2. BACKGROUND AND INTENT. It is understood by all parties that: Ziehm Imaging Inc. (Ziehm) is in the business of providing medical devices. The functionality and viability of these devices is dependent upon every detail of the components used to build this equipment. For this reason, Ziehm utilizes a “copy exact” philosophy whereas changes to the product or contracts must be qualified, verified and accepted by Ziehm before implementation of such changes. Ziehm is bound by FDA regulations as well as all U.S.A. truth in labeling laws. It is important to understand that any changes to the products or terms associated with this contract must be documented as described in the following T & C’s regardless of the sellers own interpretation of the acceptability of any changes.
3. ASSIGNMENT AND SUBCONTRACTING. Neither this Purchase Order nor any interest under it shall be assignable nor any duties delegable by Seller, voluntarily or involuntarily, without Buyer’s prior written consent. Any attempt to assign such interest or delegate such duties without Buyer’s written consent shall be void. Any such consent given shall not be deemed to waive or prejudice Buyer’s right to recoupment and/or set off of claims arising out of this or any other transactions with Seller, its divisions, affiliates or subsidiaries, or to settle or adjust matters with Seller without notice to assignees. Seller shall not subcontract the furnishing of any of the complete or substantially complete articles required by the Purchase Order without prior written approval of Buyer.
4. WARRANTIES. Seller warrants that the goods and services described herein shall be free from defects in workmanship and materials and shall conform strictly to applicable specifications, drawings and approved samples, if any, including performance specifications and, if designed by any person or entity other than Buyer, will be free from design defects. These warranties shall remain in effect for a period of twelve (12) months from date of acceptance by Buyer. Seller further gives the warranties of title and against infringement set forth in California Commercial Code Section 2312, which warranties shall continue for the useful life of the goods sold to Buyer hereunder. All warranties shall run to Buyer, its customers and subsequent owners of the goods or end products of which they are a part. In the event of a breach hereunder, Buyer may require that the goods be repaired or replaced, or Buyer may return all or part of the goods to Seller for refund, or Buyer may retain the goods. In the event Buyer retains the goods, the price of this Purchase Order shall be equitably reduced, and, if the contract price has been paid, a refund will be made to the Buyer. Seller agrees to indemnify Buyer, its customers or subsequent owners, for all claims, liabilities, losses, costs and expenses of any nature whatsoever, arising out of or related to any breach of any or all of said warranties, express or implied, including but not limited to costs of tests performed by Buyer, its customers or subsequent owners in determining whether a breach has occurred, any and all costs of disassembly and reassembly incurred as a result of the breach and reasonable attorneys’ fees and costs of litigation resulting from any breach of any or all of said warranties, express or implied. Notice of breach shall be deemed sufficient if given within 90 days after discovery thereof by Buyer. All warranties shall be construed as conditions as well as promises and shall not be deemed to be exclusive.
5. CHANGES. Buyer shall have the right at any time to make changes in drawings, designs, specifications, quantities, delivery schedules, labelling methods of shipment or packaging and place of inspection, acceptance and/or point of delivery of any item in this Purchase Order, and Seller agrees to be bound thereby. No change shall be effective unless authorized in writing by Buyer. If such changes result in delay or an increase or decrease in cost to Seller, Seller shall notify Buyer immediately and negotiate an equitable adjustment, provided, however, that Seller shall, in all events, proceed diligently to perform the work or services or supply the items contracted for under this Purchase Order as so changed. No claim by Seller for such equitable adjustment shall be valid unless submitted to Buyer in writing within 15 days from the date of such Change Notice, accompanied by an estimate of charges resulting from such change. Buyer engineering and technical personnel may, from time to time, render assistance or give technical advice to or effect an exchange of information with Seller’s personnel in a liaison effort concerning the articles to be furnished hereunder. However, such exchange of information or advice shall not vest Seller with the authority to change the articles hereunder or the provisions of the contract, nor shall such change in articles or provisions of the contract be binding upon Buyer unless incorporated as a change directed in writing by Buyer.
