HIGHER SOURCE AVIATION SERVICES, INC.: REPAIR SERVICES - TERMS & CONDITIONS OF SALE AND SERVICES

GOVERNING TERMS AND CONDITIONS. These Terms and Conditions govern the transaction entered into between Higher Source Aviation Services, Inc. (“HSAS” or “Seller”) and its customer (“Buyer”) whether for HSAS’ services to goods, parts or equipment (“Goods”) or for the sale of Goods by HSAS to Buyer (“Agreement”). HSAS’ acceptance of Buyer’s order for services or sale of Goods is expressly made conditional on Buyer’s acceptance of and agreement to these Terms and Conditions. Buyer’s agreement to these Terms and Conditions shall be conclusively presumed from Buyer’s delivery of Goods to HSAS for services or request to purchase Goods from HSAS. Any other terms and conditions, including those set forth in a Buyer’s purchase order, any other ordering document or any changes, additions or strike outs made to these Terms and Conditions by Buyer, are hereby rejected in full by HSAS, shall have no effect whatsoever and shall be null and void.

ACCEPTANCE OF ORDER. Upon delivery of Buyer’s goods for service to HSAS premises, HSAS shall notify Buyer whether HSAS accepts or rejects Buyer’s order for services. If HSAS does not reject Buyer’s order for services within five (5) business days of the delivery of Buyer’s goods to HSAS’ facility, Buyer’s order shall be automatically accepted under these Terms and Conditions.

PAYMENT. Terms are net thirty (30) days from date of HSAS’ invoice unless otherwise specified on the face of invoice. All items quoted to Buyer are in United States dollars. Buyer hereby agrees to all payment terms herein and to pay Seller for services ordered or equipment purchased by Buyer in cash or in negotiable paper collectable at its face value in United States dollars. Seller is not required to proceed with performance of Buyer's order if (i) Buyer is in default under this Agreement or any other contract or agreement with Seller or any of Seller’s affiliates; (ii) upon Buyer’s suspension of its business; (iii) Buyer’s insolvency or liquidation; or (iv) the commencement of any proceeding under any bankruptcy law by or against the Buyer. Upon failure of the Buyer to make payment when due of any invoice for HSAS’ services or any sale of goods as set forth herein, Buyer hereby grants the Seller the right to come onto the premises of the Buyer, or Buyer's purchaser, and to reclaim all or any part of the goods whether serviced by Seller or sold to Buyer under this Agreement. Seller reserves its right to self help and the remedy of replevin in connection with such failure to pay for such services, goods or equipment. In the event that any amounts due Seller hereunder become delinquent, the entire amount or balance owed by Buyer to Seller hereunder shall become immediately due and payable. Any overdue amounts owed by Buyer to Seller under these Terms and Conditions shall be charged interest from the date such payment became due and owing until such amount is paid in full at the higher of eighteen percent (18%) per annum or the legal rate of interest then in effect, determined on a pro rata daily basis.

CREDIT. Seller reserves the right, at any time, to revoke any credit extended to the Buyer if Buyer fails to pay for any services or sale of equipment promptly when due, or for any other reason in the sole and absolute discretion of Seller.

WARRANTY. Seller warrants that at time of delivery to the Buyer, and for a period of one (1) year or one thousand (1,000) operating hours for overhauled items, or six (6) months or five hundred (500) hours for repaired items, after delivery, whichever shall first occur, all goods serviced or sold by HSAS under these Terms and Conditions shall be free of defects in material and workmanship, and substantially conform to the original manufacturer's prevailing U.S. Government, and/or commercial specifications or drawings, as applicable, including all technical requirements. Seller's sole liability and Buyer’s sole remedy under this warranty shall be limited to repair, replacement, or refund, at Seller's option and in its sole discretion, of any goods which have failed to comply with this warranty. Notice of an alleged defect shall be given by the Buyer to Seller within thirty (30) days after discovery thereof, and such notices shall contain detailed particulars setting out the nature and ground of the defect. Transportation charges for the return of such defective parts or equipment to Seller and its reshipment to Buyer and the risk of loss thereof will be borne by Seller only if returned in accordance with Seller’s written packing and shipping instructions. Seller shall not be liable under this warranty in any of the following events: (i) if the aircraft component in which the part is fitted has not been operated, maintained, overhauled, or stored in accordance with the Manufacturers' instructions; (ii) if the defective part shall have been misused, subject to negligent treatment, improperly stored, handled, repaired, or altered by the Buyer in any way which may have impaired its safety of operation or efficiency; (iii) if the aircraft component in which such part is fitted has been subjected to any abnormal condition or to misuse or neglect or shall have suffered any accident. If assignable, Buyer shall be entitled to receive the benefit given by the supplier of goods to Seller, and for this purpose Seller hereby agrees to assign the benefit of such warranty to the Buyer to the extent it is transferable.

