VF-Transformer

Purchasing

PURCHASE ORDER TERMS AND CONDITIONS

1. SCOPE. These Terms and Conditions apply to the purchase by V&F Transformer Corporation (the “Buyer”) of production goods and services from the person, firm or company supplying them (the “Supplier”) including: (a) production and service parts, components, assemblies and accessories; (b) raw materials; and (c) design, engineering, or other services. All goods and/or services (whether or not ancillary to a sale of goods) to be provided under an Order are included in the term “Goods.”

2. OFFER AND ACCEPTANCE. The attached purchase order and amendments hereto (collectively referred to hereinafter as “Order”) describes the goods and services being purchased and specifies the name and address of the Buyer and the Supplier (collectively referred to hereinafter as the “Parties”). The Order is an offer to Supplier by Buyer to enter into the purchase/supply agreement it describes, and it shall be the complete and exclusive statement of such purchase/supply agreement. The agreement is formed when the Supplier accepts the offer of the Buyer. This occurs upon the earlier of: (a) the Supplier beginning work or performance; or (b) the Supplier notifying the Buyer of its acceptance of the offer. The Order supersedes all prior agreements, written or oral. No course of prior dealings between the parties and no usage of the trade may be used by the Supplier to supplement or explain any term used in this Agreement. All modifications must be in a writing signed by authorized representatives of Supplier and Buyer.

3. OTHER TERMS. Buyer objects to any additional or contrary terms in Supplier’s quotation or acceptance, and the terms herein shall be binding upon the parties. AN ATTEMPTED ACKNOWLEDGEMENT OF THE ORDER CONTAINING TERMS AND CONDITIONS INCONSISTENT WITH OR IN ADDITION TO THOSE STATED HEREIN IS NOT BINDING UPON BUYER UNLESS SPECIFICALLY ACCEPTED BY BUYER IN WRITING. No course of performance or conduct by Buyer shall be construed to waive, modify or otherwise adversely affect Buyer’s rights as stated herein.

4. DELIVERY. (a) Except if this Order is identified as a “Blanket” Order, delivery must be upon the date indicated. If this Order is identified as a “Blanket” Order, deliveries are to be made only in quantities and at times specified by Buyer in shipment releases issued to Supplier by Buyer. Buyer shall have no liability for payment for Goods delivered to Buyer which are in excess of quantities specified in the Order or in the releases. Buyer from time to time and with reasonable notice may change or temporarily suspend shipping schedules specified in the Order or shipment release. (b) Unless otherwise indicated in an Order: (i) All shipping, drayage, demurrage, storage, insurance, packing, and related charges shall be prepaid by Supplier, and then billed to Buyer if Buyer is responsible for such charges according to the terms of the Order. (ii.) All shipping charges shall be paid by Buyer as follows, except when express or priority shipment is required as in Subsection (v): if Order is seventy-five (75) pounds or less, Supplier shall bill Buyer’s United Parcel Service (“UPS”) account number; and if Order is more than seventy-five (75) pounds, Supplier will ship using a courier of Buyer’s choice and bill said charges to Buyer. (iii) All goods shall be suitably packed, marked and shipped in accordance with the requirements of common carriers in a manner to secure the lowest transportation costs consistent with accompany each shipment. (ivii) Supplier shall mark each package with the Order number, and where multiple packages comprise a single shipment, each package shall be shown on packing slips, bills of lading, and invoices. (iv) SUPPLIER SHALL PAY ALL EXPRESS AND OTHER CHARGES NECESSARY TO SPEED DELIVERY TO ENABLE SUPPLIER TO MEET THE DELIVERY SCHEDULE. SUPPLIER SHALL SHIP ALL LATE SHIPMENTS BY EXPRESS OR PRIORITY METHODS OF DELIVERY AT ITS EXPENSE AS REQUESTED BY BUYER.

5. CHANGES. (a) The Buyer may make changes to its Order for the Goods at any time. These may include changes to the design, specifications, engineering level, materials, packaging, shipping date, or time or place of delivery. The Supplier will make all changes requested by the Buyer. The Supplier may not make any change on its own without first obtaining the Buyer's consent by Written Notice. (b) The Buyer will provide the Supplier with Order or the issuance of a new purchase order. If the amendment is accomplished by issuing a new purchase order, the Initial Term of the original Order will apply. (c) The Supplier will promptly notify the Buyer by Written Notice if the proposed change will affect cost or timing and provide substantiation of its claim. If the Buyer determines that an adjustment is appropriate, the Buyer and the Supplier will negotiate in good faith on an equitable price adjustment (whether up or down), a change in shipping or delivery terms, or other appropriate adjustment. If the Buyer determines that no adjustment is appropriate, it will so advise the Supplier by Written Notice stating its reasons.

