Terms and Conditions of Purchase

1. General

Unless otherwise prohibited by applicable law, these Terms and Conditions of Purchase (the “Terms”) are incorporated into and form a part of the purchase order or revision thereto (the “Purchase Order”) issued by Flamingo Electric, Inc. d/b/a Flamingo Marine (“Buyer”) to the seller (“Seller”) designated on the Purchase Order. The term “Supplies” refers to the products, supplies, equipment and/or services to be provided to Buyer by Seller as specified on the Purchase Order.

2. Acceptance and Acknowledgement

The Purchase Order is an offer by Buyer to purchase the Supplies from Seller on the terms of the Purchase Order. Buyer shall have the right to rescind the Purchase Order at any time prior to Seller’s acceptance. Seller shall be deemed to have accepted the Purchase Order and a binding contract shall be deemed to have formed upon the earliest of: (a) Seller commencing work or performance with respect to any part of the Purchase Order; (b) Seller delivering written acceptance of the Purchase Order to Buyer; (c) any conduct by Seller that fairly recognizes the existence of a contract for the purchase and sale of the Supplies; or (d) three (3) days following Buyer’s delivery of the Purchase Order to Seller. The Purchase Order is limited to and conditional upon Seller’s acceptance of these Terms, which expressly exclude any of Seller’s general terms and conditions of sale, acknowledgment, invoice, or any other document issued by Seller in connection with the Purchase Order. Any addition to, modification of, or deletion of these Terms by Seller in any acceptance, acknowledgment, confirmation, or other communication or document, which may contain additional, different or inconsistent terms, is hereby expressly objected to and rejected by Buyer. Buyer’s failure to object to provisions contained in any communication from Seller shall not be deemed to waive any provisions herein, or to accept any different terms and conditions communicated by Seller. These Terms apply in lieu of any course of dealing between the parties or usage of trade in the industry. The following documents are incorporated into and shall be part of the Purchase Order and constitute the sole and entire agreement between the Buyer and Seller with respect to the Purchase Order: (i) these Terms; (ii) Buyer-provided specifications, designs, drawings, samples or other materials, and requirements for the Supplies (collectively “Buyer Specifications”); (iii) Buyer’s policies that have been communicated to Seller, as revised by Buyer from time to time; and (iv) any signed written agreement between Buyer and Seller which provides therein that it shall be part of the Purchase Order.

3. Delivery

Seller shall manufacture and ship Buyer’s requirements for the Supplies in such quantities, prices, and at such time as identified by Buyer as firm orders in the Purchase Order, or if a blanket Purchase Order, in scheduling agreements, manifests or other similar releases that are transmitted to Seller from time to time during the term of the Purchase Order. Time and quantities are of the essence under the Purchase Order; Buyer expects 100% on-time delivery. In the event of a delay in delivery, Seller shall notify Buyer immediately. Seller shall be liable for all increased costs, including premium freight charges, incurred by Buyer as a result of Seller’s failure to meet a scheduled delivery date and time or necessitated by quality, manufacturing or other problems for which Seller is responsible. Buyer may from time to time make changes to shipping schedules or direct temporary suspension of scheduled shipments in its sole and absolute discretion. Shipping terms shall be as stated in the Purchase Order. Title to the Supplies and risk of loss shall pass to Buyer at the time and place of delivery specified in the Purchase Order. If no time and place of delivery is specified, title and risk of loss will pass to Buyer upon Buyer’s receipt of the Supplies at Buyer’s facility. Seller warrants good title to Buyer for the Supplies delivered by Seller, free and clear of any and all liens, restrictions, reservations, security interests or other encumbrances. Seller shall, among any other instructions that may be communicated by Buyer, properly pack, mark, and ship the Supplies according to the requirements of Buyer, the involved carriers and the country of destination. Before the Supplies are shipped, Seller shall give Buyer sufficient warning in writing of any hazardous or restricted material that is a substance or material or is otherwise part of the Supplies.