DISCLAIMER. THE GUARANTIES AND WARRANTIES PROVIDED IN THIS AGREEMENT ARE EXCLUSIVE AND ARE GIVEN AND ACCEPTED IN LIEU OF (A) ANY AND ALL OTHER WARRANTIES AND/OR GUARANTIES, STATUTORY, EXPRESS OR IMPLIED (INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE); AND (B) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM, OR REMEDY IN STATUTE, CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE WHETHER ARISING FROM HSAS’ NEGLIGENCE, ACTUAL OR IMPUTED, AGAINST HSAS OR HSAS’ OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SUCCESSORS, ASSIGNS, SUBCONTRACTORS, INSURERS OR AFFILIATES. THE REMEDIES OF BUYER FOR ANY BREACH OF GUARANTIES AND WARRANTIES SHALL BE LIMITED TO THOSE PROVIDED HEREIN, TO THE EXCLUSION OF ANY AND ALL OTHER REMEDIES. NO AGREEMENT VARYING OR EXTENDING THE FOREGOING GUARANTIES, WARRANTIES, REMEDIES OR LIMITATIONS WILL BE BINDING UPON HSAS UNLESS IN WRITING AND SIGNED BY A DULY AUTHORIZED REPRESENTATIVE OF HSAS.

INDEMNIFICATION. Buyer shall indemnify and hold HSAS, its affiliates and each of their respective officers, directors, employees, successors and assigns harmless against any claim, loss, damages, costs and expenses of whatever nature, including reasonable attorney’s fees and other legal charges, arising from Buyer’s or Buyer’s subcontractors’, employees’, workmen’, servants’ or agents’ (“Indemnifying Parties”) alleged acts or omissions in connection with the Buyer’s or any Indemnifying Party’s use, sale, transfer, operation or alteration in any way of the Goods or services furnished hereunder, as well as where strict liability is imposed against HSAS by law, for (i) bodily injury, death or illness to any person; (ii) damage, destruction or other injury to any property, to include environmental damage to persons or property; (iii) any infringement, violation or misappropriation of a third party’s copyright, trademark, trade secret, patent or other intellectual property or proprietary rights; and/or (iv) in the case of any Goods furnished hereunder in accordance with the special request, plans or specifications of the Buyer any fines, penalties, damages, losses or otherwise, civil or criminal, that result from Buyer’s or any Indemnifying Party’s failure to comply with its obligations hereunder or failure to comply with any applicable laws or regulation.

LIABILITY LIMITATION. The maximum aggregate liability of HSAS to Buyer under any purchase order accepted hereunder, whether based in contract, liquidated damages, warranty, tort (including negligence), strict liability, or otherwise, arising out of the performance of this Agreement or from the manufacture, sale, delivery, purchase, resale, repair, overhaul, services, installation, technical direction of installation, replacement or use of any Goods or associated equipment shall not exceed an amount equal to the Seller’s invoiced price for such Goods or the services rendered (or if not separately priced, Seller’s established selling price for such Good or service).

HSAS’ maximum aggregate liquidated damages liability under this Agreement shall not exceed the lesser of the cost of the Goods under the applicable purchase order or the amount of Fifty Thousand US dollars (“50,000”).

IN NO EVENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, GUARANTY, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, INDEMNITY, STATUTE OR OTHERWISE, SHALL HSAS (INCLUDING ITS OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SUCCESSORS, ASSIGNS, SUBCONTRACTORS, INSURERS AND AFFILIATES) BE LIABLE TO Buyer OR IT’S OFFICERS, DIRECTORS, SUCCESSORS, ASSIGNS, INSURERS OR AFFILIATES FOR LOSS OF PROFIT OR REVENUES, LOSS OF USE OF THE GOODS OR ANY ASSOCIATED EQUIPMENT, COST OF CAPITAL, COST OF SUBSTITUTE GOODS, EQUIPMENT OR SERVICES, COST OF SUBSTITUTE FACILITIES, DOWNTIME COSTS, OR CLAIMS OF BUYER’S CUSTOMERS OR FOR SPECIAL, CONSEQUENTIAL, INCIDENTAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES.

