1. APPLICABILITY OF THE COMMERCIAL TERMS AND CONDITIONS
These Commercial Terms and Conditions (the “Terms and Conditions”) are incorporated into and comprise part of all agreements and purchase orders in which Pharmaceutical Associates, Inc. (“PAI”), and/or any related entity of PAI, is a party (“Purchase Order”) (collectively, the “Contract Documents”). Each Purchase Order shall constitute an offer to purchase the products and/or services ordered (the “Products/Services”). PAI may revoke this offer at any time before Supplier’s acceptance. Upon acceptance, Supplier agrees to sell and deliver the Products/Services to PAI in accordance with these Terms and Conditions and the applicable Contract Documents. Supplier shall be deemed to have accepted this offer by sending PAI a written acknowledgment, by delivering the Products/Services ordered, or by commencement of work on the Products/Services. PAI OBJECTS TO AND REJECTS THE PROVISIONS OF ANY ACKNOWLEDGMENT, ORDER ACCEPTANCE, WARRANTY STATEMENT, OR INVOICE WHICH IS INCONSISTENT WITH OR IN ADDITION TO THE PROVISIONS OF THESE TERMS AND CONDITIONS. THE CONTRACT DOCUMENTS SHALL BE THE COMPLETE AND EXCLUSIVE CONTRACT BETWEEN THE PARTIES WITH RESPECT TO THE PRODUCTS/SERVICES AND MAY BE MODIFIED ONLY IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF PAI AND BY SUPPLIER. NO PRIOR PROPOSALS, QUOTATIONS, STATEMENTS, FORECASTS, COURSE OF DEALING OR USAGE OF TRADE WILL BE PART OF THE CONTRACT BETWEEN THE PARTIES. In the event, however, of a conflict between these Terms and Conditions and any terms and conditions set out in a written supply agreement or purchase agreement executed by the parties, the terms and conditions in such supply agreement or purchase agreement will prevail.

2. COMMERCIAL TERMS
2.1 Price. Prices for the Products/Services are not subject to increase, except as may be permitted below under “Changes.” If no price is stated herein, the Products/Services shall be billed at the price last quoted by Supplier, last paid by us or the prevailing market price for a like kind and quantity of goods/services, whichever is lowest. Price covers the net weight of material, packaging, labeling, agreed documentation and no extra charges of any kind (including charges for containers, insurance, packing, crating, storage, handling or cartage, interest charges, service charges and the like) will be allowed. Unless prohibited by law, Supplier will separately indicate on Supplier’s invoice any tax that is required to be imposed on the sale of the Products/Services.

2.2 Changes. All quantities ordered are estimates only and may be revised as our requirements change, unless otherwise agreed. We may at any time make changes in Product/Services, including but not limited to, quantities, specifications, drawings, designs, deliverables, delivery dates, shipping instructions or other provisions of these Terms and Conditions. Such changes will be confirmed in writing signed by our authorized representative. Supplier must notify us within two (2) days of our notice whether such changes will affect price or time of delivery and, if price and time of delivery will be affected, within five (5) days of our notice to what extent.

2.3 Title and Risk of Loss. Delivery and title and risk of loss will pass to us FOB Destination in the US and DDP for the rest of the world at the premises specified in the Purchase Order (Incoterms 2010) unless otherwise stated in the Purchase Order.

2.4 Shipments. Supplier agrees to assure deliveries and quantity of Product and completion of Services on the dates specified in the Contract Documents. All deliveries must be made during the opening hours of the unit receiving, and must likewise be made at the locations, deposits or warehouses stated in the Purchase Order. Unless otherwise expressly stated, time is of the essence. In the event any Product shipment is not made in time for delivery on the date and in the quantity set forth on the Purchase Order, or if applicable, the Products are shipped without an approved/transacted Advance Shipment Notice, or Services are not commenced or completed as set forth on the Purchase Order, we may:

(i) return to Supplier some or all of the Products in the shipment at Supplier’s risk and expense, including without limitation warehouse or handling cost;

(ii) direct Supplier to make an expedited shipment of additional or replacement Products, with the difference in cost between any expedited routing and the Purchase Order routing to be paid by Supplier; or

(iii) debit Supplier for costs incurred while manually receiving materials into SAP or equivalent program of PAI’s. Supplier agrees to notify PAI immediately if Supplier ever has reason to believe that the Products/Services will not be delivered or completed as ordered, or a shipment will not be made as scheduled.

