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Terms and Conditions-Purchase

TERMS AND CONDITIONS OF PURCHASE OF PHILLIPS INDUSTRIES, INC.

1. TERMS AND CONDITIONS. No terms and conditions other than the terms and conditions set forth in Phillips’ purchase order of goods or services (“Order”) and herein (“Terms”), including any terms and conditions in any document attached to or incorporated by reference, shall be binding upon Phillips unless accepted by it in writing signed by authorized Phillips' personnel. Notwithstanding any other provision of these Terms, Phillips reserves expressly the right to revoke these Terms at any time prior to receipt of notice of acceptance by Seller. Acceptance is limited to the terms stated herein. All terms and conditions contained in any prior or subsequent proposal or acknowledgment of these Terms which are different from or in addition to the terms and conditions of these Terms are hereby rejected and shall not be binding on Phillips, whether or not they would materially alter these Terms, and Phillips hereby expressly objects thereto. Seller will be deemed to have assented to all terms and conditions contained herein if any part of the goods and/or service covered by these Terms is shipped or an invoice is presented in connection with such goods and/or services.

2. COMPLIANCE WITH LAWS.

A. In General. Seller warrants that all goods provided hereunder have been produced and all services performed are in compliance with applicable federal, state and local laws, ordinances, codes, rules, regulations or standards, including without limitation, the Fair Labor Standards Act, and those pertaining to the manufacture, labeling, invoicing and sale of such goods or services, environmental protection, immigration, employment and occupational safety and health. Sellers located within the United States also warrant that they shall at all times comply with applicable provisions relating to government contractors and subcontractors, which provisions, and any contract clauses required thereunder, are incorporated in these Terms by reference as if set forth in full, including 41 CFR 60-1, et seq., with the reporting, record keeping and affirmative action program requirements set forth therein; incorporation of the Equal Opportunity Clause of EO 11246 pursuant to 41 CFR 60-1.4; the maintenance of non-segregated facilities as required by 41 CFR 60-1.8; the provisions of 41 CFR 60-250.4 relating to disabled and Vietnam era veterans; and the provisions of 41 CFR 60-741 relating to handicapped workers. Where legally required, Seller shall include these clauses in its purchase orders supporting these Terms, and shall at Phillips’ request certify to all of the foregoing.

B. Fair Labor Standards Act. In accepting these Terms, Seller represents and warrants that the goods and/or services to be furnished hereunder were or will be produced in compliance with the requirements of the Fair Labor Standards Act of 1938, as amended, the and the orders and regulations issued pursuant thereto.

C. ITAR Compliance. Some goods and services are controlled by the International Traffic in Arms Regulations (ITAR). To ensure Phillips’ and Seller’s compliance with ITAR and to avoid imposition of export licensing requirements, Seller will ensure that each person with access to “Technical Data,” as defined in 22 CFR Section 120.10, “Defense Services” as defined in 22 CFR Section 120.9, and “Defense Articles” as defined in 22 CFR Section 120.6 (collectively “ITAR Materials”) is eligible to be granted access to such ITAR Materials pursuant to 22 CFR Section 120.1(c) or is a “U.S. Person” as defined in 22 CFR Section 120.15. In instances where “Foreign Persons,” as defined in 22 CFR Section 120.16 have access to ITAR Materials, the Seller shall immediately provide Phillips with a copy of the license or approval at the time that Seller provides such Foreign Person with access to the ITAR Materials. For those instances where Seller employs, retains, or contracts with any Foreign Persons without a license or approval described above, Seller shall immediately notify Phillips and if requested, provide Phillips with a detailed explanation of the steps undertaken to ensure that these persons are not gaining access to the ITAR Materials.

3. TRANSPORTATION. Unless otherwise stipulated on the face of these Terms or as modified in writing from Phillips,’ goods covered by these Terms shall be shipped "FOB Seller plant or shipping point." Title to such goods shall pass to Phillips only upon delivery to Phillips’ specified end destination, regardless of risk of loss. Delivery in advance of the specified Phillips’ shipping date, however, will not cause passage of title, transfer of risk of loss and/or establish FOB point. Transportation charges on goods delivered FOB destination must be prepaid. No charges for unauthorized transportation will be allowed. Any unauthorized shipment, which will result in excess transportation charges, must be fully prepaid by the Seller. Unauthorized transportation charges not prepaid will be offset by Phillips.

4. DEFAULT. Phillips may by written notice of default to Seller (a) terminate the whole or any part of any Order in any one of the following circumstances: (i) Seller fails to perform within the time specified herein or any extension thereof; or (ii) Seller fails to perform any of the other provisions of these Terms, or so fails to make progress as to endanger performance of these Terms; or (iii) the Seller shall become insolvent or make a general assignment for the benefit of creditors or a petition under any bankruptcy act or similar statute is filed by or against the Seller, and in any of these circumstances Seller does not cure such failure within a period of ten (10) days or such longer period as Phillips may authorize in writing; and (b) upon such termination Phillips may procure, upon such terms as it shall deem appropriate, goods or services similar to those so terminated, in which case Seller shall continue performance of these Terms to the extent not terminated and shall be liable to Phillips for any excess costs for such similar goods or services. As an alternate remedy, and in lieu of termination for default, Phillips, at its sole discretion, may elect (a) to extend the delivery schedule and/or (b) to waive other deficiencies in Seller's performance, in which case an equitable reduction in the price of applicable goods or services shall be granted. Phillips shall have the right at any time to require assurance from Seller. In the event Seller for any reason anticipates difficulty in complying with the required delivery date or performance schedule, or in meeting any of the other requirements of any Order or these Terms, Seller shall promptly notify Phillips in writing. If Seller does not comply with Phillips’ delivery schedule or performance schedule, Phillips may require delivery by fastest means and charges resulting from the premium transportation must be fully prepaid and absorbed by the Seller. The rights and remedies of Phillips provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under these Terms.

5. INSPECTION AND ACCEPTANCE; REJECTIONS.

A. Inspection. Seller agrees to permit Phillips’ inspectors to have access to Seller’s plant at all reasonable times for the purpose of inspecting all goods as set forth in any Order and any work-in-process respecting production of such goods. All items are subject to final inspection and approval at Phillips’ plant or other plant or other place designated by Phillips. Such inspection shall be made within a reasonable time after delivery irrespective of the date of payment and the date of payment and the payment for any item purchased hereunder shall not constitute approval or acceptance of such material by Phillips and Phillips’ right of inspection shall survive payment. If any inspection on Phillips’ part shall discover any defect in material or workmanship as to any goods, Seller shall reimburse to Phillips the reasonable costs of administering such inspection forthwith upon presentation thereof.

B. Rejection. If any of the goods or services furnished pursuant to any Order and these Terms are found at any time to be defective in material or workmanship or otherwise not in conformity with the requirements of the Order (including specifications, drawings, or samples) or these Terms, Phillips, in addition to any other rights which it may have under all applicable warranties or otherwise, may at its option correct or have corrected the nonconformity at Seller's expense, or reject such goods or discontinue such services at Seller's expense, in which case Seller shall forthwith refund or credit the full purchase price thereof. Such goods or services shall not be replaced or continued without written authorization from Phillips. Phillips may accept, without prejudice, a portion of any shipment, and, at its option, have Seller repair or replace at Seller's expense, or refund/credit the price of, any non-conforming portion of the shipment of goods. Goods rejected shall be removed from Phillips premises promptly by the Seller and at its expense and at its risk. Phillips may scrap or otherwise dispose of any goods not removed from Phillips’ premises within 30 days of date of rejection, and charge Seller any reasonable cost of such disposition. Final acceptance shall not be conclusive with respect to latent defects, fraud or such gross mistakes as amount to fraud or with respect to Phillips’ rights under the "Warranty" clause herein.

