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HEADCO INDUSTRIES’ TERMS AND CONDITIONS FOR PURCHASE OF GOODS

These terms and conditions apply to the purchase of goods by Headco Industries company and its subsidiaries, referred to as the “Company.” The Company and subsidiaries are doing business as Bearing Headquarters, Bronze Headquarters, Gear Headquarters, Gears and Sprockets, Headco Machine Works, Highland Hydraulics, and Industrial Parts and Repair.

1) General: Seller shall not assign any order or rights to another party without the prior written consent of the Company. These Terms and Conditions shall be governed by the laws of the State of Illinois. Upon acceptance by Seller of a purchase offer, request, or order, these Terms and Conditions shall apply as a part of the purchase contract, and any differing terms and conditions tendered by Seller shall not apply, but Seller shall be deemed to have agreed that Seller’s differing terms and conditions shall not apply unless Seller timely revokes the order.

2) Company’s Purchase Order: All material ordered from Seller MUST have a Company purchase order number assigned to it. The purchase order number must appear on all docu-mentation, to include packing slips, invoices, and all correspondence regarding the purchase order.

3) Pricing: Pricing on the purchase order will reflect the cost that the Company will pay for the goods when received. Any different price must be agreed to, or acknowledged, in writing before the material is shipped.

4) Payment Terms: The standard payment terms of the Company will apply to all material ordered by the Company. Any change in payment terms must be agreed to in writing by the Company before the goods are shipped.

5) Delivery: Unless agreed to in advance, all goods will be FOB Delivered, as directed by the Company. The selection of the method of delivery rests with the Seller unless specified by the Company. Risk for damaged goods starts for the Company when goods are received in good condition at the Company’s property or designated delivery site. The Seller shall not be liable for delayed deliveries because of acts of war, acts of God, accident, and inability to obtain product or material; labor issues; or anything beyond the reasonable control of Seller.

6) Shortages and Over-shipments: All shortages and over-shipments will be identified and reported in writing to the Seller within fifteen business days after the Company receives the goods. All OEM purchases are subject to an under- or over-shipment of ten (10) percent. OEM shipments will be considered complete with any under- or over-shipment of less than ten (10) percent.

7) Cancellations or Reschedules: All cancellations and reschedules are to be made in writing and subject to approval from the Company. The Company reserves the right to refuse cancel¬lations and reschedules if it causes a financial loss or extra expense to the Company.

8) Limited Warranty and Liability: All products purchased from Seller must be warranted against defect in workmanship and material for not less than one year from the date of shipment.

9) Title: Title to the goods shall pass to the Company once the goods are delivered into the possession of the Company at the destination point. Seller warrants that the product and services are free of any liens, claims, or assessments.

10) Returned Goods: For all goods that the Company seeks to return to the Seller, the Company must submit a request in writing. Any restocking charge must be agreed to in writing before material is returned to the Seller. Only an officer of the Company can ap-prove a restocking charge over fifteen percent (15%).

11) Force Majeure: The standard terms and conditions as related to Force Majeure will apply to all products and services sold.

12) Disputes Resolutions: Any transaction dispute or claim relative to the products or services purchased will first be submitted to an impartial mediator selected by Seller and approved by the Company. If the matter is not resolved with the assistance of the mediator within fifteen business days after it is submitted to a mediator, either party may withdraw from mediation and pursue any other available remedy. The mediator’s expense shall be shared equally by the parties, and each party shall be responsible for any other costs or charges incurred by the party, such as attorneys’ fees, in connection with the dispute.

13) Confidentiality: Any agreed-to terms and conditions that are exceptions to the listed Terms and Conditions are to be held as Confidential by all parties. This includes pricing, payment terms, concepts, arrangements, and specially manufactured items.

14) Notification and Approval for Nonconforming Product: Supplier is to notify the Company of nonconforming product and obtain approval for nonconforming product disposition.

15) Notification of Changes: Notify the Company of changes in product and or process, changes of suppliers, changes of manufacturing facility location and where required, obtain approval and flow down to the supply chain the applicable requirements.

16) Records Retention: Record retention of 10 years is required.

17. Right of Access: Right of access by the Company, our customer and regulatory authorities to the applicable areas of all facilities, at any level of the supply chain, involved in the order and to all applicable records.

ADDITIONAL AEROSPACE SUPPLIER REQUIREMENTS

a. Certificates of Conformance/Compliance:

Certificate of conformance/compliance to specifications and the blueprints are required with each shipment. Equipment, processes, procedures and products will meet all governing specifications and/or regulatory authority requirements when applicable. Shipments against this purchase order constitute seller’s certification of conformance/compliance to all requirements imposed within this purchase order, evidence of which will be filed and is subject to review by Bearing Headquarters.

b. Personnel Qualifications:

Personnel performing the work scope in association to the product within the requirements of this purchase order shall be qualified.

c. Documentation:

The supplier is required to document and maintain the name or other positive identification, and applicable issues of specifications, drawings, process requirements, inspection instructions and other relevant technical data in accordance with requirements as flowed down and applied by Bearing Headquarters and/or the end customer if applicable.

d. Design, Test, Etc. Requirements:

Supplier is required to meet requirements for design, test, examination, inspection and related instructions for acceptance by Bearing Headquarters and/or the end customer as flowed down in the specification/requirements on this purchase order.

e. Design Approval, Inspection, Etc. Requirements:

Supplier is required to meet requirements for test specimens (e.g. production method, number, storage conditions) for design approval, inspection, investigation or auditing by Bearing Headquarters and/or the end customer if applicable.

f. Nonconforming Product:

1. Notification of Nonconforming Product:

The supplier is required to notify Bearing Headquarters in the event of any nonconformance or nonconforming condition that exists or is believed to exist in the requested product. Notification will take place by completion of Bearing Headquarters’ nonconforming product form or applicable end customer nonconforming product documentation.

2. Disposition of Nonconforming Product;

Disposition of nonconforming product will be established prior to shipment of nonconforming product to Bearing Headquarters. Approval of nonconforming product is by Bearing Headquarters and/or the end customer is applicable.

g. Process/Facility Changes:

In the event of a process/facility change relating to the ordered product occurs, Bearing Headquarters must be notified immediately (within 72 hours). The process/facility change must be evaluated for efficacy and conformance of the specified product by Bearing Headquarters and/or the end customer is applicable.

h. Right of Access:

Right of access by the purchaser, their customer and regulatory authorities to all facilities involved in the order and all applicable quality records will be limited to areas and information considered nonproprietary by the supplier.

i. Sub-tier Supplier Requirements:

As a contracted supplier of Bearing Headquarters, when required processes are deemed necessary to use sub-tier supplier, it is the legal responsibility as stated in “Chain of Custody” that the contracted supplier flow down all required work scopes, specifications and any other stated requirements to the sub-tier supplier.

j. All records as they pertain to the purchased material by Bearing Headquarters are required to be maintained in compliance with end user flow down when applicable. If no flow down is present, then all records are required to be kept indefinitely.

k. use customer-designated or approved external providers, including process sources (e.g. special processes)

l. prevent the use of counterfeit parts;

m. ensuring that persons are aware of:

  • their contribution to product or service conformity;
  • their contribution to product safety;
  • the importance of ethical behavior.