PURCHASE ORDER TERMS AND CONDITIONS

1. Acknowledgement/Acceptance: Seller is requested to acknowledge receipt of this purchase order to Kratos Industries, LLC or its affiliated company referenced on the face of this order (“Kratos”) within (5) five days after receipt or prior to shipment, whichever is first. This is to ensure that Seller is in receipt of order, and terms and conditions of quantity, price, description, specifications and shipping date and other conditions are understood. Failure to submit said acknowledgement within five (5) days, or upon shipment of the goods, shall constitute acceptance of this purchase order in its entirety. Any terms and conditions proposed in Seller’s acknowledgement, acceptance, invoice or other form that add to, vary from, or conflict with the terms herein are hereby rejected. If this order is an acceptance of a prior offer by Seller, such acceptance is limited to the express terms set forth herein.
2. Complete Agreement: The terms and conditions herein, any non-disclosure/confidentiality agreement in force between the parties (but only to the extent it does not conflict herewith) and in the Supplier Code of Conduct incorporated herein by reference, as well as any specification(s), or description(s) of the goods and services provided to Kratos and not in conflict herewith, set forth the entire agreement between the parties (the “Agreement”) and shall supersede and mutually terminate all previous communications and agreements, either oral or written, between the parties with respect to the subject matter of this Agreement, including, but not limited to, any prior written agreement between the parties. This Agreement shall supersede any and all transaction documentation (purchase order form, terms associated with receipts, etc.) provided by you, and can only be modified a written amendment explicitly amending these terms and executed by duly authorized representatives both parties. To the extent there is no non-disclosure/confidentiality agreement in force between the parties, the following confidentiality terms shall apply:  For the duration of the business relationship and for a period of five (5) years thereafter, Seller undertakes to consider and treat as strictly confidential and, without prior written authorization from Kratos, not to disclose to any third party whatsoever, directly or indirectly, in any form whatsoever, any or all data or information (including intellectual property-related disclosures) provided by Kratos during the relationship, or of which Seller may have become aware as part of the business relationship (“Confidential Information”), whether this Confidential Information is marked as “Confidential” or not when provided, and shall apply equivalent security measures and take the same precautions as those implemented by Seller in order to protect its own confidential information. Seller also undertakes to only use Confidential Information for the purposes of its business relationship with Kratos including but not limited to fulfilment of purchase orders, and to only share sit with its officers, directors or employees who have a legitimate need to know such information in order to perform their duties. Seller undertakes to ensure that these confidentiality obligations are respected and complied with by such individuals and, where applicable, by any authorized subcontractors.  Kratos retains all right, title and interest in and to all Confidential Information it may disclose, including any intellectual property contained or reflected therein or practiced thereby. Neither this Agreement nor any disclosure of Confidential Information made under it grants Seller any right or license, express or implied, under any trademark, copyright, patent, patent application, invention, mask work, or other intellectual property now or subsequently owned or controlled by Kratos. Seller shall not make any copies of Confidential Information except as necessary to fulfill obligations pursuant hereto or to the business relationship, nor shall Seller reverse engineer, reverse compile or otherwise seek to acquire proprietary information or intellectual property of Kratos via disclosed Confidential Information.
3. Order of Precedence: If there are any inconsistencies or conflicts in the provisions applicable to an order, precedence shall apply as follows:  (i) first, the face of the purchase order, solely with regard to price, quantity and shipping; (ii) next, the terms of any master terms agreement or other agreement between Seller and Kratos that explicitly supersedes these terms and conditions and establishes alternative terms and conditions, but only to the extent of any conflict herewith; and finally (iii) these terms and conditions.
4. Price: Prices, charges or extra costs shall not be in excess of those listed on the face side of this order. If price is listed incorrect, or is not listed, Seller must notify Kratos within three (3) days of receipt of PO and prior to fabrication or shipment. All price increases must be authorized by Kratos in writing prior to shipment.
5. Quantity: The quantity(s) indicated, either total or per each schedule release, when indicated shall be adhered to by Seller. Overruns will not be accepted or Kratos held liable, and will be returned to Seller at Seller’s expense. On blanket orders or multi scheduled shipments the quantity listed or 5% less will be acceptable or satisfactory thru completion of this order. Any changes to the above must be authorized in writing by Kratos prior to implementation.
6. Delivery: The time specified for delivery shall be of the essence of this order. Seller must notify Kratos a reasonable time in advance in writing of any delays or non-performance, to insure continuity of Kratos’s production schedule or supply requirements. Failure to ship on the dates(s) and quantity(s) specified will, at Kratos’s option, relieve Kratos of any obligation to accept or pay for undelivered goods, whether completed or in any state of fabrication, and Kratos may at is option cancel or terminate this order or any remaining unshipped balance at no cost or charges or any further obligation to Seller. Payment for goods or services shall not constitute acceptance. Kratos shall have the right to inspect and test the goods and services and reject any nonconforming goods and services. The goods or services shall not be deemed to be accepted until Kratos notifies Seller in writing that the goods have been received at their destination and conform to all applicable specifications and warranties, including without limitation any such specifications or warranties included or referenced in this Agreement, after the completion of Kratos’s inspection. In addition to any other remedies under law Kratos shall have the right to reject and refuse acceptance, require prompt correction or cure, or accept any nonconforming goods or services with an equitable adjustment in price. Kratos may return nonconforming goods to Seller at Seller’s risk and expense, including transportation and handling costs; or may, alternatively, require Seller to collect such goods within eight (8) days of notification of rejection by Kratos. The right to test and inspect, whether exercised or not, shall not affect Kratos’s right to revoke acceptance or pursue other remedies if nonconformities are later discovered even if the nonconformity could have been discovered upon testing or inspection. Acceptance shall not relieve Seller from its responsibility under any warranty. The risk of loss or damage shall remain with Seller until acceptance.
7. Delivery Schedule(s): Shipment or delivery of goods in advance of shipping schedule, (date(s) and quantity(s) as indicated) and considered unreasonable by Kratos, except with the prior written authorization of Kratos, may be returned to Seller, at Kratos’s option and Seller’s expense.
