SPECIALTY SILICONE PRODUCTS, INC. TERMS AND CONDITIONS OF PURCHASE
The following SSP Terms and Conditions of Purchase shall apply to purchases of goods or services by SSP Corporation, its subsidiaries and/or affiliates, pursuant to a Purchase Order incorporating these Terms and Conditions of Purchase.
1. DEFINITIONS. (i) All capitalized terms used herein and not defined shall take on the meaning ascribed to such terms in the Purchase Order (the “Order”) which incorporates these Terms and Conditions of Purchase by reference, (ii) For the purposes of these Terms and Conditions of Purchase the following terms shall take on the assigned meanings: (A) “Terms of Purchase” shall mean the Order and these SSP Terms and Conditions of Purchase collectively, (B) “Buyer” shall mean the affiliate of SSP Corporation identified on the Order as the Buyer, and (C) “Seller” shall mean the party identified on the Order as the Seller.
2. GOVERNING PROVISIONS - These Terms of Purchase will constitute the entire agreement and understanding between the parties (except for any additional warranties or service guaranties given by Seller, or specifications provided by Buyer) with respect to the goods or services covered by these Terms of Purchase, unless a written agreement expressly referring to these Terms of Purchase expressly modifies or supplements these Terms of Purchase is signed by Seller and Buyer’s contract administrator. Seller’s acceptance is limited to these Terms of Purchase. All previous or concurrent negotiations and agreements with respect to the goods and services covered by these Terms of Purchase are superseded by these Terms of Purchase. If any terms or conditions of these Terms of Purchase conflict with any terms and conditions expressly stated in the Order, the terms and conditions of the Order issued by Buyer shall prevail and govern. Buyer rejects any additional or inconsistent terms and conditions offered by Seller at any time, whether or not such terms or conditions materially alter these Terms of Purchase and regardless of Buyer’s acceptance of or payment for Seller’s goods or services. These Terms of Purchase shall be deemed accepted by Seller upon the return of the acknowledgment of the Order (or deemed approval) and/or a copy of these Terms of Purchase, complete or partial performance by Seller, or by any other expression of acceptance by Seller.
3. TIME OF PERFORMANCE -Time is of the essence of Seller’s performance of these Terms of Purchase. Without limiting the generality of the foregoing, Seller shall strictly comply with the times, rates of performance and other provisions of these Terms of Purchase, all of which are material provisions of these Terms of Purchase. At Buyer’s request, Seller will provide Buyer with a performance assurance plan prepared in accordance with procedures established by Buyer and showing Seller’s work in progress and yield factors for each major process step. The performance assurance plan will demonstrate that, based upon Seller’s work in progress and yield factors, there is no significant risk that Seller may not meet its performance or delivery requirements. Seller shall not procure or manufacture items in advance of Seller’s reasonable schedule for delivery. Seller shall promptly notify Buyer of any actual or threatened labor dispute or other occurrence that may delay timely performance under these Terms of Purchase, along with such information about the dispute or other occurrence as Buyer may request. In the event Seller delivers goods or services after the scheduled delivery date, in addition to all other rights and remedies available to Buyer hereunder, Buyer shall be entitled to an equitable reduction in the invoice price. Seller shall insert a clause substantially in the form of this Paragraph 3 (including, specifically, the immediately preceding sentence) in any subcontract hereunder.
4. PACKING AND SHIPPING; RISK OF LOSS; DELIVERY - All goods shall be suitably packed, marked conspicuously with Buyer’s order number, and shipped in accordance with shipping instructions specified in these Terms of Purchase or elsewhere by Buyer, from time to time, and otherwise in such a manner as to obtain the lowest transportation cost without jeopardizing the time of delivery. Goods shall be packaged as directed by Buyer and otherwise in accordance with good commercial practices in a manner sufficient to ensure arrival in undamaged condition. No charge shall be made to Buyer for packaging, transportation or insurance unless separately itemized on the Order. Immediately upon shipment, Seller shall notify Buyer of complete shipping information. Title and risk of loss to goods covered by these Terms of Purchase shall pass to Buyer upon receipt by Buyer at Buyer’s facility unless otherwise provided under these Terms of Purchase. Seller shall, at its expense, ship by express mail or air shipment or by the most expeditious way if timely delivery is endangered for any reason, other than solely the Buyer’s fault. Seller shall deliver the goods and perform the services, in the quantities and within the times provided in these Terms of Purchase. Goods received in advance of Buyer’s delivery schedule may, at Buyer’s option, be returned at Seller’s expense or be retained, in which case payment shall become due at the same time as if the goods had been delivered on the scheduled date. Buyer may reject all or any portion of any delivery that varies from the quantity authorized by Buyer for shipment.