DELIVERY. All deliveries shall be made FCA, Seller’s Flat Rock, NC, USA facility (INCOTERMS 2000). Failure of Seller to make delivery when due, if such failure is due to any reason beyond the control of Seller shall not subject Seller to any liability to include the payment of any penalty or late fee to Buyer. Seller reserves the right to make delivery in installments that shall be separately invoiced and paid for when due. Delay in delivery of installments will not relieve the Buyer of its obligation to accept remaining deliveries.

RETURNED GOODS AND CANCELLATION. All sales of Goods and services by Seller are final. Buyer shall not return any Good to Seller without the express prior written approval for such return by the Seller in its sole discretion. If Seller gives permission to return any Good for any reason, the Buyer agrees to pay a standard restocking charge and all transportation and insurance costs in connection with such return. Request for the cancellation of any purchase order to include for services or sales of Goods must be submitted to Seller in writing and will be subject to a cancellation fee as well as the payment in full for work completed as of the date of the cancellation. Seller shall have sole discretion to grant any request for cancellation.

EXTRAS. Additional charges will be allowed and at Seller's discretion, be made for cartons, wrapping, packing, boxing, crating, delivery, drayage, returnable containers, taxes and transportation of goods covered by invoice. All sales, use and excise taxes and duties shall be paid by and for the account of Buyer.

TITLE. Title and risk of loss to all Goods sold hereunder shall pass to Buyer upon Seller's delivery to carrier at point of shipment designated by Seller. Seller's liability and Buyer's remedy under this warranty are limited to the removal of any title defect or, at the election of Seller, to the replacement of the Goods which have a title defect.

ASSIGNMENT/WAIVER. This Agreement is not assignable by Buyer without the prior written consent of Seller. Any failure by either party to exercise any right granted by these terms and conditions shall not be construed as a waiver of such right or any other rights under these Terms and Conditions, and shall in no way affect the subsequent exercise of such right or of any rights under these Terms and Conditions by that party. If any term of this Agreement is determined to be invalid or unenforceable under applicable law, such term or terms shall not apply; but the remaining terms herein shall remain in full force and effect.

GOVERNING LAW AND FORUM. This contract shall be governed by and construed according to the laws of the State of North Carolina, without reference to its conflict of laws rules and specifically excludes application of the United Nations Convention on Contracts for the International Sale of Goods. Any and all disputes hereunder shall be submitted solely and exclusively to binding arbitration in Charlotte, , NC, in accordance with the Commercial Arbitration Rules of the American Arbitration Association. The arbitration shall be conducted before a single arbitrator chosen in accordance with such rules, and shall be in the English language.

CLAIMS. Failure to give notice of claim within ten (10) days after the occurrence upon which a claim is founded shall constitute a waiver by Buyer of the claim. If, upon receipt of the Goods by Buyer at its location, the Goods do not conform to the Goods or services requested under the applicable purchase order,, Buyer shall within ten (10) calendar days after receipt thereof, notify Seller of such condition and afford Seller a reasonable opportunity to inspect the Goods and make any appropriate adjustment or replacement. The same remedies afforded Buyer under "Warranties" shall be exclusive for defective goods discovered upon inspection. Buyer shall not delay payment for the Goods pending their inspection. Buyer will furnish written shipping instructions for all Goods as promptly as possible. In the absence of such instructions, Seller may, at any time beginning ten (10) days after forwarding notice to Buyer by mail, facsimile or otherwise that the Goods are ready for shipment, do either of the following for the account of and at the expense and risk of Buyer: (i) arrange for shipment of the Goods by a carrier of its own selection to Buyer's place of business or other destination reasonably believed to be suitable or (ii) warehouse the Goods and charge the Buyer a reasonable warehousing fee.

DISPOSITION OF PROPERTY. Buyer property sent to Seller which is not either claimed or for which Buyer has failed to provide disposition direction to Seller within twelve (12) months after a request for the same is made by Seller will be considered abandoned property and Seller, at its sole discretion, may take clear title to such property without resorting to judicial action and may scrap or reuse such Buyer property. Buyer hereby agrees that if Buyer fails to claim its property within twelve (12) months as herein stated, Buyer hereby transfers all of its right, title and interest to such Goods or property, without more, to Seller. At its sole discretion, Seller may take clear title to any Goods or property which Buyer has requested Seller to scrap, without resorting to judicial action, and Seller may use such Buyer property without further permission from Buyer.

