|NORTHROP GRUMMAN CORPORATION
PURCHASE ORDER TERMS AND CONDITIONS
(COMMERCIAL--SHORT FORM) (FIXED PRICE — SUPPLY)
1. DEFINITIONS. "Buyer" means Northrop Grumman Corporation, its divisions or subsidiaries as identified on the face of the purchase order. "Seller" means the party with whom Buyer is contracting. "Customer" means Buyer's customer. "Order" means the instrument of contracting including this purchase order and all referenced documents, exhibits, and attachments. "Parties" means Buyer and Seller collectively. "Products" means those goods, supplies, materials, articles, items, parts, components or assemblies, and any related services required in producing such Products, described in the Order.
2. ACCEPTANCE. Seller's acceptance is expressly limited to the written terms of this Order. No additional or different term shall be binding. Buyer hereby objects to any additional or different terms contained in Seller's acceptance. Any of the following acts by Seller shall constitute acceptance:
A. Signing and returning a copy of this Order;
B. Commencing performance of any effort required to complete this Order;
C. Informing Buyer of commencement of any effort required to complete this Order; or
D. Shipping of any Products in performance of this Order.
3. COMPLETE AGREEMENT. This Order is intended by the Parties as a final expression of their agreement and is the complete and exclusive statement of all terms and conditions of agreement. No course of prior dealings between the Parties, and no usage of trade, shall be relevant to supplement or explain any term used in this Order.
4. NONWAIVER. Acceptance or acquiescence in a course of performance rendered under this Order shall not be relevant to determine the meaning of this Order, even though the accepting or acquiescing party has knowledge of the nature of performance and opportunity for objection.
5. PARTIAL INVALIDITY. If any provision of this Order is or becomes void or unenforceable by force or operation of law, all other provisions shall remain valid and enforceable.
6. MODIFICATION. No modification of this Order (including any additional or different terms in Seller's acceptance) shall be binding on Buyer unless agreed to in writing and signed by Buyer's authorized purchasing representative.
7. PACKING AND SHIPPING. Seller shall, unless otherwise stated in the Order:
A. Prepare all Products for shipment to prevent damage or deterioration;
B. Comply with Buyer's packaging requirements;
C. Secure the lowest lawful transportation rates;
D. Comply with carrier's classifications, tariffs, and packaging instructions; however, Seller shall notify Buyer, before shipping, of any conflict between Buyer's and carrier's packaging requirements;
E. Pay all charges for preparation, packaging, packing, boxing or crating;
F. Pay all cartage and shipping (except forward freight collect when free on board [FOB] origin [place of shipment]);
G. Make one daily shipment of all Products by the same means of transportation, to the maximum extent possible;
H. Number and mark each container with a consecutively assigned container number and with the applicable Order number;
I. Indicate the container, Order, item, serial (if serialized), part (from the face of this Order) and lot or batch number, if applicable, on packing sheets and bills of lading;
J. Place one copy of the packing sheet inside the first container and attach one copy to the outside of the container;
K. Instruct the Shipper to include the Order number on the freight invoice; and
L. Not declare the shipment value unless tariff rates or rating is dependent upon the released or declared value; then, declare the maximum value for the lowest rates or rating.
Damage resulting from improper Product packaging will be charged to Seller.
8. IDENTIFICATION OF MANUFACTURERS. Seller must provide the applicable manufacturer's Commercial and Government Entity (CAGE) code and the manufacturer's name on the exterior of the sealed packaging. When distributors supply Products from multiple manufacturers to fill an Order, each manufacturer's parts must be segregated and identified with the applicable CAGE code and manufacturer's name as described above.
9. DELIVERY. Time is of the essence in the performance of this Order. All deliveries shall be strictly in accordance with the applicable quantities and schedules set forth in this Order. Whenever it appears Seller will not meet the delivery schedule, Seller shall immediately notify Buyer of the reason and length of the delay. Seller shall make every effort to avoid or minimize the delay to the maximum extent possible including the expenditure of premium time and most expeditious transportation. Any additional cost caused by these requirements shall be borne by Seller.
