Purchase Order Terms and Conditions

EFFECTIVE: MARCH 15, 2016

These terms and conditions (“PO Terms”) may be periodically updated and the current version will be posted at https://www.zscaler.com/poterms. SELLER’S ACCEPTANCE OF ANY PURCHASE ORDER FROM ZSCALER, INC., INCLUDING ANY OF ITS SUBSIDIARIES AND AFFILIATES (“ZSCALER”), IS EXPRESSLY LIMITED TO THESE PO TERMS.  ANY DIFFERENT OR ADDITIONAL TERMS AND CONDITIONS ON A QUOTE, ACKNOWLEDGMENT, INVOICE OR OTHER DOCUMENT SHALL HAVE NO FORCE AND EFFECT UNLESS SPECIFIED IN A SEPARATE SIGNED AGREEMENT BETWEEN DULY AUTHORIZED REPRESENTATIVES OF ZSCALER AND SELLER. 

A. Acceptance

  1. Seller accepts Zscaler’s purchase order (“Purchase Order”) by verbal acknowledgment, written acknowledgment, or by commencing performance under the Purchase Order.  Upon Seller’s acceptance, the Purchase Order shall constitute a binding agreement between Seller and Zscaler and may not be modified except by an amended Purchase Order which is issued by Zscaler.

B. Proprietary and Confidential Information

  1. Seller shall use the same degree of care as it employs with its own Confidential Information, but in all events shall use at least a reasonable heightened degree of care, to prevent Zscaler’s proprietary and confidential information from being disclosed to third parties.  “Confidential Information” means all information disclosed by Zscaler to Seller which Zscaler labels as confidential at the time of disclosure or which otherwise should be reasonably understood by Seller to be confidential.  All Confidential Information is considered disclosed solely in connection with the Purchase Order.  Seller shall, upon written request, certify that it has destroyed or returned all copies of the Confidential Information in its possession or control.  Any proprietary information that Zscaler provides to Seller in connection with the Purchase Order, whether in written form or otherwise, shall remain the sole and exclusive property of Zscaler and may not, without the prior written consent of Zscaler, be disclosed or used by Seller for any purpose other than direct implementation of the Purchase Order.
  2. To the extent that any products or services provided by Seller hereunder contain or embody the intellectual property of Seller or any third party, Seller hereby grants to Zscaler a non-exclusive, worldwide, perpetual, irrevocable, sub-licensable, royalty-free license to make, use, sell, offer to sell, import, reproduce, distribute, service and create derivative works based upon the products or services containing or embodying that intellectual property, and Seller represents and warrants that it has the right and full authority to grant the foregoing license.
  3. All copyrights, patents, trade secrets, or other intellectual property rights associated with any ideas, concepts, techniques, inventions, processes, or works of authorship developed or created by Seller or its personnel during the course of performing services for Zscaler (collectively, the “Work Product”) shall belong exclusively to Zscaler and shall, to the extent possible, be considered a work made for hire for Zscaler within the meaning of Title 17 of the United States Code.  Seller automatically assigns, and shall cause its personnel automatically to assign, at the time of creation of the Work Product, without any requirement of further consideration, any right, title, or interest it or they may have in such Work Product, including any copyrights or other intellectual property rights pertaining thereto.  Upon request of Zscaler, Seller shall make such further actions, and shall cause its personnel to take such further actions, including execution and delivery of instruments of conveyance, as may be appropriate to give full and proper effect to such assignment.

C.  Packaging and Documentation

  1. Products or parts shipped pursuant to the Purchase Order shall be packed by Seller in accordance with Zscaler’s specifications or, if no such specifications are provided, in accordance with the highest applicable industry standards.  Each individual product or part shall display an exterior package label that includes, as applicable, Zscaler’s part number, the manufacturer’s part number, the number of the Purchase Order, and any other information required in the Purchase Order specifications, including, but not limited to, a bar code.  All packages shall contain, as applicable, an itemized packing slip that identifies Zscaler’s part number, quantity and the number of the Purchase Order.  Each box shall contain only products or parts ordered under the Purchase Order, but multiple boxes may be placed in a larger container.
  2. Seller’s invoice shall list, as applicable, the Zscaler part number, the number of the Purchase Order, packing slip number, quantity delivered, price matching Purchase Order price, the start and end date of any maintenance contract and the manufacture’s part number for each product or part.  Any invoice for any pre-paid amounts must be accompanied by satisfactory documentation, including any invoice that includes pre-paid freight charges, which must be accompanied by a copy of the carrier’s freight bill.  Zscaler reserves the right to decline payment of undocumented charges.  Payment of each invoice will be made by Zscaler based on the terms of the corresponding Purchase Order.  Any credits or discounts shall be computed on the total invoice amount.

