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Electrosonic, Inc. Purchase Order Terms & Conditions

  1. OFFER AND ACCEPTANCE--- These Terms and Conditions of Purchase (“Terms and Conditions”), together with any purchase order (“Purchase Orders”) provided by Electrosonic, Inc. (“Buyer”) to any provider of products or services (“Seller”) constitute an offer to purchase by Buyer and are not an acceptance of any offer or terms which may have been submitted by Seller. Seller may accept this offer to purchase and shall be bound to supply the applicable products or services in accordance with these Terms and Conditions either by execution of an acknowledgment copy of the order, acceptable electronic transmission, delivery of the products to Buyer or by any other statement, act or course of conduct which constitutes acceptance under applicable law. Upon acceptance, this order shall constitute the entire agreement (the “Contract”) between the parties (except for any additional warranties given by Seller), superseding any and all previous or contemporaneous communications and negotiations. Notwithstanding the foregoing, if this Contract is entered into in connection with a Subcontractor Agreement, if (a) any provision of this Contract conflicts with a provision of the Subcontractor Agreement, the Subcontractor Agreement shall govern; (b) if any provision of this Contract conflicts with a provision of the Prime Contract, the Prime Contract shall govern (unless such provision is also covered by the Subcontractor Agreement, in which case the Subcontractor Agreement governs).

  2. CHANGES--- No change in modification, variation or revision of these Terms and Conditions or any Purchase Order, including the quantities and prices contained therein, as applicable, shall be valid unless in writing and signed by Buyer. If, in Seller’s good faith opinion, changes requested by Buyer would affect delivery or the price to be paid by Buyer, Seller shall notify Buyer immediately and negotiate an adjustment, which adjustment shall be at Buyer’s discretion to accept or reject. Buyer’s technical personnel may exchange information with Seller’s personnel concerning the material or services to be furnished under Purchase Orders, but such communications shall not vest Seller with authority to change the materials or services of any Purchase Order, nor shall any change by Seller be binding upon Buyer unless incorporated as a change in writing signed by Buyer.

  3. PRICES--- Unless otherwise indicated in the Contract, the price stated on the applicable purchase order (the “Purchase Price”) shall include sales, use, excise and similar taxes and any shipping, delivery and insurance costs. The Purchase Price shall be considered a firm, fixed price for the duration of the applicable Purchase Order. Buyer shall be subject to no charges or expenses in excess of the Purchase Price.

  4. SHIPPING TERMS --- If a shipping term is not specified in the applicable Purchase Order, shipping terms in the United States are F.O.B. Buyer’s designated destination, and shipping terms outside the United States are DDP (Delivered Duty Paid) Buyer’s designated destination (INCOTERMS 2010). All products must be shipped in accordance with the shipping instructions stated on the applicable Purchase Order or as otherwise specified by Buyer, including without limitation, with respect to the required delivery date. Shipping charges shall be paid by Seller.

  5. INSPECTION--- All materials, products and services are subject to testing and approval by Buyer, either before, during or after manufacture, or after delivery, by inspectors designated by the Buyer or by the government at the Buyer’s discretion. The exercise of this right of inspection and test, however, shall in no way relieve the Seller of its obligation to furnish all articles or materials in strict accordance with these Terms and Conditions and the applicable Purchase Orders. If inspection and test is made on the premises of Seller or its supplier, the Seller shall furnish without additional charge all reasonable facilities and assistance for the safety and convenience of the inspectors in the performance of their duties. All inspections and tests shall be performed in such a manner as not to delay the work unduly. Buyer may reject any products or services which do not conform to the Warranties provided in Section 7 hereof. In the case of rejection, the remedies set forth in Section 8 hereof shall be available to Buyer in its discretion. Exercise of these remedies shall not be exclusive of any other remedies provided in law or equity or which are otherwise available to Buyer.

  6. PAYMENTS--- It shall be understood that payment shall not create any presumption as to final inspection nor constitute acceptance. Payments shall be contingent upon delivery and upon receipt of acceptable invoice.

