Standard Purchase Order Terms and Conditions

This Purchase Order ("PO") constitutes an offer by Flexible Assembly Systems Inc. ("Buyer") to purchase the goods ("Goods") and/or services ("Services") specified from the vendor named on this PO ("Seller"). Acceptance of this PO is strictly limited to the express terms and conditions contained herein. Buyer expressly rejects any additional, inconsistent, or conflicting terms or conditions proposed by Seller in any quotation, acknowledgment, packing slip, invoice, website, or other communication. Neither Buyer’s commencement of performance, issuance of payment, nor receipt of Goods/Services shall constitute acceptance of any of Seller’s terms. Any of the following acts constitutes Seller’s unqualified acceptance: (a) written or electronic acknowledgment; (b) shipment or partial shipment of Goods; (c) performance of Services; or (d) retention of any payment.

Seller expressly acknowledges and agrees that Goods purchased under this PO are procured for either or both of the following purposes:

• Resale / Distribution: Resale, distribution, or drop-shipment directly or indirectly to third-party commercial, industrial, medical, aerospace, or governmental end-users ("Customers"); and/or

• Machine Integration / Internal Consumption: Incorporation, fabrication, assembly, or consumption into custom machinery, automated assembly systems, integration cells, workstations, or tooling engineered and manufactured by Buyer for Buyer’s Customers.

All warranties, representations, indemnities, quality obligations, remedies, and covenants running to Buyer hereunder shall automatically extend to, run with the Goods for the benefit of, and be enforceable by Buyer’s Customers and successors.

• Firm Pricing: All prices stated on this PO are firm, fixed, and not subject to escalation for any reason, including currency fluctuations or increases in raw materials, components, energy, labor, or transportation, without Buyer’s prior written consent.

• No Restocking or Supplemental Fees: Seller expressly agrees that under no circumstances shall Buyer be charged or obligated to pay any restocking fees, cancellation fees, handling charges, return fees, minimum order penalties, or shelf charges. Any clause in Seller’s quotation, catalog, or order confirmation attempting to impose restocking, return, or cancellation fees is null, void, and of no force or effect.

• Inclusions: Unless expressly stated on the face of this PO, prices include all packing, crating, marking, cartage, storage, customs duties, and export/import fees.

• Payment Terms: Unless otherwise agreed in writing, Buyer’s payment terms are Net 60 days following the later of: (a) physical receipt of conforming Goods/Services at the designated delivery point; or (b) receipt of an undisputed, complete invoice.

• Unilateral Right of Setoff: Buyer reserves the absolute right to deduct, withhold, or set off any amounts owed by Seller (or any affiliate of Seller) to Buyer—including warranty claims, rework charges, scrap, or cover costs—against any amounts payable under this PO or any other order.

• Strict Schedule: Time is strictly of the essence for delivery dates, quantities, and performance schedules. Seller shall immediately notify Buyer in writing of any actual or potential delay.

• Remedies for Delay: In the event of an unexcused delay, Buyer may, at its sole discretion and without liability:

◦ Terminate this PO in whole or in part without penalty or cancellation fees;

◦ Require Seller to ship via expedited premium freight at Seller’s sole expense; and/or

◦ Purchase substitute goods or services on the open market ("cover") and back-charge Seller for all resulting price differentials, expediting costs, administrative fees, and Customer delay penalties or liquidated damages assessed against Buyer.

• Delivery Terms: Unless otherwise specified on the face of this PO, all shipments shall be DDP (Delivered Duty Paid - Incoterms 2020) Buyer’s facility (or Buyer’s Customer's facility if drop-shipping). Title and risk of loss remain with Seller until Goods are physically delivered, unloaded, and received at the specified destination.

• Early and Excess Shipments: Buyer is not obligated to accept over-shipments or premature shipments (greater than 5 business days early). Excess Goods may be rejected, held at Seller's risk, or returned at Seller's sole expense without any restocking charge to Buyer.

• Certificate of Conformance (CoC): Each shipment must include a signed Certificate of Conformance certifying that all items strictly comply with all applicable drawings, military/OEM standards, and specifications. The CoC must state the PO number, part number, revision level, lot/batch/serial numbers, and date of manufacture.

