Common use of Second Source Clause in Contracts

Second Source. Although TI has no immediate intention to second source and expects to buy all of its requires for SEA’s from MSI indefinitely, MSI recognizes that TI may require a second source of production to satisfy its customers. Accordingly, MSI grants to TI an “Option”; granting TI a license to produce internally (“Second Sourced Production”) SEAs. TI agrees to purchase SEAs from MSI at volumes in support of an MSI automotive business share of not less than 60% annually or 7M units (i.e. whichever is greater). By this agreement TI purchases an “Option” which grants TI the right to produce second sourced SEAs to cover all or a portion of volumes above this 60% minimum share level annually or 7M units (i.e. whichever is greater). TI shall be required to pay for exclusivity the higher of $.05 or 5% per SEA to MSI for such Second Sourced Production. Unless unusual circumstances make it commercially unreasonable, TI will provide MSI with notice eighteen (18) months in advance or as soon as the decision has been made, whichever is greater, prior to commencing Second Sourced Production. In the event that MSI “Like” SEA’s surface competitively in the exclusive markets we serve, the above exclusivity payments would be subject to re-evaluation. Option Price: