Terms and Conditions-Purchase

TERMS AND CONDITIONS OF PURCHASE OF PHILLIPS INDUSTRIES, INC.

1. TERMS AND CONDITIONS. No terms and conditions other than those set forth in Phillips purchase order (PO) 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 comply with applicable federal, state and local laws, ordinances, codes, rules, regulations or standards, including without limitation, 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 purchase orders shall include these clauses supporting these Terms and shall at request of Phillips certify to all 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 compliance by Phillips and SELLER 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.

D. Conflict Minerals. Phillips intends to comply with the requirements of the Dodd–Frank Wall Street Reform and Consumer Protection Act (the “Act”), Section 1502, which aims to prevent the use of Conflict Minerals that directly or indirectly finance or benefit armed groups in The Democratic Republic of the Congo (DRC) or an adjoining country as defined in the Act. “Conflict Minerals” include the following minerals.

• columbite-­tantalite (coltan) (i.e., tantalum),

• cassiterite (i.e., tin),

• gold

• wolframite (i.e., tungsten), or

• their derivatives.

The Act requires Phillips to perform due diligence with respect to the sourcing of Conflict Minerals. As a supplier to Philips, we hold you responsible complying with this Act and for passing these same requirements on to your suppliers.

3. TRANSPORTATION/SHIPPING.

A. Shipping in General. The Seller shall comply with standard routing and shipping instructions as issued by Phillips. If such instructions are not attached hereto or have not been previously received, instructions must be requested from Phillips immediately. 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. For shipments weighing at or under one-hundred fifty (150) pounds, or sixty-eight (68) kilograms. Please use the Phillips UPS account number that is included in the purchase order (PO). Goods we be handled as Free Carrier (FCA) at Seller location, or wherever the goods were produced.

C. For shipments weighing greater than one-hundred fifty (150) pounds, or sixty-eight (68) kilograms. Unless otherwise stipulated on the face of these Terms, or as modified in writing from Phillips, goods covered by these Terms shall be shipped Free Carrier (FCA) at Seller location for domestic and international transactions, if they are non-containerized. For containerized product, goods covered by these Terms shall be shipped Free On Board (FOB) port specified by Phillips for water transport, and Delivered At Terminal (DAT) for land transport.

D. Title. Title to such goods shall pass to Phillips only upon delivery to a Phillips specified end destination. Delivery in advance of the specified shipping date by Phillips, however, will not cause passage of title, transfer of risk of loss. Transportation charges on goods delivered beyond Free Carrier (FCA) 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 performance by Seller, 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 delivery schedule from Phillips 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. First Article Inspection. For Manufacturers

i. Parts will not be approved for release until the completed Initial Sample Inspection Report (ISIR) has been reviewed, approved, and signed off by Phillips Industries Engineering and Quality functions. A copy will be returned to you as authorization to start producing parts to that revision.

ii. Send in the number of samples indicated below per the applicable category that was checked off by Phillips Industries. Attach the supplied labels to the package to assure that the applicable Buyer/Engineer requesting the samples gets the parts.

iii. If a completed ISIR is required, inspect and complete the ISIR for two samples per the work instruction included in the first article package.

iv. Number each dimension on the drawing to match up to the numbering on the ISIR form for easier reference.

v. Listed below are the dimensions that must be checked.

1) New part/tooling – all dimensions

2) New supplier – all dimensions

3) Revised part/tooling – Dimensions on features affected by revision and all critical dimensions identified on the drawing

vi. Sample regimen for items produced by different processes.

1) Off the Shelf. Submit five (5) samples with specification sheets to allow Phillips Industries to establish Receiving Inspection Instructions.

2) Multi-cavity Tool. Submit five (5) raw samples (i.e., no other operations) per cavity and one (1) tree. Send in a completed ISIR on two of the samples, clearly identified, a completed Phillips Certificate of Compliance, and all applicable material and/or process certifications.

3) Progressive Tool. Send in five (5) finished samples and one (1) progressive strip. Send in a completed ISIR on two of the samples, clearly identified, a completed Phillips Certificate of Compliance, and all applicable material and/or process certifications.

4) Machined Parts. Send in five (5) finished samples. Send in a completed ISIR on two of the samples, clearly identified, a completed Phillips Certificate of Compliance, and all applicable material and/or process certifications

5) Special Processes. Send in five (5) finished samples with specific process certifications.

B. Inspection.Seller agrees to permit Phillips inspectors to have access to Seller plant(s) at all reasonable times for inspecting all goods and processes as set forth in any Order and any work-in-process respecting production of such goods. All production items are subject to final inspection and approval at Phillips 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 right of inspection by Phillips shall survive payment. If any inspection on the part of Phillips 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.

