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Terms and Conditions

1. ACCEPTANCE.

This purchase order constitutes an offer by the Buyer to Seller upon the terms and conditions stated herein and in the body of the order, and shall become a binding

contract upon acceptance thereof either by acknowledgment or performance, said offer is limited to said terms and conditions and no deviation therefore shall be acceptable.

2. DELIVERY

. Time and date of deliveries are of the essence of this order. Buyer reserves the right to cancel the order and reject the goods upon default by Seller in time or date of

delivery, or Buyer as its option may approve in writing a revised delivery schedule. Unless otherwise agreed to in writing by Buyer, Seller shall not make material commitments or production

arrangements in excess of the amount or in advance of the time necessary to meet delivery schedule. Goods shipped to Buyer in advance of delivery schedule may be rejected or returned to

Seller at Seller’s expense. Seller shall not reserve a security interest in goods shipped to Buyer.

3. PRICING.

Seller warrants that the prices for the articles sold to Buyer under this order are not less favorable than those currently extended to any other customer for the same or like

articles in equal or less quantities. In the event Seller reduces its price for such articles during the term of this order the price for the goods ordered hereby shall be reduced correspondingly.

4. REJECTIONS.

All goods are subject to inspection and test by Buyer at place of manufacture or at destination or at both. If any of the goods are found at any time to be defective in

material or workmanship (including goods damaged because of unsatisfactory packaging by Seller), or otherwise not in strict conformity with the requirements of the order, including drawings

and specifications and approved sample, if any, Buyer, in addition to any other rights which it may have under warranties or otherwise, shall have the right to (a) reject and return such goods at

Seller’s expense and to receive full credit for any such rejected goods, (b) upon written request, to require replacement of any such rejected goods without additional cost to Buyer, (c) retain and

use the goods with an equitable reduction in purchase price. Buyer is under no obligation to hold rejected goods for the Seller.

5. BUYER’S PROPERTY.

Unless otherwise agreed to in writing, layouts, models, all tools, gauges, designs, sketches, drawings, blueprints, patterns, dies, specifications, engineering

data or other technical or proprietary information, special appliances, and other equipment or material of every description furnished to Seller by Buyer, and any replacement thereof, or any

materials affixed or attached thereto, shall remain the property of the Buyer. Such property, and whenever practical, each individual item thereof, shall be plainly marked or otherwise adequately

identified by Seller as #property of AAF International” shall be safely stored separate and apart from Seller’s property and shall be subject to examination by Buyer. Seller shall not substitute

any property for Buyer’s property and shall not use such property except in filling Buyer’s orders. Such property while in Seller’s custody or control shall be maintained in good condition at

Seller’s expense, shall be held at Seller’s risk and shall be kept insured by Seller at Seller’s expense in an amount equal to the replacement cost with loss payable to Buyer.

Seller will furnish Buyer a copy of the insurance policy on request. Such property shall be subject to removal at Buyer’s written request, in which event Seller shall prepare such property for

shipment and shall redeliver the same to Buyer in the same condition as originally received by Seller, reasonable wear and tear excepted. Any special tooling, the full cost or a substantial

portion of the cost of which is included in the price of this order shall upon completion of this order become the property of Buyer and Seller shall return the same to Buyer or make such other

disposition thereof as may be directed or approve by Buyer.

6. PATENT RIGHTS.

Any and all discoveries, inventions and designs, whether or not patentable or subject to copyright, conceived or reduced to practice by Seller or its employees in

connection with the supply, pursuant to this Purchase Order, of any item as to which Buyer furnishes the specifications, shall be promptly disclosed to Buyer and shall become the property of

Buyer. Seller and its employees shall, upon request, execute all papers necessary to assign such discoveries, inventions and designs to Buyer and to cause at Buyer’s expense patent

applications to be filed, thereon in favor of Buyer. The decision as to whether to the patent applications and to prosecute same shall made solely by Buyer.

7. CHANGES.

Buyer shall have the right to make changes in the order by a notice in writing to the Seller, if such changes cause an increase or decrease in the amount due under the

order or in the time required for its performance, an equitable adjustment shall be made and the order shall be modified in writing accordingly. Any claim for adjustment must be asserted by the

Seller in writing within 15 days from the date the change is ordered. Nothing contained in this clause shall relieve the Seller from proceeding without delay in the performance of this order as

changed.

8. ASSIGNMENT AND SUBCONTRACTING.

No assignment of this order shall be binding upon Buyer until its written consent thereto is obtained. Seller shall not procure or contract

for the procurement of any item covered by this order in completed or substantially completed form without first securing the written approval of the Buyer.