10. FOB, TITLE AND RISK OF LOSS. Unless otherwise specified, the FOB point shall be Buyer's location designated on the face of this Order. Risk of any loss and/or damage to Products occurring before receipt at the delivery point specified shall be Seller's responsibility. Title shall pass to Buyer upon acceptance (except as otherwise specified within this Order); however, passing of title shall not relieve Seller of any other obligations under this Order.
11. INVOICE AND PAYMENT. Seller shall send a separate invoice in duplicate for each shipment. The invoice shall include: Order number, item number, part serial number (if serialized), and part number shown on the face of this Order. No invoice shall be issued prior to shipment of Products. Payment due dates, including discount periods, will be calculated from the date of acceptance of Products or correct invoice, whichever is later. Unless freight and other charges are itemized, any discount will be taken on the full amount invoiced. Buyer has the right, without loss of discount privileges, to pay invoices covering Products shipped in advance of schedule on the normal maturity after the date specified for delivery. Payment shall not constitute acceptance of Products.
12. PRICE WARRANTY. Seller warrants that the price(s) being paid by Buyer are as low as prices charged to Seller's most favored customer for similar quantities of like items purchased under similar circumstances.
13. NON–CONFORMING GOODS. If Seller fails to deliver or delivers defective or nonconforming Products, Buyer may:
A. Accept such Products at an equitable price reduction;
B. Reject such Products;
C. Demand specific performance; or
D. Make, or have a third party make, all repairs, modifications, or replacements (the "Corrections") necessary to enable such Product to comply in all respects with Order requirements and charge the cost incurred to Seller.
14. INSPECTION & ACCEPTANCE. Buyer and its customer shall have the right to inspect and test all material, design, to the extent design is Seller's responsibility, and workmanship at all reasonable times and places including, when practicable, during manufacture and before shipment. Seller shall provide all information, facilities and assistance necessary for safe and convenient inspection and test without additional charge. Buyer's final inspection and acceptance shall be at destination in accordance with Buyer's procedures.
A. Seller warrants, to Buyer and purchasers of Buyer's Products, that all Products delivered under this Order will be: (1) free from defects in materials, workmanship, and manufacturing processes; (2) suitable for the purposes intended; and (3) conform to the requirements of this Order, including, but not limited to, the applicable descriptions, specifications, and drawings, if any, and that those Products or any portions thereof which are manufactured, in whole or in part, in accordance with designs not furnished by Buyer will be free from defects in design.
B. The warranty set forth above shall remain in effect for eighteen (18) months after delivery to Buyer. Buyer may give notice to Seller of any breach of this Warranty within twenty-four (24) months after delivery to Buyer.
A. No modification of this Order shall be binding on Buyer unless made by a formal change order, including a Purchase Order Change Notice or a Purchase Order Supplement, executed by Buyer's authorized representative. Buyer may at any time, by written order, and without notice to sureties or assignees, if any, make changes within the general scope of this Order in any one or more of the following: (1) drawings, designs or specifications when the Products to be furnished are to be manufactured for Buyer in accordance with the drawings, designs, or specifications; (2) method of shipment or packing; (3) place of delivery; and (4) reasonable changes in quantities and schedules.
B. If any such change causes an increase or decrease in the cost of, or the time required for, performance of any part of the work under this Order, whether or not changed by such change order, an equitable adjustment shall be made in the Order's price or delivery schedule, or both, and the Order shall be modified in writing accordingly.
C. Seller must assert its right to an adjustment under this Condition within fifteen (15) days from the date of notification of the change to Seller. However, if Buyer decides that the facts justify it, Buyer may receive and act upon a proposal submitted before final payment under this Order.
D. If Seller's proposal includes the cost of property made obsolete or excess by the change, Buyer shall have the right to prescribe the manner of disposition of the property.
E. Nothing in this Condition shall excuse Seller from immediately proceeding with the Order as changed, including failure of the Parties to agree upon any adjustment to be made under this Condition.
17. TERMINATION FOR CONVENIENCE
A. Buyer may, whenever it deems it necessary, terminate this Purchase Order in whole or in part by written or telegraphic notice to Seller. Upon such termination, Seller will, as to the terminated portion of this Order, promptly stop work, notify suppliers to stop work, and protect property in Seller's possession in which Buyer has or may acquire an interest.
