CAPRO LTD. TERMS AND CONDITIONS OF SALE

1.   GENERAL:  The terms and conditions of sale set forth herein (the “Terms of Sale”) shall apply exclusively with respect to products (the “Products”) sold by Capro Ltd. (together with its divisions and affiliates, “Capro”).  Except for terms relating to identification of Products, quantities and delivery schedule set forth in Purchaser’s purchase order(s) (an “Order”) accepted by Capro, Capro will not be bound by any different or additional terms and conditions.  Purchaser’s acceptance of the Products (in whole or in part) shall constitute acceptance of these Terms of Sale.

2.   ORDERS; ACCEPTANCE.  All Orders must be submitted in writing and shall be subject to acceptance by Capro.  Capro reserves the right, in its sole and absolute discretion, to reject any Order.

3.   ORDER TERMINATION:  Capro reserves the right to terminate any Order, without cause, by providing ninety (90) days prior written notice to Purchaser.

4.   PRODUCT AND RAW MATERIAL LEAD-TIMES:  Capro requires a minimum firm lead-time authorization of two (2) weeks for Product fabrication and ten (10) weeks for material.  Some Products may require longer firm lead-time authorization for fabrication and/or materials, which shall be identified in the Product quotation to the Purchaser.  In the event that Purchaser fails to comply with the Product and/or material lead-times, Capro shall not be responsible for any failure to meet any of the delivery dates specified in the applicable Order submitted by Purchaser.  In addition, any premium costs required to expedite materials or Products due to Purchaser’s failure to comply with required firm lead-times shall be at the Purchaser’s sole cost and expense.  Capro shall not commit to any such premium costs, unless and until such time as Capro receives written authorization to do so from Purchaser, in which case Purchaser shall reimburse Capro for all such premium costs incurred by Capro.
 
5.   PRODUCT CAPACITY:  Prior to Capro’s providing any Product pricing to Purchaser, Purchaser shall provide Capro with Purchaser’s estimates of its annual volume requirements of the Product (the “AVR”) and its estimated average weekly requirements of such Product (the “AWR”).  Capro shall not be obligated to supply Purchaser with any Products that exceed Purchaser’s AVR by more than ten percent (10%).  If Purchaser’s requirements for any week exceed the AWR by more than ten percent (10%) (the “Maximum AWR”), Purchaser shall have the option to pay overtime costs and/or Product and material expediting costs for the requirements that exceed the Maximum AWR, provided that such labor and expediting are available.  If the Purchaser’s actual AVR requirements are less than the quoted AVR by twenty percent (20%) or more, then Capro shall have the right to terminate the Order in question and provide Purchaser with a new price quote for such Products, which shall be based on the cost of the unused Capro capital investment.  If Purchaser’s actual AVR increase greater than the quoted AVR by twenty percent (20%) or more, then Capro shall have the right to terminate the Order in question and provide Purchaser with a new price quote for such Products, which shall be based on the cost of the additional capital investment required to meet the new AVR.  If Purchaser terminates purchase of the Product from Capro prior to the end of production (EOP) of the program for which such Products are being purchased by Purchaser, then Purchaser shall be obligated to reimburse Capro for the cost of any unused portion of Capro’s capital investment promptly following Capro’s request.

6.   PRODUCT/MATERIAL OBSOLESENCE:  Purchaser shall be responsible for all Product and material obsolescence costs incurred by Capro due to Product design changes or Product termination directed by Purchaser for those Products and materials procured for Purchasers requirements that are within the lead-time requirements.  Capro shall submit a claim/invoice to Purchase for any and all such obsolescence costs, which shall be paid by Purchaser within thirty (30) days of the date of the claim/invoice.

7.   PRODUCT DESIGN RSPONSIBILITY & SUITABILITY FOR INTENED PURPOSE:  Purchaser is responsible for Product design and suitability of the Product for its intended purpose unless otherwise agreed to in writing by Capro.  If Capro accepts Product design responsibility, Purchaser shall be responsible to provide Capro all specifications, documentation and other information necessary for Capro to design the Product to be suitable for its intended purpose.  If Capro accepts Product design responsibility and Purchaser terminates purchase of the Product from Capro prior to the end of production (EOP) of the program for which the Product is being purchased by Purchaser, then the Purchaser shall promptly reimburse Capro for any unpaid portion of design costs, whether amortized in the Product prices or otherwise.

8.   PAYMENT TERMS: Payment terms are net 45 days from the date of invoice, subject to credit approval and credit limits.  Payment shall be made by check or wire transfer in the currency set forth on the invoice issued in respect of the purchased Products.  All amounts payable on or before the past due date as shown on each invoice will be paid by said date and if not paid on or before said due date are then to be deemed overdue.  Interest shall accrue on overdue amounts at a rate of 1.5% per month until the date of actual payment.  Purchaser shall be responsible for all collection costs and attorney’s fee in conjunction with any overdue amount placed in collection.  Each shipment shall be a separate transaction and payment shall be made accordingly.  Product held for the Purchaser shall be at the risk and expense of the Purchaser.  All payments are to be made to the address stated on the invoice. 