  7. WARRANTIES--- Seller warrants that all items delivered under any Purchase Order will (i) be merchantable and free from all defects in material and workmanship, (ii) conform to applicable specifications and drawings, and to extent such items are not manufactured pursuant to detailed designs furnished by Buyer, that all items will be free from defects in design and suitable for the intended purposes, (iii) conform to the description set forth in the applicable Purchase Order, and (iv) not infringe on any third party rights, including, without limitation, any patent, trademark, copyright, trade secret or other intellectual property rights. Seller represents and warrants that in performing its obligations under any Purchase Order it will be in compliance with all applicable federal, state and local laws, rules and regulations. These warranties, together with any services warranties or other guarantees provided by Seller, shall survive acceptance and payment, and run to Buyer, its successors, assigns and customers.

  8. REMEDIES— In the event of rejection, breach of any of the representations or warranties set forth in Section 7 hereof, non‐delivery, partial delivery, or late delivery, Buyer may at its option (i) cancel the applicable Purchase Order without liability therefor, (ii) accept the applicable Purchase with an equitable adjustment in Purchase Price approved by Buyer, (iii) require Seller to repair or replace the applicable products such that they conform, or (iv) obtain any other remedy or relief provided by law including, but not limited to, the right to set-off against any amount Seller is due from Buyer, and the right to obtain damages.

  9. INDEMNITY--- Seller shall indemnify and hold harmless Buyer and its customers from and against any and all claims, demands, causes of action, actions, liabilities, losses, damages and expenses, including attorneys’ fees (including without limitation actual, general and special damages for injuries or damage to any person or property and including attorneys’ fees) arising out of or relating to any claim, fact or circumstance that, if proven, would constitute (a) a breach of any Term or Condition or any Purchase Order, by Seller, its employees, agents or representatives, including, without limitation, any breach of any warranty provided in Section 7 herein, (b) a breach of Seller’s representations, warranties, or obligations hereunder (c) a wrongful act or omission of Seller, its employees, agents or representatives hereunder.

  10. DEVELOPMENT WORK --- If any experimental, developmental or research work is called for or required under any Purchase Order, Seller agrees to and hereby does grant to Buyer in irrevocable, non- exclusive, fully transferable, royalty-free license to make, have made, use and sell any invention, improvement or discovery (whether or not patentable) that Seller conceives or first actually reduces to practice in the performance of such Purchase Order. Seller agrees to and hereby does grant to Buyer (i) an irrevocable, non-exclusive, fully transferable, royalty-free license to reproduce, translate, publish, use and dispose of, and to authorize others so do, any copyrighted or copyrightable material ordered as articles or incorporated in, or supplied as a supplement with, any articles; and (ii) the right to reproduce, use and disclose for any purpose all or any part of the reports, drawings, blueprints, data, and technical information delivered or specified to be delivered by Seller to Buyer under any Purchase Order.

  11. DELIVERY SCHEDULE--- Unless otherwise agreed in writing, Seller shall not make material commitments or production arrangements in excess of the amount or in advance of the time necessary to meet Buyer’s delivery schedule. Goods shipped to Buyer in advance of schedule may be returned to Seller at Seller’s expense. Time is and shall remain of the essence in the delivery of products ordered by Buyer. Seller shall notify Buyer immediately if at any time it appears that the required delivery date may not be met and shall specify the reasons therefor and the steps being taken to correct the problem and the new anticipated delivery schedule. Buyer, may, at its option, either accept the new delivery schedule or terminate the order. Buyer’s acceptance of late delivery shall not constitute a modification of this Agreement or a waiver of Buyer’s right to reject late deliveries.

  12. SHIPPING DOCUMENTATION--- Proper shipping documentation must be included with delivery of Buyer’s orders. In addition to corresponding model, part and quantity, the shipping documentation should include pertinent serial number(s) on each line, Buyer’s Purchase Order number and job number designation. Also, batch numbers or other pertinent reference numbers must be included per appropriate line item. Buyer reserves the right to back-charge labor to the Seller in the event of, a) incorrectly formatted items, b) items delivered without the most current firmware, and/or c) firmware issues uncovered within the first 60 days of use.