6. SET-OFF. Phillips shall be entitled at all times to set-off any amount owing at any time from Seller to Phillips or any of its affiliates against any amount payable at any time by Phillips in connection with any Order and these Terms.

7. PRICE. The Order price shall not be increased or the terms hereof changed without Phillips’ written consent. The Seller warrants that the prices of the items covered by the Order and these Terms are not in excess of the Seller's lowest lawful prices in effect on the date of the Order for comparable quantities of similar items. If cash discounts for early payment are offered by Seller, the period of time agreed upon as constituting "early payment" shall begin with the later of the invoice date or receipt of goods.

8. PAYMENT. Upon submission of proper invoices, Phillips shall pay the Order price set forth herein for goods delivered and accepted or services rendered and accepted; however, payment may be withheld or portions thereof deducted or set-offs made against Seller if Seller is not performing work in accordance with the provisions of the Order and these Terms. There will be no minimum charges honored unless specifically agreed to prior to shipment.

9. HAZ-MAT REPORTING. If any of the items ordered herein constitute or contain "hazardous or toxic chemicals" as defined by any applicable federal, state or local law, rule or regulation, Seller shall provide at the time of delivery all required notices and information, including without limitation all material safety data sheets ("MSDS") in approved form. Seller agrees to maintain such information current and shall provide Phillips with any amended, altered or revised information on a timely basis. If any of the Order, these Terms or the specifications referred to herein requires documentation or certification, this requirement is a material requirement of these Terms. Seller's failure to provide such information prior to or at the time of delivery may result in withholding of payment until such is provided.

10. DELIVERY; CANCELLATION. Any Order and these Terms are subject to cancellation if not shipped at the specified time. Phillips reserves the right to refuse deliveries made in advance of the delivery schedule. Merchandise shipped after the time specified may be returned at the Seller's expense for full credit. Retention of all or any part of such goods shall not be considered acceptance of same. Acceptance of such goods shall not be deemed a waiver of Phillips’ right to hold the Seller liable for any loss or damage resulting therefrom, nor shall it act as a modification of the Seller's obligation to make future deliveries in accordance with the delivery schedule. Phillips shall be reimbursed in full for all goods returned. In addition thereto, Phillips shall have the privilege, if shipment is not made on time, to purchase similar goods in the open market in such quantities as they may find necessary not exceeding the amount called for in the Order and these Terms, and hold Seller responsible for the difference, if any, between the price so paid and the Order price. If Phillips determines that Seller’s deliveries are so far behind a given schedule (a) that Phillips requires express shipments, then Seller will pre-pay the express charges, or (b) that Phillips deliveries of its own products to Phillips customers are sufficiently delayed that Phillips in good faith determines express shipments to its customers to be required, then Seller will forthwith reimburse Phillips for the actual charges of such express shipments, or (c) that Phillips is compelled to use material not according to Phillips’ specification, or at a higher cost, then Seller will pay whatever additional costs, expenses, losses, or damages that Phillips sustains. The provisions of this paragraph are not intended to limit any other rights and remedies that Phillips may have against Seller.

11. SHIPMENT; PACKAGING.

A. Shipment In General. The Seller shall comply with Phillips’ standard routing and shipping instructions as from time to time issued by Phillips. If such instructions are not attached hereto or have not been previously received, instructions must be requested from Phillips immediately. No additional charge will be allowed for packing, crating, freight, express or cartage unless specified on the face of the Order. Any loss or damage, whenever occurring, which results from Seller's improper packaging or crating shall be borne by Seller. All items shall be properly identified with Phillips’ Order number releasing shipments against the Order item number or other identification number shown and these Terms.

