Purchase Order Terms and Conditions

1. INCORPORATION OF PRIME CONTRACT. All material, equipment and other items, including labor and services, if any, referenced in this Purchase Order (hereafter collectively referred to as “Goods”) shall comply strictly with the terms, conditions, plans and specifications of the Prime Contract for the Project, which contract is incorporated herein by reference and made an integral part of this Purchase Order (“PO”).  In the event of an ambiguity or conflict between payment or other provisions between the Prime Contract and the PO, this PO shall govern and control, except that under no circumstances shall Seller have any greater rights, remedies, or entitlements against MERIT ELECTRICAL, INC.  (“MERIT”) with respect to this PO or the Goods hereunder than MERIT has against Owner under the Prime Contract for same.
2. APPROVAL OF GOODS. At Seller’s expense, Seller shall promptly submit to MERIT all required shop drawings, product data, samples and other information (“Submittals”) related to the Goods or as may be required by the Prime Contract or otherwise requested by MERIT.  Submittals shall be subject to the approval of the Owner, architect, and engineer.  Seller shall call specific attention of MERIT, Owner, architect, and engineer to all intended deviations from any requirements of the Prime Contract and of this PO, including proposed “equal” substitutions.  Approval of Submittals shall not constitute approval of deviations, unless there is an express request by the Seller and express and specific approval of the deviation itself given in writing by MERIT and the Owner before performance of the deviation.  Any changes or substitution of materials or any other proposal of Seller, which may be approved, shall be Seller’s sole risk and full responsibility.  Seller shall pay MERIT for all additional costs, including all delays and disruptions in performance, incurred by MERIT or others as a result of defective or nonconforming goods, including changes or substitutions not specifically authorized in advance. Seller’s failure to provide submittals as and when required shall be a material breach of this PO.
3. RISK OF LOSS AND TITLE. Seller shall bear the risk of loss and risk of damage to Goods until delivered to MERIT in accordance with the terms set forth in this PO, properly determined to be conforming. To secure Seller’s faithful performance of this PO, Seller grants to MERIT a security interest in all Goods which are identified in or referenced by this PO.  Title to the Goods passes to MERIT upon Seller’s delivery of conforming Goods to MERIT in accordance with the terms set forth in this PO. Neither the transfer of risk of loss nor passing of title shall diminish or adversely affect warranty, indemnity, and other obligations of Seller under this PO.
4. In addition to any other warranties, including descriptions, expressly set forth in this PO and in the Prime Contract incorporated by reference, Seller warrants that the Goods supplied hereunder shall be: new; free from defects in design, workmanship and materials; fit for the purposes intended; and strictly in compliance with all plans and specifications.  Seller’s warranties shall extend either for the warranty period specified in the Prime Contract or, if no period is specified, for one (1) year after final payment by MERIT to Seller or such longer period as may be required by law.  The Seller shall, upon notice to that effect from MERIT, repair or replace, within three (3) days to the satisfaction of and without cost to MERIT, any non-conforming or otherwise defective Goods. Any replacement of materials or corrections to workmanship shall be additionally warranted as above for a period of one (1) year after the date of remedying said defect or for such longer period of time as may be provided by the Prime Contract.  Seller acknowledges that, notwithstanding any drawings, specifications, samples or other descriptions of Goods set forth in this PO, MERIT is relying on Seller’s skill and judgment to furnish Goods suitable for the purposes of the Project described herein.  All warranties survive any inspection, delivery, acceptance or payment.  Seller’s warranties in this PO are in addition to any other warranties provided by law or by separate agreement.  MERIT may demand and Seller shall provide adequate assurance, by bond or other means acceptable to MERIT, that Seller will comply with this PO, including all warranties.
5. TIME OF PERFORMANCE. Time is of the essence for this PO.  Seller accepts MERIT’ right to schedule performance and deliveries by Seller of the Goods and to adjust such schedules as MERIT in good faith deems best for the Project as a whole.  Deliveries are to be made strictly in accordance with MERIT’S schedule and directions, as may be adjusted by MERIT, as to time, quantities, and location. Seller shall arrange and pay for suitable storage of all Goods delivered, regardless of the location specified for delivery. MERIT reserves the right to cancel, reject or refuse any delivery made prior to or subsequent to the times specified.  If delivery schedules cannot be maintained, Seller must notify MERIT in writing immediately.  Seller shall be liable for all costs and damages, of whatever nature, resulting from the Seller’s failure to deliver, according to MERIT’ schedule, Goods in strict accordance with the plans and specifications and approved by the Owner; such costs and damages can be backcharged to or offset against any outstanding balance otherwise owed Seller under this PO or any other agreement.  Further, such costs and damages include but are not limited to any liquidated or actual damages assessed by the Owner against MERIT and any other costs, losses, and damages incurred by MERIT because of delays or difficulties attributable to the Seller’s late and/or deficient performance.  Seller’s failure to provide submittals as and when required or Seller’s failure to provide Goods as warranted in this PO or Seller’s failure to maintain delivery as scheduled are, jointly and severally, material breaches of this PO and shall entitle MERIT to terminate this PO for default.
