Terms and Conditions of Purchase

All purchases of Products (as defined below) by Fluid Power, Inc. (“Buyer”) from the supplier to which this Purchase Order is directed (“Seller”) shall be subject to the following Terms and Conditions, which are hereby incorporated in their entirety into this Purchase Order.

1. ACCEPTANCE, TERMS AND CONDITIONS OF CONTRACT. Whether construed as an offer, acceptance or confirmation, these terms and conditions of purchase include all documents and exhibits attached hereto and all other terms incorporated by reference herein. This purchase order shall constitute the final, complete and exclusive statement of this contract and may not be modified or rescinded except by a written change order issued by the Buyer. If this purchase order constitutes an offer by the Buyer to purchase the goods and/or services specified upon the terms and conditions and at the price(s) and with the delivery date(s) specified herein, Seller shall indicate its acceptance of this order by verbal acceptance communicated to the Buyer, by written acceptance on the face of this purchase order received by the Buyer, by other written confirmation received by the Buyer, by commencing work on this purchase order in any manner, expressly conditioned on notice of such commencement of work received by the Buyer, or by the delivery of the goods or services within the time for such delivery as stated in this purchase order. Regardless of the manner or medium of acceptance time is of the essence. As an offer, this purchase order expressly limits acceptance to its terms and conditions, and notification of objection to any different or additional terms in any response to this offer from the Seller is hereby given. If this purchase order is construed as an acceptance of the Seller’s offer, this acceptance is expressly conditioned on the offeror’s assent to any additional or different terms contained in this purchase order. If this purchase order is construed as a confirmation of an existing contract, the parties agree that this purchase order constitutes the final, complete and exclusive terms and conditions of the contract between the parties. If the parties have otherwise completed a signed, written contract, the parties agree that the use of this purchase order to place orders for goods or services pursuant to such a contract shall be construed to supplement the terms of such written contract only to the extent that the terms and conditions of this purchase order are not inconsistent with such written contract. Regardless of its construction as an offer, acceptance, confirmation or use to place orders for goods or services pursuant to an earlier contract, this purchase order incorporates by reference all terms of the Uniform Commercial Code providing any protection for the Buyer, including, without limitation, all express and implied warranty protection and all Buyer’s remedies under the Uniform Commercial Code.

2. ENTIRE CONTRACT. This Purchase Order and its terms and conditions shall constitute the entire contract between Buyer and Seller with respect to the items and/or services specified on the face hereof. No modification or addition to or waiver of any of the terms and conditions hereof will be effective (regardless of whether Buyer shall have accepted any items or services ordered herein and delivered or rendered by Seller) unless agreed to in writing by an officer of Buyer. All specifications, drawings and data submitted to Seller with this Purchase Order are hereby incorporated herein and made a part hereof.

3. DELIVERY. Deliveries shall be made as specified, without charge for boxing, crating or storage unless otherwise stated on the face hereof, and items shall be suitably packed to secure lowest transportation charges and in accordance with the requirements of common carrier. The specific quantity ordered must be delivered in full and not be changed without Buyer’s prior written consent. Any unauthorized quantity is subject to Buyer’s rejection and return to Seller at Seller’s expense. Time is of the essence in this contract. If delivery of the items or rendering of the services to be furnished here under is not completed within the time period specified, Buyer reserves the right without liability, in addition to all of its other rights and remedies, to terminate this contract by notice effective when received by Seller, as to stated items not yet shipped or services not yet rendered, and to purchase substitute items or services elsewhere and charge Seller with any loss incurred. Any provisions herein for delivery of items or rendering of services by installments shall not be construed as making the obligations of Seller severable. All prices are F.O.B. Buyer’s plant unless otherwise stated on the face hereof. Shipments sent C.O.D. without Buyer’s prior written consent will not be accepted and will be at Seller’s risk.

4. TAXES. All taxes which are properly chargeable to Buyer shall be stated separately in Seller’s invoices. All tax exemption certificates of Buyer will be recognized and accepted by Seller.

5. CHANGES. Buyer reserves the right at any time to make changes in any one or more of the following: (a) specifications, drawings, and data incorporated in this contract where the items to be furnished are to be specially manufactured for Buyer; (b) methods of shipment or packing; (c) place of delivery; and (d) time of delivery. If any such changes cause an increase or decrease in the cost of or the time required for performance of this contract, an equitable adjustment shall be made in the contract price or delivery schedule, or both. Any claim by Seller for adjustment under this clause shall be deemed waived unless asserted in writing within ten (10) days from receipt by Seller of the change. Price increases or extensions of time for delivery shall not be binding on Buyer unless evidenced by an amended Purchase Order issued and signed by an officer of buyer.