B. Packaging. All goods shall be properly packed for shipment. Goods received without proper packaging, packing, marking and/or bar coding as set forth herein and/or Phillips’ applicable requirements and instructions may be rejected by Phillips as defective and returned to Seller at Seller's expense. Packaging, packing, marking and labeling will conform to instructions specified or provided by Phillips, including those as to carton size, label placement, label size and font. If specified in the Order, Seller shall submit packaging data to Phillips for approval prior to any shipment. Seller must comply with all applicable carrier regulations, including National Motor Freight Classification and Department of Transportation Regulations. Unit containers must be marked to show: (1) Seller's name; (2) Quantity of items of goods and unit of measure; (3) Part No(s); (4) Date of manufacture; and (5) Date of shipment. Seller shall print and place bar coded shipping labels on all packages as set forth in Phillips’ requirements and instructions.

12. CERTIFICATES OF ORIGIN AND CUSTOMS DOCUMENTATION. Seller accepts all responsibility for the completeness and accuracy of information on any applicable “Certificate of Origin,” letter or affidavits, and all other customs documentation provided to Phillips. Seller accepts any liabilities resulting from inaccurate data on any such documents or failure to comply any applicable customs-related laws, regulations, or other requirements.

13. PATENT AND COPYRIGHT INDEMNITY. Seller represents and warrants that neither the goods nor the sale thereof covered by any Order and these Terms will infringe upon or violate any trademarks, patents, copyright or other legal rights of third parties. Seller agrees to indemnify and save Phillips harmless from and against any claims, liability, loss, costs, attorneys' fees, expenses and damages due to, or arising from, any such alleged infringement or violation.

14. GENERAL INDEMNIFICATION. Seller shall indemnify, hold harmless, and defend Phillips, its affiliates and its and their officers, directors, agents, representatives, employees, customers and users of Seller's goods and services from any and all claims (including, without limitation, claims by vendees of Phillips), liabilities, damages and expenses (including attorneys' fees) on account of (i) death or injury to any person or damage to any property arising directly or indirectly from or in connection with any goods or services supplied under the Order and these Terms, to the extent that such death or injury to person or damage to property has been caused by the negligence of Seller, its officers, directors, employees or agents, (ii) violation of any law or regulation or (iii) alleged infringement of any patent, copyright or trademark or violation of any other intellectual property right of a third party. This indemnity shall apply without regard to whether the claim, damage, liability or expense is based on breach of contract, breach of warranty, negligence, strict liability, or other tort. This indemnity shall survive delivery and acceptance of goods or services.

15. TAXES. Unless prohibited by law, the Seller shall pay all federal, state or local tax, transportation tax, or other tax which is required to be imposed upon the items ordered hereunder, or by reason of their sale or delivery; the Order price shall be deemed to include such taxes.

16. WARRANTY. Seller warrants that it has clear title to all goods furnished subject to the Order and these Terms and that they are being delivered free and clear of any encumbrances. The Seller further warrants that all items of goods and services shall conform to the Seller's specifications, the requirements of the Order and these Terms and approved sample or samples, if any, and further (1) that all such items shall be merchantable and fit for Phillips’ or its customer's intended use, (2) that all such items shall be free from defects in design, material and workmanship, and (3) in respect to to all such items, except with prior written notice to appropriate Phillips personnel, within the 90 days prior to purchase hereunder Seller shall not have changed or substituted any significant (a) material, (b) supplier of material or services, or (c) manufacturing procedure or standard (collectively, the "Seller's Warranty"). Seller's Warranty shall remain in effect for a one (1) year period after acceptance of the items by Phillips’ customers, or for such longer period of time as the item is normally warranted by Seller. Neither approval by Phillips of the Seller's design nor acceptance of any goods or services shall release or discharge Seller from liability for damages resulting from a breach of Seller's Warranty. If any defect, failure or other non-conformity appears, Phillips shall have the right to take the following actions: (1) retain such defective items and an equitable adjustment will be made in the Order price for such defective items; (2) require Seller to repair or replace such defective items, at the Seller's sole expense, including all shipping, transportation, and installation costs; or (3) correct or replace such defective items with similar items and recover the total cost thereof from the Seller. The aforesaid warranties shall survive acceptance and payment and shall run to Phillips, its customers and their successors in title and shall not be deemed to be exclusive, but shall be in addition to Phillips’ other rights under the terms of the Order and these Terms, or at law or equity.

