1. AGREEMENT. This writing and its associated Proposal (“Proposal”) constitute an offer by F.R. Drake Company (“Seller”) to sell the products and/or services described in the Proposal to the party to whom the Proposal is addressed (“Buyer”), in accordance with these terms and conditions. This writing is not an acceptance of any offer made by Buyer. (If, notwithstanding the foregoing, any acceptance of any offer by Buyer is deemed to be made hereby, said acceptance is expressly conditioned upon Buyer’s assent to these terms and conditions.) Seller hereby objects to any additional or different terms which may be contained in any of Buyer’s purchase orders, acknowledgements or other forms, or in any other communication heretofore or hereafter received from Buyer. All inconsistent or additional terms, modifications, or changes are deemed material, are expressly rejected, and do not form a part of this Agreement unless Seller agrees to such terms in writing.

2. TERMINATION FOR CONVENIENCE. Buyer may terminate this Agreement at any time whether or not Seller is in default, by written notice to Seller specifying that termination is being made under this provision and specifying the effective date of such termination (hereinafter called the “Termination Date”. In the event of termination under this provision, Buyer will pay to Seller, within thirty (30) days after receipt of Seller’s invoice, the sum of the following amounts, less the amounts previously paid under this Agreement:
a. The price for each unit of Equipment which has been completed under this Agreement as of the Termination Date;
b. Seller’s cost of labor, overhead and materials utilized in manufacturing Equipment which is in process under this Agreement on the Termination Date;
c. Seller’s cost for all parts and materials which are not covered by item b. above, which were purchased specifically for use in manufacturing Equipment under this Agreement and which cannot be used by Seller for other purposes;
d. Seller’s cost for engineering work required by the terms of, and performed under, this Agreement; and
e. A reasonable profit on each of the amounts set forth in items b. – d. above. In no event shall the sum of the amounts specified in items a. – e. above exceed the total amount which would have been earned under this Agreement, if manufacture of all the Equipment had been completed. In the event the amounts previously paid under this Agreement exceed the aforesaid sum, Seller shall refund said excess to Buyer promptly after Seller’s receipt of said notice of termination. Promptly after receipt of payment from Buyer as provided above, Seller shall deliver to Buyer all documents prepared under this Agreement, all units of Equipment completed under this Agreement, all partially manufactured units of Equipment, and all materials and parts paid for by Buyer hereunder.

3. PRICES AND PAYMENT. All prices are set forth in the Proposal. Price quotes are not binding until a proposal is accepted and confirmed by Buyer and Seller. Payment is due within 10 days of Buyer’s receipt of Seller’s invoice.

4. TAXES AND OTHER CHARGES. Any tax, fee, interest or charge of any nature whatsoever imposed by any governmental authority on or measured by the transaction between Seller and Buyer shall be paid by Buyer in addition to the prices quoted or invoiced. In the event the Seller is required to pay any such tax, fee, interest or charge, Buyer shall reimburse Seller on demand.

5. SECURITY AGREEMENT. This Agreement shall be considered a security agreement to the maximum extent allowed by law. Seller shall have, retain, and possess a security interest in all products sold to buyer until Seller is paid in full. Buyer grants to Seller a power of attorney to complete, sign on Buyer’s behalf, and file all forms reasonably necessary to perfect Seller’s security interest. If Buyer defaults, or Seller deems itself insecure of receiving payment, the full unpaid balance shall become immediately due and payable at the option of the Seller, and Seller may retake possession of the products without Court order.

6. SHIPMENT. Unless otherwise set forth on the face hereof, all shipments (other than parts) are F.O.B. Seller’s plant. All shipments of parts are F.O.B. Seller’s plant or other loading point designated by Seller. Notwithstanding the foregoing, Buyer shall be responsible for all freight charges. Freight may be prepaid by Seller and added to Buyer’s invoice or separately billed to Buyer.