  13. NOTICE OF LABOR DISPUTE--- Whenever any actual or potential labor dispute is delaying or threatens to delay the timely performance of this order, Seller shall immediately give notice thereof, including all relevant information with respect thereto, to Buyer.

  14. FORCE MAJEURE--- Neither party shall be liable for any delay or failure of performance due to causes that are not reasonably foreseeable and which are beyond a party’s reasonable control, including, but not limited to, acts of God, acts of civil or military authorities, fire, power surges or outages, epidemics, quarantine restrictions, flood, natural disasters, riot and war, provided that the affected party shall have given notice to the other party of any such cause for delay or anticipated delay reasonably following the commencement thereof. In the event of a delay for any of the foregoing reasons and if requested by Buyer, Seller shall, immediately upon receipt of the notice from Buyer, hold up delivery until further notice from Buyer, regardless of whether such hold extends beyond any delivery date specified in the applicable Purchase Order. Upon receiving further notice from Buyer, Seller shall promptly make delivery of the material specified in the applicable Purchase Order. If Seller fails to make delivery within a reasonable time, which in no event shall be later than 30 days, Seller shall be responsible to Buyer for all loss incurred by Buyer as a result of a change in the market price for the material purchased hereunder from Seller by Buyer

  15. TOOLS & MATERIALS--- Unless otherwise agreed in writing all tools, equipment or material of every description furnished to Seller by Buyer or specifically paid for by Buyer, and any replacement thereof, or any materials affixed or attached thereto, shall be and remain the personal property of Buyer. Such property, and wherever practical each individual item thereof, shall be plainly marked or otherwise adequately identified by Seller as “Electrosonic, Inc.” and shall be safely stored separate and apart from Seller’s property. 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 held at seller’s risk, shall be kept insured by Seller at Seller’s expense in an amount equal to the replacement cost with loss payable to the Buyer and shall be subject to removal at Buyer’s written request, in which event Seller shall prepare such property for shipment and shall redeliver to Buyer in the same condition as originally received by Seller, reasonable wear and tear excepted.

  16. ASSIGNMENT--- Assignment by Seller of these Terms and Conditions or any Purchase Order, any interest herein or therein, or any payment due or to become due hereunder, without the written consent of Buyer shall be void. For purposes of this provision, a merger, stock sale or other transfer by operation of law shall be deemed an “assignment” for which consent is required hereunder.

  17. SUBCONTRACTING--- 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 Buyer, and also, if applicable, written approval of the source from the Government Contracting Officer. Subject to the foregoing, Seller shall subcontract to small business concerns the maximum amount Seller finds to be consistent with efficient performance of this order.

  18. TERMINATION FOR CONVENIENCE--- Buyer may at any time terminate a Purchase Order in whole or in part for convenience upon written notice to Seller. Seller shall then be entitled to reasonable termination charges equal to a percentage of the Purchase Price which reflects the amount of work performed prior to termination plus direct out-of-pocket expenses actually incurred by Seller as a result of such termination.

  19. EVENTS OF DEFAULT--- Seller shall be deemed to be in default hereunder if it violates any of the terms hereof or of any Purchase Order, if it fails timely to perform any of its obligations, or if it performs or fails to perform any other act, whether pursuant to agreement or otherwise, which gives Buyer reasonable grounds to feel insecure with respect to Seller's future performance under a Purchase Order. Seller further shall be deemed to be in default hereunder upon the occurrence of any of the following events, or of any other comparable event; insolvency of the Seller; Seller's filing of a voluntary petition in bankruptcy; the filing of any involuntary petition to have Seller declared bankrupt provided it is not vacated within thirty (30) days from the date of filing; the appointment of a receiver or trustee for Seller provided such appointment is not vacated within thirty (30) days from the date of such appointment; or the execution by Seller of an assignment for benefit of creditors. Upon default by Seller hereunder, Buyer may terminate any or all outstanding Purchase Orders and exercise any rights and remedies as may be provided hereunder or by operation of applicable law.

