TERMS AND CONDITIONS OF PURCHASE

General Provisions and FAR/DFARS Flowdown Provisions for Subcontracts or Purchase Orders for Noncommercial Items Under a U.S. Government Prime Contract

Updated April 2021

1. Applicability and Acceptance: These terms and conditions are deemed to be incorporated into every purchase order issued by Colt‘s Manufacturing Company LLC (“Buyer”) whether or not the purchase order makes specific reference to these terms and conditions. The term “Seller” as used herein means the party to whom Buyer has issued a purchase order. Any of the following events shall constitute Seller’s acceptance of a purchase order: (i) acknowledgement and/or signature of the purchase order; (ii) commencement of performance under the purchase order; (iii) furnishing of any supplies and/or services under the purchase order; and (iv) acceptance of any payment by Seller in connection with this purchase order.

Acceptance of a purchase order issued by Buyer is strictly limited to the terms of these terms and conditions, except to the extent that the face of the purchase order expressly provides to the contrary. The purchase order issued by Buyer, together with these terms and conditions, constitutes the entire and sole agreement between Buyer and Seller with respect to the goods or services referred to in the purchase order. Any terms or conditions proposed by Seller that are inconsistent with, or in addition to, the terms and conditions of purchase herein contained shall be void and of no effect. To be effective against Buyer, any modification of these terms and conditions, other than on the face of the purchase order, must be agreed to by an authorized representative of Buyer in a writing that makes specific reference to these terms and conditions. When used herein, the terms this “order,” an “order” and “orders” refer to the purchase order that Buyer has issued to Seller, together with these terms and conditions.

2. Delivery; Notice of Labor Disputes or Other Excusable or Non-Excusable Delays; First Article Test: Unless otherwise stated in the purchase order, all goods will be shipped prepaid, F.O.B. destination, by least expensive common carrier or Seller’s own vehicle. Time is and shall remain of the essence for this order. No acts of Buyer, including acceptance of late deliveries, shall constitute waiver of this provision. Buyer also reserves the right to refuse or return, at Seller’s risk and expense and at no cost to Buyer, late shipments, or shipments made in excess of Buyer’s orders or in advance of required schedules or (if such shipments are not refused or returned) to defer payment on such deliveries until scheduled delivery dates. Should Seller fail to meet the schedule listed on the face of the purchase order, Buyer, without waiving any rights or remedies, may order expedited shipping of purchased goods at Seller’s sole expense.

Seller shall notify Buyer immediately, in writing, of any actual or potential labor dispute or other cause that delays or reasonably threatens to delay the timely performance of this order. In such event, Seller will update Buyer regarding delivery status from time to time, as necessary to fully inform Buyer of the status of all delays and the anticipated date of delivery. No such notice shall relieve or modify Seller’s obligation to render timely performance in accordance with the terms of this order.

If Buyer has not previously purchased from Seller any item listed in this order, Seller must within the number of days directed by Buyer (but in any event prior to making deliveries against the required quantity) deliver to Buyer sufficient quantities of such item, as specified by Buyer, for first article testing, unless Buyer waives this requirement in writing. Such first article must meet the requirements and specifications set forth by Buyer, including its quality control requirements, and, if applicable, those of the U.S. Government. Upon completing testing of the first article, Buyer shall notify Seller of the conditional approval, approval, or disapproval of the first article. If the article is disapproved or conditionally approved, Seller shall make any changes, repairs, and modifications required by Seller, and shall promptly thereafter submit an additional first article for testing. This process shall repeat until Buyer approves the first article. Provided Buyer approves the first article, Seller may use such article towards the purchase order quantity. All costs incurred in connection with first article testing, including disposal of any disapproved items from Buyer’s facility, shall be borne by Seller. If Seller fails to deliver any first article on time, or if Buyer disapproves any first article, Seller shall be deemed to have failed to make delivery in accordance with the termination for default provision set forth in Section 3(b) hereunder.