4. Price; Payment Terms

The purchase price for the Supplies is set forth in the Purchase Order. The purchase price cannot be increased unless expressly accepted in writing by Buyer. Except as otherwise expressly set forth in the Purchase Order, all prices shall cover and include all sales, use, and excise taxes, and any other similar taxes, duties, tariffs, and charges of any kind imposed by any governmental authority on any amounts payable by Buyer, and in no event shall Buyer be required to pay any additional amount to Supplier in connection with such taxes, duties, tariffs, and charges, or any taxes imposed on, or regarding, Supplier’s income, revenues, gross receipts, personnel, real or personal property, or other assets. Unless otherwise agreed by Buyer in writing or set forth in the Purchase Order, Buyer will pay approved invoices within ninety (90) days after receipt in U.S. dollars. Notwithstanding anything to the contrary in these Terms, and without prejudice to any other right or remedy it has or may have, Buyer may set off or recoup any liability it owes to Seller against any amount for which Seller is liable to Buyer.

5. Quality

Seller shall conform to all of Buyer’s quality requirements, policies and procedures as specified and updated by Buyer from time to time. Seller is responsible for the performance and quality of all of its suppliers and subcontractors. Seller may inspect all Supplies at reasonable times and places, including, when practicable, during manufacture and before shipment; provided that no such inspection shall relieve Seller of its obligations to furnish and warrant all Supplies in accordance with the requirements of these Terms and the applicable Purchase Order.

6. Seller Allocation

Should Seller need to allocate resources between or among its customers, Buyer will be treated at least as favorably as Seller’s other customers.

7. Warranty

Seller warrants to Buyer, Buyer’s customer and their respective customers, successors and assigns that the Supplies shall: (a) be new and conform in all respects to the Purchase Order, Seller’s specifications, and all Buyer Specifications and other descriptions furnished by Buyer or otherwise obtained by Seller; (b) be free from all defects in design, workmanship and/or materials; (c) be selected, designed, manufactured, assembled and packaged by Seller based upon Buyer’s stated use and be fit and sufficient for the purposes intended by Buyer; and (d) conform to all applicable laws in countries where the Supplies (or Buyer’s products into which the Supplies are incorporated) are to be sold. For all Supplies which consist of services, Seller further warrants that its work shall be performed in a professional and workmanlike manner, consistent with all standards and specifications agreed to with Buyer and otherwise consistent with the highest industry standards and that all persons, whether employees, agents, subcontractors, or anyone acting for or on behalf of the Seller, are properly licensed, certified or accredited as required by applicable law and are suitably skilled, experienced and qualified to perform the services. All warranties of Seller extend to future performance of the Supplies and are not modified, waived, or discharged by delivery, inspection, tests, acceptance and/or payment. The warranty period shall run to the latest of the following: (i) the warranty period Buyer offers to end-users of the Supplies or for the products into which the Supplies are incorporated; (ii) the warranty period provided by applicable law; or (iii) the warranty period offered by Buyer to Buyer’s customer. If any Supplies fail to meet the foregoing warranties, Seller shall, in Buyer’s sole and absolute discretion, without prejudice to any other right or remedy of Buyer: (i) accept the return of such Supplies within the time frame as requested by Buyer, at Seller’s sole expense, and refund to Buyer the full invoice price plus all transportation and other charges, costs, and expenses associated with the non-conforming Supplies; (ii) replace or reperform the non-conforming Supplies with conforming Supplies, with all associated costs and expenses, other than the original invoice and shipping prices, being borne by Seller; or (iii) at Seller’s sole expense, repair the Supplies at any time prior to shipment from Buyer’s plant.

8. Remedies; Indemnification

The rights and remedies reserved to Buyer in each Purchase Order and these Terms shall be cumulative with and in addition to all other or legal or equitable remedies available to Buyer. Seller is liable for all damages incurred by Buyer as a result of Seller’s or its subcontractors’: (a) breach of any representation or warranty set forth in the Purchase Order; (b) failure to timely deliver conforming or otherwise non-defective Supplies; and/or (c) failure to comply with the Purchase Order, even if Seller has cured the breach. Seller shall defend, indemnify and hold harmless Buyer, Buyer’s customer, and the end-users of the products sold by Buyer or the end users of the products which incorporate the Supplies, and all of their respective agents, customers, invitees, subsidiaries, affiliates, successors and assigns, against all damages, losses, claims, liabilities and expenses (including reasonable attorneys’ and other professional fees, settlements and judgments) arising out of or resulting from: (i) breach of any representation or warranty set forth in the Purchase Order; (ii) failure to timely deliver conforming or otherwise non-defective Supplies; (iii) failure to comply with the Purchase Order, even if Seller has cured the breach; (iv) any defective Supplies; (v) any suit, claim or action for actual or alleged direct or contributory infringement of or inducement to infringe or violate any third party’s Intellectual Property (as defined below) rights; or (vi) any negligent or wrongful act or omission of Seller or Seller’s agents, employees or subcontractors.