5. TERMINATION – (i) Buyer may terminate the Order in whole or in part at any time and from time to time by written notice to Seller stating the extent and effective date of such termination. In the event of such a termination, Buyer shall pay to Seller (A) the price set forth in the Order for all goods delivered and services rendered which have, as of that date, been accepted by Buyer and not previously paid for, (B) Seller’s actual (and documented) costs reasonably incurred, unless it appears that Seller would have sustained a loss on the Order had it been completed. In no event shall the amount paid by Buyer to Seller under this clause (i) exceed the total Order price as reduced by the amounts of payments paid to Seller prior to the termination. Seller shall take all necessary action to reduce and avoid costs incurred on the terminated work and, to the extent not terminated, shall continue to perform any work not affected by the termination, Should the work be governed by the Federal Acquisition Regulations (“FAR”), upon delivery of notice of termination under this clause (i), the rights of the parties will be governed by Subsection 52.249-2 of the FAR as in effect on the date of the Order, which is incorporated into these Terms of Purchase by reference, provided, however, that: (w) all references to “1 year” in Paragraph (e) thereof shall be deemed to read “6 months”, (x) Paragraph (j) thereof shall be deemed to require all disputes to be resolved pursuant to these Terms of Purchase, (y) the “90 days” time period in Paragraph (l) thereof shall be deemed to read “45 days”, and (z) all references therein to the Government or the Contracting Officer shall mean Buyer or its designees (including the Government or its representatives if so designated by Buyer).
(ii) Buyer may terminate the Order in whole or in part at any time and from time to time for Seller’s default if Seller: (A) does not perform strictly in accordance with these Terms of Purchase or fails to make progress so as to endanger performance hereunder, or (B) becomes insolvent or suspends any of its operations or if any petition is filed or proceeding commenced by or against Seller under any state or federal law relating to bankruptcy, reorganization, receivership or assignment for the benefit of creditors. Any such termination will be without liability to Buyer except for completed goods which were, as of that date, delivered and accepted by Buyer. Buyer may require Seller to transfer title and deliver to Buyer any or all property produced or procured by Seller for performance of the work terminated and Seller shall be credited with the reasonable value thereof not to exceed Seller ‘s cost or the contract price, whichever is less. Seller will be liable for damages caused by or resulting from its default. If, after a default termination, it is determined that Seller was not in default, the termination shall be considered to have been made pursuant to Paragraph 5(i) above. Termination of the Order for default shall be without prejudice to any other rights and remedies of the Buyer under statute, common law, or otherwise.
To the extent the Order is not terminated by Buyer, Seller shall continue performance under these Terms of Purchase. Upon direction of Buyer, Seller shall also protect and preserve property in its possession in which Buyer or any of its direct or indirect customers may have an interest. Buyer shall have the right to audit all matters relating to any termination claim, or any potential termination claim and Seller shall make available to Buyer on request all books, records and information relating thereto.
