Four Ways Suppliers Limit Their Risk Contractually Phil Bode

Mission Objectives To understand how four common contract provisions work together To identify how suppliers use these provisions to limit their exposure To gain insights into negotiating these provisions

Opening Comments Ask questions as we go Session will be interactive Lot of material to cover in 60 minutes Focus on exclusions and restrictions (visible and invisible) & permissions

Topics Indemnification Limitation of Liability Termination Remedies

Indemnification (Regular and IP)

Indemnification Each party to this Agreement (the “Indemnifying Party”) shall indemnify and hold harmless and, at the other party’s request, defend the other party (the “Indemnified Party”) from and against any and all claims, losses, liabilities, damages, settlements, expenses and costs (including, without limitation, attorney’s fees and court costs) which the Indemnified Party may incur that arise out of or relate to any claim, cause of action, civil or criminal action or suit asserted by any third party against the Indemnified Party due to the Indemnifying Party’s performance under this Agreement.

IP Indemnification To the best of Seller’s knowledge as of the Effective Date, the Products do not infringe upon the U.S. copyright or patent of any third party. In the event of a claim for infringement made by a third party, Seller shall defend such claim and shall indemnify and hold Buyer harmless against any liability arising from such claim, provided that (i) Buyer has promptly notified Seller in writing of such claim and (ii) Buyer has not made any admission pertaining to such claim. Buyer is not authorized to attempt to settle any claim for infringement brought by third parties; any attempted settlement by Buyer shall be null and void.

IP Indemnification Notwithstanding anything herein to the contrary, Seller shall not defend any claim, and shall not indemnify and hold Buyer harmless, from liability arising out of a claim for infringement if the claim for infringement arises from: (i) Buyer’s use of a previous version of a Product where such claim of infringement would have been avoided by using the current version of the Product; (ii) use of a Product in applications, business environments or processes for with the Product was not designed or contemplated; (iii) corrections, modifications, alterations or enhancements made by Buyer to a Product; (iv) use of a Product by any party other than Buyer or other Authorized Users; or (v) Buyer’s use of the Product with third party products.

IP Indemnification In the event that Buyer or Seller is subjected to a claim related to infringement as specified above and Seller cannot reasonably procure the right to let Buyer continue to use the Product or replace or modify a Product with a non-infringing version, either party may terminate this Agreement and Buyer shall receive a pro rata refund of any Product Fees paid based on a useful life of three (3) years. The remedies provided in this Section are Buyer’s sole and exclusive remedies in the event of any claim by a third party that the Product, or any portion thereof, infringes that third party’s U.S. copyright or patent.

Limitation of Liability

Limitation of Liability In no event shall either party be liable to the other for indirect, incidental, special or consequential damages arising out of its performance or nonperformance under this Agreement, whether such claim or action for damages is based in contract, equity, tort or otherwise. In all cases, a party’s liability under this Agreement shall not exceed twenty-five thousand dollars ($25,000). Notwithstanding anything to the contrary in this Section 17, the foregoing limitation of liability shall not apply to claims for damages against a party relating to: (i) personal injury or wrongful death; (ii) Seller’s indemnification obligations to Buyer; and (iii) a breach of the confidentiality provisions contained herein.

Termination

Termination Either party may terminate this Agreement at any time in the event of a substantial breach of the Agreement by the other, but only if the breach is not cured within thirty (30) days after written notice of the breach is given to the breaching party.

Termination Seller may terminate this Agreement upon the occurrence of either of the following: Failure by Buyer to pay when due the fees and charges referred to in Exhibit A, but only if the failure is not cured within five (5) days after written notice of the failure is given to Buyer. Default by Buyer under any other agreement with Seller.

Termination Buyer may terminate this Agreement by giving Seller prior written notice no more than ninety (90) days and no less than sixty (60) days prior to an anniversary of the Effective Date. Termination shall be effective upon the upcoming anniversary of the Effective Date.

Termination Upon termination of this Agreement, each party shall immediately return to the other party all copies, in whatever form, of any and all Confidential Information received from the other party, or created or received by a party on behalf of the other party, which are in such party’s possession, custody or control. Other than those obligations imposed in this Section 15, Seller will have no further duties of performance under this Agreement upon its termination.

Remedies

Remedies If Seller breaches the warranty in Section 6, it shall use its reasonable efforts to cure such breach or provide an acceptable work-around within thirty (30) days after receiving written notice from Buyer of the breach of warranty, which shall include the specific reasons Buyer believes Seller is in breach. If Seller is unable to resolve the breach to Buyer’s satisfaction, Seller shall refund any amounts Buyer paid to Seller relating to the Services in dispute. This shall be Buyer’s sole and exclusive remedy with respect to a breach of this warranty.

Evaluation and Materials Questions? Evaluation and Materials Take this time to go the conference app http://itps2016.sched.org find this class, and fill out evaluation. If you need the PowerPoint, it’s on your thumbdrive