9. Buyer Changes

Buyer may, at any time and upon written notice, make changes to specifications, designs, method of packing or shipment, quantity ordered, destinations and delivery schedules. If any such change causes a material increase or decrease in Seller’s cost or the time for performance, an equitable adjustment shall be mutually agreed to in writing concerning the price or delivery schedule, or both. Any claim by Seller for adjustment under this Section 9 shall be deemed waived unless made in writing within ten (10) days after receipt of written notice of the change.

10. Seller Proposed Changes

Seller shall not substitute other items or revise specifications from those specified in the Purchase Order without the prior written consent of Buyer. Seller shall notify Buyer in writing of any proposed change to the Supplies or to the manufacturing process of the Supplies no later than ninety (90) days prior to the shipment date of such Supplies. Process changes include but are not limited to: a change that incorporates addition, deletion or merging of processing methods, supplier initiated specification changes, change in manufacturing location, change in major equipment, method change in supplier of raw or bulk material, or change in manufacturing methods. Within thirty (30) days upon receipt of such notice, Buyer will provide written acceptance or disallowance of any proposed change. If Buyer disallows the proposed change, Seller shall continue to deliver unchanged Supplies and adhere to the manufacturing process of the Supplies in accordance with the provisions of the Purchase Order.

11. Termination

Buyer may, by written notice to Seller, terminate the whole or any portion of a Purchase Order in the event of (a) a voluntary or involuntary bankruptcy filing by or against Seller; (b) the appointment of any trustee or receiver for any substantial portion of Seller’s assets; (c) any assignment for the benefit of creditors; (d) Seller ceasing to carry on business in the ordinary course; or (e) Seller’s breach of any provision contained in the Purchase Order or these Terms. Without limiting any of Buyer’s remedies, in the event of any such termination, Buyer may (i) procure, upon such terms and in such manner as Buyer may deem appropriate, Supplies comparable to the Supplies covered by the Purchase Order so terminated, and Seller shall be liable to Buyer for all excess costs of such comparable Supplies; and (ii) require Seller to deliver, in the manner and to the extent directed by Buyer, any completed or partially completed Supplies, against Buyer’s payments of the portion of the price properly allocable to such Supplies. Seller shall continue performance of such Purchase Order to the extent not terminated. Buyer also reserves the right to terminate the whole or any portion of a Purchase Order for the sole convenience of Buyer with immediate effect by providing written notice to Seller. Upon receipt of such notice of termination, Seller shall immediately stop all work under the entire or portion of the Purchase Order so terminated, and shall immediately cause any of its suppliers or subcontractors to cease such work. In such event, Buyer will pay Seller the reasonable costs incurred by Seller prior to the date of such notice of termination. Buyer’s payment of such costs shall be Seller’s sole and exclusive remedy for a Buyer termination for convenience.

12. Insurance

Seller shall maintain and require its subcontractors to maintain the following minimum insurance coverage (or any other corresponding international policies): (a) comprehensive general liability insurance with limits no less than USD $1,000,000 per occurrence, USD $2,000,000 aggregate, USD $2,000,000 products/completed operations; (b) comprehensive automobile liability insurance with limits no less than USD $1,000,000 combined single limit; (c) workers compensation with minimum standards required by applicable laws; (d) umbrella liability insurance in an amount of not less than USD $1,000,000 per occurrence; and (e) such other insurance coverage as may be requested from time to time by Buyer in its sole discretion. In each case, Seller’s insurance coverage, with the exception of workers compensation, will name Buyer as loss payee and/or “additional insured.” Seller will require the insurance carrier(s) for the policies described herein to grant a waiver of subrogation in favor of Buyer. Seller policies will be placed with insurance carriers with an AM Best rating of A-VII or higher. Seller shall provide Buyer with thirty (30) days’ notice of any policy cancellation or material change to policy terms and conditions. Seller shall furnish to Buyer a certificate of insurance showing full compliance with the requirements set forth in this Section within ten (10) days of Purchase Order acceptance and on each policy renewal date thereafter. Seller’s furnishing of certificates of insurance or purchase of insurance shall not release Seller of its obligations or liabilities under the Purchase Order.

