Orders; Forecasts. [***] * A plus/minus tolerance of five percent (5%) is acceptable only on the Minimum Quantities, in any one (1) year. In the first week of the month next following the date of this Agreement, SGSF will supply Southwall with an expected take-down schedule of Film type and volumes for each film type by month for the full year 2002, (to be attached as Exhibit 1) which shall not, without written agreement of the parties, be less than the amounts shown above. By November 1, 2002 SGSF will supply a similar takedown schedule for 2003 and will exercise or cancel its option for an additional fixed 500,000 m2 for 2003. Southwall shall then be committed to supply and sell such volume and type of Film when so ordered by SGSF as part of its two (2) year purchase order. SGSF acknowledges the commercial necessity to advise Southwall of the initial takedown schedule and significant forecast demand increases or decreases, and/or significant changes in the product mix at the earliest opportunity and in no event less than three (3) months prior to the required delivery date, and confirms that it will spread out take-down volumes as evenly as possible over each year to avoid capacity problems for Southwall. In turn, Southwall needs to confirm any changes of the initial takedown schedule and acknowledges the commercial necessity for SGSF to receive even volumes and confirms it will ship takedown volumes over each month to avoid production problems for SGSF. Southwall agrees to establish a "2-week demand" safety stock of Film, as defined and agreed-upon between the Parties, to reduce the risk of supply interruption to SGSF. Southwall will maintain this safety stock with current material of acceptable quality at this minimum level throughout the term of this Agreement. This material will be held at Southwall's plants in Grossrohrsdorf, Germany and Palo Alto, California and Tempe, Arizona in the form of sputtered polyester Film (i.e. non-encapsulated). The amount of Film in each of these sites will be determined based on the quarterly scheduled demand from SGSF and will be apportioned based on the type of Film and the scheduled location of manufacture by Southwall operations. Additionally, Southwall agrees to pay for any extraordinary shipping costs that may be incurred by having to supply Film to SGSF from this stock due to late delivery. This safety stock will be maintained with Film that is no older than 3 months by ensuring that there is a quarterly turnover of this material. The initial 2-week safety stock will be established no later than March 31, 2002. When at the end of one month during the term of this Agreement, with the exception of the first quarter of 2002 (January 1, 2002 through March 1, 2002), more than one week of delay occurs with any type or width of Film, SGSF will apply penalties to Southwall for late delivery. These penalties are structured as follows:
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Orders; Forecasts. [***] * A plus/minus tolerance of five percent (5%) is acceptable only on the Minimum Quantities, in any one (1) year. In the first week of the month next following the date of this Agreement, SGSF will supply Southwall with an expected take-down schedule of Film type and volumes for each film type by month for the full year 2002, (to be attached as Exhibit 1) which shall not, without written agreement of the parties, be less than the amounts shown above. By November 1, 2002 SGSF will supply a similar takedown schedule for 2003 and will exercise or cancel its option for an additional fixed 500,000 m2 for 2003. Southwall shall then be committed to supply and sell such volume and type of Film when so ordered by SGSF as part of its two (2) year purchase order. SGSF acknowledges the commercial necessity to advise Southwall of the initial takedown schedule and significant forecast demand increases or decreases, and/or significant changes in the product mix at the earliest opportunity and in no event less than three (3) months prior to the required delivery date, and confirms that it will spread out take-down volumes as evenly as possible over each year to avoid capacity problems for Southwall. In turn, Southwall needs to confirm any changes of the initial takedown schedule and acknowledges the commercial necessity for SGSF to receive even volumes and confirms it will ship takedown volumes over each month to avoid production problems for SGSF. Southwall agrees to establish a "“2-week demand" ” safety stock of Film, as defined and agreed-upon between the Parties, to reduce the risk of supply interruption to SGSF. Southwall will maintain this safety stock with current material of acceptable quality at this minimum level throughout the term of this Agreement. This material will be held at Southwall's plants in Grossrohrsdorf, Germany and Palo Alto, California and Tempe, Arizona in the form of sputtered polyester Film (i.e. non-encapsulated). The amount of Film in each of these sites will be determined based on the quarterly scheduled demand from SGSF and will be apportioned based on the type of Film and the scheduled location of manufacture by Southwall operations. Additionally, Southwall agrees to pay for any extraordinary shipping costs that may be incurred by having to supply Film to SGSF from this stock due to late delivery. This safety stock will be maintained with Film that is no older than 3 months by ensuring that there is a quarterly turnover of this material. The initial 2-week safety stock will be established no later than March 31, 2002. When at the end of one month during the term of this Agreement, with the exception of the first quarter of 2002 (January 1, 2002 through March 1, 2002), more than one week of delay occurs with any type or width of Film, SGSF will apply penalties to Southwall for late delivery. These penalties are structured as follows:
1. End of a month with undelivered quantities per SGSF Purchase Order as received and accepted by Southwall — no penalties. 2. Southwall has 1 week to have undelivered quantities resolved per Payment Terms (Appendix A) for shipments from the U.S. and/or from SEG. 3. At end of week two any remaining undelivered quantities from the prior month have a 3% penalty applied to SGSF's account in the form of a customer credit. 4. At end of week three any remaining undelivered quantities from the prior month have a 4% penalty applied to SGSF's account in the form of a customer credit. 5. At end of week four any remaining undelivered quantities from the prior month have a 5% penalty applied to SGSF's account in the form of a customer credit . 6. The cumulative total late penalty for late shipments from the prior month will be 15%.
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