3. Termination; Breach of Contract; Damages: (a) For Convenience: Buyer may, by notice in writing, cancel this order or direct Seller to discontinue work under this order in whole or in part without cause and for its convenience at any time prior to final delivery of goods and/or completion of services. Cancellation of any undelivered portion of this order by Buyer shall be accomplished by giving written notice to Seller. Buyer shall have full rights to title and possession of any goods or work under this order paid for prior to termination. If Buyer terminates the order for convenience, Seller shall be entitled to payment only for all goods and services accepted by Buyer prior to the effective date of termination and not already paid for.

(b) For Default: Buyer may, by written notice of default, terminate this purchase order in whole or in part in the event that Seller (1) fails to deliver purchased goods or to perform the services within the time specified on the face of this purchase order or any extension thereof agreed to by Buyer in writing; (2) fails to make adequate progress so as to risk timely performance of this order; or (3) breaches any terms of this purchase order. In the event Buyer terminates this order for default, Buyer may procure goods and/or services similar in quantity or scope to those terminated and under terms similar to this purchase order, and Seller shall reimburse Buyer for any excess costs or expense for such goods and/or services, subtracted by the price of any goods and/or services under this order Buyer accepted prior to termination and not already paid for.

Seller agrees, in addition to and not in lieu of all other remedies available to Buyer, to deliver to Buyer upon demand all raw materials acquired by Seller in order to perform under this order and all work in process and Buyer may at its option (i) complete the work, deducting the cost of completion, and all damages resulting from Seller’s default, from the price, or in the alternative, (ii) pay to Seller the cost of such raw materials and the fair value to Buyer, if any, of such work in process.

In addition, Seller’s insolvency or cessation of normal business operations, or the filing of a voluntary or involuntary petition in bankruptcy by or against Seller, or the making by Seller of an assignment for the benefit of its creditors, shall be a material breach of this order and constitute an event of default for which Buyer may terminate this purchase order for default. In the event of any breach or anticipatory breach of this order, Buyer shall have, in addition to and not in lieu of any of the provisions of this order, any and all other rights and remedies that the law provides to Buyer for failure of the Seller to perform in accordance with the provisions of this order, including the right to recover all damages incurred or sustained by Buyer by reason of Seller’s default. In no event shall Seller be entitled to lost or anticipatory profits, or to special or consequential damages. Failure of Buyer to enforce any if its rights under this order shall not constitute a waiver of such rights or of any other rights.

4. Buyer’s Property: All specifications, drawings, tools, jigs, dies, fixtures, materials and other items supplied by Buyer or paid for by Buyer pursuant to the terms of this order shall be and remain the property of Buyer (or of the United States Government if such is the case) and Buyer shall have the right to enter Seller’s premises and to remove them at any time without being guilty of trespass and without liability to Seller for damages of any sort. All such items, including any documentation and data in connection with such items, shall be treated as confidential and proprietary to Buyer, shall not be disclosed to any third parties, and shall be used only in the performance of work under this order, unless prior written consent has been given by an authorized representative of Buyer. Seller shall prominently mark all such items (or, if approved in writing by Buyer, the entire area in which items are located) as being the property of Buyer or the Government. Where applicable, Seller shall also mark such items with the corresponding drawing number and/or Government number. Seller shall be responsible for all such items until they have been delivered to Buyer, and Seller shall replace any such items damaged prior to delivery at no cost to Buyer. Seller shall not dispose of any such items (even though no longer being used), without Buyer’s prior written consent. The provisions of this Section 4 hereinabove set forth shall survive delivery and payment for the goods or services referred to in this order, and shall remain in full force until all said items are delivered to Buyer or otherwise disposed of with Buyer’s written consent. Such property shall be and remain free of all liens or claims by Seller or any third party, and Seller shall, without limitation as to time, indemnify and save Buyer harmless from and against all liens or claims that may be asserted against said property.