13. Buyer’s Property

Any and all materials furnished by Buyer to Seller shall be carefully maintained and insured by Seller while in Seller’s possession, and said property shall not be used by Seller in connection with the manufacture of any products not ordered by Buyer and shall be returned to Buyer at its request. Seller shall keep adequate records of all materials and information including Buyer Specifications and any other type of information furnished by Buyer as confidential, maintain appropriate procedures to preserve the confidential nature thereof and make no use directly or indirectly of any such information without Buyer’s prior written consent. Upon completion, cancellation or termination of the Purchase Order, Seller shall return all such property to Buyer.

14. Tooling

Any and all hardware, software, robotics, machinery, dies, molds, cavities, jigs, fixtures, gauges, tools, tooling, material, patterns, samples, prototypes, and any other property used to manufacture Supplies, which is owned, provided, charged to, or paid for by or on behalf of Buyer in whole or in part (“Buyer Tooling”) shall be and remain the exclusive property of Buyer. Title to Buyer Tooling shall pass to Buyer without regard to Buyer’s payment or performance of other obligations. Seller and its suppliers shall not retain any lien, encumbrance or interest, nor attempt to encumber Buyer’s interest in the Buyer Tooling. Buyer Tooling shall be: (a) used exclusively to fill Buyer’s orders; (b) maintained in good working condition at Seller’s expense; (c) subject to periodic accounting by Seller at Buyer’s request and inspection by Buyer; (d) identified as to location and not be moved without Buyer’s prior written approval; (e) not scrapped or destroyed without Buyer’s prior written approval – any revenue generated from scrapping will be offset against the costs of scrapping and any profit made thereof shall be refunded to Buyer; (f) located at the agreed upon location and not be moved without Buyer’s prior written consent; and (g) promptly returned (including any components or spare parts) in the same or better condition, reasonable wear and tear excepted, at any time upon Buyer’s request. Seller agrees to assist in protecting and perfecting Buyer’s interest in the Buyer Tooling. Seller waives any lien, right of set-off or counterclaim that might permit Seller to refuse to deliver Buyer Tooling to Buyer. All Buyer Tooling shall be conspicuously marked as the property of Buyer by Seller, insured by Seller and held at Seller’s risk while in Seller’s or its agent’s control or possession. Seller shall provide Buyer with an updated tooling list on a yearly basis and agrees, upon request, to diligently execute Buyer’s tooling agreement.

15. Intellectual Property

Seller warrants that the Supplies and the sale and/or use thereof (with respect to goods, before or after incorporation into products during manufacture) are original to Seller and do not and shall not infringe the Intellectual Property rights of any third party. Any Intellectual Property created (a) at the request of Buyer; (b) in connection with Supplies sold only to Buyer; or (c) based in whole or in part on information provided by Buyer, including Buyer Specifications, shall be considered as ordered or commissioned by Buyer as a contribution to a collective work, and be considered “work made-for-hire” and shall belong to Buyer. To the extent such Intellectual Property may not be deemed “work made-for-hire,” Seller and its employees, subcontractors and agents hereby assign and agree to assign, and Buyer accepts, on a paid-up basis, all right, title and interest in and to all such Intellectual Property. Seller shall not seek any registration, patent, copyright or titling of such Intellectual Property in its name or for its benefit. Seller shall promptly execute and deliver such documents and take such action as Buyer may reasonably request to protect or perfect Buyer’s right, title and interest in the Intellectual Property. Seller shall not supply to anyone other than Buyer any Supplies designed in whole or in part by or exclusively for Buyer. The term “Intellectual Property” means all industrial and other intellectual property and intellectual property rights, including without limitation: (i) inventions, discoveries, patents, patent applications and all related continuations, divisional, reissue, utility model, design and process patents, applications and registrations thereof, certificates of invention; (ii) works, copyrights, registrations and application for registration thereof; (iii) computer software programs, data and documentation; (iv) trade secrets, confidential information, know-how, techniques, designs, prototypes, enhancements, improvements, work-in progress, research and development information; and (v) all other proprietary rights relating to the foregoing.