B. In the event of termination under paragraph 17.A, Seller shall be paid:
(1) The actual costs incurred up to and including the date of termination which, using recognized accounting practices, are properly allocable to, or apportionable under the terminated portion of the Order; this will include costs to suppliers which are so allocable.
(2) The contract average unit cost plus 3% profit for acceptable or accepted finished items not previously billed or paid.
(3) Reasonable termination expenses.
(4) Profit, which shall not exceed 3%, on Seller's costs and expenses described in subparagraphs (1) and (3) of this paragraph 17.B.
In no event shall the termination charges exceed the average unit price agreed upon by the Parties as set forth in the Order for the terminated item nor shall Buyer be liable for incidental or consequential liabilities. Seller shall submit its termination claim to Buyer within three (3) months after the effective date of the termination.
18. OFFSET COMMITMENT. This Condition shall only apply to purchase orders in excess of $10,000.00.
A. Definition: "Offset" means the obligations that Buyer undertakes, in order to market its Products, to assist a customer country in reducing any trade imbalance caused by its purchase of Buyer's Products or to meet other customer country national objectives.
B. Notwithstanding that this Order is or is not made in direct support of a foreign sale, Seller agrees that it is obligated to support Buyer's offset commitments as a condition of this Order.
C. The offset credits arising out of or resulting from, directly or indirectly, this Order are for the exclusive use of Buyer and may be used by Buyer and any of its affiliates and subsidiaries to fulfill all past, present and future offset obligations. In addition, Seller agrees to identify and retain for Buyer's use any rights to offset credits generated by its suppliers and subcontractors arising out of or resulting from this Order.
D. Seller shall provide a copy of each purchase order or subcontract placed with a foreign source under this Order in support of Buyer's rights to offset credit.
E. Seller shall execute all necessary documents to evidence Buyer's right to use or assign any offset credits.
F. Buyer reserves the right to assign offset credits generated through Seller's efforts under this Order to third parties.
G. Seller shall include the substance of this Condition, in favor of Buyer, in its subcontracts issued at all tiers pursuant to this Order.
19. SELLER'S DATA. Any knowledge, information, drawings, designs, data or computer programs (herein called "Data") which Seller discloses to Buyer for this Order that Seller has not marked with a "proprietary" legend, shall not be considered proprietary to Seller or in any way restrict Buyer's use of such Data.
20. RESTRICTIONS ON USE AND DISCLOSURE OF DATA. Seller shall safeguard and keep confidential all designs, processes, drawings, specifications, reports, data and other technical or proprietary information and the features of all parts, equipment, tools, gauges, patterns and other items furnished or disclosed to Seller by Buyer or designed for Buyer in connection with the work performed and Products produced in accordance with this Order. All such information shall remain the property of Buyer. Unless otherwise provided herein or authorized by Buyer in writing, Seller shall use such information and items and features thereof, only in the performance of this Order.
21. ACCESS TO BUYER DATA BASES OR ELECTRONIC COMMUNICATION LINES. If this Order grants or otherwise provides for access to Buyer data bases or electronic communication lines, Seller understands that such access is granted solely for the purposes described or reasonably implied in this Order. Seller shall exercise due care to prevent unauthorized persons or third parties from gaining access to such data bases or communication lines and shall promptly report any inadvertent access by such parties. Further, Seller shall report any inadvertent access to data bases or electronic communications beyond the scope of the access granted. Seller shall defend and hold harmless Buyer from and against all claims and actions, and all expenses incidental to such claims or actions, based upon or arising out of access by unauthorized parties caused or contributed to by Seller or anyone acting under its direction or control or in its behalf in the course of Seller's performance under this Order.
22. BUYER'S PROPERTY. Buyer shall retain title to all Buyer property furnished to Seller (i.e., dies, molds, jigs, tools, materials, etc.). Seller shall label, maintain and dispose of Buyer's property, including scrap, according to Buyer's direction and Seller shall be responsible for all loss or damage.
