Terms & Conditions of Purchase

Hydro-Mechanical Systems, Inc.
Terms and Conditions of Purchase

HYDRO-MECHANICAL SYSTEMS, INC. is herein referred to as the “Buyer,” and the person or entity selling goods and/or services (“Products”) to Buyer is referred to as the “Seller.” These Terms and Conditions of Purchase, together with the attached purchase order, supplier requirements, statement of work, or other agreement to order Products (the “Order”), are collectively referred to herein as the “Agreement”.  The Agreement represents Buyer’s offer to purchase the Products from Seller. THIS AGREEMENT IS EXPRESSLY LIMITED TO, AND EXPRESSLY MADE CONDITIONAL ON, SELLER’S ACCEPTANCE OF THE TERMS AND CONDITIONS OF THE AGREEMENT, INCLUDING WITHOUT LIMITATION, THE ORDER, SUPPIER REQUIREMENTS, AND THESE TERMS AND CONDITIONS OF PURCHASE.  BUYER OBJECTS TO ANY DIFFERENT OR ADDITIONAL TERMS.

01. Seller’s Acceptance

Seller will be deemed to have accepted the terms of the Agreement:  (i) even if Seller’s acceptance purports to make acceptance conditional on acceptance of inconsistent, additional or different terms to the Agreement; (ii) when acknowledged by Seller in writing; or (iii) if Seller makes any shipment or performance in response to or in anticipation of an Order.

02. Price

The purchase price will be set forth in the Order.  Unless otherwise provided in the applicable Order, the price set forth in the Order includes all applicable taxes, duties, tariffs, surcharges, and other amounts assessable by any government authority with respect to the Products.  The purchase price may not be modified or changed without the prior written agreement of Buyer.

03. Payments

Invoices, together with such supporting documents as may be reasonably requested by Buyer, must be sent in accordance with the schedule and to the address listed in the Order.  BUYER WILL NOT PROCESS FOR PAYMENT WITHOUT PROOF OF SHIPMENT TO DESTINATION. All invoices must bear Buyer’s purchase order number and shipment date to be processed for payment.

04. Payment Terms

Unless otherwise set forth in the applicable Order, payment terms are net 45 days from Buyer’s receipt of a correct and undisputed invoice from Seller.

05. Termination

Buyer reserves the right to cancel or suspend all or any unshipped Order for its sole convenience with no penalty whatsoever. Buyer may also terminate an Order or any part Thereof for cause in the event of any default by the Seller, or if the Seller fails to comply with any of the terms and conditions of this Agreement.  Late deliveries, deliveries of products which are defective or which do not conform to the Agreement, incorrect quantities of Product, or Seller’s failure to provide Buyer, upon request, reasonable assurance of future performance shall all be events allowing Buyer to terminate an Order for cause.  Buyer may also terminate for cause in the event Seller files a voluntary petition in bankruptcy, makes any assignment for the benefit of Seller’s creditors, a receiver is appointed for Seller, or Seller otherwise ceases selling the Products or doing business.  In the event of termination for cause, Buyer shall not be liable to Seller for any amount, and Seller shall be liable to Buyer for any and all damages sustained by reason of the default which gave rise to the termination.

06. Obligations upon Termination

In the event of any termination of this Agreement or the expiration or termination of any Order, then, unless otherwise provided in the applicable Order, the following will apply:

• a. Seller will immediately cease performance and cooperate with Buyer to effect an orderly, efficient, effective and expeditious winding-down of the parties' respective activities.
• b. Seller will return to Buyer any tools, data, information, items and other materials provided by or on behalf of Buyer.
• c. Seller will promptly deliver to Buyer any completed or partially completed Products which have been paid for.
• d. With respect to a termination of this Agreement or an Order for Buyer’s convenience, Buyer will reimburse Seller for Seller’s substantiated and unrecoverable expenses (which shall not include lost profits, reallocation of costs, or recovery of overhead) resulting directly from such termination or cancellation, which amount shall in no event exceed the actual direct and unrecoverable costs for the percentage of work performed prior to the notice of cancellation or suspension. Seller shall not be paid for any work done after receipt of the notice of cancellation, nor for any costs incurred by Seller’s suppliers or subcontractors which Seller could reasonably have avoided. Seller’s claim for reimbursement under this paragraph must be submitted to Buyer in writing within 45 days of receipt of notice of cancellation or termination, otherwise all such claims of Seller shall be deemed to have been waived. The foregoing states the Buyer’s entire liability and the Seller’s exclusive remedy for claims or damages under this paragraph.