2.5 Packing List. If applicable, each shipment made by Supplier shall include a packing list containing the Purchase Order number, name of the supplier, item number(s), revision number(s) and our product identification(s), unit of measure, quantity shipped, date of shipment, Country of Origin, and such other information as we may reasonably request or is required by applicable law. Delivery may be refused in absence of such information.

2.6 Inspection and Rejection. All Products/Services delivered to PAI by Supplier must meet the specifications and the terms and conditions of the applicable Purchase Order(s). All Products/Services shall be received subject to our acceptance or rejection on or before the end of the Inspection Period. We may reject any entire order based upon a reasonable sampling of Products/Services. “Inspection Period” means a reasonable time after delivery of any Products or completion of any Services, to allow for the performance of any inspection, installation activities, testing, or trials, but shall in no event be less than thirty (30) days. Partial or total payment by PAI for Products/Services under the applicable Purchase Order(s) prior to the end of the Inspection Period shall not constitute its acceptance thereof, nor shall such payment remove Supplier’s responsibility for any non-conforming items. Supplier agrees to provide and maintain inspection and process control systems acceptable to PAI with respect to the manufacture of Products and performed Services, and Supplier agree to keep and make available complete records of all Supplier’s inspection work and process control work for 10 years or the product shelf life + 1 year.

2.7 Quality Assurance. Supplier shall apply, maintain and document a quality system that complies with cGMP/ISO or a comparable standard for guaranteeing that the Products/Services comply with the agreed quality.

2.8 Invoices. Supplier’s Invoices shall contain the Purchase Order number, item number(s), invoice quantity, unit of measure, unit price, total invoice amount, Supplier’s name and phone number, address to which remittance should be sent, and other such information as may be required by law or requested from time to time by PAI. Upon our request, Supplier’s Invoices shall also contain the country of origin per item and applicable Harmonized Tariff number per item.

2.9 Payments. Unless otherwise agreed to in writing, we shall settle accurate invoices arising under a Purchase Order prepared in accordance with the terms hereof within sixty (60) days of receipt of invoice. Such time period will not apply to the extent it does not comply with applicable law; in such event, the time period is hereby deemed modified in order to render it compliant with such law. All sums to be paid by PAI under a Purchase Order shall be in the currency of the country of the purchasing entity, unless otherwise agreed to by the parties. We will not be liable for any late fees, interest, carrying or other charges associated with any late payments in excess of any minimum requirements for late payments prescribed under applicable law. Invoices submitted without required data are subject to rejection.

2.10 Set-Off. We may deduct any amounts owed to PAI by Supplier or any of Supplier’s affiliates on any basis whatsoever under any order from the amount owed to Supplier. We may set-off such amounts owed PAI by right, regardless of whether the legal requirements for set-off have been met or not.

2.11 Warranty. Supplier represents and warrants that the Products will:

(i) be owned by Supplier and free of all liens, claims or encumbrances;

(ii) conform strictly to all express or implied specifications, drawings, plans, instructions, samples or other descriptions;

(iii) be fit and sufficient for the purpose(s) for which they were manufactured and sold, and if Supplier knows (or have reason to know) of a particular purpose for which we or our customers intend to use the Products, will be fit for such particular purpose;

(iv) be new and merchantable; and

(v) be free from defects in design, material and workmanship, whether latent or otherwise. Supplier represents and warrants that neither the Products nor use of the Products/Services will infringe any patent, copyright, trade secret, trademark or other property right of a third party, but only to the extent that such infringement is not caused by any design feature incorporated into the Product/Service at our request. Supplier represents and warrants that any Service Supplier may provide will be performed in a competent manner and be fit for any purpose for which Supplier knows or has reason to know we or our customers intend to use such Service. Supplier agrees that these warranties: (x) survive the inspection, acceptance and use of the Products/Services by PAI and our customers; (y) are for the benefit of PAI and our successors, assigns, customers and users of our products/services; and (z) are in addition to any warranties and remedies to which we may otherwise agree, or which are provided by law. Supplier agrees to extend to our customers and PAI (and to enforce) any warranties received from Supplier’s suppliers. In the event of breach of the warranty hereunder Supplier agrees, at our option, to promptly re-perform, replace or repair any non-conforming Products/Services at Supplier’s own cost or to refund PAI for any payments made and to compensate PAI in accordance with applicable law for damage and loss suffered by PAI as a consequence of the non-conformance. Any claims by PAI under this warranty provision will be submitted to Supplier within three (3) years from date of delivery of the Products or completion of the Services; provided, however, that claims for latent defects shall be made within ninety (90) days of discovery of such defect.