• Traceability & Record Retention: Seller shall maintain a complete traceability system linking raw materials, manufacturing lots, sub-tier sources, and test records to the serialized or lot-controlled Goods delivered. Seller must retain all quality, inspection, and test records for a minimum of ten (10) years (or longer if required by Buyer's end-customer contract) and furnish copies to Buyer within forty-eight (48) hours of request.

• Right of Entry and Audit: Seller shall grant Buyer, Buyer’s Customers, and regulatory authorities (e.g., ISO, OSHA, FAA, FDA) unrestricted access to all facilities involved in the PO, at any tier of the supply chain, to inspect processes, tooling, quality records, and test data.

Seller shall make no change in:

• Product design, material specifications, or chemical formulations;

• Manufacturing processes, test procedures, or quality standards;

• Tooling, dies, molds, or test equipment;

• Sub-tier suppliers or component sources; or

• Geographic manufacturing facility location

without prior written Engineering Change Order (ECO) authorization from Buyer. Any unauthorized change constitutes a material breach and grounds for immediate termination for cause, with Seller bearing all validation, re-certification, and testing costs.

• Seller represents and warrants that only new, authentic, non-counterfeit, and unrefurbished components are incorporated into Goods sold to Buyer.

• Seller shall maintain a counterfeit part detection and avoidance system compliant with industry standards (e.g., AS5553/AS6174). Seller shall purchase components exclusively from the Original Equipment Manufacturer (OEM), Original Component Manufacturer (OCM), or authorized franchised distributors. Procurement through independent brokers or unauthorized open-market sources requires Buyer’s prior written approval.

• If counterfeit, suspect-counterfeit, or unauthorized refurbished parts are delivered, Buyer shall impound such parts without compensation to Seller. Seller shall be solely liable for all replacement costs, containment, validation, and any regulatory or customer reporting requirements.

• No Deemed Acceptance: Buyer’s receipt, physical check-in, or payment for Goods does not constitute acceptance. Goods integrated into machines remain subject to final acceptance until the completed machine or automated system undergoes full commissioning and operational run-off testing at Buyer’s or Customer’s site.

• Non-Conforming Goods: If any Goods fail to strictly conform to specifications or warranties, Buyer may, at its sole discretion:

◦ Reject and return the Goods for a 100% full refund or credit at Seller’s sole expense, strictly without assessment of any restocking fee, return surcharge, or handling deduction;

◦ Require Seller to replace or repair the Goods within forty-eight (48) hours at Seller's sole expense;

◦ Perform internal rework or retain a third party to correct the Goods, back-charging Seller for all direct and indirect labor, machine time, and material costs; or

◦ Cancel the order and procure replacement goods elsewhere at Seller’s expense.

Seller expressly warrants and covenants to Buyer, its successors, assigns, and Customers that all Goods and Services:

• Strictly conform to all drawings, CAD models, specifications, samples, and descriptions;

• Are new, merchantable, and free from defects in design, engineering, materials, and workmanship;

• Are fit and sufficient for their intended purpose, including operation within automated machinery, production environments, and integrated assembly systems;

• Convey good and marketable title, free and clear of all security interests, liens, and encumbrances;

• Do not infringe or misappropriate any patent, trademark, copyright, trade secret, or other proprietary right; and

• Comply with all applicable federal, state, and international laws, regulations, and industry standards (including OSHA, CE, RoHS, REACH, and Conflict Minerals).

Warranty Duration: These warranties survive inspection, delivery, installation, integration, testing, acceptance, and payment, and extend for a period of twenty-four (24) months from the date the machine or product is accepted by Buyer’s end-customer, or Seller’s standard warranty period, whichever is longer.

All patterns, tools, dies, molds, jigs, fixtures, specifications, blueprints, CAD models, data, software, or materials furnished by Buyer ("Buyer Property") shall remain the exclusive property of Buyer.