07. Time of Delivery

Time is of the essence, and if delivery of Product or rendering of services is not completed by the time promised, Buyer reserves the right, without liability and in addition to its other rights and remedies, to terminate this Agreement by notice effective when received by Seller as to items not yet shipped and to purchase substitute product or services elsewhere and charge Seller with any loss or damages incurred.

08. Shipping and Delivery

Unless otherwise specified in an Order, delivery shall be DDP at Buyer’s facility named in the Order, and title and risk of loss will pass to Buyer at Buyer’s facility.  Seller shall comply with any additional requirements regarding the packing and shipment of Products as set forth in the Order.  If in order to comply with Buyer’s required delivery date it becomes necessary for Seller to ship by a more expensive way than specified in an Order, any increased transportation costs resulting therefrom shall be paid for by Seller unless the necessity for such increased costs has been caused by Buyer. The bill of lading, shipping papers and all cartons must bear Buyer’s Order number. Seller must notify Buyer immediately if the foregoing shipping and carrier instructions cannot be met. Palleting, boxing, crating and strapping charges are not permitted unless expressly authorized by Buyer prior to shipment.

09. Changes

Buyer shall have the right at any time to make changes in drawings, designs, specifications, materials, packaging, time and place of delivery and method of transportation. If any such changes cause an increase or decrease in the cost of the Product, or the time required for Seller’s performance, an equitable adjustment shall be made accordingly. Seller’s claim for adjustment under this paragraph must be submitted to Buyer in writing within 60 days of receipt of notice of the change, otherwise all such claims of Seller shall be deemed to have been waived. Seller agrees to accept any such changes subject to this paragraph. Seller shall make no substitutions without Buyer’s consent.

10. Inspection/Testing

Payment for Products delivered hereunder shall not constitute acceptance thereof. Buyer shall have the right to inspect such goods and to reject any or all of said Products which are in Buyer’s judgment defective or nonconforming, or that violate the warranty set forth herein. Products rejected and Products supplied in excess of quantities called for herein may be returned to Seller at its expense and, in addition to Buyer’s other rights, Buyer may charge Seller all expenses of unpacking, examining, repacking and reshipping such goods. In the event Buyer receives Products whose defects or nonconformity is not apparent on examination, Buyer reserves the right to require replacement, as well as payment of damages, once the defect or nonconformity is discovered. Nothing contained in this Agreement shall relieve in any way the Seller from the obligation of testing, inspection, and quality control.

11. Warranty

Seller expressly warrants that all Products shall conform to all specifications and appropriate standards and requirements set forth in the Order, will be new, free from defects in material or workmanship, merchantable, and will be safe and appropriate for the purpose for which Products of that kind are normally used. If Seller knows or has reason to know the particular purpose for which Buyer intends to use the Products, Seller warrants that such Products will be fit for such particular purpose. Seller warrants that all such Products will be adequately contained, packaged, marked and labeled, and free from liens, claims or encumbrances of any kind whatsoever.  To the extent the Products include services, Seller further warrants that all services provided hereunder shall be performed by personnel with the experience, training, skill and other qualifications needed to perform the services, and will be provided in a timely, professional and workmanlike manner, in accordance with the highest industry standards. Seller warrants that the Products and the sale and use of them will not infringe any United States or foreign patents, trademarks, tradedress, copyrights, trade secrets or any other form of intellectual property. Inspection, test, acceptance or use of the Products furnished hereunder shall not affect the Seller’s obligation under this warranty. Seller’s warranty shall run to Buyer, its successors, assigns, and customers, and users of products sold by Buyer. Seller agrees to promptly replace or correct defects of any Products not conforming to the foregoing warranty, without expense to Buyer, its successors, assigns, customers, or users of products sold by Buyer, when notified of such nonconformity by Buyer.  In the event of failure of Seller to correct defects in or replace nonconforming Products promptly, Buyer, after reasonable notice to Seller, may make such corrections or replace such Products and charge Seller for the cost incurred by Buyer in doing so. All costs and expenses incurred by Buyer as a result of nonconforming or defective products may be recovered from Seller by equitable price reduction, setoff, or credit against any amount which may be owed to Seller under this Agreement or otherwise.

12. Recalls

Buyer may initiate a recall, withdraw the Products, or suspend the sale or distribution of the Product (collectively, a “Recall”) if (i) the Products create a risk of personal injury or public safety, or (ii)  if required by any federal or state governmental agency or regulatory authority with jurisdiction over the Products.  Seller shall bear the direct cost and expense (including fines and damages and costs to Buyer and to third parties) and shall indemnify and hold Buyer harmless from and against any costs Buyer may incur in connection with a Recall, except to the extent caused by the negligent actions or omissions or willful misconduct, or violation of federal, state or local laws, rules and regulations (including labelling rules and regulations) by Buyer.

