PURCHASING TERMS & CONDITIONS

Between: AirGroup America, Inc. and/or Approved Air Parts, LLC - hereinafter "Buyer", and "Seller" (Supplier, Seller, Vendor, Contractor)

1. PURCHASE ORDER ACCEPTANCE AND ACKNOWLEDGEMENT

1.1. BY ACCEPTING OUR P.O. SELLER WARRANTS THAT THE MATERIAL WAS NOT SUBJECTED TO EXTREME STRESS OR HEAT (AS IN A MAJOR ENGINE FAILURE, ACCIDENT, INCIDENT, OR FIRE) OR IMMERSED IN SALTWATER. ADVISE IF OBTAINED FROM ANY GOVERNMENT OR MILITARY SOURCE.

1.2. Written Purchase Order acceptance or exceptions shall be made within 5 business days of receipt

1.3. Any performance on the Purchase Order (hereinafter "P.O.") is deemed an acceptance, without exception, of the terms and conditions set forth on the face of the purchase order and in these terms and conditions.

2. PRICE AND QUANTITY

2.1. Each P.O. is for a firm, fixed quantity and price. Buyer and Seller agree that there shall be no adjustment in quantity, unit price or delivery schedule without a written change order or revision to the P.O.

2.2. Goods rejected and goods supplied in excess of quantities ordered may be returned to Seller at its expense.

2.3. Buyer shall be under no obligation to accept production shortages or overruns.

3. DEVIATIONS

3.1. No deviation or substitution of the part number ordered is permitted unless authorized in writing. All material is subject to Buyer’s inspection and acceptance.

4. DOCUMENTATION

4.1. OEM CERTIFICATE OF CONFORMANCE, 8130-3 RELEASE & CHAIN OF POSSESSION TRACEABILITY BACK TO TC/STC/PMA/TSO HOLDER OR PRODUCTION APPROVAL HOLDER / OEM IS REQUIRED UNLESS WAIVED IN WRITING.

4.2. Additional required documentation may include Company Certificates of Conformance (C of C), Chemical & Physical Test Reports, First Article Inspection Reports (FAI/FAIR), and traceability as specified on Buyer's P.O.

4.3. All related Quality Documentation must be maintained on file and be accessible for a minimum of seven (7) years from Seller's invoice date.

4.4. Certification or test report fees must be authorized at time of P.O. issuance. No certification or test report fees are otherwise authorized or will be paid unless previously agreed in writing.

4.5. All documentation must be legible, in English or clearly and thoroughly translated into English.

4.6. All documentation is subject to our review and acceptance.

4.7. Parts will not be considered received or invoices processed for payment until ALL required documentation is provided.

4.8. Failure to provide all required documentation shall result in rejection of parts without consequence to Buyer.

5. DELIVERY

5.1. Delivery time is of the essence. Shipments shall be made as specified and strictly in accordance with the delivery schedule of the subject P.O.

5.2. For scheduled deliveries, early releases are NOT AUTHORIZED without prior written approval.

5.3. No more than 1 scheduled release is permitted within a 30-day period, unless otherwise approved in writing.

6. PENALTIES FOR LATE DELIVERY

6.1. Seller shall have a 30-business day grace period to be considered on time. Delays in excess of 31 or more days shall be deemed LATE, at which time Buyer reserves the right to modify or cancel P.O. without penalty.

6.2. In lieu of cancellation, Buyer may impose penalties for Seller's failure to meet its promised delivery schedule by more than 30 business days grace period:

6.2.1. Seller shall pay the difference between the shipping method specified in this P.O. and the premium transportation rates for expedited delivery (such as UPS or FedEx overnight/express shipping)

6.2.2. If not delivered within the 30-day grace period, Seller shall accept a reduction in payment in the amount of the past due quantity's price by 0.005% per business day, retroactive to the due date shown on the P.O., up to a maximum of 50% off the original contracted price.