9.   ADDITIONAL COSTS:  Purchaser will reimburse Capro, at Capro’s standard rates, for any additional costs attributable to changes in the specifications, quality requirements, logistic requirements, directions or design of the Product furnished hereunder which are requested or approved by the Purchaser.

10.  TAXES: Purchaser shall be responsible for and shall pay any additional monies which may be necessary to cover any tax or charge (other than income tax) now existing or hereafter imposed by Federal, State or Municipal authorities upon Products purchased from Capro.

11.  ERRORS: Capro reserves the right to correct all stenographic or clerical errors which may be present in the invoice.

12.  CANCELLATION OR DEFERRED DELIVERY:  Purchaser may only cancel an Order or release to a blanket Order upon Capro’s written approval and upon payment of reasonable charges specified by Capro, which will normally include, but are not limited to, charges for the following: (a) work completed, at the full unit price; (b) work in process, at cost of completed operations plus overhead and percentage of profit attributable thereto; (c) raw materials and purchased parts, at cost to Capro, plus our handling charge and disposal cost, (d) unamortized tooling on the basis of balance due to Capro, (e) any other expenses or charges, including engineering and overhead charges incurred by Capro in connection with the performance of the Order up to date of cancellation and (f) any other applicable expenses or charges set forth in these Terms of Sale.  Purchaser’s request for deferral of delivery may, at Capro’s option, be treated the same as cancellation of Purchaser’s Order, and in such event, the foregoing cancellation charges will apply.
 
13.  SHIPMENTS AND DELIVERY: All shipments are made EX WORKS Capro’s plant of manufacture or warehouse unless otherwise agreed to in writing by Capro.  Risk of loss or damage shall transfer per INCOTERMS 2000 unless other arrangements have been agreed to in writing.  The Products will be prepared for shipment in a manner prescribed by Capro, consisting of one or more pieces, unless Purchaser and Capro have agreed differently in writing at time of placing Order.

14.  ACCEPTANCE OF PRODUCTS BY PURCHASER:  All Products purchased from Capro shall be deemed accepted by Purchaser unless written notice of defect or nonconformity is received by Capro within five (5) days after the delivery of such Products to Purchaser at the address specified in the Order.

15.  FORCE MAJEURE:  Capro will not be liable for delays in performance or non-performance which are due to causes beyond Capro’s control, including but not limited to: (a) acts of God, fires, floods, priorities, epidemics, war, government action (which shall include, without limitation, actions by customs agents) or sabotage; (b) labor disputes or the inability to obtain necessary labor, materials, components or manufacturing facilities; and (c) changes in specifications, directions or design requested by Purchaser or agreed to by Purchaser, or (d) any action or inaction by the Purchaser, including, without limitation, Purchaser’s delay in approving documents.  In the event of any such delay, the date of delivery will be extended for a period equal to the time lost by reason of the delay.

16.  WARRANTY: Capro warrants exclusively that, on the date of delivery by Seller to Purchaser’s carrier, the Products shall be in conformity with the Product specifications, and shall be free of defects in material and workmanship.  Purchaser may only assert a claim for breach of the foregoing warranty until the first (1st) anniversary of Purchaser’s receipt of the Products.  THE FOREGOING WARRANTY IS MADE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT AND ANY WARRANTY ARISING OUT OF A COURSE OF DEALING, A CUSTOM OR USAGE OF TRADE.  Without limiting the foregoing, Capro neither assumes, nor authorizes any person to assume on its behalf, any other obligation in connection with the Products or the sale of the Products.  The warranty provided in this Section shall not apply to any Products which: (i) have been modified or altered; (ii) have been subjected to misuse, negligence or accident; or (iii) have been used in a manner inconsistent with any instructions or recommendations of Capro.

17.  RETURNED PRODUCTS:  Returns will not be accepted without Capro’s prior written authorization.  A copy of such authorization must accompany each returns shipment.  Returns other than warranty claims will not be accepted without Capro’s prior written consent; provided, that any such returns which Capro agrees in writing to accept shall be subject to a restocking charge, to be determined by the condition, age and usability of the Product returned.

18.  LIMITATION OF LIABILITY:  No claim of any kind, whether as to Products delivered or for non-delivery of Products, and whether or not based on negligence, shall be greater in amount than the purchase price of the Products in respect of which damages are claimed.  In addition, in no event, whether as a result of breach of contract, warranty, indemnity, tort (including negligence), strict liability or otherwise, shall Capro or any of its subsidiaries or affiliates be liable to Purchaser for any punitive, consequential, incidental or indirect damages or charges whatsoever, including, but not limited to, loss of profit or revenues, cost of capital, cost of substitute facilities, services or replacement power, downtime costs or claims of Purchaser or Purchaser’s customers.