6. INSPECTION AND REJECTION - Notwithstanding payment, passage of title, or prior inspection or test, all goods are subject to final inspection and acceptance or rejection by Buyer at Buyer’s facility and goods shall not be deemed accepted until actually so inspected. Buyer, its direct and indirect customers, and representatives of the Federal Aviation Administration and other regulatory bodies may inspect and test the goods to be furnished under these Terms of Purchase at the places where the work is being performed, including those of the Seller’s suppliers, and Seller shall provide, without additional charge, reasonable facilities and assistance for safe and convenient inspection and test. Buyer may inspect all or a sample of all goods at Buyer’s option, and Buyer shall have the right to reject all or any portion of the goods if any such inspection reveals them to be, in Buyer’s sole opinion, defective or nonconforming. Seller shall reimburse Buyer for any losses or damages incurred (including, but not limited to, shipping costs) in connection with such rejection. Seller shall provide and maintain a test and inspection system acceptable to Buyer and its direct and indirect customers. Records of all inspection work by Seller shall be kept complete and available to Buyer and its direct and indirect customers during the performance of these Terms of Purchase and for ten years after final payment by Buyer or for such longer period as may be specified elsewhere in these Terms of Purchase or as may be required by applicable law or regulation. Buyer may inspect its property delivered to Seller and Seller’s records relating to the goods and services furnished under these Terms of Purchase. Seller shall not replace goods returned as defective unless so directed by Buyer in writing. Seller shall keep adequate records of hours of direct labor and all costs incurred in the performance of these Terms of Purchase, which records shall be subject to audit by Buyer. All rejected materials will be held or returned at Seller’s risk and expense. Without limiting Buyer’s other remedies, all goods and services found nonconforming or defective as to material, workmanship, manufacture, or otherwise will immediately be repaired, corrected or replaced by Seller without expense to Buyer or, at the option of Buyer: (i) Seller will refund the price of (or issue a credit for) all such nonconforming or defective goods and services, (ii) such nonconforming or defective goods and services may be retained by Buyer subject to an equitable adjustment to price determined by Buyer, (iii) Buyer may have such nonconforming or defective goods and services repaired, corrected or replaced at Seller’s expense, or (iv) the Order may be terminated in whole or in part for Seller’s default. If Buyer, in its sole discretion elects, Buyer may repair defective material that has been delivered by Seller if Buyer’s delivery schedule requires such action and charge the cost thereof to Seller. Seller shall also be responsible for all costs relating to such defects or noncompliance, including, but not limited to, costs of removal, disassembly, failure analysis, fault isolation, reinstallation, re-inspection and retrofit. Buyer will not be required to return defective materials prior to replacement and Seller agrees to accept the report of Buyer and/or any government authority in respect to such defective items. Rejected items shall not be resubmitted for acceptance without a concurrent notice of the prior rejection.
7. PRICE AND INVOICES; TAXES - Seller agrees to execute and perform in accordance with these Terms of Purchase at the price shown on the Order. If Seller at any time during the effectiveness of these Terms of Purchase quotes or sells similar materials or services under similar conditions to any other customer at lower prices than those stated herein, such lower prices shall from that time be substituted for the prices stated on the Order. Unless otherwise expressly provided on the Order, the price stated on the Order shall be deemed to include any and all taxes and other government charges, now imposed or hereafter becoming effective, upon the production, sale, shipment, or use of the goods and services and Seller shall pay and discharge all such taxes and charges without reimbursement from Buyer. Invoices shall be submitted in duplicate and shall contain the following information: order number, item number, description of goods and services, sizes, quantities and unit prices. Buyer will pay invoices submitted hereunder within 30 days after receipt of invoices and acceptance of delivered items, unless otherwise agreed to by Seller and Buyer. Buyer may make any adjustment in Seller’s invoices due to shortages, late delivery, rejections or other failure to comply with the requirements of these Terms of Purchase before payment. Payment periods and cash discounts will be computed from either the date of delivery or acceptance or the date of receipt of correct and proper invoices prepared in accordance with the Order, whichever is latest. Buyer may extend the payment date by the same number of days that the goods or services were delivered later than called for under these Terms of Purchase. Seller shall be liable for any taxes, duties or other assessments in connection with the sale, delivery, transfer, export, import or transportation of the goods ordered or services performed, except as otherwise expressly provided on the Order. Seller shall be responsible for obtaining all required governmental approvals in connection with these Terms of Purchase, including import and export licenses and exchange permits.