6. DELIVERY. Unless expressly agreed otherwise in writing, the pricing set forth on this order is FOB Buyer’s destination, and Seller is solely responsible for shipping costs as well as risk of loss during shipment, and title passes to Buyer upon delivery of the ordered goods at Buyer’s specified destination. Time is off the essence in the performance of this Purchase Order. Buyer may accept or return to Seller at Seller’s expense items received in advance of their required delivery date as specified on the face of this Purchase Order. No retention shall waive Buyer’s right to return subsequent shipments delivered in advance of the required delivery date, nor shall said retention accelerate time for payment. Over shipments may be returned at Seller’s expense or retained by Buyer at no increase in unit price. Seller shall not, without Buyer’s written consent, manufacture or procure materials in advance of Seller’s normal flow time or deliver in advance of schedule. In the event of termination or change, no claims will be allowed for any such manufacture or material commitments in advance of the lead-time necessary to meet Buyer’s firm delivery schedule and those planned schedules that are within Seller’s lead-time unless there has been such prior written consent of Buyer.
7. BUYER’S PROPERTY.
(a) All property used by Seller but owned, furnished, charged to or paid for by Buyer shall be the property of Buyer subject to removal and inspection by Buyer at any time without cost or expense to Buyer. All such property shall be identified and marked appropriately as Buyer’s property, used only for this and other orders placed by Buyer and insured in Buyer’s name in the amount of its full replacement value as determined by Buyer. Seller shall maintain full liability insurance on Buyer’s property while it is out of the possession of Buyer. Seller shall pay the premiums of all the aforesaid insurance policies. All insurance policies shall contain a provision whereby he insurance company agrees to give Buyer a thirty (30) day written notification prior to cancellation or reduction in coverage of any or all of the policies. Seller shall assume all liability for and maintain and repair such property and return the same to Buyer in as good condition as when received, reasonable wear and tear expected and except for the utilization of the property in accordance with the provisions of Buyer’s orders. Buyer does not guarantee the quality or suitability of any tooling or any material supplied by it. If this order is for tooling, such tooling, upon completion, shall become the property of Buyer.
(b) Seller shall not reproduce, use or disclose any data, designs or other information belonging to or supplied by or on behalf of Buyer, or developed as a result of the performance of this Purchase Order or other orders by Buyer, except as necessary in the performance of orders for Buyer. Such data, designs or other information and any copies thereof shall be returned to Buyer upon Buyer’s request. Buyer shall be considered the person for whom the work was prepared for the purpose of authorship in any copyrightable work created by Seller pursuant to this order. Any information which Seller may disclose to Buyer with respect to the design, manufacture, sale or use of the items covered by this Purchase Order shall be deemed to have been disclosed as part of the consideration for this Purchase Order, and Seller shall not assert any claim against Buyer by reason of Buyer’s use or disclosure.
(c) Where payment is made for experimental, developmental or research work performed hereunder, Seller agrees that title to and all other rights and legal interests in all data, analyses, graphs, reports, physical property, or other subject matter prepared, procured, or produced in the performance of this Purchase Order shall vest in Buyer. Seller further agrees to execute an assignment in a form satisfactory to Buyer giving it title to any such data and all property produced, procured, or prepared. All such materials shall be delivered to Buyer promptly upon expiration or termination of the Agreement. Seller agrees to have agreements with its employees and agents adequate to be able to convey by such assignment all such title, rights and legal interests. Seller agrees to disclose promptly and in writing to Buyer all inventions, improvements, or discoveries (whether or not patentable) which Seller conceives or reduces to practice during the period of performance of this Purchase Order and to assign all of Seller’s rights, title, and interest in and to such inventions, improvements, or discoveries to Buyer. Seller further agrees to execute and deliver to Buyer all documents and perform all lawful acts which Buyer deems necessary for the preparation, prosecution, issuance, procurement, defense, and maintenance of patent applications and patents of the United States or foreign countries covering said inventions, improvements, or discoveries and to execute all documents which shall be requested or necessary to vest title in Buyer in said inventions, improvements, discoveries, patent applications, patents, and interest therein.
(d) Seller shall not use, disclose, or reproduce Buyer’s tooling, equipment, materials, gauges, patterns, designs, drawings, blueprints, sketches, engineering data, technical data, manufacturing data, or other proprietary information for any other purpose than performing Buyer’s orders. Without limiting the generality of the foregoing, Seller shall not use, disclose, or reproduce any of Buyer’s proprietary
information for the design, manufacture or repair of parts outside the scope of this purchase order for third parties.
8. DISPUTES. Any dispute arising under this order which is not settled by agreement of the parties may be settled by appropriate legal proceedings. Pending any decision, appeal or judgment in such proceedings or settlement of any dispute arising under this order, Seller shall proceed diligently with the performance of this order in accordance with the decision of the Buyer.
