; ENTIRE AGREEMENT; SEVERABILITY

This Agreement shall be governed by and construed in accordance with the laws of the state/province chosen by the parties in the applicable SOW. This Agreement, together with all SOWs and Change Orders executed hereunder, constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior agreements and understandings. If any provision of this Agreement is held invalid or unenforceable, the remainder of the Agreement shall remain in full force and effect, and the invalid provision shall be reformed to the extent necessary to make it enforceable.

17. ADDITIONAL PROVISIONS

The parties agree to cooperate in good faith to resolve disputes and to execute such further documents and instruments as may be necessary to carry out the provisions of this Agreement. If requested by either party, the parties shall participate in non-binding mediation prior to initiating litigation.

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