6. RISK OF LOSS AND TITLE. All shipments are at the risk of the Supplier, regardless of the F.O.B. point, unless otherwise agreed to in writing signed by an authorized representative of Buyer. If Buyer assumes risk of loss in writing, all risk casualty insurance must be provided by Supplier for the benefit of Buyer. Title shall remain with Supplier until the earliest of payment for or receipt of the Goods by the Buyer at its plant. Risk of loss shall not be governed by transfer of title.

7. INSPECTION. All Goods shall be received subject to Buyer’s right of inspection and rejection. Buyer shall have a reasonable time, but not less than 4514 days after delivery, to inspect delivered Goods prior to accepting the Goods. Defective Goods and Goods not in conformity with Buyer’s specifications or the Order will be returned to Supplier at Supplier’s expense. Payment for the Goods prior to inspection shall not constitute an acceptance thereof. Acceptance shall not release Supplier’s responsibility for latent defects or non-conformities nor for warranty claims.

8. CONFIDENTIAL INFORMATION. In these Terms and Conditions, “Confidential Information” means any and all information in whatever form, whether disclosed in writing, orally, visually, electronically or in any other media format, including without limitation, volume projections, future product plans, the form, materials and design of any relevant plant and equipment or any part thereof, methods of operation and applications, processes, formulae, plans, strategies, data, know-how, designs, trade secrets, patent applications, software, market opportunities, photographs, drawings, specifications, technical literature and any other material gained or made available by either Party (or any of its representatives or advisors) to the other (or any of its representatives) as a result of the relationship of the Parties under the Order. The Parties acknowledge that as part of their relationship they may from time to time share confidential information that is outside the scope of a specific Order. In order to facilitate the successful collaboration of the Parties, both Parties acknowledge that such information shall be deemed to fall within the scope of “Confidential Information”. The Parties shall keep and procure to be kept secret and confidential all Confidential Information by using at least the same degree of care as it uses to protect its own Confidential Information, but in any event no less than a reasonable degree of care, to prevent the unauthorized use, disclosure, dissemination or publication of the other Party’s Confidential Information. Neither Party shall use nor disclose Confidential Information, save for the purposes of proper performance of the Order or with the prior written consent of the other Party. The obligations in this Section do not apply to the receiving Party with respect to Confidential Information that the receiving Party can show by evidence was: (a) in, or has become part of, the public domain other than as a result of a breach of these Terms and Conditions; (b) disclosed with the prior written approval of the disclosing Party by written notice; (c) rightfully obtained from a third party entitled to disclose the same; (d) in its possession or already known by it prior to entering the Order; (e) independently developed by it; and (f) required to be disclosed under any applicable law, or by order of a court or governmental body or authority of competent jurisdiction – this exception shall only apply if the Receiving party has, to the fullest extent permitted by law, provided the Disclosing 3 party with a written notice of the court order, and has fully cooperated with the Disclosing party in seeking confidential treatment for the disclosures. Neither the Buyer nor the Supplier will share any Confidential Information of the other Party with any third party, including any competitor of the other Party, without the prior written agreement of the other Party, except as may otherwise be permitted under the Order, these Terms and Conditions, or in writing between the Parties.