7. DELIVERY AND DELAY. Seller reserves the right to make delivery in installments; and all such installments, when separately invoiced, shall be paid for when due per invoice, without regard to subsequent deliveries. Delay in delivery of any installment shall not relieve Buyer of its obligation to accept remaining deliveries. Seller shall not be liable for any damage as a result of any delay due to any cause beyond Seller’s reasonable control, including but not limited to any act of God, act of buyer, embargo or other governmental act, regulation or request, fire, accident, strike, slow down, war, riot, delay in transportation, delayed delivery by suppliers, and inability to obtain necessary labor and materials. In the event of any such delay, the date of delivery shall be extended for a period equal to the time lost by reason of the delay.

8. RETURNS. Products may not be returned without Seller’s prior written authorization. Seller may, however, in its sole discretion, refuse to authorize, or place conditions on, any request for return authorization. Buyer will reimburse Seller for any cost Seller incurs to put products in marketable condition.

9. WARRANTIES. Seller warrants products manufactured by it and supplied hereunder to be free from defects in materials and workmanship under normal use and service for a period of eighteen (18) months from the date of shipment from the Drake plant or 12 months from installation, whichever comes first. If within such period any such product shall be proved to be defective, such product shall be repaired or replaced at Seller’s option. Seller’s warranty obligations shall be limited to such repair or replacement, shall be Buyer’s exclusive remedy hereunder, and shall be conditioned upon Seller’s receiving written notice of any alleged defect within ten (10) days after its discovery and, at Seller’s option, return of such products to Seller, F.O.B. its factory, freight prepaid. This exclusive remedy shall not be deemed to have failed its essential purpose so long as the Seller is willing and able to replace defective products or issue a credit to Buyer within a reasonable time after Buyer proves to Seller that a defect exists. This warranty shall not apply to products which shall have been subjected to negligence, accident, damage by circumstances beyond Seller’s control or improper use, operation, maintenance or storage. THE FOREGOING WARRANTIES ARE EXCLUSIVE AND IN LIEU OF ALL OTHER EXPRESS AND IMPLIED WARRANTIES WHATSOEVER (except warranties of title). SELLER SPECIFICALLY DISCLAIMS AND EXCLUDES ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE.

10. EXCLUSION OF CONSEQUENTIAL DAMAGES AND DISCLAIMER OF LIABILITY. Seller’s liability with respect to breaches of warranty shall be limited as provided in Paragraph 9 hereof. Notwithstanding anything to the contrary in this Agreement, Buyer shall not be entitled to indemnification hereunder if such indemnification claim arises in whole or in part, due to the negligence, bad faith or willful misconduct of Buyer or any of its employees, agents or contractors. SELLER SHALL NOT BE SUBJECT TO AND DISCLAIMS: (1) ANY OTHER OBLIGATIONS OR LIABILITIES ARISING OUT OF BREACH OF CONTRACT OR OF WARRANTY, (2) ANY OBLIGATIONS WHATSOEVER ARISING FROM TORT CLAIMS (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR ARISING UNDER OTHER THEORIES OF LAW WITH RESPECT TO PRODUCTS SOLD BY SELLER, OR ANY UNDERTAKINGS, ACTS OR OMISSIONS RELATING THERETO, AND (3) ALL CONSEQUENTIAL, INCIDENTAL AND CONTINGENT DAMAGES WHATSOEVER. Without limiting the generality of the foregoing, Seller specifically disclaims any liability for penalties (including administrative penalties), special or punitive damages, damages for lost profits or revenues, loss of use of products or any associated equipment, cost of capital, facilities or services, downtime, shut down or slowdown costs, spoilage of material, or for any other types of economic loss. In no event shall seller’s cumulative liability under this Agreement, including, without limitation, for any damages, costs and fees attributable to any and all Infringement Claims, and Seller’s defense thereof exceed the total purchase price.

11. PRODUCT DESCRIPTIONS AND LITERATURE. Any description of the products, whether made in writing or orally by Seller or Seller’s agents, or in specifications, samples, models, bulletins, drawings, diagrams, engineering sheets, catalogues, product brochures, photographs and other illustrations or similar materials used in connection with Buyer’s order, are for the sole purpose of identifying the products and shall not be construed as an express warranty and shall not form part of the terms of the transaction between Seller and Buyer. Any suggestions by Seller or Seller’s agents regarding use, application or suitability of the products shall not be construed as an express warranty unless confirmed to be such in writing by Seller.

