Terms and Conditions of Purchase

Acceptance and Governing Provisions
Purchase orders issued by Tecate Industries Inc. or Tecate Products, collectively known as the Tecate Group (”Buyer”) represent an offer by to buy the goods and/or services described on buyer’s purchase order (and in all specification and data submitted to Seller herewith) from the Seller to which this offer is addressed, subject to these terms and conditions. This is not an acceptance of any offer by Seller to sell; and Buyer hereby objects to any additional or different terms contained on any of Seller’s quotation, acknowledgement invoice or other forms, or in any other correspondence from Seller. The offer expires thirty (30) days from its date or upon prior notification thereof to Seller, unless goods conforming hereto are subsequently shipped by Seller and accepted by Buyer. The terms of these offers, when accepted by Seller explicitly, by shipment of conforming goods or otherwise, shall constitute the entire agreement between the parties on the subject hereof, superseding all prior or contemporaneous communications and negotiations. THESE OFFER AND ANY AGREEMENT OF SALE RESULTING FROM THE ACCEPTANCE HEREOF SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL NOT BE GOVERNED BY THE PROVISIONS OF THE 1980 U.N. CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS.

Price; Security Interest
All prices are firm, and no additional charges will be allowed unless specifically provided for on the face of buyer’s purchase order. All time periods for determining payment due dates and availability of discounts commence upon Buyer’s receipt of the items or receipt of an invoice, whichever is later. If Buyer is to make any payment before Buyer’s receipt of the goods, Seller grants Buyer a security interest in the goods and all proceeds thereof to secure performance of Seller’s obligations hereunder, and agrees to execute and deliver such financing statements or other documents as Buyer may reasonably consider necessary or appropriate to perfect its security interest.

Delivery Schedule
Seller shall deliver the goods, in the quantities and within the time, which is of the essence, in accordance with the specifications (as well as the sample approved by Buyer, if any) and at the prices specified on the purchase order or in any document attached thereto or referred to thereto. Failure of Seller to comply with such requirement shall entitle Buyer, in addition to any other rights or remedies, to cancel this order and be relieved of all liability for any undelivered portion. Seller shall not unreasonably anticipate delivery by purchasing materials or manufacturing quantities in excess of what is reasonably required to meet Buyer’s delivery schedule. Goods received in advance of Buyer’s delivery schedule may at Buyer’s option be returned at Seller’s expense or be accepted and payment withheld until the scheduled delivery date.

In the event that Seller breaches any of its obligations hereunder, Buyer may, at its option, purchase substitute goods or services, and Seller shall pay to Buyer the excess of the cost of such substitute goods or services over the purchase price provided, plus any damages and expenses incurred by Buyer as a result of Seller’s breach. In the event Seller is late in delivering goods, Buyer may deduct damages resulting from the delay from the purchase price of the goods. Buyer shall not be required to accept replacements or substitutes, or to permit cure of defects in any goods or services rightfully rejected. Seller shall be liable for all direct, consequential, indirect and incidental damages arising form any breach of any Seller’s obligations hereunder or any defect in the goods or services furnished. The remedies set forth in this paragraph shall be in addition to, and not in lieu of, any other remedies that Buyer may have under the applicable purchase order or under applicable law.

Packing and Shipping
All goods shall be suitably packed, marked conspicuously with Buyer’s purchase order number, and shipped in accordance with shipping instructions specified and otherwise in accordance with the requirements of common carriers so as to obtain the lowest transportation cost. Buyer shall have the right to route all shipments. No charge shall be made to Buyer for packaging, boxing or cartage unless separately itemized on the face of the Buyer’s purchase order. Seller shall be liable to Buyer for any loss or damage resulting from Seller’s failure to act so as to provide adequate protection during shipment. Additional expenses, charges or claims incurred as a result of deviation from the specified route, non-compliance with other shipping instructions or improper description of the shipment in shipping documents shall be Seller’s responsibility. Immediately upon shipment Seller is to notify Buyer, advising of complete shipping and routing information.

Seller agrees to permit Buyer to have access to Seller’s plant and all reasonable times for the purpose of inspection any goods set forth in this order or work in progress for production of such goods. All goods are subject to final inspection and approval at Buyer’s plant or other place designated by Buyer. Such inspection shall be made within a reasonable time after delivery, but not less than ninety (90) days, irrespective of the date of payment. Notwithstanding any payment that may be made, no goods are to be deemed accepted until Buyer has had a reasonable opportunity to inspect them.