9. WARRANTY. The Supplier warrants that the Goods will: (a) conform in all respects to the drawings, specifications (including without limitation in relation to design and performance of the Goods), samples and other descriptions and requirements relating to the Goods that have been furnished, specified or approved by the Buyer; (b) comply with all Government Requirements and applicable safety standards of the countries in which the Goods or the transformers into which the Goods are to be installed are to be sold; (c) be of a high standard and quality in accordance with the quality standards as agreed between the Parties, and shall be free from defects in materials and workmanship; (d) be free from defects in design to the extent furnished by the Supplier, its Group Companies or their subcontractors, even if the design has been approved by the Buyer; (e) be suitable and fit for their intended use by the Buyer and all other end-users, including the specified performance in the component, system, subsystem and transformer location specified by the Buyer and the environment in which the Goods are or reasonably may be expected to perform; (f) be in total compliance with the Registration, Evaluation, Authorization, and Restriction of Chemicals regulation (REACH) as well as the Restrictions of Hazardous Substances regulation (RoHS); (gf) be free from any substance which is banned or any substance which the Buyer does not wish to use; and (hg) in respect of services, be provided in accordance with the terms of the Order and executed with reasonable care, skill and diligence by properly qualified and experienced persons. Supplier further warrants that it has taken all necessary steps to ensure that the computer software and systems used by Supplier and its suppliers are Year 2000 compliance before, on and/or after January 1, 2000 to the extent necessary to ensure Supplier’s continued ability to fully and satisfactorily perform all obligations under this agreement. ANY ATTEMPT BY SUPPLIER TO LIMIT, DISCLAIM, OR RESTRICT ANY SUCH WARRANTIES OR ANY REMEDIES OF BUYER, BY ACKNOWLEDGEMENT OR OTHERWISE, IN ACCEPTING OR PERFORMING THE ORDER, SHALL BE NULL, VOID AND INEFFECTIVE WITHOUT BUYER’S WRITTEN CONSENT SIGNED BY BUYER’S DIRECTOR OF PURCHASING.

10. INDEMNITY. Supplier shall defend, indemnify and hold harmless Buyer, its affiliates, subsidiaries, directors, officers, employees, and agents from and against all liabilities, claims demands, or actions arising out of the performance of the Order by Supplier which are for actual or alleged (a) injury to any person, (b) damage to any property, (c) economic loss, or (d) violation of any law, ordinance, or regulation, including but not limited to claims asserting that the Goods are defective, as well as claims arising from the alleged action, inaction or negligence of Supplier, its servants, employees, contractors, or agents. Buyer will investigate, defend and otherwise handle any such claim. At Buyer’s request, Supplier will assist Buyer in its investigation, defense or handling of any such claim. Supplier will pay all costs, expenses, damages and settlement amounts that Buyer and others selling or using Buyer’s products incorporating the Goods may sustain by reason of an indemnified claim. Supplier’s indemnification obligations will apply even if Buyer furnishes all or a portion of the design and specifies all or a portion of the processing used by Supplier unless agreed otherwise in writing. Buyer will determine Supplier’s financial responsibility under this Section after taking into account the relative involvement of Buyer and Supplier in the design, whether Supplier made Buyer aware of the potential for the claim, the extent to which the 4 Goods gave rise to the claim, the duration and nature of the relationship with Supplier and such other factors as Buyer may deem relevant.

11. DEFAULT. Supplier shall be in default if Supplier (1) fails to perform any obligations created by this Order within the time specified herein or any extension thereof; (2) breaches any warranty or representation contained herein; or (3) fails to make progress as to make Buyer reasonably apprehensive about Supplier’s ability or willingness to perform its obligations under this Order, and if in any of these circumstances, Supplier does not cure such failure or breach within a period of five (5) days after receipt of notice from Buyer specifying such failure or breach, or such longer period as Buyer may authorize in writing. Upon such default, Supplier shall indemnify Buyer from all damages and expenses (including labor costs and attorneys fees) incurred by Buyer in connection with Supplier’s default, including but not limited to, any and all late fees charged to Buyer by any of its customers. In addition, Buyer expressly reserves those rights and remedies contained in the Uniform Commercial Code, as reflected in the statutes of the State of Illinois.

12. NONCONFORMING GOODS. Supplier will deliver only Goods that conform in all respects to the requirements described in Section 9(a) to (f) inclusive. If any of the Goods ordered are found at any time to be defective in material or workmanship, or otherwise not in conformity with the requirements and warranties contained in this Order, Buyer will notify Supplier as soon as reasonably practicable after Buyer has discovered it. Upon finding any nonconformity described above, in addition to such other rights and remedies as it may have under the Order or by law, Buyer, at its option and sole discretion may: (1) reject and return such Goods at Supplier’s expense; or (2) require Supplier to inspect the Goods and remove and replace nonconforming Goods with Goods that conform to the Order, so long as the remedial work will not cause any delay in Buyer’s operations, including its production process, or cause Buyer to incur any additional costs. If Buyer elects option (2) above and Supplier fails to promptly make the necessary inspection, removal and replacement, Buyer may at its option and Supplier’s cost, inspect and repair the Goods.

13. EXCUSABLE DELAY. Neither Buyer nor Supplier shall be liable for a failure to perform that arises from causes or events beyond its reasonable control and without its fault or negligence, such as floods, tornadoes or other natural disasters, fire, war, government or statutory restrictions, or labor disputes; provided, however, that in the event such party finds or anticipates any difficulty in performing this Agreement by reason of such causes or events, such party shall promptly notify the other party to that effect and use its best efforts to avoid or remove causes of such difficulty.

