Supplier Terms & Conditions | Royal Oak Industries

General Statement

Royal Oak Industries Inc. and its divisions are premier manufacturers of gas and diesel engine components for the trucking and heavy equipment industry. It is and always has been our goal and ambition to be a world class seller to our customers worldwide, and to provide them with the highest quality products and service possible. Through adherence to these terms and conditions we expect those entities with which we d business (“Sellers” to Royal Oak Industries its affiliates and subsidiaries) to achieve the same level of customer satisfaction that we strive for every day.

It is expected that all current and potential Sellers review and understand these terms and conditions with the expectation that together with Royal Oak Industries, a commitment to high quality, low costs, and excellent service can be afforded all customers throughout the process, from beginning to end.

These terms and condition are being issued to all Sellers to Royal Oak Industries or any of its affiliates or subsidiaries, including but not limited to, Royal Oak Boring, Bronson Precision Products, Royal Oak Medical Devices, Precision Manufactured Products, Texas Machining Enterprises, and Texas Powertrain Assembly d/b/a Texas Power Systems (hereafter referred to both singularly and collectively as “Buyer”). These terms and conditions will be applicable to all Purchase Orders issued from any Buyer to Sellers for goods and services. Any references to “Purchase Order” shall refer to the Purchase Order document from any Buyer.

Royal Oak Industries reserves the right to amend these Terms and Conditions at any time.

01 - The Purchase Order

The Buyer’s Purchase Order shall be considered an offer to the Seller, by the Buyer, to enter into an agreement to purchase goods and/or services pursuant to the terms described on the face of the Purchase Order.

02 - Acceptance of Offer

The Purchase Order may be accepted only on the terms and conditions as stated on the Purchase Order. Acceptance by any means other than the execution of a copy of the Purchase Order shall be deemed as acceptance on the terms and conditions as stated on the Purchase Order only. Any additional, different or inconsistent terms or conditions contained in any form of acknowledgement acceptance or confirmation used by seller shall be of no force or effect whatsoever, unless specifically agreed to in a separate written instrument signed by an authorized representative of the Buyer after the date of the Purchase Order.

03 - Pricing

The price(s) shown on the face of the Purchase Order shall be the total price payable by Buyer for the goods and/or services shown, and no charge shall be made by Seller for packing costs, freight costs, taxes, storage fees, surcharges or other extra charges unless and only to the extent that it has been provided for on the face of the Purchase Order, or in an agreement signed by both Buyer and Seller. Quoted prices for goods and services by and from the Seller shall include pricing affected by lot sizes ( tier or bracket prices ) agreed upon prior to the order. Any requests for alterations to pricing require a minimum 60 day notice prior to the requested effective date and acceptance in writing from Buyer to Seller.

04 - Amendments / Modifications

The Purchase Order may, at any time, be amended or modified. These amendments and/or modifications may include amendments or modifications to drawings, specifications, quantity, materials, packaging methods, delivery and destination. Amendments and/or modifications will only be by written notice from Buyer to Seller and providing a commercially reasonable timeframe for any material changes.

If the change to the Purchase Order affects the timing and/or cost of the purchased item, Buyer and Seller will negotiate the revised timing and price with the Seller prior to the issuance of the new Purchase Order.

The Seller will not make any changes to the Purchase Order in any manner without prior written consent from the Buyer, including but not limited to changes in price, quantity, surcharge, method of delivery, packaging or timing. Additionally, any price increase agreed to by Buyer shall be subject to a 60 day review period before becoming effective.

05 - Releases / Release Dates

The Seller shall be required to provide all goods and services outlined in the Purchase Order, by the date specified on the face of the Purchase Order. If there is no date specified on the face of the Purchase Order, the Seller shall make every effort to contact the Buyer to secure a required delivery date. Shipments and/or services should not occur without a specified delivery date. Seller should however, make all necessary arrangements in the procurement and fabrication of items specified on the Purchase Order.

06 - Delivery

The date as specified on the face of the Purchase Order shall be the date the goods or service is required at the Buyer’s location. Buyer reserves the right to reject any and all goods or services that do not meet the required delivery date. Buyer will however, consider each situation individually to determine conformance.