C. Rejection.SIf 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 expense of the Seller, or reject such goods or discontinue such services at the expense of the Seller, 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 expense of the Seller, 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 thirty (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 rights of Phillips under the "Warranty" clause herein.

6. PROHIBITED CHANGES. In respect to products governed by these Terms, Seller will institute no change to design, material, manufacturing process, tooling or place of manufacture without the prior written consent of Phillips, which consent shall not be unreasonably withheld or delayed. Examples of changes which will require such consent include those which may be found in the current Production Part Approval Process manual section 3.1 Customer Notification, available at http://www.aiag.org/products/products-list/product-details?ProductCode=PPAP-4.

7. SET-OFF. Phillips shall be entitled always 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.

8. PRICE. Per the Order requirements (e.g., quantity, effective dates) price shall not be increased, or the terms hereof changed. The Seller warrants that the prices of the items covered by the Order and these Terms are not more than the lowest lawful prices of the Seller 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 agreed upon as constituting “early payment” shall begin with the later of the invoice date, or receipt of goods. For contiguously ordered items, e.g., “A” inventory items, any request to change price must be submitted ninety (90) days in advance of the desired effective date. All such requests must be accompanied with documentation supporting the request, e.g., price indexes, supplier invoices.

9. 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.

A. Conditions. 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. No minimum charges will be honored unless specifically agreed to prior to shipment.

B. Terms. Payment terms are net ninety (90) days for domestic suppliers and one-hundred-twenty (120) days for international suppliers.

10. 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.

A. Overall 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 ten (10) days prior 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. Failure by Seller to provide such information prior to or at the time of delivery may result in withholding of payment until such is provided.

B. Compliance with Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65). Labeling with a list of chemicals MUST be included on goods being provided if they have chemical content that is included in the California Office of Environmental Health Hazard Assessment (OEHHA) list of chemicals known to the state to cause cancer or reproductive toxicity (https://oehha.ca.gov/proposition-65/proposition-65-list).

11. 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 expense of Seller 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 right to hold by Phillips, the Seller is liable for any loss or damage resulting therefrom, nor shall it act as a modification of the obligation by Seller 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 deliveries by Seller 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.

12. PACKAGING.

A. General. 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 applicable requirements of Phillips and instructions may be rejected by Phillips as defective and returned to Seller at the expense of the Seller. If specified in the Order, Seller shall submit packaging data to Phillips for approval prior to any shipment. 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 improper packaging by Seller or crating shall be borne by Seller.

B. Package Labeling. 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. Seller must comply with all applicable carrier regulations, including National Motor Freight Classification and Department of Transportation Regulations. Seller shall print and place bar coded shipping labels on all packages as set forth in requirements and instructions from Phillips. Unit containers must be marked to show the following.

i. Seller name,

ii. Quantity of items of goods and unit of measure,

iii. Part No(s),

iv. Date of manufacture, and

v. Date of shipment.

13. 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.

14. 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.

15. 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 goods and services provided by Seller 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.

16. 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.

17. 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 specifications, the requirements of the Order and these Terms and approved sample or samples 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 all such items, except with prior written notice to appropriate Phillips personnel, within the ninety (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 Warranty"). Seller Warranty shall remain in effect for a one (1) year period after acceptance of the items by customers of Phillips, or for such longer period as the item is normally warranted by Seller. Neither approval by Phillips of the design by Seller nor acceptance of any goods or services shall release or discharge Seller from liability for damages resulting from a breach of Seller 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 sole expense to the Seller, 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 other rights of Phillips under the terms of the Order and these Terms, or at law or equity.

18. 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 instructions from Phillips 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 reasonable costs borne by Seller 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 any claim by Seller, if any, for termination costs within ten (10) days after receipt of any notice of termination.

19. INSURANCE. Seller will purchase and maintain commercial general liability insurance in the amount of at least five-million USD ($5,000,000) with a company rated "A- VII" or better by A. M. Best, or reasonable equivalent, and at request by Phillips provide a “Certificate of Insurance” identifying Phillips as an additional insured. Failure to provide such certificate after request shall void any pending Order, at the sole option of Phillips. 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 obligation by Seller to maintain the insurance coverage set forth herein.

20. 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 the proposal by Seller and in any subsequent acknowledgment by Seller, notwithstanding the 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 performance by Seller 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 sources of supply for the goods the subject of any Order, Seller will first meet all of requirements by Phillips 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 because of the delay or failure of delivery by Seller.

F. Waiver. Failure by Phillips 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.