TERMS AND CONDITIONS OF ALL SALES OF PRODUCTS BY SOUHRADA MANUFACTUIRNG, INC.

1. Applicability. The following Terms and Conditions (“Terms”) are applicable to all sales by Souhrada Mfg., Inc. (“Souhrada Mfg., Inc.”) to a purchaser (“Purchaser”) and are the only conditions applying to the sale of Souhrada Mfg., Inc. products (“Products”), except conditions relating to price, quantities, delivery schedules, terms of payment, invoicing, shipping instructions, and the description and specification of the Products, together with other written conditions which may be mutually agreed upon by the parties. Souhrada Mfg, Inc. shall not be deemed to have waived any of these Terms if it fails to object to provisions appearing, or incorporated by reference in, or attached to Purchaser’s purchase order or other purchase documents.

2. Acceptance. Souhrada Mfg., Inc. offer to sell Products to Purchaser is expressly conditioned upon Purchaser’s acceptance of these Terms. Souhrada Mfg., Inc. expressly rejects and objects to all new, different, or additional terms submitted by Purchaser. A Purchaser’s letter of intent or PO for custom product will constitute their approval of the design quoted.

3. Price and Payment Terms. All prices and quantities quoted are subject to adjustment after thirty (30) days, and may be adjusted earlier for any significant material cost increase Souhrada Mfg., Inc. incurs. Customers requesting terms are subject to Souhrada Mfg., Inc. credit review and verifications. Upon approval, and unless otherwise stated in Souhrada Mfg., Inc. quotations, payment of the price is due in full thirty (30) days after shipment at 108 West 17th Avenue, PO Box 528 Tyndall, SD 57066. A discount of 1% is allowed for payments received within 10 days. Any payment not made when due shall accrue a finance charge of 1-1/2% per month. Customers not seeking terms or not meeting Souhrada Mfg., Inc. credit underwriting are subject to a 50% deposit of the quotation total due before work begins. The balance is due upon delivery.

4. Shipment. Unless otherwise agreed in writing, all Product sales are F.O.B. Tyndall, SD. Souhrada Mfg., Inc. shall have no liability for delays, damage, or delivery failures occurring after the Products are delivered to the carrier. Product shortages and visibly damaged or defective Products must be reported to Souhrada Mfg., Inc. within 10 days of delivery. Shipping dates are estimated, and not guaranteed.

5. Quantities. Quantities specified on the Purchaser’s Purchase Order, unless otherwise noted, are subject to an overrun or underrun of up to 10% as specified.

6. Purchase Orders. All purchase orders must include date of any incoming Purchaser supplied components, any special instructions, references to drawings and specifications, if any.

7. Time and Material. A shop rate of $80 dollars an hour is the established rate for services rendered not specified in Purchase Orders. For Materials sourced by Souhrada Mfg., Inc. the rate shall be cost plus 7%. This charge is to cover handling, overhead, and labor used to source material for purchaser.

7.1 Prototypes. Prototypes are charged at Time and Material. At the sole discretion of Souhrada Mfg., Inc., a credit of 50% of the prototype charges will be credited to the Purchaser when the Purchaser submits a Purchase Order for a production run.

7.2 Lead–Times. Production lead-times are usually two (3) weeks upon receipt of signed off first piece acceptance. Prototypes are usually one (2) weeks upon receipt of Purchase Order. Lead-times are guidelines and may be decreased or extended based upon purchased parts availability and receipt of Purchaser supplied items.

8. Purchaser Components. Purchaser supplied components (i.e. fabric, velcro, labels, or pallets) must be shipped PREPAID to Souhrada Mfg., Inc. Late shipment of Purchaser supplied components may result in changes to Souhrada Mfg., Inc. estimated ship date.

9. Tooling. Purchaser is responsible for any Product-specific tooling that is needed for Souhrada Mfg., Inc. to produce Products. Tooling becomes the property of the Purchaser after it is invoiced to and paid for by the Purchaser. Any Purchaser-owned tooling that is stored by Souhrada Mfg., Inc. will be considered obsolete when it is not used for a period of 6 months after the date of the most recent invoice for Products produced from that tooling. Souhrada Mfg., Inc. may dispose of obsolete tooling in the manner it considers appropriate without further notice to or authorization from Purchaser. Souhrada Mfg., Inc. will forward obsolete tooling to Purchaser (at Purchaser’s expense for packaging, handling and freight) if Souhrada Mfg., Inc. receives written instructions to do so at the time the tooling is initially ordered.

10. Dimensional Tolerance. Unless otherwise specified, products are made to dimensional tolerance allowances that are generally acceptable to textiles trades and packaging industries. Generally tolerance on sewn goods is + / – .25”.

11. Purchaser Testing and Approval. When specially treated materials are ordered, or materials have special physical or chemical properties, or where the Product to be packaged might be harmed by impurities in Souhrada Mfg., Inc. materials, the Purchaser assumes full responsibility for adequate testing of the materials prior to their use and agrees to hold Souhrada Mfg., Inc. harmless from all claims relating thereto.