Rejected Items
Buyer may return rejected items at Seller’s expense. Seller shall not replace items returned as defective unless so directed by Buyer in writing.

Buyer may make changes in drawing, specifications, quantities, delivery schedules, or methods of shipment or packaging on any item at any time. If such changes result in an increase or decrease in cost, an equitable adjustment of price and delivery schedules may be made, or Buyer may, at its option, terminate this order pursuant to paragraph 14 hereof if agreement on an equitable adjustment cannot be reached. Claims for equitable adjustment must be asserted by Seller within ten (10) days of the issuance of the change order. This order, together with any change orders or instructions, shall constitute on contract.

Risk of Loss
Notwithstanding any applicable terms of shipment, the risk that the ordered goods may be lost, damaged or delayed in transit shall be borne by Seller until actual receipt of them by Buyer in conformity with the terms of this order.

In addition to its standard warranty and/or service guaranty, Seller warrants that all goods supplied shall be free and clear of all liens and encumbrances, good and merchantable title thereto being in the Seller; be new and unused and free from any defects in design, material or workmanship and of good and merchantable quality; conform to Buyer’s specifications or the sample approved by Buyer, as the case may be, or be fit for the known purposes for which purchased; and comply and have been produced, processed and delivered in conformity with all applicable national, federal, state or other laws, administrative regulations and order. The foregoing warranties shall survive inspection, delivery and payment and shall run in favor of Buyer and its customers, whether direct or indirect.

Seller shall not assign or sublet the work to be done without the prior written consent of Buyer; but this provision shall not restrict Seller in the procurement of component parts or materials. If this order shall be terminated for Buyer’s convenience, Buyer’s liability to Seller with respect to such parts or materials shall not exceed the amount for which Seller would be liable to its supplier or suppliers if such liability were determined on the basis of paragraph 14 hereof.

Buyer shall not be liable for any national, federal, state or local taxes, duties, fees, customs, or assessments in connection with the sale, purchase, transportation, use or possession of the goods ordered hereunder, except those expressly set forth on the face of Buyer’s purchase order.

Infringement; Indemnity
Seller warrants that the sale or use of goods furnished will not infringe or contribute to infringement of any patent, copyright or trademark in the United Stares or elsewhere, and Seller shall indemnify Buyer, its successors and assigns and Buyer’s customer, whether direct or indirect, against any and all losses, damages and expenses (including attorney’s fee’s and other costs of defending any infringement action) which they, or any of them, may sustain or incur as a result of a breach of this warranty. Seller shall also indemnify Buyer, its successors and assigns and Buyer’s customer, whether direct or indirect, against any and all losses, damages and expenses (including attorneys’ fees and other costs of defending any action) which they, or any of them, may sustain or incur as a result of any claim of negligence, breach of warranty or contract, or strict liability in tort in connection with the goods furnished, except such as may be caused solely by the negligence of Buyer, its successors and assigns, and/or its customers.

Cancellation By Buyer
Buyer shall have the right to cancel purchase orders without cause and in such event Buyer’s liability for cancellation shall be limited to Seller’s actual and substantiated cost of work and material, applicable solely to this order, which shall have been expended before notice of cancellation has been received by Seller.

Drawings, Specifications and Technical Information
Drawings, specifications, photographs and other engineering and manufacturing information supplied by Buyer shall remain Buyer’s property and shall be treated as confidential information and shall be returned to Buyer upon completion of this order or upon demand. Any information that Seller may disclose to Buyer with respect to the design, manufacture or sale or used of the items covered by it’s orders shall be deemed to have been disclosed as part of the consideration for it’s orders and Seller shall not assert any claim (other than a claim for patent infringement) against Buyer by reason of Buyer’s use thereof.

Buyer’s Property; Tools
Seller shall insure, and bear the risk or loss, of any property of Buyer in Seller’s possession for performance of the contract. Tool charges convey ownership of the tools to Buyer, and Seller shall deliver such tools (and all other property of Buyer) to Buyer on demand.

Compliance with Laws
Seller agrees to comply with all applicable local, state and federal laws, regulations, rules and orders in connection with it’s orders.   Seller certifies that all goods furnished shall have been produced in compliance with all applicable requirements of the Fair Labor Standards Act of 1938, as amended.