If late delivery results in a Buyer line stoppage, then line down costs and associated charges will be debited to Seller. If late delivery results in a line stoppage at Buyer’s customer, then line down charges and associated costs will be debited to Seller. For line down and associated costs the Buyer may consider the circumstances of each situation on an individual basis. Buyer also reserves the right to debit Seller for freight costs associated with late deliveries and/or rejected lot receipts as described below.

Shipments made to the Buyer’s location via common carrier after the due date as specified on the Purchase Order unless prior authorization is obtained from the Buyer.
Shipments made to the Buyer’s location via expedited freight carrier after the due date as specified on the Purchase Order unless prior authorization is obtained from the Buyer.
Shipments made to the Buyer’s location via common carrier due to the rejection of Seller material.
Shipments made to the Buyer’s location via expedited freight carrier due to the rejection of Seller material. The Seller’s inability to ship to full release quantities by the due date, unless prior authorization is given.

07 - Samples

Casting and / or component samples must be provided in accordance with the Buyer’s quality guidelines and with TS-16949 or applicable quality standard guidelines. Buyer reserves the right to reject any shipment from Seller for failure to comply with this requirement.

08 - Product Preservation and Packaging

Seller will insure that all goods are packaged in a manner that will preserve and protect the goods. Seller will follow all packaging requirements of Buyer provided Buyer has established procedures for a particular product. Seller will insure that all packaging materials used will comply with all requirements and that third party providers of materials will follow all guidelines as established by Buyer. Seller will reimburse Buyer for all costs associated with the handling, rework, repackaging or identification of goods not packaged to the specification provided.

09 - Shippers Documents / Bill of Lading

A bill of lading and a packing slip issued in a format acceptable to Buyer “MUST” accompany each shipment to Buyer’s location. Any packing slip must include the date shipped, quantity of goods, description of goods, the Buyers Purchase Order number and any other information deemed pertinent towards that shipment.

10 - Receiving Inspection

All goods and services shall be subject to inspection upon and during receipt as supplied under the Purchase Order. All castings and components shall conform to drawings and specifications as provided. All goods are subject to Buyers receiving inspection guidelines as outlined in the TS-16949 quality standards. Goods deemed as unsatisfactory by Buyer, in Buyer’s sole discretion, shall be returned to Seller at Seller’s expense, for credit or refund to be determined by Buyer. No defective goods or services shall be replaced without written consent of Buyer. Buyer reserves the right to inspect goods on Seller’s premises with reasonable notice given. Payment for goods received prior to rejection shall not be considered a waiver of the Buyer’s rights to reject and return goods to Seller for credit or refund.

11- Amended Purchase Orders

Seller agrees to provide Buyer with goods or services pursuant to any amended Purchase Order, for a period of not more than two years after the previous Purchase Order has been issued. Amended Purchase Orders shall be reviewed with Seller to insure all current drawings and specifications are applicable. Periods of more than two years shall be negotiated between Buyer and Seller to determine timing, price and conformance to all applicable drawings and specifications.

12 - Cancellation

Buyer reserves the right at any time prior to delivery, to cancel an order in whole or in part without cause by means of a written notice to Seller. This right applies to Purchase Orders, revisions and all other forms of orders whether formal or informal. Seller agrees that cancellation charges will be limited to labor and materials used in the production of said order. Any claim for reimbursement of or credit for cancelled orders must be submitted to Buyer by Seller, within 30 days of cancellation notice. Buyer reserves the right to dispute any and all cancellation charges. Seller also agrees to take reasonable steps to avoid such charges.

13 - Buyer’s Property

All Buyer property generally defined but not limited to, drawings, tooling, specifications, dies, jigs, special fixtures or other types of property (“Buyer Property”) shall be clearly identified in a manner acceptable to the Buyer as the Buyer’s property. Seller shall not employ the Buyer’s Property for its own benefit or the benefit of others without Buyer’s prior written consent. Seller shall maintain all Buyer’s Property in a manner satisfactory to Buyer. Seller shall promptly deliver the property to Buyer in good condition upon demand of Buyer.