8. Fabrication: All goods ordered and furnished to Kratos requirements specifically, as indicated by drawings, specifications or other technical data furnished with or included on the face of this order by Kratos, will not be fabricated by the Seller in excess of 30 days in advance of the shipping schedule(s) and quantity(s) indicated. Any fabrication in advance of these instructions will be at the Seller’s risk. In the event of specification or schedule changes, Kratos will not be liable or responsible beyond such 30-day period, except in such cases where compliance to quantity(s) or shipping schedule otherwise mandates or warrants, and advance notice is supplied to and agreed to by Kratos. In the event of cancellation or termination, Kratos will only be responsible as set forth in Section 14.
9. Packaging and Shipment: Unless otherwise specified, all goods to be delivered hereunder shall be stored, boxed or packaged without charge, so as to ensure safe arrival at their ultimate destination and to comply with any and all laws, regulations, requirements or standards of common carriers. Packing list must accompany goods, listing contents, quantity, part number, and P.O. number. Goods must be routed in accordance with Kratos’s instructions. In the event the method of shipment is not indicated or the term “Best Way” is used, the most economical and practical method will be secured by the Seller and shipped, pre­paid. Discrepancies encountered with count or quantity will rest on the Seller. Kratos will notify Seller in writing when such discrepancies occur or are encountered. All goods must be packaged and shipped in accordance with all laws and regulations applicable thereto, including but not limited to road/shipping regulations of the transit and destination, as well as environmental, health and safety laws, including, but not limited to, the Hazardous Materials Transportation Act of 1975, as amended.
10. Title and Risk of Loss: Seller shall bear all risk of loss or damage for all goods until such time as the goods are received and accepted by Kratos. Title to, and risk of loss for, the goods shall pass only after such receipt and acceptance have occurred.
11. Inspection: All materials and goods supplied hereunder as specified are subject to test and inspection and approval or acceptance after receipt by Kratos. Inspection may be performed at Kratos’s option on a statistical sampling basis, in accordance with ANSI/ASQ Z1.4-2003 (R2013). Kratos shall have a reasonable time after delivery or performance to inspect the items delivered or services performed.
12. Rejection: Kratos will notify Seller of any rejection by either notice in writing or by the return to the Seller of the rejected goods at Seller’s expense. Kratos reserves the right to reject and return the entire lot or any portion thereof. Kratos may, at its option, supply QC and inspection data of any non-conforming lot as requested by Seller. At Kratos’s sole option, Seller may be allowed to replace defective goods with conforming goods within a reasonable amount of time by issuing a Rejection Replacement Order, without invalidating any remainder of unshipped balance of this order, or Kratos may cancel such order without payment or penalty.
13. Changes: Kratos shall have the right to make changes to this order or any part thereof at any time through issuance of a written change notice. Such change notice may cancel this order in part or in whole if performance becomes impracticable due to an Act of God or any event(s) beyond Kratos’s control. If any such change causes an increase or decrease in the cost of or the time required for performance, an equitable adjustment shall be made in price or delivery schedule or both (“Adjustment Claim”), and Kratos shall modify this order accordingly. Seller must submit an Adjustment Claim in writing in the form of a complete change proposal, fully supported by factual information, to Kratos no later than fifteen (15) days after Seller’s receipt of the change notice.
14. Termination: Kratos may terminate this order or any remaining unshipped portion thereof at any time, for any reason. In the event of termination, Kratos will notify Seller in writing. Subject to the requirements set forth in this order, Kratos will be responsible to Seller for (1) all goods received and accepted prior to cancellation date; (2) all goods in transit, and in accordance with Kratos’s shipping schedule, provided they meet with applicable QC and specifications; (3) any goods fabricated or in process and scheduled for shipment within (30) thirty days of the termination date. Kratos will not be liable for costs or cancellation charges on any goods manufactured, fabricated or considered work in process in excess of (30) thirty days beyond the cancellation date, unless otherwise agreed to in writing by Kratos prior to termination. Kratos may cancel this order at no cost or cancellation charges or further liability, at any time, for Seller’s non-performance, non-compliance with Section 17, or failure to deliver conforming goods as scheduled or within reasonable time thereof, at Kratos’s option.
15. Warranty: Seller warrants to Kratos that all goods provided hereunder shall be and shall continue to be: (i) merchantable and fit for the ordinary purposes for which such goods are used; (ii) new; (iii) free from defects in material and workmanship; and (iv) free from liens or encumbrances on title. Seller agrees that the foregoing warranties are transferrable to Kratos’s customers and the users of Kratos’s products. If the goods or services are defective in any way or fail to conform in all respects to the warranties of this Agreement any time within twenty-four (24) months of purchase, Seller shall at its own expense within two (2) weeks or less after notice, repair, replace or correct any defective or nonconforming goods or services provided, however, that Seller is notified of the defect or nonconformity within a period of one year after the date Kratos discovers the defect. Whether or not Seller repairs, replaces or corrects any defects within a reasonable time, Seller shall reimburse Kratos for reasonable expenses incurred in connection with such failure and in enforcing its warranty rights (including without limitation its reasonable attorney fees at trial and on appeal), in addition to any other remedies Kratos may have.  The warranty shall be extended by the amount of time equal to the number of days from notification to repair or replacement and acceptance by Kratos.  Seller commits to provide maintenance and spare parts for the goods for the anticipated life of such goods and to notify Kratos at least twelve (12) months in advance if it intends to stop supplying the goods or spare parts purchased by Kratos.
16. Indemnity: Seller shall indemnify and hold harmless Kratos and Kratos’s parent and affiliated companies, as well as the officers, directors, and employees of Kratos and Kratos’s parents and affiliated companies, from and against any loss, damage or liability arising, directly or indirectly, from or relating to (i) the imposition of any tax, duty, assessment, fine or penalty of any kind relating to the chemical content of Seller’s products/goods, including without limitation whether such content is properly disclosed, labelled or otherwise required to be accounted for, or (ii) the actual or alleged infringement of any patent or other intellectual property right, or the release of hazardous materials by reason of the sale, distribution and/or use of the Seller’s products/goods, or (iii) product defect (including recall), or (iv) failure to comply with Section 17 hereof.
17. Compliance:

a) General Compliance: Seller shall be responsible and liable for compliance with any and all laws, rules and regulations applicable to the performance of its obligations hereunder, including, but not limited to (i) the actions of its employees and the conduct and operation of its business, and (ii) laws and regulations governing data privacy, including without limitation those of the US, EU and France, as applicable. Seller’s policies and practices shall explicitly prohibit the improper payment or provision of anything of value, directly or indirectly, to any public official or to any agent or consultant of any public entity or official, foreign or domestic.  Seller shall also have in place policies to ensure that normal and customary business entertainment and expenses or the provision of other things of nominal value are bona fide and legitimate under applicable law.

b) CSR: Seller will use all commercially reasonable efforts to comply with Kratos’s Corporate Social Responsibility commitments, in particular regarding the UN Global Compact.

Seller and its subcontractors also undertake to comply with the conventions of the International Labor Organization as well as with any regulation applicable to their activities in the countries in which they operate.

c) Anti-Corruption / Conflicts of Interest: Seller shall
(i) not engage in corruption, extortion, embezzlement, or bribery to obtain an unfair or improper advantage;
(ii) abide by all applicable anti-corruption laws and regulations of the countries in which it operates, including the Foreign Corrupt Practices Act (FCPA) and applicable homologue EU, French and international anti-corruption directives, laws and conventions;
(iii) have a policy that prohibits the giving and acceptance of gifts (gifts include items such as cash, or cash equivalents including entertainment, gift cards, product discounts, and nonbusiness activities); and
(iv) have a process to investigate and report any violations to the policy. In addition, Seller must act with reasonable care and diligence to prevent any actions or conditions that could result in a conflict of interest with Kratos’s interests. While engaged in Kratos-related work, Seller must not accept any employment or engage in any work that creates a conflict of interest with Kratos or that in any way compromises the work being performed for Kratos.

Seller undertakes to require its suppliers and subcontractors, to comply with the same laws, regulations, rules, etc. as Seller must comply with pursuant to this Agreement.

Kratos reserves the right to conduct at any time audits in order to confirm Sellers compliance with this Agreement, including the foregoing requirements. To this end, Seller shall grant Kratos’s internal or external auditors, as the case may require, full access to its production and administrative sites.