D. Pricing and Payment Terms

  1. Seller’s prices and quotation shall clearly state (a) whether or not applicable local, state, federal and VAT taxes are included, and (b) are inclusive of any other costs (including, without limitation, set-up, testing and tooling costs and non-recurring engineering expenses) incurred by Seller in connection with the development or manufacture of products for sale to Zscaler and delivery to Zscaler’s destination.
  2. The currency for any payments due under the Purchase Order shall be U.S. dollars unless Zscaler’s agrees in writing to pay in another currency and the payment matches the currency stated on the Purchase Order.
  3. For any price termed “not to exceed,” Seller warrants that the price charged to Zscaler is based on actual costs incurred by Seller for its performance with respect to the product, part or service in question.
  4. Unless otherwise agreed, the terms of payment for all products, parts or services purchased under the Purchase Order shall be net forty-five (45) days from later of the date of Zscaler’s receipt of invoice, receipt of products or receipt of notice that the services are complete.

E. Shipment Delivery

  1. All products purchased under the Purchase Order shall be shipped in accordance with the delivery schedule specified on the Purchase Order and shall clearly state the delivery terms per Incoterms 2010.If shipment is late for any reason other than specified in section J(4) herein, Seller shall expedite shipment by air freight or other mode of shipment specified by Zscaler at Seller’s expense.
  2. Seller shall provide for delivery of all products to Zscaler’s receiving department during normal business hours unless otherwise directed by Zscaler.  Quantities and delivery schedules for products purchased hereunder shall be as specified on the Purchase Order.  Zscaler shall have no liability or obligation for any excess quantities or early deliveries shipped by Seller.
  3. Seller may release a partial shipment to Zscaler only if specified by Zscaler on the Purchase Order or otherwise approved in writing by an authorized representative of Zscaler.  The acceptance by Zscaler of any such partial shipment shall not affect any other remedy to which Zscaler may be entitled on account of Seller’s inability to supply Zscaler’s complete requirements when due.  Zscaler may reschedule the Purchase Order or any delivery hereunder, in whole or in part, for any reason at its convenience and at any time upon written notice to Seller and Zscaler shall not be liable to Seller for any penalties or other charges of any kind or nature whatsoever in the event of such rescheduling.  Time is of the essence for the Purchase Order.

F. Inspection and Acceptance

  1. For a period of 60 days following delivery of products or completion of services, all products and services shall be subject to acceptance, inspection and testing by Zscaler.  Zscaler shall have the right at any time to reject any non-conforming product or service at no cost to Zscaler.  
  2. Any replacement product furnished by Seller shall be new or repaired fully conforming products and shall be subject to Zscaler’s approval.
  3. In no event shall the inspection and acceptance of any products or services by Zscaler, or the payment for such products or services by Zscaler, in any way impair or reduce Zscaler’s rights under warranty provisions stated herein or Zscaler’s right to further inspect and test such products or services.  Seller’s warranty period for any new, repaired or replacement products or services shall commence upon acceptance by Zscaler.