6. WARRANTY. Seller warrants that the items and services to be furnished hereunder will be in full conformity with Buyer’s specifications, drawings and data and/or samples submitted by Buyer and/or submitted to Buyer by Seller and accepted by Buyer, will be free from all defects in material and workmanship, will be merchantable, and will be fit and sufficient for their intended use and purpose. Seller agrees to indemnify and save harmless Buyer, its agents and customers and the users of any such items from any and all liability, loss and damage which may be incurred or suffered by them or any of them by virtue of Seller’s breach of said warranty and to pay any and all judgments rendered against them or any of them as a result therof and to pay all costs and expenses incurred by them or any of them in defending any action brought against them or any of them as a result of any claim arising out of Seller’s breach of said warranty, including but not limited to attorney’s fees and expenses, expert witness fees and expenses and court costs. If requested by Buyer, Seller will at its own cost and expense defend any and all such actions.

7. PATENT INDEMNITY.Seller warrants that the sale or use of the items to be furnished hereunder will not infringe upon or contribute to the infringement of any patent or patent right and agrees to indemnify and save harmless Buyer, its agents and customers and the users of any such items from any and all judgments, damages and expenses, including but not limited to attorney’s fees and expenses, expert witness fees and expenses and court cost, which they or any of them may incur or suffer or to which they or any of them may be subjected as a result of or arising out of any infringement or claimed infringement. If requested by Buyer, Seller will at its own cost and expense defend any and all such actions.

8. INSPECTION. All items covered by this contract shall be subject to inspection and/or test in any quantity by Buyer or Buyer’s customer at any reasonable time and place. If any defects are found in materials or workmanship of some of the items or if some of the items are found not to be in conformity with the instructions, specifications, drawings or data, or Seller’s warranty, then Buyer or its customer shall have the right to reject all such items or require their replacement or correction. Buyer may return all rejected items which have been delivered by Seller at Seller’s invoice price plus all transportation charges. Seller will bear all costs of replacing or correcting any items furnished by Seller which are rejected and returned to Seller pursuant hereto. If Seller fails to replace or correct such rejected items, then Buyer may by contract or otherwise have said items replaced or corrected and charge the excess cost to Seller. Seller is not relieved of its warranty obligation whether or not Buyer or its customer inspects any item covered by this contract.

9. PROPERTY FURNISHED to SELLER by Buyer. Unless Buyer otherwise agrees in writing, all special dies, molds, patterns, jigs, fixtures, and any other property furnished to Seller by Buyer, or specifically paid for by Buyer for use in the performance of this contract, shall be and remain the property of Buyer, shall be subject to removal upon Buyer’s instructions, shall be used only in filling orders from Buyer, shall be held at Seller’s risk, and shall be kept insured by Seller at Seller’s expense while in its custody or control in an amount equal to the replacement cost thereof, with loss payable to Buyer. Copies of policies or certificates of such insurance will be furnished to Buyer on demand. Seller shall keep confidential all information, drawings, specifications, or data furnished by Buyer, or prepared by Seller specifically in connection with the performance of this contract and shall not divulge or use such information, drawings, specifications or data for the benefit of any other party. Except as required for the efficient performance of this contract, Seller shall not make copies or permit copies to be made without the prior written consent of Buyer. Seller shall thereafter make no further use, either directly or indirectly, of any such data or of any information derived therefrom without first obtaining Buyer’s written consent.

10. DELAYS. Seller shall furnish Buyer in writing all available information regarding possible delays in production or delivery of the items to be furnished hereunder, including delays or threatened delays caused by actual or potential labor disputes.

11. COMPLIANCE with LAWS. Seller represents that it has and will continue during the performance of this contract to comply with the provisions of all federal, state and local laws and regulations from which liability may accrue to Buyer from any violation thereof. Seller warrants that all of the items to be furnished hereunder which are subject to the “Occupational Safety and Health Act” of 1970, as amended, or the rules and regulations thereunder, will conform, at the time of delivery to Buyer, to all applicable standards and requirements set forth in said Act or rules and regulations. Seller certifies compliance with the “Fair Labor Standards Act” of 1938, as amended, in the performance of this contract.

12. REMEDIES – WAIVER. The remedies herein reserved shall be cumulative and in addition to any other or further remedies provided in law or equity. A waiver by Buyer of any right under this contract shall not affect any rights subsequently arising under the same or similar provisions hereof nor shall it operate as a waiver or the provision or condition under which such rights arise. Nothing contained herein shall limit or affect the right of Buyer to cancel this contract for the default of Seller.

13. NONASSIGNABILITY. Neither this contract nor any interest hereunder shall be assignable by Seller without the prior written consent of Buyer.

14. GOVERNING LAW.This contract shall be construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania.

F-P-1105-02