 Seller acknowledges that exposure to Buyer’s proprietary design information will make it easier for Seller to manufacture parts that have the same form, fit and function as parts Seller manufactures for Buyer. As a result, Seller agrees and promises not to disclose such proprietary design information to any third parties (except where such information becomes publicly available information through no fault of Seller or disclosed by Seller with Buyer’s express written approval), and to notify Buyer in writing through Buyer’s Purchasing Management and to obtain Buyer’s written agreement, not to be unreasonably withheld, prior to manufacturing any parts for another entity that have the same form, fit and function as any parts Seller manufactures for Buyer (including any replacements or substitutes for any parts Seller manufactures for Buyer). The written notification shall describe the parts to be manufactured for the other entity and identify the corresponding parts Seller manufactures for Buyer. The written notification shall also provide Buyer with sufficient information to demonstrate, to Buyer’s reasonable satisfaction, that any parts Seller plans to manufacture for another entity that have the same form, fit and function of any parts Seller manufactures for Buyer will be manufactured without reference to or use of Buyer’s proprietary design information. Seller agrees that failure to comply with the above requirement shall create a presumption that Seller is misusing Buyer’s proprietary design information and will cause Buyer irreparable harm. If, without obtaining Buyer’s written agreement, Seller manufactures or sells for or to anyone other than Buyer any parts that have the same form, fit and function as any parts Seller manufactures for Buyer (including any replacements or substitutes for any parts Seller manufactures for Buyer) to which the presumption described in the immediately preceding clause applies, then Seller shall be in violation of this Agreement and Buyer shall be entitled to damages (including, but not limited to, injunctive relief, attorneys’ fees, and Buyer’s lost profits on the manufacture or sale of such parts). Seller agrees and promises that those persons working for or at the direction of Seller who are exposed to Buyer’s proprietary design information for Buyer’s parts will have no involvement in the manufacture of parts with the same form, fit and function for any entity other than Buyer without prior written approval from Buyer. At any time following completion or termination of this order, Seller shall, at Seller’s expense, make such disposition of all of Buyer’s Proprietary Information as Buyer may direct. Seller shall remain and continue to be obligated to perform each and every provision of this Section 4 notwithstanding completion or termination of this order. Absent contrary instructions, Seller shall destroy all proprietary information one year after final delivery under this order unless required to be kept longer by law or contract or government requirement. Buyer shall have the right to audit all pertinent books and records of Seller, and to make reasonable inspection of Seller’s premises, in order to verify compliance with this Section.

5. Subcontracting: None of the work under this order shall be subcontracted without the prior written consent of Buyer.

6. Specifications, Warranty, and Inspection: Goods made in accordance with Buyer’s specifications or drawings shall not be furnished or quoted to any other person or concern without the prior written consent of Buyer. In case of ambiguity in the specifications, drawings or other requirements of this order, Seller shall, before proceeding, consult Buyer, whose written interpretation shall be final. Seller warrants that all goods delivered or services rendered pursuant to this order shall be free of defects in workmanship, materials and design, and shall be in accordance in all respects with the design and, where applicable, the performance specifications, drawings and/or samples specified by Buyer. The duration of Seller’s warranty obligations set forth in the preceding sentence shall be coterminous with Buyer’s corresponding warranty obligations to Buyer’s commercial retail customer, international customer, or the United States Government, respectively. By way of example, and without limitation, if Seller delivers an item to Buyer on January 1, 2021 and Buyer subsequently supplies that item to a customer on February 1, 2021 under a three-year warranty obligation, then Seller’s warranty obligations to Buyer shall expire on February 1, 2024. These warranties shall survive acceptance and payment. Seller shall be liable for and hold Buyer harmless from any loss, damage or expense whatsoever that Buyer may suffer from breach of any of these written warranties. Buyer shall have the right to inspect all goods before and after delivery but no such inspection shall relieve Seller of any obligation pertaining to this order. In addition to all other rights and remedies available to it, Buyer may require Seller to replace rejected goods or Buyer may accept any goods that conform to Seller’s warranties and upon discovery of goods not so conforming may reject or keep and rework any such goods not so conforming. Cost of rework, inspection, transportation, repackaging, and/or reinspection by Buyer shall be at Seller’s sole expense. Seller, at its expense, shall provide and maintain an inspection system that complies with all specifications stated in this order or, in the absence of such specifications, an inspection system that is acceptable to Buyer. Seller shall maintain complete inspection records for all goods including, without limitation, the results of such inspections and the disposition of non-conforming or rejected goods.