Seller shall bear all responsibility for damage and/or loss to any Buyer Property in the Seller’s possession or control for use in performing the obligations as set forth in a Purchase Order. Exercising due care and caution to protect Buyer’s Property does not relieve the Seller of its responsibilities or obligations. All Buyer Property shall be stored in a suitable manner as to protect and preserve the property. Buyer Property shall be readily identifiable by the Buyer and shall not be stored with other properties unless such storage lends itself to proper protection and easy identification. The Seller may not at any time relocate or move Buyer’s Property to a location other than the original location without proper notification to Buyer and not without Buyer’s consent.

14 - Installation

If an order covers the installation of Sellers products on Buyers premises or on the premises of Buyers customers or other work on such premises, Seller shall indemnify, defend and hold Buyer harmless from all demands, claims, suits , liabilities, damages, judgments, costs and expenses including attorney fees, with respect to any injury or death of any person, or property damage arising out of such work by Seller, its subcontractors and its employees, agents or representatives of any of them. The Seller shall also furnish to Buyer on demand, an insurance carriers certificate showing that the Seller has workers compensation, product liability, public liability and property damage insurance with coverage’s and limits satisfactory to the Buyer.

15 - Assignment

Seller may not assign, subcontract or otherwise delegate its duties and/or obligations under any Purchase Order to a third party without prior written consent of Buyer.

16 - Compliance with Applicable and Governing Laws

Seller represents and warrants that all goods supplied and/or all services performed shall be manufactured, delivered, transported and performed as the case may be, in compliance with applicable federal, state, and local laws statutes, ordinances and regulations as applicable, including without limitation the Fair Labor Standards Act, the Occupational Safety and Health Act, the Americans with Disabilities Act, the Vietnam Era Veterans Readjustment Act and the Rehabilitation Act of 1973.

17 - Patents / Copyrights

Seller shall indemnify Buyer and its customers against and hold them harmless from all demands, claims, suits, liabilities, damages, judgments, costs and expenses including attorney fees, resulting from any alleged infringement of any United States or foreign patent with respect to any goods supplied by Seller, other than those goods built to Buyer specifications.

18 - Subcontracts / Resale

If a Purchase Order indicates that the order is being issued pursuant to the terms and conditions of a specific obligation between Buyer ( as a vendor ) and another party, Seller shall be subject to the terms and conditions of the same extent as Buyer, including without limitation, the delivery time, specifications liquidated damages, payment and warranties. To the extent Seller provides Buyer with finished products for resale by Buyer, Seller shall indemnify, defend and hold Buyer harmless from all demands, claims, suits, liabilities, damages, judgments, costs and expenses including attorney fees with respect to any injury to or death of any person or property damage based on an allegation that any products provided are defective in workmanship, materials or design. For any and all Purchase Orders issued by Buyer, work that is subcontracted shall follow the same terms and conditions as are required from the Seller by the Buyer.

19 - Terms and Conditions Relating to Material Certifications, Requirements and Standards.

Certificate of Compliance: The Seller’s certificate of compliance shall specifically state that the goods or services were manufactured or provided in accordance with the requirements of the Purchase Order and will be signed and dated by and authorized representative of the Seller. The COC should include the Buyers Purchase Order number, part number, job number, where applicable, and must accompany each shipment. The Sellers COC applies to all goods and services, materials and components.

Actual Material Certification: The Seller shall maintain and provide to the Buyer upon request, an actual material certification for each material lot produced. The actual material certification must provide the actual chemical and physical properties of each lot, as well as the heat date, Buyers Purchase Order number, and any other information deemed necessary in maintaining traceability to that specific lot.

Special Test and/or Sampling: Seller will maintain and provide to Buyer upon request, any test results that are required in completing an order or used in the processing of an order to include but not limited to heat treat, spectrograph, air decay testing, or other such tests for all lots as deemed reasonable by the Buyer and Seller.

Third Party Specifications: Seller will maintain and provide test results and or inspection documentation required by Buyer and Buyers customer as provided in any part prints, specifications and drawings used in the manufacture of product or completion of a Purchase Order.

Responsibility of Seller: Inspection and test documentation generated in the manufacture of a product or component shall be maintained and provided to Buyer upon request. Seller will follow inspection and test procedures in accordance with TS-16949

requirements in the manufacturing process. Purchase Orders not specifically referring to this condition do not relieve the Seller of its responsibility to provide products or services that meet all of the requirements of the specifications.