19.  EXPORT CONTROL: Purchaser shall comply with all applicable laws, regulations and treaties relating to the sale and destination of the Products.  Purchaser agrees not to sell any of the Products in any territory or country prohibited by applicable laws and to obtain representations from its customers that they will not resell or transfer any of the Products to such countries or territories.  Purchaser will defend, indemnify and hold Capro harmless for any damages or costs to Capro arising from Purchaser’s failure to comply with these terms.

20.  INTELLECTUAL PROPERTY RIGHTS.  Unless otherwise agreed to in writing by Capro and Purchaser, Capro shall exclusively own all rights, title and interest (including, without limitation, all intellectual property rights throughout the world) in and to the Products and any and all inventions, works of authorship, layouts, know-how, ideas or information discovered, developed, made, conceived or reduced to practice in connection with the supply of the Products to Purchaser.  Nothing in these Terms of Sale or the sale of the Products shall imply any license or other rights with respect to any intellectual property rights of Capro, its affiliates or its suppliers, and Capro reserves all such rights.  Purchaser shall not reverse engineer any Products purchased from Capro.

21.  CONFIDENTIALITY:  All confidential and proprietary information provided by Capro to Purchaser (“Confidential Information”) shall be maintained by Purchaser as confidential and shall not be disclosed to any third party without Capro’s prior written consent.  Purchaser shall exercise the same degree of care to avoid disclosure of the Confidential Information as it employs with respect to its own Confidential Information, but not less than reasonable care.  Confidential Information will not include information that: (i) is now or hereafter becomes publicly known without violation of these Terms of Sale; (ii) was independently developed by Purchaser without reliance upon any Confidential Information; or (v) is authorized to be disclosed by the Capro.

22.  SEVERABILITY:  If any provision of these Terms of Sale is held by a court, government agency or other legal authority of competent jurisdiction to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not invalidate, void or render unenforceable any other portion of these Terms of Sale but rather these Terms of Sale shall be construed as if they did not contain the particular invalid, illegal or unenforceable provision or provisions, and the rights and obligations of the parties shall be construed and enforced accordingly.

23.  APPLICABLE LAW:  These Terms of Sale will be governed by the laws of the State of Texas.

24.  PURCHASER DIRECTED SUPPLIERS:  Purchaser may direct Capro to use Purchaser specified raw material supplier.  If Purchaser directed supplier causes increased cost to Capro then Capro has the right to replace supplier with a supplier of Capros choice or terminate the Purchaser’s Order and requote the Purchaser a new Product price based on the additional cost caused by the Purchaser’s directed supplier.

25.  SETOFF: Capro (which for purposes of this section shall mean and include all of Capro’s parent, subsidiary and affiliated entities) shall have the right to set off any sums receivable from Purchaser (which for purposes of this section shall mean and include all of Purchaser’s parent, subsidiary and affiliated entities) against any sums payable to Purchaser.

26.  ENTIRE AGREEMENT: Unless agreed otherwise in writing, these Terms of Sale shall constitute the entire agreement between Capro and Purchaser with respect to the purchase of the Products in question.  CAPRO HEREBY EXPRESSLY REJECTS AND REFUSES ANY GENERAL OR SPECIFIC PURCHASE CONDITIONS OR ANY ADDITIONAL OR INCONSISTENT TERMS OR CONDITIONS OFFERED BY PURCHASER AT ANY TIME AND IRRESPECTIVE OF CAPRO’S ACCEPTANCE OF PAYMENT, DELIVERY OF PRODUCT, PERFORMANCE HEREUNDER OR RECEIPT OR ACKNOWLEDGMENT OF RECEIPT OF ANY SUCH CONDITIONS.  No change or addition to, or modification of, these Terms of Sale shall be binding upon Capro unless signed by an authorized representative of Capro.  NO SALESPERSON IS AUTHORIZED TO BIND CAPRO.  Unless accepted by Capro in writing, Capro shall be under no obligation to accept any notice of cancellation, change, hold, stop work or other such notice or order by or from Purchaser.  Notwithstanding the generality of the foregoing, however, these Terms of Sale shall not be construed as superseding or replacing any obligations undertaken by Purchaser for the benefit of Capro in any confidentiality or nondisclosure agreement heretofore or hereafter entered into by Capro and Purchaser.
 
27.  ASSIGNMENT:  Neither party may assign or otherwise transfer its rights or obligations under any Order or these Terms of Sale, or assign any of its rights or delegate any of its obligations hereunder, without the prior written consent of the other party, and any attempted or purported assignment by either party without such consent shall be null and void.  Notwithstanding the foregoing, however, Capro may assign all of its rights and delegate all of it obligations hereunder, (a) to any parent, subsidiary or affiliated entity of Capro, or (ii) in connection with a merger, acquisition or sale of all or substantially all of its assets, in each case, without the consent of Purchaser.

Revision Date:  7-6-07