12. Food Grade Products. It is understood and agreed that the Products ordered by Purchaser are not to be used for food or food-grade products unless Souhrada Mfg., Inc. is notified in writing of such intended use at the time of Purchaser’s purchase order. Where the Products ordered are to be used for food or food-grade products, Purchaser assumes full responsibility for adequate testing of the materials prior to their use and agrees to hold Souhrada Mfg., Inc. harmless for all claims relating thereto.

13. Warranty and Disclaimer. Souhrada Mfg., Inc. warrants that its Products are made to Purchaser’s dimensional specifications or to design specifications approved by the Purchaser. THESE WARRANTIES BY SOUHRADA MFG, INC. ARE IN LIEU OF ANY AND ALL OTHER WARRANTIES, EXPRESS OR IMPLIED. SOUHRADA MFG, INC. SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY AND ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.

14. Exclusive Remedy. SOUHRADA MFG, INC. LIABILITY TO PURCHASER AND PURCHASER’S REMEDY FOR A BREACH BY SOUHRDA MFG, INC. OF ANY WARRANTY OR OTHER OBLIGATION IS LIMITED, IN SR INDUSTRIES DISCRETION, TO EITHER THE REPLACEMENT OF THE DEFECTIVE PRODUCTS RETURNED TO SOUHRADA MFG, INC. OR TO A REFUND OF THE PURCHASE PRICE OF THE DEFECTIVE PRODUCTS (OR, IF NOT PAID, TO A CREDIT IN THE AMOUNT OF THE PURCHASE PRICE). THE DISPOSITION OF ANY REJECTED MATERIALS MUST BE APPROVED BY SR INDUSTRIES COMPANY IF A CREDIT IS TO BE CONSIDERED. IN NO EVENT SHALL SOUHRADA MFG, INC. BE LIABLE FOR SPECIAL, PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS.

15. Indemnity. In the event Purchaser provides or specifies tooling, materials, specifications, drawings, instructions, or the like, Purchaser agrees to defend, protect and hold harmless Souhrada Mfg., Inc. from and against any and all suits, damages, claims, and demands for actual or alleged infringement of any patent or proprietary right, and to defend any suit or action and reimburse all attorney fees incurred by Souhrada Mfg, Inc. in defense of any such suits or actions which may be brought against Souhrada Mfg., Inc. for an alleged infringement of a patent or proprietary right. Souhrada Mfg., Inc. shall have the right to participate in the defense of any suits or actions described in this paragraph, and no settlement, discontinuance, dismissal or judgment may be entered without advising and consulting with Souhrada Mfg., Inc.

16. Installments. Souhrada Mfg., Inc. reserves the right to ship Products in installments. In the event of shipment in installments, installments will be separately invoiced and paid for when due, without regard to subsequent shipments. Delay in shipment of any installment shall not relieve Purchaser of its obligation to accept remaining deliveries.

17. Cancellation. No order accepted by Souhrada Mfg., Inc. may be cancelled or altered by Purchaser except upon terms and conditions acceptable to Souhrada Mfg., Inc. as evidenced by written consent signed by a duly authorized representative of Souhrada Mfg., Inc.

18. Returns. Product returns will not be accepted without prior written approval of Souhrada Mfg., Inc. and a return authorization number issued by Souhrada Mfg., Inc.

19. Proprietary Information. Product specifications supplied by Souhrada Mfg., Inc. is the property of Souhrada Mfg., Inc. They are proprietary information and are disclosed to Purchaser in confidence with the understanding that they are not to be reproduced or copied, directly or indirectly. The information is not to be used, in whole or in part, to assist in the creation of any drawings, prints, specifications, etc. which use the features or information derived from this design without the express written consent of Souhrada Mfg., Inc. Product specifications supplied by Purchaser are the property of the Purchaser and will be considered proprietary and confidential.

20. Force Majeure. Except for the obligation to make payments to the other party (which shall not be deferred or extended for any reason), neither party shall be responsible for any failure to perform or delay in performing if such failure or delay is due to any strike, riot, civil commotion, sabotage, act of God, war, terrorist act or governmental action in response to any terrorist act, or other cause beyond its reasonable control. In addition, Souhrada Mfg., Inc. shall not be responsible for any failure to perform or delay in performing due to inability to obtain deliveries of necessary raw materials.

21. Claims. In the event that there are claims involving Products discovered after completion of a sale of Products, the party discovering the error shall immediately notify the other party. The parties agree that any claim or action arising out of or related to Products or to any sale transaction between Souhrada Mfg., Inc. and Purchaser, will be brought within thirty days after the cause of action has accrued or be deemed waived.

22. Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the state of South Dakota without regard to any conflict of law or choice of law rules or provisions. With respect to any action, suit, or proceeding brought in connection with the transactions contemplated hereby, Souhrada Mfg., Inc. and Purchaser agree to bring such action, suit, or proceeding exclusively in the United States District Court in the Bon Homme County South Dakota Circuit Court.