20 - Terms and Conditions Relating to Inspection and Testing.

Inspection Results: All materials, processes and workmanship shall conform to the specifications, drawings, and/or manufactured samples referenced on the part print. Individual items or lots may be rejected pending inspection by Buyer or Buyers customer. Buyer will not be responsible for damage or loss to Seller product if deemed defective.

Buyer reserves the right : to conduct inspections and tests on materials to be used prior to or during the manufacturing process, and to witness all parts of the process. Buyers personnel, with due notice, shall be permitted to enter the Sellers facilities for the purpose of inspection, review of any and all of the Sellers inspection records, methods, procedures and/or other items as related to the Purchase Order and attachments.

Sample Submission / Resubmission: Seller shall follow all guidelines regarding submission or resubmission of sample material to the Buyer in accordance with TS-16949 quality requirements. Standard A.I.A.G. forms will be accepted providing all line items are completed. Seller may substitute with proprietary forms providing such forms are acceptable to the Buyer.

Sellers Quality Program: Seller shall operate and maintain a quality system in accordance with TS-16949 or shall provide evidence that Seller is seeking certification to said requirements. Seller shall operate and maintain a Buyer approved quality system while seeking certification and shall maintain documentation of that system. Buyer will use the TS-16949 quality standards as a basis for evaluating its supply base.

Returned Material: Material or components deemed as unacceptable by Buyer shall at the Buyers sole discretion be returned to Seller, or repaired for use. Any costs incurred due to this defective material by either the Buyer’s customer or the Buyer such as but not limited to, return, repair, rework, warranty costs, line stoppage, sort activity including warehousing costs, tooling replacement or repair, equipment repair, tear down costs shall be the Sellers responsibility and shall be debited. The Buyer will notify the Seller of these charges with a SNIT (Supplier Non-conformance Issue Ticket) and the accumulation of these charges will be debited to Seller. For these cost associated with the defective material the Buyer may consider the circumstances of each situation on an individual basis. Buyer will exercise due care to avoid unnecessary charges to Seller for work as described above.

Sellers Responsibility: It shall be the responsibility of the Seller to follow all guidelines for inspection and testing, sampling and processing of any and all products, goods or services as described in Buyers Purchase Orders. It is also expected that Seller will communicate with Buyer, all quality related issues pertaining to the items as stated in the Purchase Order.

21 - Terms and Conditions Applicable to Orders Placed for Castings

All castings shall be sound and free of injurious defects such as but not limited to the following: blowholes, inclusions, porosity, slag, fins, flash.
Castings shall be clean and free of sand, scale, core wires, chaplets etc.
All castings shall be coated with a light rust inhibitor as required by the Buyer, unless otherwise noted. The rust inhibitor and any dye-penetrant must be approved and the MSDS provided to Buyer. Over or under application will be subject to the return material clause in Paragraph 20 above.
All castings produced from pattern equipment supplied by the Buyer shall be the sole responsibility of the Seller in relation to a sound casting and complete compliance to applicable drawings, dimensional accuracy, notes, specifications etc.
In the event that the pattern equipment or related tooling used to produce castings for the Buyer should require repair, the Seller shall be responsible for 100% of the associated costs of said repair unless agreed upon otherwise. All associated tooling shall be maintained and kept in good working order by the Seller.
In the event that castings are rejected and the rejection has caused losses will be subject to the any applicable LVA agreement and the return material clause in Paragraph 20 above.
Scrap and repair of castings will be done in a controlled manner with trained employees following approved procedures with processes and documents to the ROI quality system, including FIFO, visual management to clearly show disposition of parts. All completed rework and scrap transactions will be reported daily. Rejected material must be disposition within a maximum of 8 days. Resources will be applied to match the volume of defects to ensure timely rework and final disposition of scrap. Only the allotted foundry repair area can be used. If additional space is required it will be the Seller’s responsibility to acquire and manage. See also return material clause in Paragraph 20 above.
Castings produced from the tooling for the exclusive use of the Buyer, shall not under any circumstances be sold to a customer other than Buyer unless written permission is obtained from Buyer.
The Seller is responsible for the control and documentation of material to applicable government restrictions and safety guidelines as they apply to toxic and hazardous material.