9. INTERPRETATION AND APPLICABLE LAW. Irrespective of the place of performance of this order, this order shall be interpreted in accordance with the laws of the State of California. If a United States Government prime contract number or other Government designation appears on the face of this order, the provisions of this order shall be governed by and construed in accordance with the law of the United States Government Contracts as set forth by statute and applicable regulations and decisions of the appropriate Courts and Boards of Contract Appeals. To the extent that the law referred to in the foregoing sentence is not determinative of an issue, the law of the State of California shall govern.
10. QUALITY CONTROL AND INSPECTION.
(a) Seller shall provide and maintain a quality control system acceptable to Buyer and, if this Purchase Order is under a Government Contract, to the Government covering work hereunder. Records of all inspection work performed by Seller shall be kept complete and available to Buyer’s and Government’s representatives. The Buyer reserves the right to perform lot sampling inspection and accept or reject materials supplied hereunder on a lot basis.
(b) Seller shall permit Buyer’s inspectors and inspectors of the Government and/or Buyer’s Customer to have access to Seller’s plant at all reasonable hours for the purpose of inspecting any items covered by this Purchase Order or work in process for production of said items.
Seller, without additional cost to Buyer, shall provide all reasonable facilities and assistance for the safety and convenience of such inspectors. At the time of inspections, Seller shall make available to the inspectors copies of all drawings, specifications and processes, preservation and packaging data applicable to the articles ordered herein. Seller shall promptly furnish to Buyer an inspection certificate.
Unless otherwise specified, all supplies will be subject to final inspection and acceptance by Buyer at Buyer’s destination facility, notwithstanding any prior payment or inspection and preliminary acceptance. In addition to and not in limitation of the provisions of Section 3 hereof, the Buyer may, at its option (1) hold the rejected items for Seller’s instructions and at Seller’s risk (2) return them to Seller at Seller’s expense and require their correction, (3) retain said supplied and make expenditures for improvements, changes and alterations to said supplies as it may deem necessary in order to bring them into conformity with the contract requirements at Seller’s expense and the contract price shall be reduced accordingly, or if payment has already been made, Seller shall promptly reimburse Buyer for any such expenditures, and/or (4) terminate this order for default in which case Seller shall promptly reimburse Buyer for any and all damages sustained by Buyer as a result of said failure of supplies to meet contract requirements. Buyer may charge to Seller any and all costs of inspection and testing when supplies, on preliminary inspection, appear not to comply with the requirements of this Purchase Order. No replacement or correction of rejected supplies shall be made unless otherwise specified on Buyer’s returned material orders. All rejects will be charged back at full billing price plus the costs of freight and handling. No item rejected by Buyer will be resubmitted for acceptance by Seller without prior written consent of Buyer. If such consent is given by Buyer, the resubmitted items must be designated as having been previously rejected. Subject to Paragraph 3 Warranties, acceptance by the Buyer will be considered conclusive except for latent defects, fraud, or such gross mistakes as amount to fraud. Seller shall ensure that the inspection rights provided to the Buyer, Government and/or Customer in this clause shall be included in all approved lower tier subcontracts.
11. INDEMNIFICATION AND INSURANCE. Seller shall indemnify and hold Buyer harmless from and against any suits, liabilities, losses, damages, claims, causes of action and expenses (including without limitation attorneys’ fees) arising out of or connected with any act or omission of Seller, its agents, employees or subcontractors, excepting only such injury or damage due solely and directly to Buyer’s negligence, provided, however, that Seller specifically agrees to defend, indemnify and hold Buyer harmless from and against any suits, liabilities, losses, damages, claims, causes of action and expenses (including without limitation attorneys’ fees) that may be made or incurred by Seller’s employees or by employees of any of its subcontractors which are alleged to be attributable to the act, omission, fault, or negligence of Buyer, its agents or employees, or to any condition of Buyer’s property, facilities, materials, or equipment. If Seller’s agents, employees, or subcontractors enter upon premises occupied by or under the control of Buyer or any of its customers or suppliers in the course of the performance of this Purchase Order, Seller shall take all necessary precautions to prevent the occurrence of any injury (including death) to any person or any damage to any property arising out of any acts or omissions of Seller’s agents, employees or subcontractors. Seller shall maintain such public liability, property damage insurance and worker’s compensation insurance as will protect Buyer from any of said risks and from any claims under any applicable worker’s compensation law. Buyer reserves the right to establish the limits of insurance coverage applicable to this Purchase Order and to require Seller to secure and maintain said coverage.
12. ADVERTISING. Seller shall not, without first obtaining the written consent of Buyer, in any manner advertise or publish the fact that Seller has supplied or contracted to supply to Buyer the items herein mentioned.
