Purchase Order Terms and Conditions


ACCEPTANCE OF PURCHASE ORDER: This Purchase Order constitutes DSI's offer to Seller and shall become a binding contract upon the terms and conditions set forth herein upon acceptance by Seller either by acknowledgment or commencement of performance. Any terms or conditions (including process and delivery dates) proposed by Seller in accepting DSI's offer, which are inconsistent with or in addition to the terms and conditions herein set forth, shall be void and of no effect unless and to the extent expressly accepted by DSI in writing. DSI's production schedules are based upon the agreement that materials will be delivered to the company by the date specified on the face of this Purchase Order. Time is therefore of the essence in this Purchase Order. If deliveries are not made at the time agreed upon, DSI reserves the right to cancel or to purchase elsewhere and to hold the Seller accountable therefore.

TOOLS, EQUIPMENT AND MATERIALS: All tooling, equipment and material ("equipment") furnished to Seller by DSI or specifically paid for by DSI will remain the property of DSI. Such equipment while in the Seller's custody or control, will be maintained in good working condition, reasonable wear and tear excepted, by Seller at Seller's expense, held at Seller's sole risk and will be kept insured by Seller at Seller's expense in an amount equal to the replacement cost with loss payable to DSI. Such equipment will be delivered in good working condition, reasonable wear and tear excepted, to DSI immediately upon request by DSI. Equipment shall not be disposed of without prior written approval by DSI. No use of DSI's equipment shall be permitted without prior written approval by DSI. Seller shall not publish or display DSI's product manufactured by DSI's equipment, without prior written approval by DSI.

BILLINGS AND SHIPPING: Invoices shall be in duplicate and bills of lading shall show full routing, car number, etc. and shall be mailed at time of shipment to DSI's Accounts Payable Department. Taxes shall be listed separately. All articles are to be suitably prepared and packed for shipping and shall be shipped pursuant to the specific instructions on the face of this Purchase Order. All packages, packing slips and invoices shall be plainly marked to show DSI's order number.

CASH DISCOUNT: The date used as the basis for cash discount calculation is the date the articles are received or the date an acceptable invoice is received, whichever is later.

ASSIGNMENT: Seller may not assign either its rights or obligations under this Purchase Order without the prior written consent of DSI except that claims for monies due or to become due under this Purchase Order may be assigned by Seller provided that Seller shall supply DSI promptly with two copies of any such assignment. None of the work to be performed under this Purchase Order shall be subcontracted for completed or substantially completed articles or major components without DSI's prior written consent.

INSPECTION: The articles may be inspected by DSI at all times and places and at any stage of production, and if at the premises of Seller, Seller, without additional charge, shall provide all reasonable facilities and assistance required for safe and convenient test and inspection. The foregoing shall not relieve Seller of its obligation to make full and adequate test and inspection. Any inspection prior to final acceptance at DSI's premises shall not be a waiver of DSI's right to inspect upon delivery. DSI reserves the right to inspect at its premises any items shipped F.O.B. Seller's plant. DSI may base acceptance or rejection on any or all articles on inspection by sampling. If, upon inspection, any of the articles shall be found to be defective in material or workmanship, or otherwise not in conformity with the requirements of this Purchase Order, DSI may, in addition to its other rights: (a) require prompt correction, or replacement thereof at Seller's expense, including transportation charges; (b) rework, or have reworked, any such articles at Seller's expense for the purpose of conforming the articles to contractual requirements; (c) reject any such articles and require the immediate removal thereof, DSI to be repaid or credited the full invoice price therefore plus transportation charges; or (d) cancel this Purchase Order in whole or in part under Section 8 hereof.

RISK OF LOSS: Risk of loss shall be determined pursuant to the delivery provision shown on the face of this Purchase Order. In the event that goods are rejected, the risk of loss for rejected items shall be the responsibility of the Seller from the time rejected items leave DSI's plant until redelivered to DSI.

DEFAULT: DSI may, by written notice to Seller, cancel for default this Purchase Order, in whole or in part, (i) if the Seller fails to deliver the articles or to perform the services strictly within the time specified herein, or if no time is specified, within a reasonable time; (ii) if the articles delivered do not conform to contractual requirements and if Seller shall fail to cure such defects within the contract time, or if Seller fails to perform any of the provisions of this Purchase Order, or so fails to make progress as to endanger performance of this Purchase Order in accordance with its terms; or (iii) if any proceedings in bankruptcy or insolvency, voluntary or involuntary, are commenced by, or against Seller, or if any receiver is appointed with or without Seller's consent, or if Seller makes any assignment for the benefit of creditors or if Seller commits any other act of bankruptcy or becomes insolvent or unable to meet its debts as they mature. If DSI terminates this Purchase Order, in whole or in part, due to Seller's default and it is necessary for DSI to procure any of the specified products or services elsewhere, then Seller will be liable for any reprocurement charges which exceed the amount which would have been due the Seller if it had satisfactorily completed this Purchase Order. Upon such termination, Seller will deliver to DSI any of the articles, parts or materials, for which DSI shall make written request at or after termination and DSI will pay Seller the fair value of any such property so requested and delivered. Notwithstanding DSI's right to terminate this Purchase Agreement for delay in delivery, Seller shall not be liable to DSI for any damages therefore if Seller's delay is due to causes beyond its control, and without its fault or negligence, provided Seller exercises due diligence in promptly notifying DSI of conditions causing delay. DSI's remedies shall be cumulative and in addition to any other or further remedies provided in law or in equity.

