Terms and Conditions of Purchase

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1. ACCEPTANCE

   All purchase orders ("P.O.") issued by Earnest Machine Products Co. ("Earnest") will be subject to the terms and conditions herein ("Terms and Conditions"). Seller has read and understands these Terms and Conditions and agrees that performance under a P.O. issued by Earnest constitutes acceptance of the Terms and Conditions. Any additional or contradictory terms or conditions contained in the bid package, acknowledgment, invoice, change or other communication, oral or written, heretofore or hereafter furnished by Seller is hereby objected to by Earnest, and shall be of no force or effect. No course or dealing between Seller and Earnest, no customer usage in the trade, shall be relevant to supplement or explain in any inconsistent manner these Terms and Conditions.

2. PRICES

   All prices are F.O.B. shipping point unless otherwise specifically provided in the P.O. Other payment terms shall be specified in the P.O.

3. CANCELLATION

   A P.O. is subject to cancellation or hold-up on delivery at Earnest's discretion, and Earnest is not obligated to compensate Seller for its loss from such cancellation or hold-up on delivery.

4. INSPECTION AND ACCEPTANCE

   Within thirty (30) days of the receipt of shipment of products subject to a P.O., Earnest shall inspect the products with regard to the defects, quantity, and identity. In case defects, shortages or excess quantities are found during such inspection, Earnest shall notify Seller not later than thirty-five (35) days after receipt of the products. Upon receipt of notice, Seller shall have the right to inspect and investigate to determine the validity of the defect, shortage or excess. Unless otherwise agreed to in writing, all products furnished under these Terms and Conditions shall be subject to an allowable variation in shipment of up to plus or minus 10% from the quantity ordered. To the extent Seller and Earnest mutually agree that there is a defect, shortage or excess for which Seller is responsible under these Terms and Conditions, then in such case Seller is obligated to correct or replace the products to conform with the P.O. at the expense of Seller, or correct the shortages or excess as further defined below. In such case, Seller agrees to arrange for transportation and sufficient insurance to protect the products in transit, as well as the transportation of the repaired or replaced products from Seller's facility, and such costs of such shorting, rework or return including a return for analysis of the products shall be borne by Seller. In the event the products are returned to Seller, Seller shall promptly make substitute delivery of products. In the case of shortages, Earnest may request expedited delivery of replenishments and Seller shall bear all additional costs of such expedited delivery. In case of excess quantities, a corresponding reduction of the next shipment shall be made or the excess quantity may be returned to Seller at Seller's expense.

5. DELIVERY

   Unless otherwise specifically provided by Earnest in the P.O., delivery of the product shall be F.O.B. shipping point at Seller's designated facility set forth in the P.O. Seller shall be responsible for goods lost, damaged or delayed in transit, as well as all delivery and transit costs and expenses. Failure of risk of damage or loss for whatever reason shall be upon Seller, and Seller assumes any and all liabilities, expenses and obligations regarding transportation, insurance, or any damage or loss to the products in transit. Seller will deliver within stated delivery dates, and Seller guarantees that such delivery dates will be satisfied. TIME IS OF THE ESSENCE. Seller will be responsible for any failure or delay in performance of any of its obligations, including, but not limited to delivery within stated delivery dates.

6. WARRANTIES

   Seller warrants its products will be merchantable fit for their particular purpose, of good quality, free from defects in materials and workmanship and shall conform to any specifications or requirements provided by Earnest. If Earnest determines the products to be defective in material or workmanship, the products will be replaced or repaired at the Seller's expense, including authorized transportation, if such claims for defects are made in writing to Seller within reasonable time of the discovery. The remedies of Earnest set forth herein are not exclusive and not in lieu of all other remedies provided in these Terms and Conditions or by law.

7. PRODUCT LIABILITY

   Earnest shall not be responsible for any damage or injury resulting to or caused by Seller's products by reason of negligent design, alteration of the products, neglect or abuse in the transportation of the products in a manner inconsistent with its design. Earnest shall not be liable for any delays or losses caused by Seller's error, unless such delays and losses are caused by willful misconduct of Earnest. If design and specifications are specified by Earnest, the parties agree that Seller is exclusively responsible for the manufacturing of the products in conformance with the design and specification plans. Seller shall be responsible for the correctness and adequacy of any design details, plans, or material not furnished by Earnest. The parties further agree that Seller shall be responsible for any product modifications not selected by Earnest.

8. INDEMNIFICATION

   Seller shall indemnify and hold Earnest, its officers, employees, directors, representatives, agents, successors and assigns harmless against any and all losses, any special, indirect, incidental, exemplary or consequential damages and any loss of business, loss of profits or loss incurred by Earnest's Customers, claims, damages, judgments, liabilities, or expenses, including, without limitation, reasonable attorney fees and expenses, incurred by Earnest as a result of or arising out of (1) Seller's breach of these Terms and Conditions, including but not limited to breach of warranty or failure to meet specifications or requirements; (2) the transportation, alteration of the product sold to Earnest in a manner inconsistent with its design; (3) any claim by a third party against Earnest for any errors, omissions, defects, or any and all claims regarding the manufacture of the product and services sold to Earnest; (4) actual or alleged direct or contributory infringement of, or inducement to infringe, any United States or foreign patent, trademark, or copyright by reason of the design, manufacture, construction or use of the product or services being sold hereunder, including infringement arising from compliance with the specifications provided by Earnest, or for actual or alleged misuse or misappropriation of a trade secret resulting directly or indirectly from Earnest's action; (5) any act or omission of Seller or its agents, employees, representatives or subcontractors. Earnest shall promptly notify Seller of any suit filed against it or its customers on account of any such indemnification obligation of Seller hereunder, and at Seller's option, Seller may assume the sole responsibility for the defense of such action at Seller's sole expense. Earnest may be represented by their own counsel in any such suit at the expense of Earnest; however, no settlement shall be entered into on behalf of Earnest without Earnest's prior consent in its sole discretion. This Section shall survive termination, cancellation, or expiration of these Terms and Conditions and/or a P.O. The remedies of Earnest set forth herein are not exclusive and are in addition to all other remedies provided in these Terms and Conditions or by law.

