Mutual Termination Agreement
Parties
This agreement is dated the date on which it is signed by the last of the parties.
This agreement is made between [First Party] (the "First Party") and [Second Party] (the "Second Party").
Key Terms
"Existing Agreement" means [Existing Agreement], together with each amendment, change order, purchase order, statement of work, order form, schedule and other document entered into under or incorporated into it.
"Termination Date" means [Termination Date].
"Termination Scope" means [Termination Scope].
"Final Invoice Date" means 30 days after the Termination Date; "Payment Period" means 30 days; "Refund Date" means 30 days after the Termination Date; "Property Return Period" means 30 days after the Termination Date; "Data Return Period" means 30 days after the Termination Date; "Data Deletion Period" means 60 days after the Termination Date; "Transition Period" means the period from the date of this agreement until 30 days after the Termination Date; "Third-Party Notice Period" means 10 business days after the date of this agreement; and "Confidentiality Period" means three years after the Termination Date.
"Insurance Run-off Period" means three years after the Termination Date.
"Transition Rate" means [Transition Rate].
Termination
The parties agree to terminate the Existing Agreement to the extent of the Termination Scope with effect from the Termination Date. Except for provisions that this agreement or the Existing Agreement states survive, neither party is required to perform obligations under the terminated portion after the Termination Date.
Financial Close
Termination does not affect any right, remedy, obligation or liability that accrued before the Termination Date. Amounts properly due for goods delivered or services performed before the Termination Date remain payable in accordance with this agreement and the Existing Agreement.
No later than the Final Invoice Date, each party must submit any final invoice or other written statement of amounts it claims are due under the Existing Agreement. The parties must cooperate in good faith to reconcile those statements and determine the net closing balance. The party owing the net closing balance must pay the undisputed amount within the Payment Period after receiving the corresponding invoice or statement. Neither party may withhold or set off an amount except for an amount that is due and payable, undisputed, or finally determined by a court of competent jurisdiction.
Second Party must refund to First Party by the Refund Date any prepaid fees, deposit or other advance payment allocable to goods not delivered or services not performed after the Termination Date, less amounts properly due to Second Party under the Existing Agreement and this agreement. The refund must be accompanied by a reasonable calculation.
First Party must pay Second Party an early termination charge of [Early Termination Charge]. The parties agree that this charge is a reasonable allocation of the costs and value associated with early termination and is not a penalty. It is due within the Payment Period after the Termination Date and is subject to the Financial Close clause.
Return of Property
Within the Property Return Period, each party must return to the other party, or at the other party's written direction securely destroy, all tangible property, equipment, materials, documents and media belonging to the other party that are in its possession or control, ordinary-course copies and records required by law excepted. The receiving party must bear reasonable return shipping costs for its property unless the Existing Agreement provides otherwise.
Data
Within the Data Return Period, each party must make available to the other party its data held in connection with the Existing Agreement in a commonly used, machine-readable format, to the extent reasonably practicable and permitted by law. Within the Data Deletion Period, each party must securely delete the other party's data from its active systems and require deletion by its subcontractors, except for copies retained in routine backup systems until overwritten in the ordinary course, and records required by law or reasonably retained for legal claims, audit or compliance. Retained data remains subject to the Existing Agreement's confidentiality, security and use restrictions. On written request, an authorized officer must certify compliance with this clause.
Confidentiality
"Confidential Information" means non-public information that one party or its affiliates disclose to the other in connection with this agreement or the Existing Agreement and that is marked or would reasonably be understood to be confidential. Each party must protect the other's Confidential Information with at least reasonable care, use it only to perform or receive the services and to exercise rights or meet obligations that survive termination, and disclose it only to its personnel, professional advisers, and permitted subcontractors who need to know it and are bound by equivalent confidentiality obligations, or where required by law after giving prompt notice if legally permitted. These obligations do not apply to information that the recipient can show is or becomes public through no fault of its own, was lawfully known to it without restriction, is independently developed, or is lawfully received from a third party without restriction. These obligations continue for the Confidentiality Period and, for trade secrets, for as long as they remain trade secrets.
Under 18 U.S.C. § 1833(b), an individual is not held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret (a) in confidence to a federal, state, or local government official, directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or (b) in a complaint or other document filed in a lawsuit or other proceeding, if that filing is made under seal. An individual who files a lawsuit for retaliation for reporting a suspected violation of law may disclose the trade secret to the individual's attorney and use it in the court proceeding if the individual files any document containing the trade secret under seal and does not disclose it except under court order.
Intellectual Property
Except as expressly stated in this agreement, termination does not transfer ownership of either party's intellectual property. Each party retains ownership of its intellectual property and of materials it owned before the Existing Agreement or developed independently of it. Licences granted under the Existing Agreement end on the Termination Date except to the extent the Existing Agreement expressly provides that they survive. Any paid-up, perpetual or otherwise surviving licence validly granted before the Termination Date, and any corresponding sublicence to a customer or end user validly granted before the Termination Date, continues in accordance with its terms. Each party must provide reasonable cooperation to document those continuing rights.