16. Confidential Information

Any confidentiality or non-disclosure agreement entered into between Buyer and Seller shall govern the disclosure of any and all confidential information, as defined in such agreement, and such agreement shall be incorporated into these Terms and shall remain in full force and effect. In the absence of a separate confidentiality or non-disclosure agreement, any information or knowledge which Buyer may have disclosed or may hereafter disclose to Seller (including the existence of this business relationship with Buyer) in connection with the Purchase Order and any and all Supplies, including services to be rendered and/or work to be performed pursuant to the Purchase Order, is and shall be deemed confidential and proprietary information of Buyer. Seller shall not, without authorization in writing from Buyer, use (except as necessary to the performance of the Purchase Order), communicate or disclose such confidential and proprietary information of Buyer or use such information for any purpose other than to perform its obligations under the Purchase Order.

17. Compliance with Laws

Seller and all Supplies shall comply with all (a) applicable foreign, federal, state, and local laws, rules, regulations, orders, conventions, ordinances and standards (“Applicable Law”), including but not limited to those that relate to the manufacture, labeling, transportation, importation, exportation, licensing, approval or certification of the Supplies, emissions and other environmental matters, the handling and transportation of dangerous products or hazardous materials, data protection and privacy, wages, hours and conditions of employment, subcontractor selection, discrimination, occupational health/safety and motor vehicle safety; and (b) requirements, policies and procedures related to the foregoing as specified and updated by Buyer from time to time. Upon Buyer’s request, Seller shall promptly furnish to Buyer in such form and detail as Buyer may direct: (i) a list, and the origin, of all materials incorporated in the Supplies; (ii) the amount of such materials; and (iii) information concerning any changes in or additions to such materials. Seller shall promptly provide and require the suppliers in its supply chain to provide, in writing, any records, data, and information regarding the Supplies requested by Buyer so that Buyer may comply in a timely manner with reporting or other requirements under Applicable Law with respect to consumer and environmental protection, “conflict minerals” or similar materials, if any. At Buyer’s request, Seller shall certify in writing its compliance with the foregoing and provide Buyer with any requested documentation to enable Buyer to comply with Applicable Law.

18. Trade Compliance

Seller will comply with all applicable export control, import, customs and economic sanctions laws and regulations of the United States and other governments (collectively, “Trade Control Laws”) in the performance of the Purchase Order and in the import, export, re-export, shipment, transfer and use of the Supplies (or any components thereof). Trade Control Laws include, but are not limited to, the U.S. Export Administration Regulations, The Customs Modernization Act of 1993, Foreign Trade Regulations and the economic sanctions rules and regulations implemented under statutory authority and/or President’s Executive Orders and administered by the U.S. Treasury Department’s Office of Foreign Assets Control and any export or import requirements imposed by the U.S. Food and Drug Administration. Seller specifically agrees that it will not export, re-export, import or otherwise transfer, directly or indirectly through any third parties or otherwise, the Supplies (or any components thereof) or any related technical data to or from, or originating in, or for use within, Cuba, Iran, Myanmar (Burma), North Korea, Sudan or Syria or any other country that is designated as a sanctioned country by the U.S. Government or to, from or for use by any party included on, or owned or controlled by and party included on, any of the restricted party lists maintained by the U.S. Government, including, but not limited to, the Specially Designated Nationals List administered by the U.S. Treasury Department’s Office of Foreign Assets Control and the Denied Persons List, Unverified List or Entity List maintained by the U.S. Commerce Department’s Bureau of Industry and Security. Seller, for itself and its employees, suppliers, subcontractors, agents and intermediaries, agrees that they will: (a) at all times comply with the U.S. Foreign Corrupt Practices Act; (b) not pay, and will not permit or suffer any employee, supplier, subcontractor, agent or intermediary to pay, directly or indirectly, any money or thing of value, to any official of the government of any nation or political subdivision thereof, or any of their agencies, instrumentalities, corporations or ventures, or to any political party, official thereof, or any candidate, for the purposes of influencing the acts, omissions or decisions, in an official capacity, of such official, party or candidate in violation of his/her or its lawful duty or inducing him/her or it to exercise his/her or its influence to affect or influence any act or decision of such government or instrumentality or to obtain or retain business for Buyer in violation of the U.S. Foreign Corrupt Practices Act or other applicable anti-bribery laws; and (c) immediately notify Buyer should they become aware of information that suggests a possible violation of the U.S. Foreign Corrupt Practices Act has occurred.