6. INSPECTION, ACCEPTANCE AND CANCELLATION. MERIT and its authorized representatives shall have the right, but not the obligation, to inspect the Goods at all reasonable times and places during manufacture and before and after delivery.  Acceptance of any part of the Goods required by this PO shall not bind MERIT to accept future shipments, nor deprive MERIT of the right to return Goods already accepted or to exercise any other remedy which MERIT may have.  Payment for Goods prior to inspection shall not constitute acceptance and is without prejudice to any claim MERIT may have against Seller.  Rejected Goods shall be held for Seller’s instructions at Seller’s risk, and all returns shall be at Seller’s expense.  If Goods are to be returned to Seller for any reason, Seller shall, before said Goods are removed from the Project site, give to MERIT written notice specifying all alleged damages, missing parts or items, and all other claimed reduction in value of said Goods, and Seller shall afford MERIT an opportunity to inspect said Goods at the Project site following Seller’s written notice; Seller’s failure to give MERIT the foregoing required written notice and opportunity to inspect shall constitute Seller’s waiver of claims and release of MERIT.
7. Price shall be as stated in this PO and is firm for the full duration of the construction of the Project described herein.  If price is not stated in this PO, the Goods shall be billed at the price as quoted or the prevailing market price, whichever is lower.  The prices stated herein include all applicable federal, state and local taxes and charges of whatever nature.  If Seller’s invoices are subject to a cash discount, the discount period shall commence on the later of delivery of conforming Goods or the date of MERIT’ receipt of the invoice.  During the term of this PO, Seller shall give MERIT the benefit of all trade discounts, rebates, or price reductions offered to any other party with respect to the same or substantially similar items as the Goods covered by this PO.
8. MERIT may, by written order, make changes in the general scope of this PO and Seller shall be obligated to perform such changes, with the purchase price being adjusted accordingly.  No price increases or additional charges of any kind will be valid unless Seller obtains a written change order from MERIT before Seller incurs any extra costs.   Seller shall give written notice to MERIT of any changes or extra costs, of whatever nature, at least five (5) working days prior to the time the Prime Contract requires MERIT to give notice of same to the Owner; otherwise, Seller’s claims shall be waived.  For any changes in this PO, Seller shall be limited to an increase in the price and/or an extension in time to the extent of price increases and time extensions that MERIT, on behalf of Seller, actually receives from the Owner.
9. Before submitting any invoice or otherwise requesting payment from MERIT, Seller shall have paid through the date of invoice or request for payment all labor, services, material, supplies, equipment and other charges relating to the Goods and obligations covered by this PO.  Seller and Seller’s materialmen and suppliers shall furnish affidavits, lien waivers, releases of claim, and such other documents as may be required by MERIT.  Subject to the terms and conditions of this PO, MERIT agrees to pay Seller’s approved invoices, less retainage, for conforming Goods timely delivered and suitably stored at the Project or incorporated into the work within thirty (30) working days after MERIT’ receipt of payment from the Owner for said Goods.  Notwithstanding anything to the contrary in this PO, in the Prime Contract, or in any bond or other document, the Owner’s acceptance of Seller’s Goods and MERIT’ actual receipt of payment from the Owner for Seller’s Goods shall both be absolute conditions precedent to any right of the Seller to receive any form of payment whatsoever from MERIT.  These conditions precedent apply to both progress payments and final payment to Seller which shall be made only out of funds actually received by MERIT from the Owner for progress payments or for final payment under the Prime Contract and only to the extent said progress payment or final payment reflects payment from the Owner to MERIT for Seller’s Goods which comply strictly with this PO and which have been accepted by the Owner.  Seller’s acceptance of payment constitutes a general release of MERIT and MERIT’ surety from all claims and liability of whatever nature, whether known or unknown, which arise out of or relate to events occurring through the date of payment.  Seller’s acceptance of final payment shall constitute a full release of MERIT from all claims and liabilities arising under or related in any way to this PO.  No payment, including final payment, shall be construed as acceptance of defective, incomplete or nonconforming Goods, and Seller shall remain responsible for full performance in strict compliance with this PO.
10. TERMINATION BY MERIT.  Seller’s failure to comply strictly with all terms and conditions of this PO shall entitle MERIT to terminate this PO for default; to take possession and assume ownership of all Goods made by Seller; to procure Goods, in whole or in part, elsewhere; and to charge Seller with all costs, expenses, and damages of whatever nature including, without limitation, attorneys’ fees and consequential damages arising from or attributable to said default.  In the event of termination for default, Seller shall not be entitled to any further payments until all requirements of this PO have been fully satisfied and until final payment has been actually received by MERIT from the Owner, and then only to the extent the unpaid PO balance exceeds all costs, expenses, and damages incurred by MERIT in completing the PO requirements and sustained by MERIT as a result of Seller’s default.