2.12 Indemnification. Supplier agrees to defend, indemnify and hold PAI and our customers harmless from and against any and all claims (including without limitation claims for infringement of intellectual property, breach of contract, death or injury to a person or injury to property, or other tort claims), liabilities, damages (whether direct or indirect, incidental or consequential) and expenses (including court costs and attorneys’ fees) arising out of or relating to the alleged breach by Supplier of any covenant, representation, certification, or warranty contained in these Terms and Conditions or at law, or from any act or omission of Supplier or Supplier’s agents, employees or subcontractors. We will notify Supplier of any such claim, suit or proceeding and will assist Supplier (at Supplier’s expense) in the defense of the same. This indemnity is without prejudice to any other claims or rights that we may have, whether under these terms and conditions, at law or otherwise.

3. TERMINATION
3.1 Without Cause. We may terminate all or any part of any Purchase Order at our convenience, without cause, at any time by giving Supplier ten (10) days’ written notice. In such event, Supplier shall immediately cease all work and terminate all orders and contracts, and we shall be liable to Supplier only for Supplier’s reasonable actual costs as a direct result of the termination which may not be recovered or mitigated (e.g., purchased materials and labor costs incurred prior to receipt of notice of termination). Supplier will notify PAI in writing of such costs within thirty (30) days of termination. The foregoing shall constitute our only liability to Supplier for termination without cause.

3.2 With Cause. If Supplier defaults, we may terminate all or any part of the Purchase Order without liability to Supplier by giving notice to Supplier. A default will occur if Supplier:

(i) fail to perform within the time period specified in the Purchase Order;

(ii) so fail to make progress as to endanger performance of the Purchase Order,

(iii) fail to comply with the applicable laws and regulations under which Supplier does business; or

(iv) fail to comply with all compliance requirements described herein.

We may terminate any Purchase Order upon a default and if Supplier does not cure the default within ten (10) days (or any longer period we authorize in writing) after Supplier’s receipt of our written notice of default. Additionally, if we determine that any of Supplier’s representations, warranties, certifications or covenants are untrue, we shall have the right to terminate any Purchase Order immediately without further compensation to Supplier, and Supplier shall compensate PAI for any damages suffered by PAI as a result of Supplier’s untrue representations, warranties, certifications or breach of covenants. A default will also occur if Supplier fails to meet Supplier’s financial obligations as they become due, if any proceeding under the bankruptcy or insolvency laws is brought against Supplier, a receiver is appointed for Supplier, or Supplier makes an assignment for the benefit of creditors. If a Purchase Order is terminated due to Supplier’s default, without prejudice to any other legal or equitable remedies available to PAI, we will have the right to: (a) refuse to accept delivery of any and all Products; (b) return to Supplier unused Products already accepted and recover from Supplier payments made for such Products (and for our freight, storage and other expenses); (c) recover any advance payments to Supplier for undelivered or returned Products/Services; (d) purchase Products/Services elsewhere and charge Supplier with any resultant losses, including without limitation incidental or consequential damages incurred which are attributed to Supplier’s default; and (e) take title to and possession of any previously undeliverable part of work performed under a Purchase Order.

4. COMPLIANCE
4.1 Applicable laws. Supplier represents and warrants that Supplier’s performance under a Purchase Order will comply with all applicable laws, ordinances, rules, and regulations, and all conventions and standards, as amended from time to time, of each and all countries where the Products/Services are to be manufactured, used, or delivered, or Supplier’s performance is to occur. When relevant, Supplier represents and warrants that the Products and their manufacture will comply with all applicable drug and medical device laws and regulations, and any other relevant government and environment laws and regulations in countries where the Products are sold. Supplier represents and warrants that Supplier has complied with all applicable environmental rules and regulations. Before shipment, Supplier agrees to check whether the material is dangerous according to applicable dangerous goods transportation regulations and to comply with any similar requirements in any other jurisdictions to which we inform Supplier the goods are likely to be shipped.