14. TERMINATION AT OPTION OF BUYER. (a) Buyer may terminate it’s the Order in whole or in part at any time by a written notice of termination to Supplier. Buyer shall have such right of termination withstanding the existence of an excusable delay as referenced above. (b) Unless Buyer terminates because of Supplier’s default, Buyer’s obligation to Supplier upon termination shall be: (i) the purchase order price for finished work and completed services that conform to the requirements of this Order; (ii) Supplier’s actual costs of work-in-progress and parts and materials that Supplier produced or acquired hereunder and transfers to Buyer, and (iii) Supplier’s actual costs of protecting Buyers property that is in Supplier’s possession. In no event shall Buyer’s obligations upon termination exceed those Buyer would have had to Supplier in the absence of termination. (c) Supplier shall furnish to Buyer, within one month after the date of termination, Supplier’s written termination claim, which shall consist exclusively of the items of Buyer’s obligation to Supplier under the preceding subsection. Supplier’s failure to provide such termination claim to Buyer in accordance with the provisions of this Section shall relieve Buyer of any obligation to Supplier under this Section. Buyer may audit Supplier’s records, before or subsequent to payment, to verify Supplier’s termination claim. (d) Buyer shall have no obligation to Supplier if Buyer terminates its purchase obligations because of default by Supplier. 5

15. SUBCONTRACTING AND ADVERTISING. Supplier shall notify Buyer in advance of any intent to subcontract work to be performed under this Order, and shall remain fully responsible for all obligations under this Order in connection with Goods manufactured by subcontractors and delivered to Buyer. Supplier shall not refer to Buyer in advertising or public releases without Buyers written approval.

16. QUALITY ASSURANCE. Supplier will promote continuous quality improvement in the manufacture, production and distribution of the Goods. Supplier will comply, and procure that its subcontractors comply, with the quality assurance processes, inspections and standards specified by the Buyer for suppliers providing Goods or services similar in nature to the Goods.

17. INSURANCE. Supplier shall, at its own expense, and for a period of two (2) years following completion of the Order, have and maintain in force insurance policies as are appropriate and adequate having regard to its obligations and liabilities under the Order and these Terms and Conditions, but including without limitation: (a) commercial general liability insurance (including product liability) in a sum no less than $1,000,000 for each occurrence and $2,000,000 in the aggregate; (b) excess/umbrella liability insurance with a minimum limit of $2,000,000; (cb) automobile insurance covering all liabilities for personal injury and property damage arising from the use of vehicles, with limits of no less than $1,000,000; and (dc) adequate insurance against loss of, or damage to, any of the assets of Supplier, its personnel or any of its subcontractors or approved suppliers who are located at Supplier’s premises. The commercial general liability insurance and the excess/umbrella insurance shall name Buyer as additional insured. Supplier shall: (a) on the written request of Buyer from time to time, Supplier shall provide Buyer with copies of the insurance certificates evidencing such policies; (b) comply with all obligations and meet all conditions of the insurance policies and not do or omit to do, not permit or suffer to be done or omitted anything which may invalidate any of the insurance policies; (c) during the term of the Order procure that the terms of the insurance policies shall not be altered in such a way as to diminish the benefits of the insurance.

18. TAXES. Unless specified otherwise on the face of the Order, the prices are inclusive of, and Supplier shall be solely responsible for and pay, all federal, state, and local taxes, including, but not limited to, value added tax, goods and services tax, sales, use or consumption tax. No sales or use tax shall be added when a valid tax exemption is indicated on the face of the Order by the Buyer.

19. COMPLIANCE WITH LAW. Supplier shall comply with all applicable industry, federal, state and local laws, rules, regulations or ordinances, and standards as to the Goods and otherwise in its performance of the Order, including but not limited to laws addressing Equal Employment Opportunity, Employment of Veterans, Employment of the Handicapped, Age Discrimination, Fair Labor Standards Act, Wages and Fringe Benefits, and related Acts and Executive Orders as now or hereafter amended or codified.

20. NON-ASSIGNMENT. Assignment of the Order or any interest herein or any payment due or to become due hereunder, without the consent of the Buyer, shall be void.