7. Changes: Buyer shall have the right by written change order at any time to make changes in the services rendered or the goods to be furnished by Seller hereunder. If such changes cause an increase or decrease in cost of the performance of this order, or in the time required for its performance, an equitable adjustment shall be negotiated, and this order shall be modified in writing accordingly. Any claim by Seller for adjustment under this Section 7 must be asserted in writing within 30 days from the date of receipt by Seller of notification of the change and shall be followed as soon as practicable with specification of the amount claimed, together with supporting cost figures. Any request by Seller for adjustment under this Section 7 not made within the time period specified in the previous sentence shall be deemed void.

8. Assignment: Seller may not assign monies due or to become due under this order without the prior written consent of Buyer, except in the case of an accounts receivable financing arrangement secured by all or substantially all of Seller’s accounts receivable. In any case, assigned accounts shall be subject to set off, recoupment, or other claim of Buyer against Seller, whether or not arising from this order. Any assignment not made in accordance with this provision shall be null and void.

9. Taxes: The prices stated on the face of the purchase order include all local, state and federal excise, sales and use taxes. All such taxes shall, when applicable, be separately identified on Seller’s invoice.

10. Compliance with Law, Gratuities: Seller warrants that the goods to be furnished and the services to be rendered under this order shall be manufactured and sold in compliance with all relevant Federal, state, and local laws and regulations. In accepting this order, Seller represents and warrants that the goods and/or services to be furnished hereunder were or will be produced in compliance with the requirements of the Fair Labor Standards Act of 1938, as amended, and the Executive Orders and regulations issued pursuant thereto. Unless otherwise agreed in writing, Seller shall insert a certificate indicating such compliance on all invoices submitted in connection with this order. Seller warrants that it has not offered or given and will not offer or give to any employee, agent or representative of Buyer any money, service or thing of value with a view towards securing any business from Buyer or influencing such person with respect to the terms, conditions, or performance of any contract with, or order from, Buyer. Any breach of this warranty by Seller shall be a material breach by Seller of each and every contract between Buyer and Seller.

11. Export Control: Seller acknowledges that any technical data furnished by Buyer in connection with this order may be subject to U.S. export control laws, including but not limited to the Arms Export Control Act, 22 USC § 2778, (AECA) and the International Traffic in Arms Regulations, 22 CFR 120-130, (ITAR) promulgated pursuant thereto. In this regard, Seller agrees that, unless it has obtained prior written consent from an authorized employee or representative of Buyer, and unless prior written authorization is obtained from the U.S. Department of State, Directorate of Defense Trade Control (DDTC), it will not export, reexport, or transship, directly or indirectly, the goods, documentation, technical assistance, or any media in which any of the foregoing is contained, or other technology provided hereunder or the direct product thereof, to any country or to any non-U.S. citizen. As required by the AECA and the ITAR, all manufacturers, exporters and brokers of defense articles, defense services or related technical data, as defined on the U.S. Munitions List, are required to register with the DDTC, and if Seller is engaged in the United States in such activities, Seller represents that it is registered with the DDTC, as may be required under 22 CFR 122.1 of the ITAR and, that it maintains an effective export/import compliance program in accordance with DDTC guidelines.

12. Suspension and Debarment: By performing any work and/or services in connection with this order, Seller certifies that, to the best of its knowledge and belief, Seller and/or any of its principals (as defined in FAR 52.209-5) are not presently debarred, suspended, or proposed for debarment, or declared ineligible for award by any federal agency. Seller shall notify Buyer in writing at the earliest practicable time and, at Buyer’s request, shall promptly meet with Buyer, if Seller (a) is suspended, debarred, or proposed for suspension or debarment from doing business with the U.S. Government, or (b) is listed or proposed to be listed by the U.S. Government for U.S. export administration purposes in any “denial orders,” as a “blocked person,” as a “specially designated national,” or as a “specially designated terrorist” by the U.S. Department of Commerce, Bureau of Industry and Security, (collectively, “Debarment”). Seller shall indemnify and hold Buyer harmless against any and all loss or damage suffered by Buyer as a result of Seller’s actual or prospective Debarment, including, without limitation, attorneys’ fees.