23. RESPONSIBILITY FOR CLAIMS/INDEMNITY. Seller shall at its own expense defend, indemnify and hold harmless Buyer from any claims, injury, or liability arising out of or related to this Order, including attorneys' fees and costs. In the event that Seller fails to defend, hold harmless, and indemnify Buyer, then Seller shall pay for any damages, attorneys' fees, and any other fees, costs and expenses that may be incurred by Buyer in the defense of any action related to the Order and/or in the prosecution of any action to enforce the provisions of this Condition.
24. ASSIGNMENT AND SUBCONTRACTING. Seller shall not assign any part, nor subcontract any substantial part, of this Order without Buyer's prior written consent.
25. COMPLIANCE WITH LAWS.
A. Seller warrants that it shall comply with all applicable Federal, State and local laws, rulings, and regulations in effect on the date of this Order.
B. Seller shall warrant that the Products called for by this Order have been or will be produced in compliance with the Fair Labor Standards Act of 1938 (29 U.S. Code 201-219) and any amendments thereto, including without limitation all applicable requirements of Sections 6, 7 and 12 thereof, and all of the regulations and orders of the U.S. Department of Labor issued under Section 14 thereof, and, insofar as applicable to this Order, the Walsh-Healey Public Contracts Act (41 U.S. Code 35-45) and any amendments thereto, as well as with the provisions of any other Federal Laws with respect to labor relations, minimum wages and hours of employment, now in effect or hereafter enacted, including the Work Hours and Safety Act of 1962 (40 U.S. Code 327 et seq.), and with any and all rules and regulations issued under each and every such Law. Seller agrees that this warranty may be considered as the written assurance and certificate contemplated by the amendment dated October 26, 1949, to the Fair Labor Standards Act of 1938.
26. CHOICE OF LAW. This Order and any dispute arising hereunder shall be governed by the substantive and procedural laws of the State of Texas, except, however, that the Texas Choice of Law provisions shall not apply.
27. RELEASE OF INFORMATION AND ADVERTISING. Seller shall not, without prior written consent of Buyer, make any disclosure, news release or public announcement, denial or confirmation of same, of any part of the subject matter of this Order or in any manner advertise or publish the fact that Seller has supplied or contracted to supply to Buyer the items mentioned herein except as may be required to perform this Order.
28. RIGHTS IN COPYRIGHTS. The Parties expressly agree that all original works of authorship fixed in any tangible form, including software improvements, enhancements, derivative works and mask works, whether specially ordered or commissioned, made by Seller alone or jointly with others in connection with this Order are hereby assigned to Buyer. Seller agrees to require its personnel or others hereinafter associated with or used by Seller in the performance of this Order to execute all necessary documents to transfer and assign all right, title and interest in said work to Buyer.
29. PATENT, TRADEMARK, AND COPYRIGHT INDEMNITY. Seller shall defend, indemnify, and hold Buyer, Buyer's officers, agents, employees, and Customers harmless against all claims and liabilities, including costs, for infringement of any United States patent, trademark, or copyright by any Products delivered under this Order or, at Seller's option and expense, Seller shall obtain such licenses as are necessary to remove such infringement, provided that Seller is reasonably notified of such claims and liabilities. Seller's obligation shall not apply to Products manufactured by Seller pursuant to detailed designs developed by Buyer and furnished to Seller under an Order which does not require research, development, or design work by Seller. Seller's obligation shall also not apply to any infringement arising from the use or sale of Products in combination with Products not delivered by Seller if such infringement would not have occurred from the use or sale of such Products solely for the purpose for which they were designed or sold to Buyer.
30. ANTI–KICKBACK PROGRAM. Kickbacks are prohibited. Seller and each of its subcontractors shall submit certifications to Buyer on demand that they have not paid kickbacks. The substance of this clause shall be incorporated in all subcontracts issued hereunder. Seller shall immediately notify the Northrop Grumman Law Department of the division issuing this Order of any alleged violations involving any of Buyer's or Seller's employees.
31. ASBESTOS. Seller shall not provide any Product that contains asbestos and shall submit certifications to Buyer on demand that the Products contain no asbestos.