      In addition to termination by default, MERIT reserves the right, at any time and for its convenience and without Seller’s consent, to terminate this PO in whole or in part by written notice to Seller.  Seller, however, acknowledges that it has no right or privilege to terminate this PO without MERIT’ written consent.  Immediately upon receipt of notice of termination from MERIT, Seller shall stop all performance hereunder, except as otherwise directed by MERIT. If Seller is not in default of any of its obligations hereunder at the time of such termination, MERIT shall pay to Seller, as Seller’s sole and exclusive remedy, less any applicable offsets, an amount equal to (a) reasonable and documented costs (the “Costs”) incurred by Seller prior to the notice of termination, plus (b) a fee (“Fee”) not to exceed ten percent (10.0%) of the Costs, for Seller’s provable overhead and profit, and said Fee shall be deemed full and complete compensation for all other amounts to which Seller may be entitled, including without limitation indirect expenses, overhead, administration, supervision and profit; provided, however, that in no event shall the payments specified herein, plus prior payments, exceed the purchase price of the Goods.

If MERIT terminates the PO for default but it is determined that Seller was not in default as of the termination, the termination will be regarded as for MERIT’ convenience and Seller’s sole and exclusive remedy shall be amounts payable under the convenience termination provisions above.  In no event shall Seller be entitled to special, consequential, or exemplary damages, nor shall Seller recover any lost or anticipatory profits alleged to have resulted from termination of this PO.  Regardless of whether the termination is for Seller’s default or for MERIT’ convenience, all Goods completed or partially completed prior to termination shall become the property of MERIT, or at MERIT’ option, the salvage value of the Goods may be deducted from any amount due Seller by reason of termination.  MERIT reserves all rights and remedies provided by law, in addition to those set forth herein.

11. ASSIGNMENTS.  Without the prior written consent of MERIT, Seller shall not make any contract with any other entity for furnishing any of the Goods covered by this PO, or assign this PO or any right hereunder.  Seller shall not assign any amounts due or to become due under this PO without written notice to MERIT at least thirty (30) days before such amounts are due to be paid to Seller.  MERIT’ acceptance or acknowledgment of any assignment shall not constitute any representation or admission by MERIT that the sum assigned or any amount whatsoever is owed to Seller.  Seller shall remain fully liable to MERIT for performance of this PO even if MERIT assigns rights or delegates duties.
12. DISPUTES.  This PO is made in, and shall be governed by the laws of, Mississippi.  Any claims or disputes arising out of or related to this PO shall be resolved by binding arbitration in accordance with the current and applicable rules and procedures of the American Arbitration Association, except if MERIT in good faith believes that any claim, dispute, or matter in controversy with Seller also involves rights or liabilities of the Owner, Architect, or other third party, then, at MERIT’ sole election, Seller agrees to resolve such issues in the same forum or proceeding, including arbitration, court, or administrative authority, which has jurisdiction over some or all claims, disputes, and matters in controversy involving the Owner, Architect, or other third party so as to promote economy and avoid inconsistent results.

