Terms and Conditions Agreement

We would first like to take the opportunity to thank you for allowing Harkened Rows Pbc “us” to provide services to you. The purpose of this letter is to confirm our mutual understanding of the terms and scope of our agreement.

Please review this letter carefully. If it meets with your approval and reflects your understanding of our respective responsibilities, please sign at the bottom.

BACKGROUND

  1. We at Harkened Rows Pbc and its subsidiary Fibras Unidas SAC are manufacturers and suppliers of knitwear products made in Peru.

  2. You are in the business of designing, marketing and distributing knitwear products under the your brand;

Harkened aims to foster long-term relationships that help its client partners grow, while upholding mutually held values regarding sustainability, including environmental impact and fair trade principles. The Parties understand that we specialize in scaling artisanally crafted items. This means that many of the processes are executed with human hands - often from the artisanal dyeing of the yarns to the knitting of the garment. As a result, the nature of both parties' businesses differ greatly from the predictability, precision and scalability of traditional industrial manufacturing and fabrication (as in “fast fashion”), which on occasion may impact delivery time and quantities, despite best efforts.

TERMS AND CONDITIONS 

Agreement to Manufacture. You are appointing us to manufacture the Products and provide the Services on the terms and conditions of this Agreement. 

Independent Contractor. The Parties agree that it is their mutual intention that this Agreement will operate as an independent contract. No term of this Agreement, or any implied term, creates or establishes a relationship of employment, principal and agent, joint venture, legal partnership or other legal relationship except that of independent contractor. The Agreement does not transfer or license any of your Intellectual Property to us, except as expressly set out in the Agreement. 

Non-exclusive arrangement. The rights granted to us under the Agreement are non-exclusive. Nothing in the Agreement applies to limit or restrict your right to appoint other manufacturers of the Products. 

PURCHASE ORDERS (POs)

Development. Before a production order can be placed, we must go through a development process to define the characteristics and get your approval on all items that will be ordered for production. This includes all labels and packaging materials.

Yarn Orders. Due to long lead times, we will likely assist you in ordering yarn (materials) that you need before you place a PO. Please be aware that placing a yarn order means you are liable financially for the materials (because they are being purchased to your specifications and cannot be returned). The yarn value will be credited to your PO as the yarn is used. We may also invoice you as soon as we place the order for materials (not just when the PO is placed). Any yarn that is not used within a 3 month time frame will be subject to storage fees, discussed with you on a case by case basis.

Placing POs. You will place a PO with us setting out the quantities of each previously defined SKU that you wish to purchase, the agreed on delivery date and any other information reasonably required by us. The term SKU is “stock keeping unit” and refers to the unit by style, color and size. 

We are responsible for complying with the following for each PO:

  1. Manufacturing the Products as you have approved them;

  2. Ensuring the quality of the Products, making sure they are free from defects

  3. Labeling, packaging and shipping as instructed by you.

  4. Delivering on the agreed upon date.

A PO may be placed only once a product has been developed and approved by you. Any items requested that have not been previously developed must first pass the development stage. A PO with products that have not yet approved products may be received only if the delivery date and timelines are clear and both Parties agree in writing.

Minimum Order Quantity (MOQ). Unless otherwise agreed in writing by both Parties, you acknowledge that it is required to place Minimum Order Quantities, which are as follows: 

  • Hand knit: 32 units per style and 8 units per SKU 

  • Manual knitting machine / Hand loom: 100 units per style and 15 units per SKU

  • Industrial knit: 120 units per style, 60 units per color and 20 units per SKU

  • $15,000 dollar value per PO

Please note that a surcharge may be applied if a style/sku/PO doesn’t meet the requested minimum. 

Accepting POs. Once we receive your PO, we will send you a Sales Order confirming the delivery date and representing our acceptance of your PO. The Sales Order will be sent within 5 Business Days of you placing an Order. Once we send you the Sales Order and you accept, it becomes a binding contract for us to provide the Products in accordance with the Agreement and the relevant Order, and for you to pay the Charges for those Products.  