22 - Design or Process Changes

In accordance with established quality systems, the Buyer explicitly requests Seller to abide by the AIAG standard for PPAP submissions, and that Seller must notify the Buyer plant quality personnel to obtain prior approval before implementing any design or process changes including but not limited to those mentioned below:

Use of any material other than that approved in initial PPAP sample.
Movement of process to new or modified tooling, molds, dies, patterns etc., including additional or replacement tooling. NOTE: Perishable tooling excluded.
Production following refurbishment or re-arrangement of existing tooling and equipment.
Production from transferred tooling or equipment from plant to plant.
Changes in the use of sub-contractors for parts, non-equivalent materials or services such as heat treating, plating, painting etc., that affect form, fit, function, durability or performance to specifications.
Product produced after tooling has been inactive for a period of 1 year or more.
Product and process changes related to the components of the production product manufactured internally or subcontracted that affect form, fit, function, durability or performance of the saleable product. Additionally, sub-contractors must be approved by supplier prior to submission to Buyer.
Changes in inspection or test methods.
New technology, provided that
Such notification shall be completed in the form of a PSW (Part Submission Warrant) to your Buyer plant quality personnel with related documentation of any of the PPAP elements being affected by the change. Supplier shall obtain Buyer plant quality personnel approval prior to implementing change(s).
In the event that the above procedure is not followed and material rejections occur as the consequence of the design or process changes above, the Buyer will take appropriate action to recover any costs incurred by those material rejections. This is to include but is not limited to scrap, rework, assembly and manufacturing line down costs for both the Buyer, and the Buyer’s customer and affected facilities.

23 - Pattern Equipment

The Seller shall be responsible for the proper care, maintenance and storage of the pattern equipment. Upon the completion of the order, the tooling shall be returned to the Buyers location unless instructed otherwise.

24 - Terms and Conditions that apply to Seller visitation to any Buyer facility.

The use, possession, manufacture, distribution or sale of a controlled substance illegal drugs, drug paraphernalia, or unsealed or unauthorized alcohol on the Buyers premises is prohibited.Being under the influence of an unauthorized controlled substance illegal drug or alcohol on the Buyers premises is strictly prohibited.
Smoking is prohibited in all areas of any Buyer facility.
Safety glasses are required in all Buyer facilities where designated. Visitors who arrive without safety glasses will be provided a pair before entry into a designated safety area.
Service providers are required to abide by all safety procedures established by Buyer and all state and federal safety rules and regulations.
All visitors arriving at a Buyer facility are required to check in at the front desk prior to entering other areas of the facility. Visitors are not allowed to roam the facility unescorted unless instructed by an authorized Buyer representative. In the event the office is closed, visitors shall notify the immediate plant supervisor.
All visitors are required to follow established safety procedures regarding hearing protection.
Camera phones or photographic devices of any kind are not allowed in any Buyer facility.
All suppliers deemed as competitive or potentially competitive must follow the Buyer competitive supplier procedure before entering any Buyer facility. Those suppliers will not be allowed in any facility until this agreement has first been secured.

25 - Insolvency

The Buyer reserves the right to cancel an order without liability to Seller of any kind if any of the following occurs: the admitted insolvency of Seller, the institution of proceedings in bankruptcy or for reorganization under any insolvency laws by or against seller; the appointment of a receiver for sellers business or property; or an assignment by seller for the benefit of creditors.

26 - Applicable Law

The laws of the State of Michigan shall govern this agreement, its construction and the determination of any rights , duties or remedies of the parties arising out of or relating to this agreement. Each of the parties submits to the jurisdiction of the courts of Michigan, including the Federal courts in Michigan. The parties acknowledge and agree that the United States District Court for the Eastern District of Michigan or the Michigan Circuit Court for the County of Oakland shall have sole and exclusive jurisdiction over any case or controversy arising out of or relating to this Agreement.

27 - Binding Effect

The agreement evidenced by a Purchase Order issued from Buyer, including these Terms and Conditions, shall be binding on and insure to the benefit of Buyer and Seller and their respective heirs, successors or assigns.