13. ALLOWABLE OVERAGES ON PURCHASE ORDER.
(a) Buyer will accept an overrun of not to exceed 5% above quantity specified on the Purchase Oder. When the Purchase Order is scheduled for staggered deliveries, the 5% allowable overage will apply only on the last shipment.
(b) All hardware, e.g., products, machine parts, shall be furnished, as nearly as possible to the exact quantity or weight specified. However, unless otherwise stipulated, Buyer will accept overages of not to exceed 5% above quantity specified on the Purchase order.
(c) Processed Machine Parts: No overage allowed. Deliveries on any other items not listed in the above categories will be accepted only as quantity shown on the Purchase Order.
14. COMPLIANCE WITH LAWS. Seller shall comply with all applicable federal, state and local laws, Government orders and regulations in performing this Purchase Order. Seller shall defend, indemnify, and hold Buyer harmless from any and all claims, liabilities, losses, fines, costs, damages, and expenses (including without limitation attorneys’ fees) suffered or occasioned to it directly or indirectly through any failure of Seller to comply with any such law, regulation or order.
15. SUSPENSION OF WORK. Buyer may order Seller in writing to suspend, delay or interrupt all or any part of the work for a period not to exceed 90 consecutive days. An adjustment shall be made for any increase in the cost of performance of this contract (excluding profit) necessarily caused thereby. Adjustment shall also be made for any increase in the delivery or performance dates and any other contractual provision affected thereby. However, no adjustment shall be made for any suspension, delay or interruption to the extent that performance would have been so suspended, delayed or interrupted by any other cause including the fault of negligence of Seller. Also, no adjustment shall be made under this clause for any suspension, delay or interruption for which an equitable adjustment is provided for or excluded under any other provision of this contract. No claim under this clause shall be allowed unless the claim, in an amount stated, is asserted in writing within 15 days after the termination of such suspension, delay or interruption.
16. TERMINATION.
(a) Buyer may terminate the order in whole or in part for Seller’s default without liability to Buyer,
(i) if deliveries are not made at the time or in the quantities specified,
(ii) in the event of a breach of applicable specification requirements or any of the other terms and conditions hereof, or
(iii) in the event of the institution of any proceedings by or against Seller in bankruptcy or insolvency under any provisions of the Bankruptcy Act or for the appointment of a receiver or trustee or any assignment for the benefit of creditors.
(b) Buyer may terminate this order in whole or in part at any time for its convenience by notice to Seller in writing. On receipt by Seller of such notice, Seller shall immediately comply with Buyer’s instructions and, to the extent specified therein, stop work and the placement of subcontracts hereunder, terminate work under subcontracts outstanding hereunder, and take any action necessary to protect property in
Seller’s possession in which Buyer has or may acquire an interest. Within thirty (30) days of receipt by Seller of such notice, Seller shall advise Buyer of the actions taken by Seller to comply with Buyer’s instructions and Seller shall also notify Buyer of Seller’s intent to file a termination claim. In the event Buyer terminates and Seller submits a termination claim, Buyer shall pay to Seller the following:
(i) amounts due for goods delivered and accepted by Buyer or services completed in accordance herewith, and not theretofore paid for prior to the effective date of termination,
(ii) actual work –in- process costs incurred by Seller if properly allocable, proportionally, under generally acceptable accounting principles and practices, to the terminated portion of the contract, including liabilities to subcontractors which are so allocable, excluding any and all costs of goods which either can be diverted to other orders from other customers of Seller or retained by Seller for Seller’s own use or future orders from other customers, and
(iii) a reasonable settlement. The total settlement shall not exceed the total price set forth in this Purchase Order.
(c) Should there be an overpayment by Buyer to Seller as determined in accordance with (b) above, as the result of a termination, Seller shall promptly reimburse Buyer for all sums overpaid. Such termination claim shall be submitted within six (6) months after the effective date of the termination on forms provided by Buyer and Buyer shall not be required to make any determination on any late claim.
(d) SELLER AGREES THAT ITS FAILURE TO SUBMIT SUCH A CLAIM WITHIN THE SIX MONTH TIME PERIOD SET FORTH IN (c) ABOVE SHALL CONSTITUTE A WAIVER THEREOF UNLESS SELLER REQUESTS IN WRITING PRIOR TO EXPIRATION OF SUCH TIME PERIOD THAT A TIME EXTENSION FOR FILING THIS CLAIM OR CLAIMS BE GRANTED BY BUYER: ANY SUCH EXENSIONS, IF APPROVED, SHALL BE EFFECTIVE ONLY IF AUTHORIZED IN WRITING BY BUYER.