Changes, variations or cancellations of POs. Any proposed change to an accepted PO must be provided to us in writing and we may (at our option) accept or reject the change and may result in revised delivery dates. Likewise, if we propose any changes to a PO, this must be presented to you for approval.

Orders placed and accepted cannot be canceled or reduced without the written consent of both Parties, with the exception of extenuating circumstances, such as a force majeure event, including but not limited to delays in the raw materials beyond our control and delays due to local legal requirements that must be complied with.

In the event you request any cancellation once a PO is already accepted by both Parties and both Parties agree to the cancellation, you will still be financially liable for the yarn and materials already purchased (which may be used toward a future order), in addition to a cancellation fee to be determined depending on the time of the cancellation in relation to the delivery date.

Response Time. You must respond to inquiries from us and provide necessary information to us as it relates to Products and Orders, within three (3) Business Days and/or in compliance with the agreed on timeline or Work In Progress document. Failure to provide timely responses may impact or delay the delivery timeline. Any delays or interruptions resulting from your failure to provide a response in accordance with this clause will be your sole responsibility, and may not be construed as a breach on our part. Accordingly, any resulting additional costs incurred by us, in relation to attempts to meet the delivery date despite the delays, will be your sole responsibility and payment will be made under the same manner and timeline as detailed in this Agreement. 

TOLERANCES

In accordance with industry standard, a range of tolerances will be considered acceptable, including but not limited to:

  1. Quantities: Product Unit quantities may vary +/- 5% for POs of a value up to $70,000.00 and      +/- 3% for POs in excess of $70,000.01 in value. Anything in excess of the above stated will be your decision to accept or reject. 

  2. Raw Materials: Both Parties understand there will always be slight variations in raw materials, including thickness and color, especially if yarns are naturally or hand dyed. You must communicate your standards clearly as well as how to handle these variations, so we can coordinate this with you appropriately. 

  3. Measurements: The variances as stated on the accepted and final tech packs per product, will serve as the accepted range of measurement variance.

QUOTES AND PAYMENTS

Quotes. All items will be quoted in US dollars at an FOB unit rate. Shipping terms may actually be FOB or FCA, but what this means for pricing is that freight from the port of Lima is not included in the quoted unit cost.

Invoicing and Payments. You must pay the invoices, as defined in the payment terms agreed to in writing via email and restatement in the invoices. Design and development costs are billed at a multiple of the FOB rate, as stipulated during communications, depending on the type of prototype. Yarn may be billed separately, and applied or credited to a production PO if/when used, to the extent and degree that it is used. 

Payment terms must be agreed upon before a PO is placed and received.

Overdue Amounts. We may charge interest on any overdue amount. Interest will be calculated from the due date to the date of payment at an annual percentage rate equal to the corporate reference rate applied by our primary trading bank (JP Morgan Chase). We may also refrain from shipping products until payment has been received, in the case of outstanding invoices or when there have been more than 3 late payments during a 5 month period. Late is considered paid after the date requested and/or mutually agreed upon.

Additionally, if overdue amounts delay the shipment of the goods for over 30 calendar days, you will be responsible for the condition of the goods thereafter and for any costs related to additional quality control.


DELIVERY, RISK AND TITLE 

Approval. You will inspect and approve the Products’ quality prior to shipment from the port of origin (Lima Callao) through one of the following two methods (as you decide): 1) representative samples from production (TOPS) shipped via courier to you, or 2) a QC Contractor will visit the our Lima office, to examine the Products for quality and accuracy. Either method requires you to approve the goods in writing prior to Shipment from Lima and must be factored into the agreed upon timeline for production and shipment. 

Delivery and Delivered.

You are the Importer of Record. In this case, delivery is at the port of origin (Lima). Once quality is approved, Products will be transported to the Lima, Callao port in Peru and turned over to the responsible freight agent, as designated by you. All transport, insurance and responsibility for the Order is yours from that point forward.

We are the Import of Record. Delivery is to the final destination in the designated country and address. Quality must still be approved prior to shipment from the port of origin (Lima). We reserve the right to choose the freight and customs agent, the travel route and purchase insurance. These costs are not included in the product FOB unit cost and will be charged separately.