9. INDEMNIFICATIONS.

Seller shall defend and shall indemnify and hold harmless Buyer, its successors, assigns, customers, and the users of its products, from all loss and damage

including attorneys’ fees, by reason of any and all claims and suits charging injury or charging infringement of any patent, trademark or copyright arising out of the sale or use of any goods

furnished hereunder except that Seller shall have no liability with respect to patent infringement for goods as to which Buyer furnishes complete specifications. Seller agrees to protect, defend,

hold harmless and indemnify Buyer from and against any and all liability and expense, including attorneys’ fees, resulting from any alleged or claimed defect in product whether latent or

patent, including allegedly improper construction and design, or from the failure of Product to comply with specifications or with any express or implied warranties of Seller or arising out of the

alleged violation of any statute, ordinance, administrative order, rule or regulation connected with the manufacture or sale of Product, including but not limited to the Federal Occupational Safety

and Health Act of 1970, as amended. Seller further agrees to obtain and maintain during the life of this agreement at its expense, product liability insurance, with a vendor’s endorsement, in

such form and amount and in such company as may be approved by Buyer in writing. Satisfactory evidence of such insurance shall be submitted to Buyer upon request. For the purposes of this

paragraph, #Product” shall be deemed to include any packaging supplied by Seller.

10. WARRANTIES.

By accepting this offer, Seller warrants that all items delivered under this order will be #merchantable” as defined in Sect. 2-314 of the Uniform Commercial Code

and free from defects in materials and workmanship (including damage due to unsatisfactory packaging by Seller), that all items delivered will be strictly in accordance with Buyer’s

specifications, drawings, and approved sample, if any, and to the extent such items are not manufactured pursuant to detailed designs furnished Buyer, that all items will be free from defects in

design and suitable for the intended purposes, that all items subject to the Occupational Safety and Health Act of 1970 are in conformity with the most current Standards established thereby.

11. SURVIVAL OF INDEMNIFICATIONS AND WARRANTIES.

Seller’s obligations under Paragraphs 9 and 10, hereinabove shall not be deemed to be exclusive, and together with

any service warranties and guarantees, if any, shall survive acceptance and payment, and shall run to Buyer, its successors, assigns, customers and the users of its products.

12. DEFAULTS - BANKRUPTCY - CANCELLATION.

Buyer may cancel this order, in whole or in part by written or telegraphic notice: (a) if the Seller shall become insolvent or make

a general assignment for the benefit of creditors, or a receiver or liquidator for Seller is appointed or applied for, or if Seller admits in writing its inability to pay its debts as they become due; or

(b) if any proceeding under any applicable Federal or State bankruptcy or insolvency law is brought by or against Seller; or (c) if, at any time, Seller defaults in the performance of any term or

condition which it is obligated to perform hereunder. After receipt by Seller of notice of any such termination, Buyer at its option may require the Seller to transfer title and deliverto Buyer any

satisfactorily completed work and such work in process as the Seller has specifically produced or specifically acquired for the performance of such part of the order as has been cancelled, upon

any such cancellation pursuant to this clause, if the cost of completion of the order is in excess of the contract price, then Seller shall be liable for such excess. However, except with respect to

default of subcontractors, the Seller shall not be liable for any excess costs if the failure to perform arises out of causes beyond the control and without the fault or negligence of the Seller. If the

failure to perform is caused by the default of the subcontractor and if such default arises out of causes beyond the control of both the Seller and its subcontractors, and without the fault or

negligence of either of them, the Seller shall not be liable for any excess costs for failure to perform, unless the goods or services to be furnished by the subcontractor were obtainable from other

sources in sufficient time to comply with the order. The term #causes beyond the control” as used herein may include but is not restricted to acts of God, or of the public enemy, acts of the

government in its sovereign capacity, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, or unusually severe weather; but in every case the failure to perform must be

beyond the control and without the fault or negligence of the contractor and subcontractor, as the case may be. The rights and remedies of Buyer provided in this clause shall not be exclusive

and are in addition to any other rights and remedies provided by law or under this contract. In the event of breach or default by Seller, Seller shall be liable to Buyer for damages, including

consequential damages, lost profits, damage to reputation and Buyer’s attorney fees.

13. USE OF DESIGNS, DATA, ETC.

Seller agrees that it will keep confidential the features of any equipment, tools, gauges, patterns, designs, drawings, engineering data or other

technical or proprietary information furnished by Buyer and use such items only in the production of items under this order or other orders from Buyer and not otherwise, unless Buyer’s written

consent if first obtained. Upon completion or termination of this order, or sooner if requested by Buyer, Seller shall return all such items to Buyer or make such other disposition thereof as may

be directed or approved by Buyer. Seller agrees that all such materials are the proprietary materials and information of the Buyer. Upon completion or termination, retention by Seller of the

materials which is inconsistent with the directions of Buyer or unauthorized use of the materials by Seller shall entitle the Buyer to immediate injunctive relief.