17. BUYER AUDIT RIGHTS. Seller agrees to provide access to the plants and facilities and to main its books, records, documents, computerized records, projections and other supporting data in accordance with generally accepted accounting principles and practices which properly reflect all direct and indirect elements of cost of whatever nature whether incurred or anticipated to be incurred for the performance of any work hereunder or anticipated work hereunder for same or similar goods and/or services; such shall be made available for inspection, audit, reproduction and retention by any authorized representative of Buyer or, if applicable, at Buyer’s option, the Government Department or Agency having jurisdiction.
18. GRATUITIES, GIFTS AND KICKBACKS. Buyer may, by written notice to Seller, terminate for default the right of Seller to proceed under this order if Buyer has reasonable cause to believe that gratuities (in the form of entertainment, gifts or otherwise) or kickbacks were offered or given by Seller, or any agent or representative of Seller, to any officer, employee or representative of Buyer with a view toward securing this order or securing favorable treatment with respect to the award of amendment of this order or the making of any determination with respect to the performance of this order. The rights and remedies of Buyer provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law under this order.
19. WAIVER. The failure of Buyer in any one or more instances to enforce one or more of the terms or conditions of his order or to exercise any right of privilege in this order or the waiver by Buyer of any breach of the terms or conditions of this order shall not be construed as a waiver of such term, condition, right, or privilege or thereafter waiving any such terms, conditions, rights or privileges, and the same shall continue and remain in force and effect as if no such failure to enforce has occurred.
20. OFFSET. Buyer shall have the right at any time to offset any amount owing by Seller to Buyer or its divisions or affiliated companies against any amounts due and owing to Seller on this order.
21. ENTIRE AGREEMENT. This Purchase Order and the attachments and documents incorporated herein constitute the complete and exclusive statement of the terms of the agreement between Buyer and Seller and it supersedes all prior representations, understandings and communications. This Purchase Order may only be amended by a writing, signed by both Buyer and Seller, which clearly states the intent of both such parties to amend this Purchase Order.
22. COST ACCOUNTING. Seller agrees that if its certified cost or pricing data is found to be inaccurate, incomplete or otherwise defective, then upon demand by the Buyer, such amount shall be refunded forthwith by the Seller or Buyer shall have the right to deduct such amount from future payments due Seller under this order or any other order or contract placed by Buyer with Seller or any of Seller’s affiliated companies. Seller agrees to indemnify and hold Buyer harmless to the full extent of any loss, damage or expense if Buyer is subjected to any liability as the result of a failure by Seller.
23. DISCLOSURE OF BUYER’S TECHNICAL DATA TO FOREIGN PERSONS AND FOREIGN ENTITIES.
(a) Seller shall not disclose or export Buyer’s technical data, including but not limited to, design, development, production, manufacture, assembly, operation, repair, testing or maintenance data in the form of blueprints, drawings, photographs, instructions and documentation to any foreign person or foreign subcontractor. The Parties will comply with all U.S. export control laws and regulations. The information which the Parties may wish to disclose pursuant to this Agreement may be subject to the provisions of the Export Administration At of 1979 and the Export Administration Regulations promulgated thereunder, the Arms Export Control Act, and the International Traffic in Arms Regulations, and the sanction laws administered by the Office of Foreign Assets Control. The parties acknowledge that these statutes and regulations impose restrictions on import, export and transfer to third countries of certain categories of data, and that licenses from the U.S. Department of State and/or the U.S. Department of Commerce may be required before such data can be disclosed thereunder, and that such licenses may impose further restrictions on use and further disclosure of such data.
(b) If Seller intends to conduct quotation work for this purchase order using anyone other than U.S. citizens or permanent resident aliens (i.e.green card holders), Seller must provide advance written notice to Buyer. In any event, Seller is responsible for compliance with applicable export control laws and regulations.
24. COUNTRY OF ORIGIN-PART MARKING.
Seller shall mark every article of foreign origin (or its container) imported into the United States in a conspicuous place as legible, indelibly, and permanently as the nature of the article (or container) will permit, in such manner as to indicate to an ultimate purchaser in the United States, the English name of the Country of Origin of the article, at the time of importation into the customs territory of the United States. Containers of articles excepted from marking shall be marked with the name of the Country of Origin of the article unless the container is also excepted from marking (19 U.S.C. 304-19 C.F.R 134.11).