G. Seller’s Warranty

  1. Seller warrants that all products, parts and services purchased hereunder shall (i) conform to all applicable federal, state and other laws, (ii) conform to all applicable specifications, drawings and samples, (iii) be of good material and workmanship, (iv) not infringe the intellectual property rights of any third party, and (v) be new and free from defects in design, material, workmanship and programming.
  2. Seller further warrants that: (i) it shall perform the services with due diligence and in a safe, workmanlike and competent manner and in accordance with all provisions of the Purchase Order and applicable law, (ii) it has or shall obtain, at its expense, before performing all the necessary certificates, permits, licenses, and authorizations to conduct business and perform the services, and (iii) it shall ascertain, before performing any services, whether any drawings and specifications are at variance with applicable law and good engineering and operational practices, notify Zscaler of such variances, and with Zscaler’s agreement ensure that the necessary changes are made. 
  3. Seller shall, at Zscaler’s option and Seller’s expense, either promptly repair or replace non-conforming products, parts or services, or shall reimburse Zscaler its costs of remedying such non-conformance including, but not limited to, obtaining replacement products or services from an alternate source (provided that Zscaler shall have sought Seller’s prior written consent, which shall not be unreasonably withheld, before incurring any such expense).  Any and all costs associated with remedying any nonconforming product or service, including the shipment of nonconforming products or parts by Zscaler to Seller and the return shipment of repaired or replacement products or parts by Seller to Zscaler, shall be at Seller’s expense.
  4. Seller represents and warrants that each delivery hereunder is free and clear of any and all liens, claims and encumbrances of any kind and that Seller has all requisite authority and has obtained all authorization required by law under any agreement from any and all third parties necessary for Seller to provide the foregoing warranty and sell the product to Zscaler for its intended use.
  5. These representations and warranties shall survive any inspection, delivery, acceptance or payment.
  6. Seller acknowledges and agrees that it shall have documented reliability and quality manufacturing processes, and at the request of Zscaler shall be able to present to Zscaler engineering documentation which demonstrates the implementation of these policies in the design, analysis, test and manufacture of the product, each in accordance with ISO9001 requirements, or other suitable standards (i.e., TL9000) for product reliability and quality.

H. Seller’s Indemnity

  1. Upon receipt of notification by Zscaler, Seller will promptly investigate and defend, at Seller’s expense, all claims, allegations, suits, actions or proceedings in which Zscaler or its affiliates, agents, employees, directors, successors, assigns, distributors or customers are made defendants or claimed potential defendants for any infringement, claimed infringement or alleged inducement of infringement, or unauthorized or unlawful use of any patent right, copyright, trademark right, trade secret, design right (whether registered or unregistered), mask work, proprietary data, database right or other information arising from the sale, use, license, sub-license, lease or other disposition of any product or part received from Seller hereunder or as the result of any products or services provided by Seller hereunder.  Seller further agrees to pay and discharge any and all judgments rendered in any such suits actions or proceedings against any such defendants.  Seller shall have the right to settle any such suits, actions or proceedings on terms and conditions of Seller’s own election, provided that such settlement is not adverse to Zscaler and does not conflict with Seller’s obligations in the Purchase Order.
  2. In the event that Seller fails to promptly investigate and defend or settle any claim, allegation, suit, action or proceeding as described herein, then Zscaler shall, following notification to Seller, have the right to assume sole control of the defense and settlement or other resolution of such matter with respect to Zscaler only, and Seller shall pay all costs, expenses and attorney’s fees incurred by Zscaler and any judgments or decrees that may be rendered against Zscaler.

I. Termination

  1. Prior to acceptance, Zscaler may cancel the Purchase Order or any delivery hereunder, in whole or in part, for any reason at its convenience and at any time upon written notice to Seller and shall not be liable to Seller for any penalties or other charges of any kind whatsoever in the event of such cancellation.
  2. If Seller wishes to terminate the Purchase Order, it shall so notify Zscaler in writing.  Zscaler may in its sole discretion reject such request to terminate.
  3. Termination of the Purchase Order by either party shall not prejudice the right of either party to recover any monies or require performance of any obligations due at the time of such termination.  In the event of termination of the Purchase Order by Zscaler due to Seller’s breach: (a) Seller shall, at Zscaler’s option and within thirty (30) days after Zscaler’s written request, pass title and deliver to Zscaler such quantities as Zscaler shall request of completed products ordered under the Purchase Order in Seller’s possession meeting applicable specifications, and/or raw materials or work-in-progress attributable to such products, provided that Zscaler shall pay to Seller, within thirty (30) days after receipt, (i) for completed product, the lowest net price that would have applied if Seller had delivered such products according to the terms of the Purchase Order, (ii) for raw materials, Seller’s documented net cost, and (iii) for work-in-progress, Seller’s documented net cost for the raw materials contained therein, (b) Seller shall be liable to Zscaler for the difference between the lowest net price that would have applied if Seller had delivered such products according to the terms of the Purchase Order and the actual price paid by Zscaler for replacement products, for the quantity of products specified on the Purchase Order that were undelivered due to Seller’s breach and (c) Zscaler shall only be liable to Seller for any services that have been accepted at the time of termination.  In the event of termination, and regardless of any dispute which may exist between Seller and Zscaler, all Zscaler property, materials, and work in Seller’s possession, including any and all documents in the possession of Seller and/or Seller’s personnel, in any way pertaining to the Purchase Order, shall be delivered immediately to Zscaler.