4.2 Import/Export. Supplier represents and warrants that Supplier will comply with all applicable laws and regulations, relating to import/export matters. Supplier will also obtain all applicable permits and licenses necessary to perform Supplier’s obligations under the Contract Documents, and upon our request, will provide PAI with copies of such permits and licenses. Where Products contain United States components, Supplier will also provide PAI with details of the United States content value as a percentage of the Product price upon our request. Additionally, Supplier will provide ECCN numbers assigned to Products or any other information we may reasonably require upon request.

4.3 Country of Origin. Supplier will mark each Product, and, as appropriate, Product packaging, labels, and invoices with the country of origin for the Product, in accordance with the applicable trade and customs laws. Supplier will also provide acceptable and auditable documentation that establishes the country of origin for Product, including without limitation, certifications of origin for Products qualifying for EFTA/EU and other preferential duty provisions, as applicable.

5. PERSONAL DATA PROTECTION/INFORMATION SECURITY
For the purpose of this provision the definitions of “Personal Data” and “Processing” shall be as provided for in EU Directive 95/46/EC. With regard to Personal Data received from us, Supplier agrees
(i) not to use it other than for its intended purpose and
(ii) not to disclose it to any third parties unless we have given our prior written consent thereto.

6. SUPPLIER CODE OF CONDUCT
6.1 Employment of Minors. Supplier shall not employ any person younger than the legal minimum age for working in the jurisdiction in which such person is employed. In no event shall Supplier or its Affiliates or business partners employ persons who are less than fourteen (14) years old.

6.2 Fair Wages. Supplier shall compensate its employees by providing wages and benefits in accordance with the higher of (i) the minimum amount of wages and benefits required by applicable local and national laws and regulations of the jurisdiction(s) in which Supplier does business and (ii) the minimum amount of wages and benefits required to be consistent with industry best practices in the jurisdiction(s) in which Supplier does business.

6.3 Working Hours. Supplier shall comply with all local and national laws and regulations regarding working hours in the jurisdiction(s) in which Supplier does business. Where such local and national laws are silent or ambiguous with respect to a permissible number of working hours, Supplier shall implement its own rules and regulations providing that the standard work week for its employees does not exceed sixty (60) hours per week and includes at least one (1) day per week off from work at Supplier. Supplier shall provide leave privileges to its employees that are at least consistent with the greater of (i) best practices of the industry in the jurisdiction(s) in which Supplier does business and (ii) the applicable local and national laws and regulations of the jurisdiction(s) in which Supplier does business.

6.4 No Forced Labor. Suppliers will maintain employment on a voluntary basis and must not use forced, prison, bonded, indentured, or involuntary labor.

6.5 Equal Opportunity. All conditions of employment by Supplier shall be based upon an individual’s merit and ability to perform the responsibilities of the job, and shall not be on the basis of race, color, national origin, sex, or religion.

6.6 Labor Organizations. Suppliers will respect the rights of employees to associate, organize, and bargain collectively in a lawful and peaceful manner, without penalty or interference.

6.7 Illegal Aliens. Supplier shall only employ employees with a legal right to work in the jurisdiction(s) in which Supplier intends to hire such employees. Supplier shall review the legal status of all of its employees and shall validate such status by reviewing original documentation (but not photocopies where such original documentation exists) before Supplier may permit any employee to commence work.

6.8 Workplace Safety. Supplier shall maintain a healthy, clean and safe work environment. Supplier shall maintain written safety and health policies and systems to minimize work-related injury and illness.

6.9 Inspection Rights. In order to ensure compliance with the obligations set forth in this Schedule, PAI or a third-party designated by PAI may conduct periodic, unannounced inspections of Supplier’s facilities and the facilities of Supplier’s Affiliates and business partners. Such review and inspections may include reasonable and relevant review of the books and records of Supplier, its Affiliates, and its business partners.