12. CHANGES. Seller may at any time, upon notice to Buyer, make changes in design, specifications or materials which in Seller’s opinion are necessary because of requirements established by any governmental authorities or non-availability of materials from suppliers. Changes requested by Buyer after contract has been accepted may increase the price by the amount of all extra costs and expenses incurred by Seller as a result thereof.

13. DRAWINGS. It is Buyer’s responsibility to review and approve drawings within two (2) weeks after submission. Once Buyer has approved drawings, any cost or expenses as a result of changes thereto requested by Buyer shall be the responsibility of Buyer.


14.a. In the event of any claim, action, proceeding or suit brought by a third party (excluding any affiliate or licensee of Buyer) alleging infringement of any U.S. patent known to Seller as of the Effective Date, or any United States trademark or copyright, by reason of the use by Buyer, in accordance with the Specifications, of any Equipment furnished under this Agreement, and provided that Buyer is in compliance with this Agreement, including having made all payments then due hereunder (an “Infringement Claim”), subject to the conditions and exceptions stated below, Seller, at its expense, will defend and hold harmless Buyer, and will indemnify Buyer against any liability assessed against Buyer in a judgment resulting from such Infringement Claim. Notwithstanding the foregoing, Buyer will not be indemnified for and may not incur any costs or expenses, including reasonable attorneys' fees, in defending against any such claim unless Seller has given Buyer written authorization for such costs and fees or has refused to defend Buyer. For purposes of Seller’s indemnification obligations for Infringement Claims under this Agreement, the term “Buyer” shall include Buyer’s officers, directors, and employees.

14.b. Buyer shall give Seller prompt written notice of all Infringement Claims, provided that the failure to give such notice will not affect the indemnification provided hereunder except to the extent that Seller has been prejudiced as a result of such failure and, if Seller has been materially prejudiced as a result of such failure, Seller shall have no obligation under this Section [14]. Seller shall have full and complete authority to assume the sole defense of the Infringement Claims, including appeals, and to settle same. Buyer shall upon Seller's request furnish all information and reasonable assistance available to Buyer and cooperate in every reasonable way to facilitate the expeditious and cost-effective defense and settlement of any Infringement Claim.

14.c. Seller shall not be responsible or liable for any Infringement Claim to the extent that it: (i) arises from Seller’s adherence to specifications, including design modifications, drawings, or other instructions, or incorporation of equipment, provided by, or acquired or modified at the direction or request of Buyer; (ii) arises from adherence to instructions from Buyer to apply a trademark, trade name or other identification; (iii) relates to a modification made by Buyer (or any third party) of any Equipment; (iv) arises from use of the Equipment other than for its specifically intended use in accordance with the Specifications and any contractual obligations between Buyer and Seller; or (v) arises from any breach of any representation, warranty, covenant or agreement under this Agreement; or (vi) relates to uses of any Equipment provided by Seller hereunder in combination with any other equipment, software, material, data or other item. In the foregoing cases numbered (i) through (vi), Buyer will defend and hold Seller harmless for any infringement claim relating thereto, subject to the same obligations set forth above in subsection (b).

15. TECHNICAL INFORMATION. Any sketches, models or samples submitted by Seller shall remain the property of Seller, and shall be treated as confidential information unless the Seller has in writing indicated a contrary intent. No use or disclosure of such sketches, models and samples, or any design or production techniques revealed thereby, shall be made without the express written consent of the Seller.

16. GOVERNING PROVISIONS. This contract and these terms and conditions, together with the Proposal applicable to goods to be purchased, when accepted by Buyer explicitly, by acceptance of goods or otherwise, shall constitute the entire agreement between Seller and Buyer, and shall be governed by and construed according to the internal laws of the State of Virginia (without reference to principles of conflicts of laws). Seller reserves the right to impose additional terms of sale on any products sold or used beyond the boundaries of the United States.

17. SEVERABILITY. Any legally unenforceable provision may be severed from this Agreement, and the remaining terms and conditions will be enforced as a whole as if such provision had not be inserted herein.

18. WAIVER, ENTIRE AGREEMENT. No waiver by either party of a right under this Agreement shall waive any other rights. These terms and conditions, together with the Proposal, and any other writing signed by Seller constitute the entire agreement, and may not be modified other than in writing signed by Seller.

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