9. DEFECTIVE GOODS

   In the event non-conformity of the product(s) provided under these Terms and Conditions and/or a P.O. results in or requires the reasonably necessary corrective action involving recall or product repair or rework project of the product itself or Earnest's customers' goods or product incorporating said product, Earnest shall be entitled to recover from Seller all costs and expenses reasonably incurred by Earnest and Earnest's customers in taking any such corrective action. Seller shall immediately notify Earnest of any actual or suspected defect in a product provided by Seller, or other matter that may affect the safe or proper operation or use of the product. Seller shall promptly provide all relevant information and any rework, field retrofit or recall. Seller shall be responsible for all costs incurred by Earnest due to any product defect, recall, retrofit, or other related action.

10. DEFAULT

    In the event that Seller fails to provide product subject to the P.O. to Earnest or otherwise breaches any obligation or covenant contained in these Terms and Conditions or in any other agreement with Earnest, Earnest may, in its discretion, in addition to other remedies to which Earnest may be entitled without affecting an election of remedies, cancel or terminate this Agreement upon notice to Seller, or suspend performance by Earnest under this Agreement until Seller pays for such charges or amounts. Furthermore, in the event of a cancellation or termination of this agreement by Earnest, Earnest shall be entitled to any and all damages under the Uniform Commercial Code, including without limitation Sections 2-708, 2-710, and 2-711 or their corresponding sections in the Ohio Revised Code, including, without limitation, lost profits, and all other expenses and losses incurred by Earnest.

11. RIGHT OF OFFSET

    Upon written notice any sum payable to Seller by Earnest under a P.O. and/or this Agreement maybe set off by Earnest against any sum payable to Earnest by Seller under this Agreement or other agreements or P.O.s between Earnest and Seller.

12. ARBITRATION

    Any controversy or claim arising out of or relating to this Agreement, or the performance or breach hereof, shall be settled by arbitration in Cleveland, Ohio, in accordance with the rules and procedures then existing of the American Arbitration Association.

13. GOVERNING LAW/VENUE

    This Agreement shall, in all respects, be subject to, and governed by, the laws of the State of Ohio. In the event that any legal proceeding is commenced or arises out of the provisions of this Agreement after application of the arbitration described above, said legal action shall be commenced and filed in Cuyahoga County, Ohio. Seller hereby knowingly and irrevocably waives any objection on the grounds that improper jurisdiction or venue to an action in the State of Ohio, and agrees that effective service of process may be made upon Seller by mail at the last known address of the Seller.

14. CONFIDENTIALITY

    Seller acknowledges that Earnest possesses certain confidential or proprietary information of Earnest, and of Earnest's customers, including, without limitation, designs, data, ideas, drawings, specifications, trade secrets, formula, technical experience, financial data, financial information, and other valuable, confidential and proprietary information, which may be disclosed to Seller or for which Seller may have access, for Seller's performance for Earnest. During the term of Seller's service and at all times thereafter, Seller agrees not to disclose to any person, firm, or entity any Confidential Information, except to those of its employees who have a need to know and only to the extent the employee has signed an agreement of confidentiality restricting any disclosure of such Confidential Information. Seller hereby agrees that if Seller breaches this section, Earnest shall incur irreparable injury and harm and money damages would be an insufficient remedy, and as such, Earnest shall be entitled to seek injunctive relief restraining Seller from further breach of this section.

15. NON-ASSIGNMENT

    Seller may not assign or delegate its obligations under this Agreement without Earnest's prior written consent; however, Earnest may assign or subcontract its obligations hereunder without Seller's consent.

16. MODIFICATION/WAIVER

    This Agreement may not be changed or modified orally, but may be amended in writing only by the duly authorized officers of both Earnest and Seller. A party's failure to insist on compliance or enforcement of any provision of this Agreement shall not affect the validity or enforceability or constitute a waiver of future enforcement of that provision or of any other provision of this Agreement by that party or any other party.

17. SEVERABILITY

    Any legally invalid provision of this Agreement shall be considered severable, and the invalidation of any such provision shall not impair the obligations of the parties to comply with all other unaffected provisions hereof.

18. PARAGRAPH HEADINGS

    Paragraph headings have been inserted in this Agreement for convenience of reference only. If there is any conflict between such headings and the text of this Agreement, the text shall control.

19. FORCE MAJEURE

    Neither party shall be responsible for any acts or omissions of the other party, nor for events beyond its reasonable control (hereinafter referred to as "Force Majeure"), including but not limited to Acts of God, changes of laws or regulations or other acts of government, labor disputes, strikes, riots, mobs, fires, floods, wars, embargoes, impossibility to obtain necessary material, labor, machinery, transportation, provided the party which has reason to believe that, due to the Force Majeure it will not be able to perform according to this Agreement, shall give to the other party written notice setting forth the cause and expected time of the delay or impossibility to perform.