  20. ELECTRONIC TRANSMISSION OF DATA--- Upon Buyer’s request, Buyer and Seller will facilitate business transactions by electronically transmitting data. Any data electronically transmitted pursuant to this contract will be as legally sufficient, binding and enforceable upon the parties as a written signed paper document exchanged between the parties, notwithstanding any legal requirement that the data be in writing or signed. To the extent required by Buyer, each authorized representative of a party will adopt a unique verifiable digital identification consisting of symbols or codes to be transmitted with each electronic transmission and the use of such digital identification will be deemed for all purposes to constitute a “signature” and will have the same effect as a signature on a written document.

  21. DISCLOSURE AND NON-DISCLOSURE OF INFORMATION--- Any knowledge or information which Seller shall have disclosed or may hereafter disclose to Buyer in connection with the purchase of the goods or services covered by any Purchase Order, shall not, unless otherwise specifically agreed upon in writing by the Buyer, be deemed to be confidential or proprietary information, and shall be acquired, free from any restrictions as part of the consideration of this order. To the extent that tools, specifications, or other information are furnished or paid for by Buyer, Seller shall not make use or disclosure thereof except as necessary to perform under the applicable Purchase Order or as otherwise expressly authorized in writing by Buyer, provided, however, the Seller may produce items for direct sale to the U.S. Government where the U.S. Government has the right to use the equipment, tools, gauges, patterns, designs, drawings, engineering data or other technical or proprietary information furnished by Buyer which are required to produce the items.

  22. COMPLIANCE WITH LAWS--- Seller shall comply with all applicable state, federal and local laws, rules and regulations, including without limitation applicable codes, such as fire and electrical codes. Without limiting the generality of the foregoing. Seller in accepting any Purchase Order, represents that the goods to be furnished or the services to be rendered thereunder were or will be produced or performed in compliance with all applicable requirements of Sections 6, 7, and 12 of the Fair Labor Standards Act of 1938, as amended, and of all valid and applicable regulations and orders of the Administrator of the Wage and Hour Division issued under Section 14 thereof. Seller shall insert a certificate on all invoices submitted in connection with such Purchase Order stating that the goods or services were produced or rendered in accordance with the foregoing representation.

  23. DISPUTES--- This Contract is made in accordance with and shall be governed and construed in accordance with the laws of the State of Minnesota, United States, without regard to its rule of conflicts of laws. All claims arising under or related to this Contract or the negotiation, validity or performance of the terms of the Contract by the parties hereto, shall be venued in a Federal or state court sitting in the State of Minnesota, and each party irrevocably consents to the sole and exclusive personal jurisdiction of such courts, waives any objection to the laying of venue in any such court and agrees not to plead or claim that such litigation has been brought in any inconvenient forum or that there are indispensable parties that are not subject to the jurisdiction of such courts.

  24. NON-WAIVER OF RIGHTS AND SEVERABILITY--- The failure of Buyer to insist upon strict performance of any of the terms and conditions in any Purchase Order or to exercise any rights or remedies, shall not be construed as a waiver of its rights to assert any of same or to rely on any such terms or conditions at any time thereafter. In the event a provision of this Agreement is determined to be invalid, illegal or unenforceable, it will not affect the validity, legality or enforceability of any other provision of the Agreement and the parties agree that the remaining provisions will be deemed to be in full force and effect.

  25. NONDISCRIMINATION EMPLOYMENT--- During the performance of service under the applicable Purchase Order, the Buyer and Seller agree 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 C.F.R. §§ 60-1.4(a) and 29 C.F.R. Part 471, Appendix A to Subpart A, which equal opportunity clauses and other requirements are hereby incorporated by reference where applicable. This Buyer and Seller shall also abide by the requirements of 41 C.F.R. §§ 60-300.5(a) and 60-741.5(a). These regulations prohibit discrimination against qualified protected veterans and against qualified individuals on the basis of disability, and require affirmative action by covered prime contractors and subcontractors to employ and advance in employment qualified protected veterans and qualified individuals with disabilities. Notification is hereby given that compliance with the above clauses and regulations, if applicable, may require the Buyer/Seller to annually file certain reports (e.g. the EEO-1 Report and VETS 100A Report) with the federal government and may require the Seller to develop written Affirmative Action Programs for Women and Minorities, Protected Veterans and Persons with Disabilities.