Transition
During the Transition Period, each party must provide reasonable cooperation requested by the other to effect an orderly handover of the terminated activities, including transfer of then-current records, status information, open work items and reasonable knowledge transfer. Transition assistance beyond obligations already included in the Existing Agreement must be agreed in writing. Unless otherwise agreed, each party bears its own costs of that assistance; Second Party's additional services are chargeable at the Transition Rate, if stated.
Pre-Termination Claims
Termination does not extinguish warranties, indemnities or other obligations under the Existing Agreement to the extent they apply to goods delivered, services performed, acts, omissions or claims arising before the Termination Date. Any claim must be made and handled in accordance with the Existing Agreement, including its notice, defence, limitation and survival provisions.
Insurance
Each party must maintain, or procure extended reporting period coverage for, the insurance required of it under the Existing Agreement for the Insurance Run-off Period, to the extent commercially available on reasonable terms and necessary for claims arising from acts or omissions before the Termination Date. On reasonable request, a party must provide evidence of that coverage.
No New Restrictions
Nothing in this agreement creates a new non-competition, non-solicitation, non-dealing or similar restriction. Any restriction in the Existing Agreement survives only if and to the extent the Existing Agreement expressly provides, subject to applicable law.
No Admission
This agreement is a commercial accommodation and is not an admission of liability, wrongdoing, breach or fault by either party or any of its affiliates.
Release
The parties do not give a release under this agreement. Their rights and remedies remain subject to the Existing Agreement and applicable law.
Third-Party Notices
Within the Third-Party Notice Period, the parties must consult in good faith about notices reasonably required for customers, end users, subcontractors, suppliers, guarantors, insurers or regulators in connection with the termination. Neither party may make a notice in the other party's name without its prior written approval, except where required by law. Each party is responsible for notices required because of its own legal obligations or relationships.
Announcements
Neither party may name the other as a client or vendor, or describe the services or the termination in any publicity without the other's prior written consent, except for a disclosure required by law, regulation, stock-exchange rule or court order after giving prompt notice if legally permitted.
Effect of Termination
The provisions of this agreement that by their nature or express terms are intended to survive do survive, including the Financial Close, Data, Confidentiality, Intellectual Property, Pre-Termination Claims, Insurance, No New Restrictions, No Admission, Release, Announcements, Effect of Termination and General provisions. The provisions of the Existing Agreement that expressly survive termination continue according to their terms, subject to this agreement.
This agreement records the parties' agreement concerning termination of the Existing Agreement. Except as expressly amended by this agreement, the Existing Agreement remains unchanged. If there is a conflict between this agreement and the Existing Agreement, this agreement prevails to the extent of that conflict.
General
An amendment to this agreement is effective only if it is in writing and signed by authorized representatives of both parties.
Neither party may assign, transfer or delegate this agreement or any right or obligation under it without the other party's prior written consent, except to an affiliate or in connection with a merger, reorganization, sale of substantially all assets or change of control, provided that the assignee agrees in writing to be bound by this agreement. An assignment in breach of this clause is void to the extent permitted by law.
A notice under this agreement must be in writing and delivered by hand, by nationally recognized overnight courier, or by email to First Party at [First Party Notice Address] or to Second Party at [Second Party Notice Address], or to any other address a party designates by notice. A notice is effective on delivery, except that an email received outside the recipient's normal business hours is effective on the next business day.
This agreement and the Existing Agreement, as modified by this agreement, are the entire agreement between the parties concerning the termination and supersede prior discussions, proposals and understandings concerning that subject. Neither party relies on a statement not set out in those documents, except that this clause does not limit liability for fraud.
If a provision of this agreement is held invalid, illegal or unenforceable, it must be modified to the minimum extent necessary to make it enforceable; if modification is not permitted, it must be severed. The remaining provisions remain in effect.
This agreement may be signed in any number of counterparts. Each counterpart is an original, and together they form a single instrument. Delivery of an executed counterpart by electronic means is effective. The parties intend that electronic signatures be valid and enforceable under the Electronic Signatures in Global and National Commerce Act (E-SIGN), the Uniform Electronic Transactions Act (UETA), and other applicable law.
Except for the released persons under the Release clause, no person other than the parties has a right to enforce this agreement.
Governing Law and Disputes
This agreement is governed by the laws of the law governing the Existing Agreement, without regard to its conflict-of-laws rules. Each party submits to the exclusive jurisdiction of the forum specified in the Existing Agreement for any action arising out of or relating to this agreement, except that either party may seek injunctive relief in any court of competent jurisdiction to protect its Confidential Information or intellectual property. Goods sold under the Existing Agreement are governed by the Uniform Commercial Code where it applies.