EXPORT COMPLIANCE. For all international shipments, unless otherwise instructed by the Buyer, the Seller will obtain any and all necessary export licenses necessary to ship these Goods from the United States Government Department of State or Department of Commerce, if so required under the applicable U.S. Government export control regulations. Seller and Buyer specifically acknowledge that Seller’s ability to obtain an export license is conditioned upon the ability of Seller and Buyer to conform to the laws and regulations of the U.S. Government and its various cognizant departments regarding the sale of the Goods or services to Buyer. Buyer agrees to provide any required documentation to Seller required to obtain an export license. Buyer understands that Seller is legally responsible for violations of U.S. export law; therefore, Buyer agrees that Buyer will, upon demand by Seller, make Seller whole as a result of any fines, penalties, or forfeitures resulting from errors or omissions of any freight forwarder not recommended or approved by Seller. Any technical data or defense service exported from the United States under these Terms and Conditions and any defense article which may be produced or manufactured from such technical data or defense service may not be transferred to a person in a third country or to a national of a third country except as specifically authorized by the United States Department of State unless the prior written approval of that agency of the U. S. Government has been obtained, and this obligation shall remain binding on the Buyer and survive the term of delivery of any Goods or property from Seller. For all domestic shipments, the Buyer assumes all responsibility for any subsequent export of the Goods and shall indemnify Seller against any and all losses, liabilities, damages, costs, penalties, fines, civil or criminal or expenses arising from the improper or unauthorized export of Goods shipped following any purchase or sales made under this Agreement by Buyer or Buyer’s customer, and Buyer by acceptance of these terms and conditions of sale, certifies that, if receiving defense articles, Buyer is legally registered with the Directorate of Defense Trade Controls and therefore eligible to handle such Goods.

IMPORT COMPLIANCE. With respect to any import laws and other regulations of the country of destination and its various cognizant departments regarding the import of the Goods sold and purchased or serviced hereunder, Buyer shall be solely responsible for obtaining and complying with any and all import licenses or other authorizations which may be required for importing the Goods. Buyer shall be responsible for any and all taxes and custom fees assessed.

U.S. GOVERNMENT FLOWDOWN. Seller accepts only the flowdown of those government purchasing regulations (FAR, DFAR, etc.) made known to and accepted by Seller at time of price quotation. If a purchase or sale of Goods or services rendered to Goods under a purchase order requires compliance with any regulations not made previously known to and accepted by Seller, Seller reserves the right to re-price the Goods or cancel the applicable purchase order without any further liability.

NOTICES. All notices or communications of any kind under and with respect to a purchase order, these Terms and Conditions of sale and the Goods shall be in the English language. All legal notices required hereunder shall be given by hand delivery or registered mail. The effective date of each such notice shall be the date upon which it is received.

FORCE MAJEURE. Buyer acknowledges that the delivery dates are based on the assumption that there will be no delay due to causes beyond the reasonable control of Seller. Seller shall not be charged with any liability for delay or non-delivery when due to delays of suppliers, acts of God or the public enemy, compliance in good faith with any applicable foreign or domestic governmental regulation or order, whether or not it proves to be invalid, fires, riots, labor disputes, unusually severe weather, or any other cause beyond the reasonable control of Seller. To the extent that such causes actually delay deliveries on the part of Seller, the time for the performance shall be extended for as many days beyond the date thereof as is required to obtain removal of such causes. This provision shall not, however, relieve Seller from using reasonable efforts to avoid or remove such causes and continue performance with reasonable dispatch whenever such causes are removed.

DEBARMENT OF BUYER. If Buyer is debarred by the U.S. Government from participating in transactions which involve the export of goods (whether commercial or military), Seller has the immediately available option of canceling any purchase order without liability of any kind to Buyer. If Buyer is debarred by the U.S. Government from selling goods either directly to the government or from providing goods as a subcontractor in fulfillment of requirements originating with the U.S. Government, Seller has the immediately available option of canceling any and all Buyer purchase orders without any liability of any kind to Buyer.

Revision Date 10/20/11