TERMINATION: DSI may terminate work under this Purchase Order, in whole or in part, at any time by giving notice to Seller in writing. Seller will thereupon immediately stop work on this Purchase Order or the terminated portion hereof and notify any subcontractors to do likewise. If DSI terminates this Purchase Order pursuant to this Section 9, DSI shall pay Seller for the delivered portion of this Purchase Order at the rate specified on the face hereof and shall reimburse Seller for direct costs incurred by the Seller in obtaining raw materials and components in order to fulfill the Purchase Order (which the Seller cannot recover from its suppliers) until the time of DSI's written notice of termination. DSI shall have no other liability to the Seller for termination.

WARRANTIES: Seller represents and warrants that: (a) all articles supplied hereunder are free from defects in material and workmanship, claim, encumbrance, or lien and are of merchantable quality, and conform to DSI's specifications; (b) no article supplied hereunder is adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as amended, or is an article which may not under such Act be introduced into interstate commerce; and (c) the use or sale of the articles delivered hereunder will not infringe any intellectual property right of any third party, but Seller does not warrant against infringement by reason of the use thereof in combination with other materials or in the operation of any process. All warranties shall be construed as conditions as well as warranties and shall not be deemed to be exclusive.

INTELLECTUAL PROPERTY: In case the product or any part thereof is held to infringe any intellectual property right of any third party and the use of the product or any part thereof in enjoined, Seller shall, at its own expense, either procure for DSI the right to continue using the product or any part thereof or replace same with non-infringing product or part thereof, or modify the product so that it becomes non-infringing, or in the event of the impossibility of the foregoing options grant DSI a credit for the purchase price of such product. Seller will not be liable to DSI if any patent infringement or claim thereof is based upon the use of the product in combination with other items where such infringement or claim thereof would not have occurred from the normal use for which the product was designed.

INDEMNIFICATION: Seller agrees to defend, indemnify and hold harmless DSI against any and all liability, judgments, damages, losses, and expenses occasioned by or resulting from any breach of warranty or by the failure of the Seller to comply with the terms hereof, regardless of whether or not such failure is caused in part by DSI.

INFORMATION PROPRIETARY TO DSI: Seller agrees that all information contained in drawings, specifications, tooling, etc., which are submitted by DSI to Seller under or pursuant to this Purchase Order is proprietary to DSI and is submitted with the understanding and agreement by Seller that such information shall not be utilized in whole or in part by Seller, except for fulfillment of this Purchase Order, without written permission of DSI.

INFORMATION PROPRIETARY TO SELLER: Any information which is proprietary to Seller and which is disclosed in the products or documents furnished by Seller hereunder shall be deemed to have been disclosed as a part of the consideration for this Purchase Order and DSI shall have full right to its use as DSI sees fit.

ADVERTISING: Seller shall not, without first obtaining the written consent of DSI, in any manner advertise or publish the fact that Seller has contracted to furnish DSI the articles or services.

WAIVERS: The failure of DSI to insist, in any one or more instances, upon the performance of any of the terms, covenants or conditions of this Purchase Order or to exercise any right hereunder, shall not be construed as a waiver or relinquishment of the future performance of any such term, covenant or condition or the future exercise of such right, but the obligation of Seller with respect to such future performance shall continue in full force and effect.

REVISION: This Purchase Order expressly limits acceptance to the terms set forth herein. No terms stated by Seller in accepting or acknowledging this Purchase Order shall be binding upon DSI if inconsistent with or in addition to the terms stated herein unless accepted in writing by DSI. If, however, a written agreement is already in existence between DSI and Seller covering the purchase of the articles, work, or services covered hereby, the terms and conditions of such written agreement shall prevail to the extent that they are inconsistent with the terms and conditions hereof.

CONSTRUCTION: This Purchase Order shall be deemed to have been entered into and shall be construed and interpreted in accordance with the laws of the State of Minnesota (exclusive of choice of law provisions).

CHANGES: DSI shall have the right by written notice to change the extent of the work covered by this Purchase Order, the drawings, specifications, or other description herein, the time, method or place of delivery, or the method of shipment or packaging, or to suspend work. Upon receipt of any such notice, Seller shall immediately notify DSI of any price or delivery change, suspend work to be effected by the change, and not proceed until written acceptance is given by DSI. If any such change causes an increase or decrease in the cost of performance or in the time required for performance, an equitable adjustment shall be negotiated promptly and this Purchase Order modified in writing accordingly.

COMPLIANCE WITH LAWS: Seller shall comply with all applicable federal, state and local laws, rules and regulations in producing the goods and supplies to be furnished hereunder.

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