13. Patents: Seller warrants that the sale, use or incorporation into manufactured products of all machines, devices and materials sold to Buyer hereunder which are not of Buyer’s design, composition or manufacture shall be free and clear of infringement of any United States or foreign patent, copyright, trademark or other proprietary claim of Seller or any third party. Seller shall defend any suit or proceeding brought against Buyer and/or Buyer’s customer insofar as such suit is based upon a claim that any goods or parts thereof furnished hereunder infringes on any party’s patent, copyright, trademark, or other proprietary rights. Seller shall defend, indemnify and hold Buyer and its customers harmless from any and all expenses, liabilities and loss of any kind, including attorneys’ fees, growing out of any claim, suit or action alleging such infringement, which claim, suit or action Seller agrees to defend at its own expense. Buyer shall be free to obtain its own counsel in any such instance and, if Buyer does so, Seller shall be obligated to reimburse Buyer for all attorneys’ fees reasonably incurred by Buyer to defend itself as a result of any claim against Buyer or a customer of Buyer contemplated by this Section 13.

14. Indemnity Against Claims: Seller shall defend, indemnify and hold Buyer and its customer(s), including the U.S. Government, harmless against all losses, liability, suit, claim cost, and expense (including, without limitation, reasonable attorneys’ fees, court costs, damages, and Buyer’s cost of testing and inspection) on account of claims of injury or death to persons (including Seller’s employees) or damage to property which may result in any way from or in connection with any act or omission of Seller or of its agents, employees or subcontractors. Seller shall also maintain such Public Liability, Property Damage, Employee’s Liability and Compensation insurance and Motor Vehicle Liability insurance (Personal Injury and Property Damage), in prudent and reasonable limits as will protect Seller (and any of its lower-tier subcontractors) and Buyer from the risk and obligations set forth herein, and from any claims under any applicable Workers’ Compensation or Occupational Health and Safety statute or regulation. Seller shall name Buyer on any and all of the insurance policies set forth in the preceding sentence. Insurance maintained pursuant to this clause shall be considered primary as to Buyer’s interest and is neither secondary nor contributory to any insurance which Buyer carries. 

15. Stop-Work Order: A Buyer may, at any time, by written order to Seller, require Seller to temporarily stop all, or any part, of the work called for by this order for a period of up to 90 days after the stop-work order is delivered to Seller, and for any further period beyond 90 days to which the parties may agree. Upon receipt thereof, Seller shall forthwith comply with its terms and take all reasonable steps to minimize the incurrence of cost allocable to the work covered by the stop-work order during the period of work stoppage. Within said period or any extension thereof, Buyer shall either (1) cancel the stop-work order, or (2) terminate the work covered by such order as provided in Section 3 above.

16. Applicable Law, Disputes: This order is to be governed by, construed and enforced in accordance with the laws of the State of Connecticut, without regard to its conflicts of laws rules and principles. Any lawsuit arising from or related to the performance of this order shall be filed exclusively in the United States District Court for the District of Connecticut or the Superior Court of the State of Connecticut, Judicial District of Hartford. Seller expressly consents to the jurisdiction of the United States District Court for the District of Connecticut and the Superior Court of the State of Connecticut, Judicial District of Hartford, and hereby waives any objections to personal jurisdiction or venue in either of these judicial forums.

17. Setoff: At all times Buyer shall be entitled to deduct from any payment owed to Seller any amounts then pending or otherwise payable by Seller to Buyer pursuant to these terms and conditions and/or Buyer’s purchase order.

18. Waiver; modification: Except as otherwise provided for in these terms and conditions, to be effective, any waiver must be in writing signed by the party which is purported to waive its rights under the agreement. No modification of these terms and conditions or the terms of the purchase order shall have effect unless set forth in writing and signed by both parties

20. Intellectual Property: Except as to commercial off-the-shelf items not modified or redesigned pursuant to this order, Seller agrees that Buyer shall be the owner of all inventions, technology, designs, technical data and information, and other information developed under, or generated pursuant to, this order. As to Seller’s pre-existing intellectual property, including, without limitation, inventions, technology, design, technical data information, and other information pre-dating this purchase order, Seller hereby grants Buyer and Buyer’s customer for the items or services supplied by Seller, including the U.S. Government, an irrevocable, nonexclusive, world-wide, royalty-free license to make, have made, use, reproduce, and sell products utilizing Seller’s pre-existing property rights.

US GOVERNMENT CONTRACT PROVISIONS

When the goods furnished are for use in connection with a United States Government (“Government”) contract or subcontract (as indicated on the face of the purchase order), the additional provisions set forth hereinafter shall apply, in addition to the above provisions.