8. REPRESENTATION AND WARRANTIES - In addition to its standard warranty and/or service guaranty, Seller represents and warrants to Buyer and Buyer’s direct and indirect customers that: (i) Seller has good and merchantable title to all goods supplied hereunder and that such goods shall: be free and clear of all liens and encumbrances, be in conformance with all functional and performance requirements, be free from any defects in design, material or workmanship, be of good and merchantable quality, conform to applicable specifications, drawings, samples and designs, and be fit for the known purposes for which purchased hereunder, and comply and have been produced, processed and delivered in conformity with all applicable federal, state or other laws, and administrative regulations and orders. All services performed under these Terms of Purchase shall be free from defects in workmanship, will meet all applicable requirements and speculations, will be performed to the highest standards in the industry in conformity with all applicable federal, state or other laws, and administrative regulations and orders. The foregoing shall survive inspection, delivery, payment, sale, resale and use until the end of the applicable statute of limitations. The warranty period shall be suspended and tolled upon notice to Seller that nonconforming goods or services have been furnished until they have been repaired, corrected or replaced and redelivered to Buyer or, in the case of nonconforming services until they have been corrected. Seller warrants that none of the goods furnished under these Terms of Purchase are surplus, used, remanufactured or reconditioned, and that none of such goods are of such age or so deteriorated as to impair the usefulness or safety of such goods. Buyer’s release or approval of any data or drawings shall not release or diminish any warranty, and (ii) the manufacture, sale and use of goods furnished hereunder (other than goods designed by Buyer) and the provision of services hereunder will not infringe or contribute to an infringement of any patent, copyright, trademark or other intellectual property rights.
9. INDEMNITY – Seller shall indemnify and hold Buyer, its successors and assigns and their direct and indirect customers and their respective directors, officers, employees, affiliates, agents and invitees harmless from and against any and all losses, liabilities, damages and expenses (including reasonable attorneys’ fees and other costs of defending any claim or action) which any of them may incur (by reason or on account of property damage, death, personal injury or otherwise) in connection with or relating to any actual or alleged: (i) claim of negligence, (ii) breach of representation and/or warranty, (iii) strict liability in tort, (iv) defect or fault in goods or services, or (v) other claim in connection with the performance of these Terms of Purchase. Seller and Buyer shall keep and hold one another harmless from all damages, costs and liabilities arising out of or in connection with the presence of their personnel on the other’s premises pursuant to these Terms of Purchase, provided, however, that such damage, loss and liability shall not have been caused by the negligence of the personnel of the indemnified party.
10. INSURANCE - Seller will acquire and/or maintain liability insurance, including but it not limited to commercial general liability (including product liability and for services to be performed, completed operations liability) in a sum no less than $5 million, automobile liability in a sum no less than $5 million, workers’ compensation in an amount no less than the applicable statutory minimum requirement and employer’s liability in an amount no less than $1 million, with insurance carriers acceptable to Buyer, and such other additional insurance as reasonably requested by Buyer in the amount reasonably requested by Buyer. Seller will, if requested by Buyer, furnish certificates of insurance from its carrier for any of the types of coverage aforementioned, which shall provide that such coverage shall not be changed, non-renewed, or canceled without 30 days advance written notification to Buyer from the carrier.
11. DRAWINGS, PLANS, TOOLS, DATA, WORK FOR HIRE, ETC. - Any technical information, drawings, ideas, plans, works of authorship, inventions, proprietary information, discoveries, patents, specifications, tools and other materials: (i) supplied to Seller by or on behalf of Buyer, (ii) designed by Seller at Buyer’s expense, or (iii) designed specifically to meet Buyer-furnished technical requirements, is referred to herein as “Buyer’s Property”. Seller agrees that it will not sell any of Buyer’s Property or goods incorporating any of Buyer’s Property or similar or interchangeable or substitute goods or parts thereof to anyone other than Buyer. All of Buyer’s Property shall remain the property of Buyer and shall be returned upon demand at Seller’s expense. Buyer makes no representation or warranty with respect to any of Buyer’s Property. Seller shall keep all Buyer’s Property that is tangible safe and in good condition and shall bear the risk of loss with respect to such Buyer’s Property. Seller shall not use Buyer’s Property except in connection with sales to Buyer. Any information disclosed by Seller respecting the Buyer’s Property or the design, manufacture, sale or use of the goods ordered shall be deemed to have been disclosed as part of the consideration for these Terms of Purchase. The entire right, title and interest in and to any discoveries, inventions, ideas, knowledge or patents arising out of or in connection with the work performed by Seller in connection herewith shall vest in Buyer. All of the