6.2.3. In the case of scheduled deliveries, the late delivery discount shall apply to the past due line item only, and not the balance of the order, unless subsequent deliveries schedules are also late.

6.2.4. If subsequent delivery dates are not met, the discounts shall be calculated as in point 6.2.2 above, unless overlapped due to the original late delivery, in which case the original late delivery penalty schedule shall continue unabated.

6.2.5. Any delivery extension or waiver of late delivery penalties by Buyer must be in writing.

7. PACKAGING AND SHIPPING

7.1. All goods must be packed appropriately to arrive at destination without damage.

7.2. Unauthorized Charges will be deducted from our payment unless otherwise agreed to in writing.

7.2.1. No handling or other charges shall be allowed for boxing, crating, or packaging

7.2.2. Do NOT insure unless otherwise instructed in writing. We carry a freight insurance policy and agree to be responsible for lost or damaged shipments.

7.3. Freight charges must be billed to Buyer/receiver's shipment carrier's account. "Prepay and Add" shipping charges are not authorized.

7.4. Buyer will only pay actual shipping charges for the method shown on its P.O. or the difference shall be deducted from Buyer's payment.

8. RECEIVING INSPECTION/TESTING

8.1. All goods received are subject to inspection, test, and rejection. If goods received are in non-conformance to specifications, drawings, or P.O., at the Buyer's discretion, goods may be returned at Seller's expense and all delivery charges paid by Buyer will be refunded by Seller, corrected; or replaced at Seller's expense, including transportation costs both ways.

8.2. In the event Buyer receives goods whose defects or nonconformities are not apparent on examination, Buyer reserves the right to require replacement or refund, as well as payment of damages.

8.3. Payment for the goods delivered shall not constitute acceptance thereof.

8.4. This clause shall not affect any of the rights or liabilities of the parties under the WARRANTY clause. The aforesaid in no way relieves the seller of their responsibility to inspect and verify product in every way meets P.O., print and specification requirements.

8.5. Nothing contained in the purchase order shall relieve in any way the Seller from the obligation of testing, inspection and quality control.

9. INVOICES

9.1. Seller will send a separate invoice and shipping notice for each shipment.

9.2. Each invoice must show the Buyer P.O. number, part numbers, unit prices, and quantities shipped.

9.3. Seller shall provide invoices in electronic (email) format unless otherwise requested.

9.4. Delays in receiving invoice, errors or omissions on invoice, or lack of supporting documentation required by the terms of this order will be cause for withholding settlement.

10. SURVEILLANCE AND RIGHT OF ENTRY

10.1 Suppliers are subject to surveillance and investigation by the FAA

10.2 The requirements of the subject purchase order include quality provisions required by the FAA.

10.3. Buyer reserves the right to verify at Seller's premises that product meets requirements. The same right is reserved for our customer and regulatory agencies as necessary and notified in writing.

11. WARRANTY

11.1. Seller warrants that all items delivered under this P.O. will conform to applicable specifications and drawings; and that for a minimum of 1 year after each respective delivery date.

11.2. Seller further warrants all items delivered under this P.O. will be merchantable, and free from defect in materials and workmanship.

11.3. If Seller is responsible for design, Seller warrants will be free from defective design and will be fit and sufficient for all purposes for which it is designed.

11.4. Buyer's approval of designs furnished by Seller shall not relieve Seller of obligations under this warranty.

11.5. Seller's warranties shall run to Buyer and its customers.

11.6. Without prejudice to any other remedy which the Buyer may have, Seller shall be responsible for, and bear the expense of, any necessary correction due to faulty workmanship or materials, or due to faulty design unless such design was supplied by the Buyer.

11.7. Seller further warrants that all aircraft materials and/or components shall be furnished in compliance with all applicable Federal Aviation regulations.