13. LIMITATION ON LIABILITY AND TIME FOR SUIT

IN NO EVENT SHALL BUYER BE LIABLE HEREUNDER FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOST PROFITS AND/OR ATTORNEYS’ FEES. BUYER’S LIABILITY ON ANY CLAIM OF ANY KIND FOR ANY LOSS OR DAMAGE ARISING OUT OF OR IN CONNECTION WITH OR RESULTING FROM THIS AGREEMENT OR FROM THE PERFORMANCE OR BREACH THEREOF SHALL IN NO CASE EXCEED THE PRICE ALLOCABLE TO THE PRODUCTS OR UNIT THEREOF WHICH GIVES RISE TO THE CLAIM. BUYER SHALL NOT BE LIABLE FOR PENALTIES OF ANY DESCRIPTION. ANY ACTION RESULTING FROM ANY BREACH ON THE PART OF BUYER AS TO THE PRODUCTS DELIVERED HEREUNDER MUST BE COMMENCED WITHIN ONE YEAR AFTER THE CAUSE OF ACTION HAS ACCRUED.

14. Indemnification

Seller shall defend, indemnify and hold harmless Buyer against all damages, claims or liabilities and expenses (including attorney’s fees) arising out of or resulting in any way from (i) any defect or alleged defect in the Products purchased hereunder, (ii) from any act or omission of Seller, its agents, employees or subcontractors in connection with its performance hereunder, or (iii) the actual or alleged infringement, violation, or misappropriation of a third party’s intellectual property rights by Seller or the Products. This indemnification shall be in addition to the warranty obligations of Seller and shall survive the termination of this Agreement or any Order.

15. Insurance

Seller agrees to carry insurance covering product liability and general liability in amounts of not less than three million dollars ($3,000,000) per occurrence. All such policies shall provide for at least thirty (30) days’ prior written notice, to Buyer, of cancellation, non-renewal or material change in the terms and conditions of coverage and name Buyer as an additional named insured. At Buyer’s request, Seller will provide Buyer with a certificate or certificates of insurance evidencing such coverage. In the event Seller ceases to carry adequate insurance that names Buyer as an additional insured, Buyer may immediately cancel this Agreement and any pending Orders by giving Seller written notice of Buyer’s election to cancel.

16. Confidentiality/Advertising

Seller shall consider this Agreement and all information furnished by Buyer to be confidential and shall not disclose or use such information for any purpose other than performing this Agreement, unless Seller obtains written permission from Buyer to do so. Seller may not refer to Buyer, the Agreement or the existence of a business relationship between Seller and Buyer for any marketing or promotional purposes, without the prior written consent of an authorized representative of Buyer.

17. Intellectual Property

Any and all drawings, art work, special products, materials, tools or tooling, information or data furnished by Buyer to Seller shall be used by Seller only for Buyer’s work, shall remain the exclusive property and proprietary information of Buyer, shall be kept confidential and shall be returned promptly at Buyer’s request. Seller acknowledges that Buyer’s patents, trademarks, tradedress, copyrights, trade secrets or any other form of intellectual property that Buyer provides to Seller are Buyer’s exclusive property and Seller disclaims all rights in same other than expressly provided in this Agreement. If specified in an Order, or where payment is made to Seller for product design, improvement, modification, development, experimental products or research work, or work is to be performed in accordance with special requirements of Buyer, such work and work product, and all intellectual property related to such work or work product (collectively, “Works”), created by Seller or its employees, service providers, contractors, or agents will be deemed to have been specifically ordered and commissioned by Buyer, and will be considered a work-made-for-hire from the moment of creation and will be the sole and exclusive property of Buyer without any need for accounting therefor.  To the extent that the Works are not considered works-made-for-hire, without reservation or limitation, Seller (on behalf of itself and its employees, service providers, contractors, and agents to) hereby assigns, transfers and conveys the Works to Buyer, exclusively, irrevocably, and perpetually, together with all right, title and interest and any goodwill associated therewith throughout the world.  Seller grants to Buyer a non-exclusive, worldwide, irrevocable, royalty-free license, with the ability to license and sublicense and without a need for accounting, to make or use any and all of Seller’s intellectual property rights in connection with the use and utilization of the Works and improvements or derivatives related to the Works.

18. Export-Related Information

On Buyer’s request Seller shall promptly provide all information necessary to export Products under this Agreement, including, as applicable, the Export Control Classification Numbers (ECCN) and subheadings or munitions list category numbers, and shall promptly notify Buyer of any changes to the information provided by Seller to export Products under this Agreement.