7. OTHER TERMS
7.1 Supplier’s Information. Unless expressly agreed in writing to the contrary, any knowledge or information which Supplier discloses to us will not be considered confidential or proprietary information, and we may use it free from any restrictions. Supplier acknowledges that we will use and rely upon information Supplier furnishes to us and that Supplier will indemnify and hold us harmless from any and all costs and damages suffered by us as a result of any inaccuracies in such information.

7.2 Our Information. Supplier agrees to keep confidential any materials or information furnished by us to Supplier. Supplier will not disclose or use, directly or indirectly, such materials or information for any purpose other than the purposes of complying with these Terms and Conditions. Supplier will return to us, at Supplier’s expense, all such materials and information upon completion of work, termination of a Purchase Order or our request.

7.3 Publicity. Supplier may not, without our prior written consent, issue any press release or announcement, advertise or publish the fact that we have contracted to purchase goods or services from Supplier, disclose information relating to a Purchase Order, or use our name or trademarks, or the names or trademarks of any of our affiliates, related companies, or customers.

7.4 Work on Our Premises. If Supplier works on our premises or premises of our customer, Supplier will comply with any applicable site rules and regulations. Except to the extent a claim is due solely and directly to our negligence or our customer’s negligence, Supplier will indemnify PAI and customer from any claim which may result in any way from any act or omission of Supplier or Supplier’s agents, employees or subcontractor while on our premises or premises of our customer

7.5 Insurance. Supplier agrees to maintain all coverages in the types and amounts identified on the agreement signed by Supplier that references these Terms and Conditions or the applicable Purchase Order(s), which shall include but not be limited to workers compensation, employer’s liability, comprehensive general liability, product liability and property damage insurance, as will adequately protect PAI in the event of any liability arising under the Contract Documents and, upon our request, Supplier will provide PAI with evidence of such insurance. Supplier shall name Pharmaceutical Associates, Inc. as an additional insured on all liability insurance if requested.

7.6 Governing Law and Dispute Resolution. This Agreement shall be governed and construed in accordance with the laws of the State of South Carolina, excluding conflict of law principles. The United Nations Convention on Contracts for International Sales of Goods shall not apply. Any dispute, controversy or claim relating to the Contract Documents (a “Dispute”) will be resolved first through good faith negotiations between the parties. If the Dispute cannot be resolved through good faith negotiations within forty-five (45) days, either party may submit the Dispute to the courts of South Carolina, excluding any other jurisdiction or arbitration. With regards to any action for breach of confidentiality or intellectual property obligations, nothing in this section shall preclude either party from seeking interim equitable relief in the form of a temporary restraint order or preliminary injunction.

7.7 Limitation of Liability. IN NO EVENT WILL WE BE LIABLE TO SUPPLIER FOR ANY SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE, OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO LOST PROFITS AND LOST BUSINESS), WHETHER BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY, OR OTHERWISE ARISING OUT OF OR RELATED TO THE CONTRACT DOCUMENTS, AND WHETHER OR NOT WE HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

7.8 Remedies. Our rights and remedies herein are cumulative and in addition to all other rights and remedies available at law or in equity.

7.9 Waiver and Invalidity. Any waiver or renunciation of a claim or right arising out of breach must be in writing and signed by the injured party. Any failure to enforce any provision of the Contract Documents may not be construed as a waiver of such provision or any other provision nor of the right to enforce such provision. Should any provision of the Contract Documents be deemed invalid or unenforceable, in whole or in part, all remaining provisions of the Contract Documents shall remain in full force and effect.

7.10 Assignment. Supplier may not assign any right or delegate any duty hereunder without our prior written consent. Any attempted assignment or delegation by Supplier will be void.

7.11 Independent Contractor. The relationship of the parties hereunder shall be that of independent contractors. Nothing in the Contract Documents shall be deemed to create a partnership, joint venture, or similar relationship between the parties, and no party shall be deemed to be an agent of the other party. Supplier shall indemnify, defend, and hold PAI harmless from and against any and all claims by Supplier’s employees, contractors, or subcontractors regarding entitlement to any compensation or benefits from PAI or that we are for any purpose their employer or co-employer, including but not limited to any claim for taxes or related penalties.

7.12 Headings. The headings on these Terms and Conditions are for convenience only and may not be used in the interpretation thereof.