11.8. All inspection records will be made available to the Buyer upon request.

11.9. Seller further warrants that all items supplied or services performed shall be in accordance with all applicable Federal, state, and local laws including environmental protection and occupational safety and health.

12. QUALITY CONTROL SYSTEM

12.1. Seller shall provide and maintain a quality control system acceptable to the Buyer for all goods covered by this P.O.

12.2. As a minimum this system shall meet the requirements of either ISO/AS-9001, ASA-100, or otherwise qualified by the AGA or AAPCO Supplier Quality Survey.

12.3. Certifications, Test Reports, Inspection, and traceability records shall be maintained for a minimum of seven (7) years after delivery.

12.4. For AAPCO Suppliers, AAPCO Supplier Requirements (Form SQR-1) also apply.

13. INDEMNIFICATION

13.1. Seller shall indemnify and hold harmless Buyer against any and all claims for U.S. or foreign patent, copyright or trademark infringement.

13.2. Seller shall defend at Seller's expense any and all patent infringement suits or actions of law or in equity brought against Buyer, and shall satisfy all judgments entered therein.

14. NON-DISCRIMINATION & FAIR LABOR STANDARDS ACT

14.1. Seller hereby certifies that all goods sold hereunder which are produced or manufactured in the United States are produced in compliance with all applicable requirements, orders and regulations of the Federal Government pertaining to nondiscrimination in employment and facilities including, without limitation, the provisions contained in paragraphs one through seven of Part II, Nondiscrimination in Employment by Government Contractors and Subcontractors, of Executive Order 11246 (as amended by Executive Order 11375), Certification of Non-segregated Facilities (41 CFR Chap.1, Section 1-12.803-10), the Equal Opportunity and Affirmative Action clauses as required by 41 CFR 60-1.4 (f) (7),60-250.4(m) and 60-741.4(f), and the Fair Labor Standards Act of 1938 as amended (29 U.S. Code 201-219), all of which provisions are incorporated herein by reference and expressly made a part hereof.

14.2. Seller also certifies full compliance with all state and local laws and orders relating to nondiscrimination in employment and facilities which are applicable to Seller.

15. RIGHTS AND RESERVATION

15.1. All drawings, designs, information, tools, and other items supplied by Buyer are reserved and the same shall not be used or reproduced for any purpose whatsoever except the performance of work under this P.O.

16. BANKRUPTCY

16.1. In the event of any proceeding, voluntary or involuntary, in bankruptcy or insolvency by or against the Seller, including any proceeding under the United States bankruptcy laws, or in the event of the appointment, with or without Seller’s consent, of a receiver of an assignee for the benefit of creditors, Buyer shall be entitled to cancel any unfilled part of this Order without any liability whatsoever.

17. COSTS AND ATTORNEY'S FEES

17.1. In the event that Buyer shall engage an attorney or commence an action against Seller arising out of facts and circumstances related to this P.O., including, without limitation, Seller's breach of any of its obligations hereunder, Buyer shall be re-entitled to recover its reasonable attorney's fees, costs, and other disbursements incurred in connection therewith.

18. DEFAULT

18.1. Buyer may cancel whole or any part of this P.O. under any one of the following circumstances.

18.1.1. If Seller fails to make delivery of the supplies or perform the services within the time specified herein or any agreed upon extension thereof.

18.1.2. If Seller fails to perform any of the other provisions of this P.O., or fails to make progress so as to endanger performance of P.O. in accordance with its terms.

18.1.3. If in either of these two circumstances, failure to cure within a period of ten (10) days (or such longer period as Buyer may authorize in writing) after receipt of notice from Buyer specifying such failure, as indicated in the points immediately above.

18.2. In the event Buyer cancels this P.O. in whole or part provided herein, Buyer may procure upon such terms and in such a manner as Buyer may deem appropriate, supplies or services similar to those so canceled, and Seller shall be liable to Buyer for any extra costs for such similar supplies or services provided that Seller shall continue performance of this P.O. to the extent not canceled under the provisions of clause.