32. HAZARDOUS MATERIAL.
A. If this Order involves delivery of any hazardous material, packaging and shipment of such material must be made in accordance with Hazardous Materials Regulations Title 49 CFR, OSHA Hazard Communication Standard 29 CFR 1910.1200, and Federal STD. 313C. A Materials Safety Data Sheet (MSDS) shall be provided to Buyer by Seller as a condition of this Order unless previously submitted. ***Seller shall enter Buyer's purchase order number on the top right corner of the MSDS's first page.
The purchase order number may be handwritten.*** Unless there are changes affecting the characteristics and composition of the hazardous material previously reported, only one submission to Buyer is required. An MSDS from the manufacturer will satisfy these requirements for distributors, dealers, jobbers and retailers who must comply with this Condition.
B. The warning label required on hazardous material by CFR 1910.1200 shall not be obscured by other stamps or labels. When an MSDS is required, Seller shall mail it separately to the address on the face of this purchase order to the attention of the Safety Manager.
C. By acceptance of this Order, Seller certifies: (1) Compliance with this Condition; (2) an up to date MSDS will be submitted prior to delivery of any hazardous material; or (3) that no hazardous material will be delivered, as applicable.
33. LABELING REQUIREMENTS FOR OZONE-DEPLETING SUBSTANCES. By acceptance of this Order, Seller certifies that Products delivered to Buyer are in compliance with Section 611 of the Clean Air Act Amendments of 1990 as promulgated by 40 CFR PART 82, Subpart E.
34. TAXES. Seller's prices include applicable Federal, State and Local taxes.
35. ENVIRONMENTAL REQUIREMENTS. (NOTE: If the face of this Order indicates it was issued from one of Buyer's purchasing offices located within the State of California for work to be performed within or Products to be shipped into the State of California, then the following Conditions apply).
A. As a result of passage of California's "Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65)," Seller is hereby required to identify any chemicals on the California list of chemicals known to cause cancer or reproductive toxicity that are contained in any Products being furnished to Buyer. Such information may be provided on material safety data sheets which clearly identify the chemicals and includes a statement concerning its carcinogenicity or reproductive toxicity.
Note: A list of currently regulated chemicals is available from the State of California Health and Welfare Agency, 1600 Ninth Street, Room 450, Sacramento, CA 95814. In order for Seller to be assured of knowing the chemicals currently on the list, and those that will be listed, it is necessary that Seller request the health and welfare agency to include Seller in its distribution on Proposition 65 materials.
B. Seller's and Subtier Supplier's performance to any or all work requirements of this Order, may require application of Primer, Top Coating, and/or other Aerospace Coating subject to local air pollution control regulations. These rules, listed in Table 1, restrict the Volatile Organic Compounds (VOC) content and emissions of aerospace assembly and component coatings. Compliance with these rules is mandatory by law for all suppliers located within the affected jurisdictions. No instruction or requirements, verbal or written, by Buyer shall be construed as to modify or circumvent the requirement for Seller's compliance with said rules. Should Seller find that prior to or during performance of work on this Order, a violation of the applicable rule will or does exist, Seller is required to take action to ensure Buyer's schedule, quality requirements, and all Terms and Conditions of this Order are maintained within full compliance of the law, or advise Buyer immediately of inability to perform.
C. Seller's efforts at establishing or maintaining compliance with the applicable local air pollution control rule or regulation shall be at no cost or charge to Buyer. In the event that the local air pollution regulatory agency determines that a Seller is not in compliance or fails to maintain compliance with the appropriate rule or regulation, Buyer may, at its sole option, terminate this Order pursuant to the default provisions contained herein.
Table 1. Air Pollution Regulations for Aerospace Coating Operations in Southern California
RULE OR REGULATION
NUMBER AND NAME
South Coast Air Quality Management District
South Coast Air Basin (Los Angeles, Orange, Riverside and portions of San Bernardino Counties)
Rule 1124 Aerospace Assembly and Component Coating Operations
Ventura County Air Pollution Control District
Rule 74.13 Aerospace Component Surface Coatings and Cleaning
San Diego County Air Pollution Control District
San Diego County
Rule 67.9 Aerospace Coating Operations
Kern County Air Pollution Control District
Rule 410.4 Surface Coating of Manufactured Metal Parts of Products