17. TERMINATION BY PHILLIPS. Phillips shall have the right for and at its convenience to terminate any Order and these Terms, in whole or in part, at any time, and from time to time, by written (including electronic mail/email) notice effective upon receipt by Seller, even though Seller is not in breach of any obligation hereunder. Upon receipt of such notice of termination, Seller shall immediately discontinue performance and shall comply with Phillips’ instructions concerning disposition of completed and partially completed items of goods or services, including work in progress and materials acquired pursuant to any Order and these Terms. In the event of such termination, Seller shall be paid an amount in settlement to be mutually agreed upon by the parties which shall cover Seller's reasonable costs of performance incurred prior to termination in connection with the items for which the Order and these Terms are terminated. However, such payment shall not exceed the price specified herein for any such items. In no event shall the Seller be entitled to recover incidental or consequential damages. Seller shall advise Phillips, in writing, of Seller's claim, if any, for termination costs within ten (10) days after receipt of any notice of termination.

18. INSURANCE. Seller will purchase and maintain commercial general liability insurance in the amount of at least US $5,000,000 with a company rated "A- VII" or better by A. M. Best, or reasonable equivalent, and at Phillips’ request provide Phillips with a “Certificate of Insurance” identifying Phillips as an additional insured. Failure to provide such certificate after request shall void any pending Order, at Phillips’ sole option. Seller shall cause the applicable insurer to provide thirty (30) days written notice to Phillips prior to cancellation or material changes to applicable policies. Any such change, modification or cancellation shall not affect Seller’s obligation to maintain the insurance coverage set forth herein.

19. MISCELLANEOUS.

A. Entire Agreement. Together with the Order these Terms constitute the entire agreement between the parties and contain all the agreements and conditions of purchase and sale; no course of dealing or usage of the trade shall be applicable unless expressly incorporated in these Terms. The terms and conditions set forth in the Order and these Terms may not be added to, modified, superseded or otherwise altered except by a written modification signed by an authorized officer of Phillips. Each delivery shall be deemed to be only upon the terms and conditions set forth in the Order and these Terms, which shall supersede all inconsistent provisions included in Seller's proposal and in any subsequent acknowledgment by Seller, notwithstanding Phillips’ act of accepting or paying for any delivery or similar act of Phillips.

B. Assignment. Neither any Order, these Terms nor any interest under either of them may be assigned or delegated by Seller without the prior written consent of Phillips.

C. Time of the Essence. Seller acknowledges and agrees that time is of the essence with respect to Seller’s performance under the Order and these Terms.

D. State Law. The Order and these Terms shall be governed in all respects by the laws of the State of California and all actions commenced pursuant hereto shall be brought in a court of competent jurisdiction residing in the State of California.

E. Force Majeure. Neither Seller nor Phillips shall be considered in default in the performance of its obligations herein to the extent that performance of such is delayed or prevented due to causes beyond the control of such party, including, but not limited to, acts of God, war, revolution, civil commotion, blockade or embargo, any law, order, regulation, or ordinance of any government, fires, floods, unavoidable casualties, strikes, labor disputes, and other causes beyond the reasonable control of either party. In the event of a partial failure of Seller’s sources of supply for the goods the subject of any Order, Seller will first meet all of Phillips’ requirements under the Order and these Terms prior to any allocation among customers under Section 2-615 of the Uniform Commercial Code. Further, to the extent due to negligence of Seller, Seller shall be liable for any damages to Phillips incurred as a result of the Seller's delay or failure of delivery.

F. Waiver. Phillips’ failure to insist upon strict compliance shall not be deemed to be a waiver of any right granted Phillips herein. Phillips shall not be deemed to waive any such right unless such waiver is in writing signed by an authorized officer of Phillips; such waiver shall not constitute a waiver of any other default under the Order or these Terms.


 
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