• Seller shall hold Buyer Property on a bailment basis, strictly maintain it in good operating condition, identify/tag it as "Property of Flexible Assembly Systems Inc.", and keep it segregated and insured at full replacement cost.

• Buyer Property shall not be used for any purpose other than fulfilling this PO.

• Seller shall immediately surrender Buyer Property upon Buyer’s demand without asserting any artisan’s, statutory, or mechanics’ liens.

Seller agrees to defend, indemnify, and hold harmless Flexible Assembly Systems Inc., its affiliates, directors, officers, employees, agents, and Customers from and against any and all claims, demands, suits, losses, liabilities, damages, fines, penalties, settlements, and costs (including reasonable attorneys’ fees and expert witness expenses) arising out of or related to:

• Any actual or alleged defect in design, manufacturing, materials, or assembly of the Goods;

• Any failure of the Goods in the field, whether resold standalone or integrated into machines or systems built by Buyer;

• Any breach of any warranty, covenant, or obligation under this PO;

• Any personal injury, bodily injury, death, or damage to tangible property caused in whole or in part by the Goods or Seller’s personnel;

• Any infringement, dilution, or misappropriation of any third-party intellectual property rights; and

• Any violation of applicable laws, export regulations, or environmental standards.

Buyer shall not indemnify, hold harmless, or defend Seller under any circumstances.

IN NO EVENT SHALL BUYER BE LIABLE TO SELLER OR ANY THIRD PARTY FOR INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE, STATUTORY, OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS, REVENUE, DATA, OR PRODUCTION, ARISING OUT OF OR IN CONNECTION WITH THIS PO. BUYER’S MAXIMUM AGGREGATE LIABILITY ON ANY CLAIM OF ANY KIND SHALL NOT EXCEED THE PURCHASE PRICE ALLOCABLE TO THE SPECIFIC GOODS OR SERVICES DIRECTLY GIVING RISE TO THE CLAIM.

• Termination for Convenience: Buyer may cancel this PO, in whole or in part, at any time for its convenience by written notice. Seller shall immediately cease all work. Buyer shall not be subject to any cancellation penalty, termination fee, restocking charge, loss of anticipated profits, or unabsorbed fixed overhead. Buyer’s sole obligation shall be reimbursement for actual, verifiable, non-recoverable direct out-of-pocket costs for standard non-catalog work already performed prior to notice, which shall in no event exceed the PO price. For standard off-the-shelf or catalog Goods, Buyer may cancel prior to shipment at zero cost or liability.

• Termination for Default: Buyer may terminate this PO immediately by written notice without liability or penalty if Seller: (a) fails to deliver conforming Goods on time; (b) breaches any provision or warranty; (c) makes an unauthorized configuration or process change; or (d) files for bankruptcy, dissolves, or becomes insolvent.

Seller shall maintain, at its sole cost, insurance with A.M. Best "A-" or better rated carriers:

• Commercial General Liability: $2,000,000 per occurrence / $4,000,000 aggregate, including Products and Completed Operations;

• Automobile Liability: $1,000,000 combined single limit;

• Workers’ Compensation & Employer’s Liability: Statutory limits / $1,000,000 per accident; and

• Errors & Omissions / Professional Liability (if providing engineering, integration, or custom design services): $2,000,000 per claim.

Seller shall name Flexible Assembly Systems Inc. as an Additional Insured and deliver a Certificate of Insurance with a waiver of subrogation in Buyer's favor prior to shipment.

All technical, business, machine integration, and customer data disclosed by Buyer shall remain strictly confidential. Seller shall not disclose Buyer’s designs, drawings, or customer identities to any third party. Any custom machine integration designs, firmware, tooling, or adaptations paid for or developed under this PO shall be deemed "work made for hire" and the exclusive property of Buyer.

This PO and all related disputes shall be governed by and construed under the laws of the State of California, without regard to conflict of laws principles or the UN Convention on Contracts for the International Sale of Goods (CISG). Seller irrevocably consents to the exclusive jurisdiction and venue of the state and federal courts situated in San Diego County, California. In any legal action to enforce this PO, Buyer shall be entitled to recover all reasonable attorneys' fees and costs.