14. LAWS.

All goods shall be produced and services rendered under conditions which meet the applicable requirements of the Fair Labor Standards act of 1938, as amended, including

Section 12 (a) thereof, as amended, and all applicable Federal, State and Municipal laws and regulations governing wages, hours and conditions of labor. Seller shall insert a certificate on all

invoices submitted in connection with this order stating that the goods or services were produced or rendered in compliance with the requirements of the Fair Labor Standards Act of 1938, as

amended, including Section 12 (a) thereof, as amended. If the order is for more than $10,000 and is otherwise subject to the Walsh-Healey Act (41, U.S. Code 35-45) the representations and

stipulations required by that Act and regulations issued thereunder by the Secretary of Labor to be included in all contracts therein specified are incorporated herein by reference.

15. INDUSTRIAL LAWS.

The Seller agrees that neither the Seller nor any of the persons furnishing materials or performing work or services which are required by this order are

employees of Buyer within the meaning of or the application of any Federal or State Unemployment Insurance Law or Old Age Benefit Law or other Social Security Law, any Workmen’s

Compensation Industrial Accident Law or other Industrial or Labor Law. The Seller hereby agrees at its own expense to comply with such laws and to assume all liabilities or obligations

imposed by any one or more of such laws with respect to this agreement.

16. COMPLIANCE WITH OTHER LAWS.

During the performance of this contract (or purchase order), the contractor/vendor agrees to comply with all Federal, state and local laws

respecting discrimination in employment and non-segregation of facilities including, but not limited to, requirements set out at 41 CRF 60 - 1.4, 60 - 250.4 and 60 - 741.4, which equal

opportunity clauses are hereby incorporated by reference. Seller will comply with all Federal, State, and Municipal Laws, rules and regulations that may be applicable to this order.

17. MODIFICATION OF AGREEMENT.

This order contains all the agreements and conditions of these transactions and no agreement or other understanding in any way modifying the

conditions hereof will be binding upon Buyer unless made in writing as a change of purchase order and signed by Buyer.

18. CONTINGENCIES.

Buyer reserves the right at its option and without liability either to direct suspension of shipments of materials covered by this order or to cancel this order, in

whole or in part, at any time where such suspension or cancellation is caused by Government order or other requirements, embargoes, act of civil or military authorities, acts of the public

enemy, inability to secure transportation facilities, strikes, differences with workmen, accidents at plant of Buyer or Defense Materials System Priority Regulations or other law or order or

regulation or other contingencies beyond control of Buyer.

19. NO WAIVER OF CONDITIONS.

Failure of Buyer to insist upon strict performance of any of the terms and conditions of this order shall not constitute a waiver of such terms and

conditions or a waiver of any default.

20. UNITED STATES GOVERNMENT CONTRACTS AND SUBCONTRACTS.

With respect to purchases under United States Government contracts and subcontracts, the parties

hereto hereby incorporate as part of this purchase order the provisions of Sec. 202 of Executive order No. 11246 of September 24, 1965, and all of the clauses set forth or referred to in Section

VII of the Armed Services Procurement Regulations (as the same are in effect on the date hereof) which are required to be included herein by such regulations. Where necessary to make the

context of such required clauses applicable to this purchase order, the term #Government” and equivalent phrases shall mean the Buyer and the term #contractor” shall mean the Seller, and

the term #contract” shall mean this purchase order in the event of any conflict between the provisions of any of the clauses of the Armed Services Procurement Regulations hereby

incorporated into this agreement and any other terms and conditions of this purchase order, the provisions of the clauses of the Armed Services Procurement Regulations so incorporated shall

govern.

21. CONSTRUCTION.

The terms hereof shall be construed in accordance with the laws of the State of Texas. The invalidity of one provision shall not affect the validity of remaining

provisions which are otherwise valid.

22. BUYER’S PREMISES.

If any work under this order is to be performed on Buyer’s premises, Seller shall perform such work in accordance with the safety rules of Buyer and

applicable federal, state and local laws and regulations. Seller shall comply fully with the applicable laws pertaining to worker’s compensation and unemployment compensation or insurance,

and Seller shall indemnify and save harmless Buyer, its employees, agents, licensees and invitees from any and all losses, costs, damages, claims and expenses (including reasonable

attorney’s fees) of and any nature whatever relating to (a) injuries, occupational diseases or deaths of any employee or subcontractor of Seller, to the extent compensable under the worker’s

compensation laws of any state, (b) bodily injuries, deaths or property damage caused by the negligent or wrongful act of the Seller, any subcontractor of his, or any employee or agent of

either, and (c) unemployment compensation or insurance, social security taxes or other federal, state or municipal taxes, contributions or benefit payments measured by or based on

employment of such employees. Prior to commencement or such work, Seller shall furnish to Buyer satisfactory evidence that Seller and its subcontractors have full worker’s compensation

coverage, and have no less than bodily injury coverage of $250,000 per person, and $500,000 per occurrence, and property damage coverage of $500,000 per occurrence.

NOTE:

The Armed Services Procurement Regulations are obtainable from the Superintendent of Documents U.S. Government Printing Office, Washington 25, D.C.


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