foregoing is considered “works made for hire” under U.S. law, and Buyer shall be the author of such works. If any such work is determined by a court of competent jurisdiction not to be a “work made for hire,” these Terms of Purchase shall be deemed an irrevocable assignment by the author of such work to Buyer, of the copyright in the work and all related rights, title, interests and goodwill therein and in connection therewith throughout the world. During performance of these Terms of Purchase, Seller shall not make changes in the design of goods covered by these Terms of Purchase. After completion of these Terms of Purchase if Seller discontinues any products or makes any modifications in design at any time, Seller guarantees that it will supply replacement parts for any goods ordered hereunder at then current prices for a period of at least five (5) years from the date of shipment. Notwithstanding any other provision of this Paragraph 11, Buyer’s Property may be used by Seller in the manufacture of articles for direct sale to the U.S. Government to the extent the U.S. Government has the right to authorize such use and discloses to Seller that it has such right, provided that such use will not interfere with Seller’s performance of these Terms of Purchase and any other order with Buyer and provided further that Seller shall: (i) give Buyer written notice of each such proposed use at least ten (10) days prior to acceptance of a contract for such articles from the U.S. Government and, in the event Buyer objects to such use, forward Buyer’s objection to the U.S. Government, (ii) to the extent practicable, prominently identify each article as being manufactured by Seller in performance of contracts for the U.S. Government, (iii) advise Buyer of the method of identification used, (iv) make no claim against Buyer that arises out of the use by Seller of such Buyer’s Property, and (v) indemnify Buyer and hold Buyer harmless from and against any and all claims or liabilities resulting from performance of contracts for the U.S. Government. Where such Buyer’s Property is furnished to Seller’s suppliers for use in performance of Buyer’s orders, including, but not limited to these Terms of Purchase, Seller shall insert the substance of this provision in all their orders with such suppliers. Nothing herein shall be construed as restricting the U.S. Government’s use of Buyer’s Property which the Government owns or is authorized to use.
12. CHANGES; STOP WORK ORDERS - Buyer may at any time, by a written change order, without notice to any sureties, make changes in any one or more of the following: (i) drawings, designs, specifications, where the articles to be furnished are to be specially manufactured for the Buyer in accordance therewith, (ii) method of shipment or packing, (iii) place or time of inspection, delivery, or acceptance, and (iv) the amount and types of Buyer’s Property. If any such change causes an increase or decrease in the cost of, or time required for, performance of these Terms of Purchase an equitable adjustment shall be made in the price or delivery schedule or both and these Terms of Purchase shall be modified accordingly. No claim by Seller for adjustment hereunder shall be allowed unless made in writing for a specified amount within twenty (20) days from the date such change order is received by Seller. If Seller considers that the conduct, statement or direction of any of Buyer’s employees constitutes a change hereunder, Seller shall notify Buyer’s contract administrator and take no action on the perceived change pending written approval of Buyer’s contract administrator. Only Buyer’s contract administrator has authority to approve a change. Any change made by Seller without such written approval shall be deemed voluntary by Seller and not compensable in the cost of or time required for performance and nothing in this clause shall excuse Seller from proceeding with performance of these Terms of Purchase as contemplated by the Purchase Order prior to the change. Notwithstanding the above or any other provision of these Terms of Purchase, the Seller hereby agrees that no changes to the goods or services provided under these Terms of Purchase that may be required in order to meet the specified performance requirements of these Terms of Purchase shall entitle the Seller to any adjustment in either price or delivery. Buyer may at any time by sending a stop work order to the Seller, which requires the Seller to stop all or any part of its work under these Terms of Purchase for a period of up to 90 days after delivery of such stop work order. Immediately upon receipt of such stop work order, Seller shall comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the work stoppage. At any time during such period, Buyer may, in whole or in part, either cancel such stop work order or terminate the work in accordance with Paragraph 5 these Terms of Purchase. To the extent the stop work order is canceled or expires, Seller shall resume work. If a stop work order is the sole and exclusive cause of a material change in cost or delivery, an equitable adjustment shall be made in the price (excluding profit) or the delivery schedule, and the Order is modified accordingly, provided, however, that no adjustment in price or delivery shall be made under this provision if: (i) the work would have been otherwise interrupted or delayed, or (ii) such adjustment is available or expressly excluded under any other provision of these Terms of Purchase. No claim for adjustment shall be allowed unless submitted to Buyer in writing in a specified amount within twenty (20) days after the work is terminated or the stop work order expires or is canceled, whichever first occurs.