We will use reasonable endeavors to deliver the products on or before the delivery date requested in the Order, but will not be liable for any loss, liability or damage resulting from any delay, nor will you be relieved of any obligation to accept or pay for the Products by reason of that delay. 

Warranties. We represent, warrant and covenant that: (a) the Products are genuine and free from gross defects; (b) all materials and other items incorporated into the Products are as specified and approved by you; (c) We agree to comply with all relevant laws and standards; (d) We possess clean and clear title to, and have the unencumbered right to sell, each and every one of the Products supplied or to be supplied to you. 

Gross Defect and Credit. Where the Parties agree there are gross defects present in some of the Products, we will compensate you for the FOB value of the defective Products by applying a credit to your account for application to the next PO. The identification of a gross defect being present is some of the Products will not be grounds for rejection or return of the Product(s). The Parties agree the expense of shipping rejected or returned Products is often cost prohibitive and will not be used as a remedy for addressing gross defects, unless otherwise agreed in writing by both Parties. Any and all claims must be presented within one month of delivery.

COVENANTS

Intellectual Property. Under this Agreement Intellectual Property will be any and all novel, non-derivative idea, design, drawing, manufactured, or any other form developed by either Party.

Non-Intellectual Property. Any common, obvious, or derivative design elements will be considered Non-Intellectual Property under this Agreement. 

You (and your licensors) own all Intellectual Property rights in your tech packs and original designs. 

We own the Intellectual Property that we create and introduce to the Product as feedback, manuals, tech packs and the like that we create for our supply chain, or other suggestions that allow for the bulk production of the Product. The Parties acknowledge we are in the business of assisting brands in the creation of product design, and cannot be restricted from using Non-Intellectual Property, or Intellectual Property owned by us, nor can we be required to hand over our Intellectual Property as part of the services or products offered.

Notifying of Issues. We must promptly notify you where the Manufacturer becomes aware, or reasonably suspects, that your Intellectual Property Rights are being infringed, or are likely to be infringed, including any circumstance that suggests a person may have unauthorized knowledge, possession or use of the Products.

Confidential Information. We will protect your information that is identified as confidential or that reasonably should be considered confidential, including, without limitation, your technical specifications for its designs. We will not use any trademark, service mark, commercial symbol, or your other proprietary right; issue press releases or other publicity relating to you or this Agreement, without your written approval. We can, however, refer to you and Products made for you in private promotional materials. 

The Parties acknowledge we are in the business of assisting Clients in the creation and manufacturing of Products. Our use of any common, obvious, or derivative design elements cannot be considered a breach under this Agreement. Only novel, non-obvious, or original design elements will be considered confidential or proprietary information under this Agreement. The terms and obligations set forth in this Section will survive expiration or earlier termination of this Agreement.

Non-Solicitation. You agree to not, during the Agreement and for a period of five (5) years following termination of this Agreement, either directly or indirectly, call on, solicit, or otherwise call upon our other clients, factory partners, knitting suppliers, or employees of Harkened Rows Pbc or Fibras Unidas SAC, either for your own benefit, or for the benefit of any third-party. The terms and obligations set forth in this Section will survive expiration or earlier termination of this Agreement.

ADDITIONAL AGREEMENTS

Termination. This Agreement may be terminated by either Party with (60) days written notice based on the other Party’s breach of this agreement, a Notice of Breach and Intent to Terminate. The breaching Party agrees to have thirty (30) from receiving date of the Notice of Breach and Intent to Terminate to cure any breach. Termination will not effect your obligation to pay for any Products received or shipped by us to you prior to Termination. Termination will not prevent a Party from seeking any remedy it may be entitled to by law or equity or under this Agreement. The provisions of this Agreement which by their nature are intended to survive termination of the Agreement (including, without limitation, representations, warranties, intellectual property, indemnification, insurance, confidentiality, non-solicitation, payment obligations, damages limitation, dispute resolution, and choice of law and jurisdiction) will survive termination.