J. Miscellaneous

  1. Seller shall, in the manufacture and sale of products and parts to Zscaler, and otherwise in its performance of its obligations under the Purchase Order, fully comply with all applicable federal, state, local and other governmental laws, rules and regulations.
  2. Seller shall not use any subcontractors to provide products or to perform services under the Purchase Order without written permission from Zscaler, and no such permission will relieve Seller of any of its obligations under the Purchase Order.  Seller shall ensure that all of its contracts with its subcontractors contain provisions which are in conformity with and no less stringent than the provisions of the Purchase Order.  Seller shall be responsible to Zscaler for services performed by all its subcontractors to the same extent it is for activities performed by Seller’s employees.  
  3. The parties are acting under the Purchase Order as independent contractors.  Under no circumstances shall Seller, or any of its employees, have any status as an employee of Zscaler.  In addition, nothing in the Purchase Order shall be contemplated by the Parties to create an agent, joint venturer, or partner relationship.  Neither party shall have authority to contract for or bind the other party in any manner nor represent itself as an agent of the other party.
  4. Neither party shall be liable for delay or failure to perform, in whole or in part, by reason of contingencies beyond the reasonable control of the party affected, provided, however, that the party so affected shall promptly give notice to the other party whenever such contingency or other act becomes reasonably foreseeable and shall use its best efforts to overcome the effects of the contingency as promptly as possible.  The party affected by an event of the sort contemplated by this paragraph may suspend performance of the Purchase Order for a period of time equal to the duration of the event excusing such performance.  Notwithstanding the foregoing, in the case of any delay in delivery, Zscaler may, in its sole discretion, cancel all or part of the Purchase Order.
  5. Seller shall not, without the prior written consent of Zscaler, issue any news release, advertisements or other promotional materials that refer to, or otherwise disclose any information relating to, Zscaler or the Purchase Order.  Further, Seller shall not use Zscaler’s name, trade name, trademarks or trade mark rights (whether statutory or common law, registered or unregistered) without Zscaler’s prior written consent. 
  6. The remedies provided herein shall be cumulative and in addition to any other remedies available at law or in equity.  The failure of either party to require the performance of any of the terms of the Purchase Order or the waiver by either party of any default under the Purchase Order shall not prevent a subsequent enforcement of such term, nor be deemed a waiver of any subsequent breach.
  7. If any provision of the Purchase Order or these PO Terms is held invalid, the remainder of the Purchase Order or the remainder of such provision and the application thereof to other situations or circumstances shall not be affected thereby.
  8. The Purchase Order and these PO Terms shall be governed by and construed under the laws of the State of California without regard to the conflicts of law provisions thereof.  All litigation related to the Purchase Order shall be tried in the courts of Santa Clara County, California.  The United Nations Convention on Contracts for the International Sale of Goods shall not apply to the Purchase Order or the PO Terms. 
  9. IN NO EVENT SHALL ZSCALER BE LIABLE FOR LOSS OF PROFITS OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM OR ARISING OUT OF OR IN CONNECTION WITH THE PURCHASE ORDER, WHETHER OR NOT Zscaler HAD BEEN ADVISED, KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES.  ZSCALER’S TOTAL LIABILITY, WHETHER ARISING OUT OF BREACH OF CONTRACT OR TORT WILL IN NO EVENT EXCEED THE AGGREGATE AMOUNT PAID OR PAYABLE BY ZSCALER TO SELLER FOR THE PRODUCTS OR SERVICES FROM WHICH SUCH LOSS OR DAMAGE DIRECTLY AROSE.  
  10. Seller shall not assign or transfer the Purchase Order or any rights or obligations hereunder without Zscaler’s written consent.