18.3. Except with respect to defaults of subcontractors, Seller shall be liable for any excess costs if the failure to perform the P.O. arises or causes beyond the control and without the fault or negligence of the Seller.

18.4. Such causes may include, but are not restricted to, acts of God or of the public enemy, acts of Buyer, acts of Government in either its sovereign or contractual capacity, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, and unusually severe weather, but in every case the failure to perform must be beyond the control and without the fault or negligence of Seller.

18.5. If the failure to perform is caused by the default of a subcontractor and if such default arises out of causes beyond the control of both Seller and subcontractor, and without the fault or negligence of either of them, Seller shall not be liable for any excess costs for failure to perform unless the supplies or services to be furnished by the subcontractor were obtainable from other sources in sufficient time to permit Seller to meet the required delivery schedule.

18.6. If this P.O. is canceled as provided herein, Buyer, in addition to any other rights provided in this clause, may require Seller to transfer title and deliver to Buyer, in the manner and to the extent directed by Buyer:

18.6.1. Any completed supplies, and such partially completed supplies and material, parts, tools, dies, jigs, fixtures, plans, drawings, information, and contract rights (hereinafter called "manufacturing materials") as Seller has specifically produced or specifically acquired for the performance of such part of this P.O. as has been cancelled, and Seller shall upon direction of Buyer, protect and preserve property in possession of Seller in which Buyer has an interest.

18.6.2. Payment for completed supplies delivered to and accepted by Buyer shall be at the P.O. price. Payment for manufacturing materials delivered to and accepted by Buyer and for protection and preservation of property shall be in an amount agreed upon by Seller and Buyer.

18.7. If, after notice of cancellation of this P.O. under the provisions of this clause, it is determined for any reason that the Seller was not in default under the provisions of this clause, the rights and obligations of the parties shall be the same as if the notice of cancellation had been issued pursuant to.

18.8. The rights and remedies of Buyer provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under this P.O.

18.9. The performance of work under this P.O. may be terminated in whole, of from time to time in part, by the Buyer, for their convenience.

19. TERMINATION FOR PURCHASER CONVENIENCE

19.1. Buyer reserves the right to terminate this order or any part hereof for its sole convenience.

19.2. In the event of such termination, Seller shall immediately stop all work hereunder, and shall immediately cause any of its suppliers or subcontractors to cease such work.

19.3. Seller shall be paid a reasonable termination charge, consisting of a percentage of the order price reflecting the percentage of the work performed prior to the notice of termination, plus actual direct costs resulting from termination.

19.4. Seller shall not be paid for any work done after receipt of the notice of termination, nor for any costs incurred by Seller's suppliers or subcontractors which Seller could reasonably have avoided.

20. PROPRIETARY INFORMATION & CONFIDENTIALITY

20.1. Seller shall consider all information furnished by Buyer to be confidential and shall not disclose any such information to any other person, or use such information itself for any purpose other than performing this contract, unless Seller obtains written permission from Buyer to do so.

20.2. This paragraph shall apply to drawings, specifications, or other documents in connection with this order.

20.3. Seller shall not advertise or publish the fact that Buyer has contracted to purchase goods from Seller, nor shall any information relating to the order be disclosed without Buyer's written permission.

20.4. Unless otherwise agreed in writing, no commercial, financial or technical information disclosed in any manner or at any time by Seller to Buyer shall be deemed secret or confidential and Seller shall have no rights against Buyer with respect thereto, except such rights as may exist under patent laws.

21. GOVERNING LAW

21.1. This Agreement shall be construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania, USA.

22. SEVERABILITY

22.1. If any term of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, then this Agreement, including all of the remaining terms, will remain in full force and effect as if such invalid or unenforceable term had never been included.

23. HEADINGS

23.1. Headings used in this Agreement are provided for convenience only and shall not be used to construe meaning or intent.