Common use of Production Equipment Clause in Contracts

Production Equipment. Seller will furnish, keep in good condition, and replace when necessary, all machinery and equipment, including related tooling, jigs, dies, gauges, fixtures, molds, patterns, and other accessories, required for the production of Goods covered by this Contract (collectively, “Production Equipment”). Seller will insure all Production Equipment with fire and extended coverage insurance for its full replacement value. In addition to Buyer’s rights with respect to Buyer’s Property (as defined below), Seller grants Buyer an irrevocable option to take possession of, and title to, free and clear of all liens or other encumbrances, all or any part of the Production Equipment that is specially designed or outfitted for the production of the Goods covered by this Contract and is not used to produce goods that are the standard stock of Seller and are then being sold by Seller to other customers. To the extent Buyer elects to take title to any Production Equipment that is Seller’s property, Buyer will, within forty-five (45) days following delivery of such Production Equipment to Buyer, pay to Seller the lower of: (a) the net book value of such Production Equipment (i.e., actual cost less amortization), or (b) then current fair market value of such Production Equipment, in each case less any amounts Buyer has previously paid to Seller on account of such Production Equipment. ▇▇▇▇▇’s right to exercise the foregoing option is not conditioned on, among other things, Seller’s breach, ▇▇▇▇▇’s termination of this Contract, or payment of any other amounts due under this Contract. If Buyer and Seller do not agree on the amount to be paid to Seller for any Production Equipment under this Section 17, Buyer and Seller will work to resolve the disagreement in good faith, but ▇▇▇▇▇ will nonetheless have the right to take immediate possession of such Production Equipment upon payment of the undisputed amount (net of any amounts due to Buyer) to Seller, with any additional amounts owed to Seller to be paid promptly upon resolution of the disagreement.