19. Limitation of Liability

IN NO EVENT SHALL BUYER BE LIABLE TO SELLER OR ANY THIRD PARTY FOR ANY CONSEQUENTIAL, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR ENHANCED DAMAGES, LOST PROFITS OR REVENUES, OR DIMINUTION IN VALUE, ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH ANY BREACH OF THESE TERMS, REGARDLESS OF (A) WHETHER SUCH DAMAGES WERE FORESEEABLE, (B) WHETHER OR NOT SELLER WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND (C) THE LEGAL OR EQUITABLE THEORY (CONTRACT, TORT OR OTHERWISE) UPON WHICH THE CLAIM IS BASED.

20. Assignment

Seller may not, without Buyer’s prior written consent: (a) assign or delegate (including, without limitation, by subcontract) its obligations under the Purchase Order; or (b) enter into a transaction that includes a sale of a substantial portion of its assets used for the production of the Supplies for Buyer or a merger, sale or exchange of stock or other equity interests that would result in a change of control of Seller. Notwithstanding any Buyer consent to a subcontractor, Seller shall be liable for such subcontractor’s performance.

21. Relationship of the Parties

Seller and Buyer are independent contracting parties and nothing in the Purchase Order shall make either party the employee, agent, or legal representative of the other for any purpose.

22. Governing Law; Dispute Resolution

These Terms and the Purchase Order are governed by and shall be construed in accordance with the laws of the State of Wisconsin, USA, excluding its conflict of laws or choice of laws principles. The United Nations Convention on Contracts for the International Sale of Goods does not apply to the Purchase Order. Seller and Buyer agree that the exclusive venue and jurisdiction for the resolution of any claim, controversy, dispute or other matter involving these Terms and/or the Purchase Order between Buyer and Seller domiciled in the United States shall be the U.S. District Court for the Eastern District of Wisconsin and the state courts located in Milwaukee County, Wisconsin. If Seller is domiciled outside of the United States, any claim, controversy, dispute or other matter involving these Terms and/or the Purchase Order shall be finally settled by arbitration administered by the International Centre for Dispute Resolution of the American Arbitration Association in accordance with its International Arbitration Rules (the “ICDR Rules”). The number of arbitrators shall be one. The arbitrator shall be appointed in accordance with the ICDR Rules. The place of arbitration shall be Milwaukee, Wisconsin, USA. The exclusive language of the arbitration shall be English and all documents and exhibits submitted to the arbitrator shall first be translated into English with the cost thereof borne in the first instance by the proffering party. Any monetary award shall be denominated in U.S. dollars. If a dispute between Buyer and Seller arises relating to the Purchase Order, Seller shall proceed with the performance of the work hereunder, including the delivery of Supplies in accordance with the Purchase Order pending resolution of the dispute.

23. No Waiver

Buyer’s failure to insist on the performance by Seller of any term or failure to exercise any right or remedy reserved in the Purchase Order, or Buyer’s waiver of any breach or default hereunder by Seller shall not, thereafter, waive any other terms, conditions, rights, remedies, breaches or defaults, whether of the same or a similar type or not.

24. Severability

If any provision of the Purchase Order, or portion of any provision, is declared or found to be unenforceable, the balance of the Purchase Order or such provision shall be interpreted and enforced to the greatest extent possible as if the unenforceable provision or portion had never been a part hereof.

25. Survival

The obligations of Seller to Buyer survive termination of the Purchase Order, except as otherwise provided in the Purchase Order.

26. Modifications

Unless explicitly agreed in writing by both parties, the Purchase Order and these Terms may not be modified.