21. FORCE MAJEURE. Neither the Buyer nor the Supplier will be liable for a delay or failure to perform directly due to a “Force Majeure Event”, meaning a cause or event beyond the reasonable control of a Party that is not attributable to its fault or negligence. Force Majeure Events include fire, flood, earthquake, and other extreme natural events, acts of God, riots, civil disorders and war or acts of terrorism whether or not declared as such by a Government. In every case, the failure to perform must be beyond the reasonable control, and not attributable to the fault or negligence, of the Party claiming the Force Majeure Event. Force Majeure Events also include delays or non-performance of a subcontractor, agent or supplier of a Party only if and only to the extent that the cause or 6 event would be a Force Majeure Event. Force Majeure Events exclude labor problems (including strikes, lockouts, and slowdowns regardless of their lawfulness), or failure of supplies of power, fuel, transport, raw materials or other goods and services, or the failure to comply with applicable law or to take actions reasonably necessary to schedule performance in anticipation of any customs, export-import, or other Government Requirement of which public notice has been given. The Party claiming Force Majeure will provide the other Party by written notice of its occurrence and its termination as soon as practicable. In the event of a Force Majeure Event, the Buyer, at its option, may acquire all finished Goods, work-in-progress, and raw materials produced or acquired for the work under the Order at a reasonable price. Buyer reserves the right to acquire the Goods elsewhere for the duration of the Force Majeure Event and for a reasonable time afterwards to minimize production disruptions until Supplier’s facilities are producing Goods in the quantities required by the Order and to reduce accordingly any quantity of Goods ordered under an outstanding Order. Buyer may terminate the Order, in whole or in part, upon written notice to Supplier if a Force Majeure Event has occurred resulting in a failure or delay to perform that has lasted for more than thirty (30) days after the effective date of the written notice given by the Party claiming Force Majeure.

22. WAIVER AND RELEASE OF LIENS. Upon Supplier receipt of amounts properly invoiced, Supplier waives and releases all rights to, for itself and its subcontractors, and at its sole cost shall obtain prompt removal of any lien fixed against Buyer, for Goods performed under this Order.

23. RELATIONSHIP OF PARTIES. Supplier is an independent contractor of Buyer. Nothing contained herein shall be construed as creating an agency, partnership, employment or fiduciary relationship. Neither party shall have authority to bind the other party in any manner whatsoever.

24. NOTICES. All notices, consents, claims, demands, waivers and communications hereunder (individually, a “Notice”) shall be in writing and addressed to the Parties at the addresses set forth on the face of the Order, or to such other address that may be designated by the Receiving Party in writing. All Notices shall be delivered by personal delivery, nationally recognized overnight courier (all fees pre-paid), facsimile (with confirmation of transmission), email (with email confirming receipt), or certified or registered mail (return receipt requested, postage prepaid). Notices by way of delivery, courier, or registered mail are effective upon date of delivery; and Notices by way of facsimile or email are effective upon date of transmission.

25. SET-OFF. Buyer shall be entitled at all times to set off any amount owing at any time from Supplier to Buyer or any of its affiliated companies against any amount payable at any time to Supplier in connection with the Order.

26. SEVERABILITY. In the event that any provision of these Terms and Conditions (or portion thereof) is determined by a court of competent jurisdiction to be void, invalid or otherwise unenforceable, such provision (or part thereof) shall be enforced to the extent possible consistent with the stated intention of the parties, or, if incapable of such enforcement, shall be deemed to be deleted from the Order or these Terms and Conditions, as the case may be, while the remainder of the Order and these Terms and Conditions shall continue in full force and remain in effect according to their stated terms and conditions.

27. APPLICABLE LAW. With the exception of any conflicts of laws provisions or statutes, this Order shall be governed, construed and enforced by and under the law of the State of Illinois, including the Uniform Commercial Code as adopted in Illinois and in force on the date of the Agreement, except as provided herein. This provision shall supersede any conflicts of laws provisions that might otherwise cause the Order to be governed by laws other than the law of the State of Illinois. 7

28. MISCELLANEOUS. Supplier shall not assign, transfer, delegate or subcontract any of its rights or obligations under the Order without Buyer’s prior written consent. Any purported assignment or delegation in violation of this Section shall be null and void. No assignment shall relieve the Supplier of any of its obligations hereunder. No modification, alteration or amendment of the Order shall be binding unless agreed to in writing and signed by the Buyer. No waiver by any part of any of the provisions of the Order shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from the Order by Buyer shall operate or be construed as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or privilege hereunder preclude any other exercise of any additional right, remedy, or privilege.