Common use of Consequences of Failing to Meet Product Firm Commitments Clause in Contracts

Consequences of Failing to Meet Product Firm Commitments. (i) If the Parties determine that Customer has failed to meet its Product Firm Commitment for any Product for the preceding calendar quarter of the Term (and such failure was not excused, for example, as the result of a Force Majeure Event, or because the Parties agreed to permit Customer to meet the Product Firm Commitment for one Product by purchasing a different Product or some other accommodation), then Supplier may, as its exclusive remedy, impose the following penalty, determined on a per Product basis, by: (A) calculating the difference between the amount, in number of ▇▇▇▇▇, of a particular Product that Customer actually ordered during the preceding calendar quarter and the Product Firm Commitment; multiplied by (B) the applicable weighted average price per watt that corresponds to that Product for the preceding calendar quarter; multiplied by (C) 15.6% in the case of Products with an “RES” SKU (or 7.8% for any such Products in commercial production for less than one year (or portion thereof within the measurement period)) and 13.6% in the case of Products with a “COM” SKU (or 6.8% for any such Products in commercial production for less than one year (or portion thereof within the measurement period)). The Parties agree that because Supplier must allocate manufacturing capacity and procure raw materials based on the anticipated requirements of Customer, as represented by the Agreed Minimum Quarterly Commitments (as modified by the Product Firm Commitment), and Supplier’s exclusivity obligations under this Agreement preclude it from selling competing Products for use in the Territory, the penalties described in this Section 4(c)(i) reflect a reasonable estimate of the Damages to Supplier if Customer fails to meet its Product Firm Commitments. For the avoidance of doubt, no penalties may be assessed pursuant to this Section with respect to any quarter that has been completed prior to the Effective Date. (ii) If the Parties determine that Supplier has failed to meet its Product Firm Commitment for any Product for the preceding calendar quarter of the Term (and such failure was not excused, for example, as the result of a Force Majeure Event, or because the Parties agreed to permit Supplier to meet the Product Firm Commitment for one Product by supplying a different Product or some other accommodation), then Customer may, as its exclusive remedy, impose the following penalty, determined on a per Product basis, by: (A) calculating the difference between the amount, in number of ▇▇▇▇▇, of a particular Product that Supplier committed to supply and deliver during the preceding calendar quarter and the Product Firm Commitment; multiplied by (B) the applicable weighted average price per watt that corresponds to that Product for the preceding calendar quarter; multiplied by (C) 15.6% in the case of Products with an “RES” SKU (or 7.8% for any such Products in commercial production for less than one year (or portion thereof within the measurement period)) and 13.6% in the case of Products with a “COM” SKU (or 6.8% for any such Products in commercial production for less than one year (or portion thereof within the measurement period)). The Parties agree that because Customer commits to its own customers based on the anticipated manufacturing production of Supplier, as represented by the Agreed Minimum Quarterly Commitments (as modified by the Product Firm Commitment), and Customer’s exclusivity obligations under this Agreement preclude it from procuring competing Products for use in the Territory, the penalties described in this Section 4(c)(ii) reflect a reasonable estimate of the Damages to Customer if Supplier fails to meet its Product Firm Commitments. For the avoidance of doubt, no penalties may be assessed pursuant to this Section with respect to any quarter that has been completed prior to the Effective Date. (iii) In addition to the penalties described in Sections 4(c)(i) and 4(c)(ii): (A) if Customer fails to meet its Product Firm Commitments two times during any four consecutive calendar quarters during the Term (and such failure was not excused, for example, as the result of a Force Majeure Event, or because the Parties agreed to permit Customer to meet the Product Firm Commitment for one Product by purchasing a different Product or some other accommodation), then Section 3(a) will no longer apply to Supplier; and (B) if Supplier fails to meet its Product Firm Commitments two times during any four consecutive calendar quarters during the Term (and such failure was not excused, for example, as the result of a Force Majeure Event, or because the Parties agreed to permit Supplier to meet the Product Firm Commitment for one Product by supplying a different Product or some other accommodation), then Section 3(b) will no longer apply to Customer. (iv) Promptly after the Effective Date, each Party will designate a project team of its primary contact individuals for purposes of monitoring any accrued or anticipated penalties applicable to either Party pursuant to Section 4(c)(i) or 4(c)(ii), each of which must include representatives reasonably acceptable to the other Party and who are familiar with the Party’s operations under this Agreement. Throughout the Term, each Party will be entitled to change the members of its project team, and will notify the other Party of any such changes. The project teams will conduct regular telephone, video conference or in-person meetings as deemed necessary or appropriate (and, in any case, at least once per quarter) to exchange information regarding any accrued or anticipated penalties, potential strategies to mitigate such penalties, alternative means of compensation and any related disputes. Through the project teams, the Parties agree to work in good faith to mitigate the impact of any failure by either Party to meet its Product Firm Commitments, or to negotiate alternative means of compensating the other Party for such failures that best serve the interests of both Parties, in each case, before either Party submits an invoice to the other Party for any penalties imposed; provided, however, that neither Party will be under any obligation to agree to any alternative compensation and, if either Party waives or modifies any penalty or accepts any alternative compensation, such Party will not be deemed to have waived any rights to impose penalties in the future or to enforce any provision of this Agreement. (v) If the Parties determine that penalties are payable pursuant to Section 4(c)(i) or 4(c)(ii), then the Party to which the penalties are payable will issue an invoice therefor to the other Party, which invoice will be due and payable in full within 45 calendar days after the date of issuance in accordance with Section 5(c).