13. ASSIGNMENT; RIGHT OF SETOFF - Seller shall not assign or sublet the work to be done hereunder without the prior written consent of Buyer, but this provision shall not restrict Seller in the procurement of parts or materials. To the extent that Seller procures any parts or materials to be furnished hereunder for which the Seller shall take full responsibility, Seller agrees to require compliance with these Terms of Purchase by its suppliers or subcontractors as though such suppliers or subcontractors were Seller. These Terms of Purchase and Buyer’s rights under these Terms of Purchase may be assigned by Buyer without the consent of, or notice to, Seller. Buyer and its affiliated companies may set off any amount due from Seller to Buyer or its affiliated companies whether or not under these Terms of Purchase, from any amounts due to Seller.
14. COMPLIANCE WITH LAWS - Seller agrees and certifies that the goods and services to be manufactured or furnished hereunder have been and/or will be produced in compliance with all applicable laws, executive orders, rules and regulations, including, but not limited to, the Federal Fair Labor Standards Act, as amended, and the regulations and orders of the U.S. -Department of Labor issued under Section 14 thereof and the Occupational Safety and Health Act of 1970, as amended (“OSHA”). Assurance that the goods and services were so produced shall be given to Buyer by Seller including a certificate to that effect in all invoices for the goods. The Contract Clause contained in Section 301 of Executive Order 10826 issued March 6, 1961, 26 F.R. 1977 as heretofore or hereafter amended is hereby incorporated by reference Seller shall file compliance reports at such times and in such form and substance as may be prescribed by applicable rules or regulations. Seller agrees to furnish information, within seven days of Buyer’s request, regarding payment, offer, or agreement to pay “political contributions” or “fees or commissions” (as those terms are defined at 22 C.F.R. 130) with respect to any sale by the Buyer for which a license or approval is required from the Office of Defense Trade Controls, Department of State or any sale pursuant to a contract with the Department of Defense under Section 22 of the Arms Export Control Act (22 U.S.C. § 2762). Seller shall comply with all applicable laws, rules, regulations and orders of the United States of America and any and all agencies thereof, including the Federal Aviation Administration, in connection with these Terms of Purchase and all transactions contemplated hereunder. Seller agrees to comply with applicable Export Laws and Regulations of the United States and further agrees to comply with any and all export laws and regulations regarding the export and transfer of information. Seller further acknowledges that the transfer of military or aircraft components or information may require an individual validated export license from the U.S. government in order to export, re-export, transship or otherwise provide same to a non-U.S. person (even if such person is in the U.S. at the time of receipt). Such persons include, but are not limited to, employees of either party who are not U.S. citizens and non-U.S. divisions and subsidiaries of either party. Seller shall not export or otherwise transfer such covered components or information to a non-U.S. person without the Buyer’s prior written permission.
15. APPLICABLE LAW; ATTORNEYS’ FEES IN EVENT OF DISPUTE - These Terms of Purchase shall be governed by and construed under the laws of the State of New York without resort to New York’s conflicts of laws rules. The United Nations Convention on the International Sale of Goods (CISG) shall not apply to the Order, these Terms of Purchase, or any of the transactions contemplated by the Order or governed by these Terms of Purchase. Buyer and Seller hereto irrevocably submit to the jurisdiction of the courts of the State of New York and the Federal courts of the United States of America located in Saratoga County in the State of New York, in any action or proceeding arising out of or relating to these Terms of Purchase, or any document or agreement delivered in connection with or in furtherance of these Terms of Purchase, and Buyer and Seller hereby irrevocably agree that all claims in respect of any such action or proceeding must be brought and/or defended only in such courts. Buyer and Seller irrevocably waive, to the fullest extent each may effectively do so, the defense of