Assignment. Neither Party will assign this Agreement, or any obligation or right (including any right to payment) in the Agreement, without the other Party’s prior written consent, which will not be unreasonably withheld. 

Limitations on Liability; Indemnification; Hold Harmless. NEITHER PARTY AGREES TO BE LIABLE FOR ANY CONSEQUENTIAL, SPECIAL, PUNITIVE, INCIDENTAL, OR INDIRECT DAMAGES, OR LOST PROFITS OR OPPORTUNITIES WHETHER OR NOT THE PARTIES KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES. REGARDLESS OF WHETHER ANY REMEDY HEREIN FAILS OF ITS ESSENTIAL PURPOSE, THE PARTIES SOLE AND EXCLUSIVE REMEDY FOR ANY CLAIM OF ANY TYPE WHATSOEVER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY PRODUCTS WILL BE LIMITED TO PROVEN DIRECT DAMAGES. THE OBLIGATIONS SET FORTH IN THIS SECTION WILL SURVIVE EXPIRATION OR EARLIER TERMINATION OF THIS AGREEMENT.

The Parties mutually agree to indemnify, defend and hold each other harmless against any and all claims, costs, and expenses, including attorneys’ fees, arising in connection with third-party claims derived from the indemnifying Party’s actions or oversights. 

Governing Law. This Agreement is governed by the laws of the State of Texas without reference to any applicable conflict of laws rules and specifically excluding application of the United Nations Convention on Contracts for the International Sale of Goods. 

Dispute Resolution/Arbitration. The Parties agree that all disputes relating to or arising out of this Agreement, or relating to any of its subject matter, including without limitation any question concerning its formation, validity, interpretation, performance, breach or termination, (each a “Dispute” and collectively, “Disputes”) will be resolved in accordance with this Section. Each Dispute will be resolved by arbitration conducted in accordance with American Arbitration Association rules in front of a mutually agreed upon Arbitrator sitting in Harris County.

Controlling Language and Currency. The governing language of this Agreement will be English, and any interpretation of this Agreement will be based upon this English language version. All standard notices, communications and disputes that may arise under this Agreement will be made and will occur in English. All references to money, currency or amounts due and payable hereunder refer to U.S. dollars. 

Miscellaneous: 

  1. Each Party agrees to be responsible for their own tax obligations.

  2. No estimates or forecasts, if any are provided, will be binding on either Party.

  3. The failure of any Party to require strict compliance with the performance of any obligations, terms and/or conditions of this Agreement will not be deemed a waiver of that Party’s right to require strict compliance in the future or construed as consent to any breach of the terms of this Agreement.

  4. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and which collectively will constitute one Agreement. Use of email and electronic signatures will have the same force and effect as an original signature.

  5. If any provision of this Agreement is held invalid or unenforceable for any reason, the remaining provisions will continue to be valid and enforceable. If a court finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid and enforceable, then such provision will be deemed to be written, construed and enforced as so limited.

  6. This Agreement will be fairly interpreted and construed in accordance with its terms and without strict interpretation or construction in favor of or against either Party. Each Party has had the opportunity to consult with counsel in the negotiation of this Agreement. Section headings are for reference purposes only, and should not be used in the interpretation hereof

Force Majeure. Neither Party is liable to the other for any inability to perform its obligations under the Agreement arising out of or caused by, directly or indirectly, a Force Majeure event (e.g. forces beyond control, including, without limitation, strikes, lockouts, labor disputes, acts of God, acts of war, terrorist acts, pandemic illness, civil or military disturbances, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, fire, earthquakes, nuclear or natural catastrophes, or acts of God and interruptions, loss or malfunctions of utilities, interruption of transportation, loss of necessary communications or computer services, or other casualty), provided that the affected Party: 

  1. promptly notifies the other Party and provides full information about the Force Majeure; 

  2. uses best efforts to overcome the Force Majeure; and 

  3. continues to perform its obligations to the extent practicable. 

We look forward to working with you. If you have any questions concerning the contents of this letter, please do not hesitate to call me directly.

On behalf of Harkened Rows PBC and Fibras Unidas SAC