21. Inspection: The Seller shall provide and maintain an inspection system acceptable to the Government for goods and services covered by this order and shall be in accordance with FAR 52.246-2. Materials to be used in the performance of Government contracts may be inspected and tested by Buyer or by the Government agency concerned at all reasonable times and places either before, during, or after manufacture at Buyer’s direction. If inspection and test are made on the premises of Seller or Seller’s subcontractor, Seller shall furnish without additional charge all reasonable facilities and assistance for the safe and convenient inspection and tests required by the inspectors and the performance of their duty. The foregoing provisions of this Section 17 are supplementary to and not in lieu of or in derogation of the provisions of Section 6 above.

22. Annual Supplier Certification: Seller shall sign, date and promptly return to Buyer an Annual Supplier Certification furnished by Buyer that certifies Seller’s compliance with certain requirements under the Federal Acquisition Regulations (FAR) and/or Defense Federal Acquisition Supplement (DFARS), in effect as of the date of this order.

23. Incorporated FAR and DFARS Clauses: The following clauses set forth in the FAR or DFARS, as in effect as of the date of this order, are hereby incorporated herein by reference with the same force and effect as though set out in full text herein:

The foregoing FAR and DFARS clauses are hereby made applicable to this order pursuant to the requirements of the government contract or subcontract underlying this order and are incorporated into this order by reference as if given in full text, subject to the following definitions, which will have the meanings indicated in each of the following FAR and DFARS clauses, unless the context indicates otherwise:

• A. “Contract” means this order.

• B. “Contractor” means Seller.

• C. “Contracting Officer” means Buyer.

• D. “Government” means Buyer.

• E. “Subcontractor” means Seller.

• F. “Supplies” means Goods.

The full text of FAR and DFARS clauses may be accessed electronically at the following Internet websites: FAR: http://www.arnet.gov/far, and DFARS: http://www.acq.osd.mil/dpap/dars/dfars/index.htm

All FAR/DFARS provisions set forth in Buyer’s Prime Contract with the U.S. Government, pursuant to which this order is issued, shall be incorporated by reference into the purchase order regardless of whether listed above in this Section 23. A copy of the FAR/DFARS clauses set forth under Buyer’s contract with the United States Government is available upon request. Seller must adhere to the terms of each FAR/DFARS clause set forth in Buyer’s contract with the United States Government regardless of whether it requests such list from Buyer. 

24. Lobbying: 

A. Certification Concerning Use of Federal Appropriated Funds. Title 31 U.S.C. § 1352 prohibits the use of federal appropriated funds to influence a federal award. By agreeing to sell goods to Purchaser, Seller certifies that it has not and will not use funds derived from a federal government contract, grant, loan, appropriation, or cooperative agreement to lobby Congress or any employee or member of Congress, or any federal agency or federal government employee or official (hereinafter “the federal government”) to influence the award of, or ability to participate in, any federal contract, grant, appropriation, loan, or cooperative agreement, including the federal award underlying this Agreement, or to influence the continuation, extension, renewal, amendment, or modification of a federal award. If Seller engages any other subcontractor to perform all or part of its obligations under this Agreement, it will require that subcontractor to certify in writing its compliance with this requirement.

B. Agreement to Make Required Disclosures. As required by 31 U.S.C. § 1352 Seller also agrees that, if it engages any person to lobby the federal government for the purpose of influencing the federal award that is the subject matter of this contract, or for the continuation, extension, renewal, amendment, or modification of the award, the undersigned will fully and truthfully execute Standard Form LLL, a copy of which may be obtained from Purchaser, and promptly will provide such executed form to Purchaser. Seller understands that, as required by law, all executed Standard Form LLLs will be supplied to the federal government and may be supplied to others with whom Purchaser has contracted. Seller agrees to supplement its disclosure under this paragraph promptly if there is a change in any of the information therein. If Seller engages any other subcontractor to perform all or part of its obligations under this Agreement, it will impose upon such subcontractor(s) the obligations of this subparagraph and will promptly provide to Purchaser any Standard Form LLLs executed by its subcontractor(s].30183883.1