19. Ingredients and Materials Disclosure

On Buyer’s request, Seller shall promptly provide to Buyer, in such form and detail as Buyer reasonably requests, a list of all ingredients and materials incorporated in the Products and the amount of such ingredients and materials. Seller shall promptly provide Buyer notice of, and information concerning, any changes in or additions to such ingredients and materials.

20. Conflict Minerals

Seller shall not use Conflict Minerals, as defined in Section 13(p) of the Securities Exchange Act of 1934 and Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and related OECD guidance (collectively, “Conflict Minerals Regulations”), in any Products. Seller agrees and represents that it will respond to any request by, or on behalf of, Buyer for information on any Products delivered hereunder containing Conflict Minerals.

21. Slavery and Human Trafficking

Seller warrants that it has adequate controls in place to ensure the prevention of slavery, human trafficking, child labor and forced labor. Seller further warrants and covenants that it will comply with all laws and regulations relating to slavery, human trafficking, child labor, forced labor and the ethical treatment of people.

22. Audit Rights

Seller shall maintain, and shall cause its agents and permitted subcontractors to maintain, books, records, and documents, to ensure accurate billing of any charges and expenses incurred as well as Seller’s compliance with the terms of this Agreement, including, without limitation, the quality of the Products provided hereunder. Such materials shall be retained for four (4) years after the expiration or termination of this Agreement. All such materials shall be subject at reasonable times and upon reasonable prior notice, to examination, inspection, or audit by personnel authorized by Buyer and/or any third party auditor designated by Buyer.

23. Business Continuity Plan

Seller shall at all times maintain, and update at least annually, a current business continuity plan (“BCP”) that is designed to ensure that Seller can meet its obligations under this Agreement in the event of a manmade or natural disaster or other emergency situation that results in a disruption of the provision of Products furnished by, through, or on behalf of Seller, which may include, without limitation, a force majeure event, labor dispute, or other act or event.

24. Assignments and Subcontracting

No part of an Order may be assigned or subcontracted without the prior written approval of Buyer.

25. Setoff

All claims for money due or to become due from Buyer shall be subject to deduction or setoff by the Buyer of any counterclaim arising out of this or any other transaction with Seller.

26. Compliance With Laws

Seller guarantees and warrants it has complied with all federal, state and local laws applicable to this sale, and has all necessary licenses, permits, rights, powers, and authority to enter into the Agreement and perform its obligations pursuant to the Agreement, and Seller agrees to defend, indemnify, and hold Buyer harmless against any liability resulting from any non-compliance.

27. Independent Contractor

Seller represents and warrants that it is a seller, in the ordinary course, of the Products of the kind being purchased.  If Seller is to provide services under the Agreement, Seller represents and warrants that it is an independent contractor and not an employee, agent, joint venturer or representative of Buyer.  Nothing in the Agreement will be construed as creating an employer-employee or a principal-agent relationship. Seller has no authority to bind or otherwise obligate Buyer in any manner.

28. Governing Law

The interpretation of this agreement and of the rights and obligations of the parties under this agreement, and all questions concerning the validity of this agreement, shall be governed by the laws of the Commonwealth of Pennsylvania. Any suit, action or proceeding brought by either party to enforce any term or provision of this agreement, or to determine the validity of this agreement, or concerning this agreement or the subject hereof in any manner, shall be commenced and maintained solely in state or federal courts having jurisdiction at the Buyer’s address set forth on the face hereof. The Convention for the International Sales of Goods shall not apply to this Agreement.

29. General Provisions

This Agreement supersedes all other communications, negotiations and prior oral or written statements regarding the subject matter of this Agreement. No change, modification, rescission, discharge, abandonment, or waiver of this Agreement shall be binding upon the Buyer unless made in writing and signed on its behalf by a duly authorized representative of Buyer. No conditions, usage of trade, course of dealing or performance, understanding or agreement purporting to modify, vary, explain, or supplement these terms and conditions shall be binding unless hereafter made in writing and signed by the party to be bound. No waiver by either party with respect to any breach or default or of any right or remedy, and no course of dealing, shall be deemed to constitute a continuing waiver of any other breach or default or of any other right or remedy, unless such waiver, is identified as a waiver, is expressed in writing, and is signed by the party to be bound. The invalidity in whole or in part of any condition of this contract shall not affect the validity of any other condition. The remedies provided in this contract are cumulative and in addition to any other remedies in law or equity. All typographical or clerical errors made by Buyer in any Order or publication are subject to correction.