MERIT and Seller intend and agree that the foregoing dispute resolution provisions and rights of election given MERIT are not independent of or severable from the remainder of the PO and that such provisions and election rights are supported by the consideration and mutuality of the PO as a whole.  The locale for any arbitration shall be Philadelphia, Mississippi, unless MERIT agrees to designate another locale to facilitate joinder of parties, to consolidate claims, or for any other reason.

Should MERIT through litigation, arbitration, or other means seek to recover on any surety bond given by Seller under this PO, Seller and its surety, jointly and severally, agree to pay MERIT all costs, expenses, and attorneys’ fees incurred in the investigation, preparation, and trial or hearing of such matters and otherwise reasonably related thereto.

The Seller and its surety shall be liable for all damages, costs, expenses, including attorney’s fees, incurred by MERIT in enforcing the terms and conditions of this PO.

Notwithstanding the existence of any dispute, claim, or matter in controversy, Seller is obligated to and shall proceed diligently with complete and timely performance of this PO.

13. COMPLIANCE WITH LAWS.  Seller hereby represents and warrants that the Goods hereunder are not produced, manufactured, sold, packaged, marketed, transported or priced in violation of any federal, state or local law and do not violate or infringe upon any patent, trademark or other rights of third parties.  Seller shall have full and exclusive liability for the payment of all income, gross receipts, sales, use, or any other taxes applicable to materials, equipment, labor, or services relating to the Goods and obligations covered by this PO.  In the event MERIT pays any such tax or payment on behalf of Seller, Seller agrees to fully reimburse MERIT upon demand for the amount thereof (including penalties and interest).
14. INDEMNITY.  To the fullest extent allowed by law, Seller shall defend, indemnify, reimburse, save harmless and exonerate MERIT and the Owner from and against all claims, liabilities, losses, expenses and damages, of whatever nature, including without limitation, attorneys’ fees and consequential damages, which are alleged to arise from or be caused by, in whole or in part, any act or omission of Seller with respect to this PO or to the subject Project.  Seller’s obligations under this paragraph shall apply to any personal injury, sickness, death, property damage, economic loss and additional expense of any kind for which Seller’s conduct or Goods are alleged as a cause or contributing factor.  Seller’s indemnity and defense obligations shall survive acceptance and payment of the Goods.  Should any delay by Seller, nonconformance of Goods, or nonperformance by Seller cause or contribute to any delay to the Project or to any increased costs, losses, or consequential damages to MERIT or to the Owner, Seller shall pay, indemnify and exonerate MERIT for any liquidated or actual damages assessed by the Owner against MERIT and also for MERIT’ costs, expenses, and losses, including attorneys’ fees and consequential damages.
15. ENTIRE AGREEMENT/NO WAIVER.  This PO represents the complete and integrated agreement between MERIT and Seller, and it supersedes all prior negotiations, whether written or oral.  The terms and conditions of this PO are severable and the validity or unenforceability of any term or condition of this PO shall not invalidate, render unenforceable, or adversely affect the remaining terms and conditions.  This PO requires an entire and indivisible performance by Seller, notwithstanding payments to Seller in installments.  This PO cannot be amended, modified or terminated except in writing signed by an authorized representative of MERIT.  This PO is binding upon and enforceable by the successors in interest of MERIT and Seller.  The failure or delay by MERIT to exercise rights as regards any noncompliance by Seller shall not constitute a waiver of such rights as to any continuing or subsequent noncompliance.
16. COURSE OF DEALING.  MERIT and Seller agree that the Terms and Conditions hereof, establish a course of dealing between them and shall apply to this and all other purchases, unless either MERIT or Seller gives written notice of objection to any term or condition before commencement of performance in connection with any other purchase.  Otherwise, Seller’s manufacture, identification, commencement of preparation of Submittals, shipment of Goods, or any other act consistent with acceptance, shall constitute the agreement of MERIT and Seller that these Terms and Conditions apply to such purchase and constitute a waiver by both parties of all objections to any of the Terms and Conditions even if a PO has not been fully executed at the time such performance commences.  MERIT and Seller are entitled to specific performance of this provision with respect to future purchases