Standard Purchasing Terms and Conditions

Applicability. These Supplier/Vendor Purchase Order Terms & Conditions (Terms) apply to every purchase order, release, schedule, or change order issued by HTS Coatings LLC that incorporates or references them.

Section 1.0 Contract Formation and Purchase Order Administration

1.1 Definitions and Scope

Buyer or HTS. HTS Coatings LLC.

Supplier. The person or entity identified as seller, supplier, vendor, or service provider on the Purchase Order, including its employees, agents, and approved sub-tier suppliers.

Purchase Order or PO. The HTS-issued purchase order and all Buyer-issued drawings, specifications, statements of work, quality clauses, customer requirements, attachments, and authorized written changes incorporated into it.

Goods and Services. All materials, products, components, documents, data, work, and services furnished under the PO.

Nuclear/Customer-Controlled PO. A PO that identifies Goods or Services as nuclear-related, safety-related, a basic component, subject to commercial-grade dedication, customer-controlled, CFSI-controlled, or subject to specified nuclear quality or regulatory requirements.

Supplier is responsible for reviewing the complete PO before acceptance and for requesting clarification of any missing, conflicting, or ambiguous requirement before beginning work.

1.2 Acceptance and Controlling Agreement

Supplier accepts the PO and these Terms by acknowledging the PO, commencing performance, shipping Goods, providing Services, or accepting payment, whichever occurs first. The PO is Buyer's offer and is expressly conditioned on Supplier's acceptance of the PO without additional or different terms.

No term in Supplier's quotation, proposal, acknowledgment, portal, click-through, invoice, packing slip, or other document modifies the PO. Any such additional or conflicting term is rejected unless an authorized HTS representative expressly accepts it in a written PO amendment. Acceptance of Goods, payment, or signature on a Supplier document for administrative convenience does not constitute acceptance of Supplier's terms.

1.3 Order of Precedence and Conflicts

If Buyer-issued documents conflict, the following order of precedence applies: (a) an authorized written PO amendment or change order; (b) special terms stated on the face of the PO; (c) Buyer- or customer-issued technical, quality, drawing, specification, and statement-of-work requirements incorporated into the PO; and (d) these Terms. A specific requirement controls over a general requirement, and a later authorized Buyer revision controls over an earlier Buyer revision.

Supplier shall stop the affected work and obtain written direction from authorized HTS purchasing personnel before proceeding with a known conflict. Supplier bears the risk of proceeding without clarification.

1.4 Changes

Only an authorized HTS purchasing representative may change the PO. Supplier shall not change price, quantity, delivery, source, design, material, formulation, specifications, processes, sub-tier suppliers, or other requirements without an authorized written PO amendment when approval is required.

Supplier shall notify HTS promptly of any proposed Buyer-directed change that may affect cost or schedule and shall provide supporting detail within five (5) business days unless the PO states another period. Supplier waives an adjustment not timely identified before performing the changed work, except to the extent HTS expressly agrees otherwise in writing.

Section 2.0 Commercial and Legal Terms

2.1 Price Taxes Invoicing and Payment

Prices are firm and include all costs of complying with the PO, including packaging, preservation, documentation, duties, and fees, unless the PO expressly states otherwise. Supplier shall not impose surcharges or price increases without an authorized written PO amendment.

Supplier is responsible for taxes imposed on its income, property, payroll, and personnel. Separately stated sales or use taxes lawfully due may be invoiced unless HTS provides an exemption certificate. Supplier shall issue accurate invoices that reference the PO and line item and include all required delivery and quality documentation. Unless the PO states otherwise, payment is due net thirty (30) days after the latest of HTS's receipt of a correct invoice, conforming Goods or Services, and all required documents.

HTS may withhold disputed amounts and may set off amounts Supplier owes HTS or its affiliates. Payment, including early payment, does not constitute inspection, acceptance, or waiver of any right.

2.2 Delivery Packing and Shipping

Time is of the essence. Supplier shall deliver the exact quantities by the dates and to the location stated in the PO. Early, partial, substitute, or excess deliveries require prior written approval. Supplier shall promptly notify HTS of an actual or anticipated delay, its cause, duration, containment, and recovery plan; notice does not excuse performance.

Supplier shall package, preserve, label, and ship Goods to prevent damage, degradation, contamination, commingling, loss of identification, or loss of shelf life and shall comply with applicable hazardous-material and transportation requirements. Each shipment shall include a packing list showing the PO, line item, quantity, part or material identification, lot/batch/heat identification, country of origin when required, and the required certifications and inspection/test reports.

Delivery terms are those stated in the PO. If none are stated, delivery is FOB HTS Coatings' designated facility, destination, freight prepaid and allowed. Supplier bears all transportation costs and risk of loss until conforming Goods and all required documents are delivered to and accepted by HTS. Supplier is responsible for reasonable premium freight and recovery costs caused by its delay or nonconformance.

For international or cross-border shipments, Supplier is responsible, unless the PO expressly states otherwise, for export clearance, licenses, permits, accurate tariff classification and country-of-origin documentation, transportation, insurance, brokerage, customs clearance, duties, tariffs, taxes, merchandise processing fees, harbor or port charges, storage, demurrage, and every other charge required to deliver the Goods to HTS. Supplier shall not designate HTS as importer of record, customs declarant, or the party responsible for charges without HTS's prior written approval. HTS will not advance, absorb, reimburse, or share any freight, duty, tariff, tax, brokerage, customs, port, storage, demurrage, or similar charge unless an authorized HTS representative expressly agrees in the PO or a written PO amendment. If law or a governmental authority requires HTS to pay an amount allocated to Supplier under this clause, Supplier shall promptly reimburse HTS or issue a corresponding credit.

2.3 Title and Risk of Loss

Supplier warrants good and marketable title, free of liens and encumbrances. Unless the PO states otherwise, title and risk of loss pass to HTS upon delivery and acceptance at the designated destination. Risk for rejected Goods revests in Supplier upon notice of rejection. Passage of title does not limit HTS's inspection, rejection, warranty, or other rights.

2.4 Inspection Acceptance and Rejection

HTS may inspect, test, audit, or verify Goods and Services at reasonable times and locations, including at Supplier and approved sub-tier facilities. HTS may use sampling plans, but acceptance of a sample does not accept the lot. Supplier shall provide reasonable facilities, records, assistance, and test specimens at no additional charge when required by the PO.

Goods and Services are subject to final inspection and acceptance by HTS notwithstanding source inspection, prior payment, or delivery. HTS may reject nonconforming Goods or Services within a reasonable time after discovery, including latent defects. At HTS's election, Supplier shall promptly repair, replace, reperform, or refund rejected Goods or Services and bear associated transportation, inspection, segregation, testing, and administrative costs. Supplier shall not redeliver rejected Goods without disclosure of the prior rejection and HTS's written authorization.

2.5 Warranties

Supplier warrants that all Goods and Services will: (a) be new and authentic unless the PO expressly permits otherwise; (b) strictly conform to the PO, approved samples, representations, and applicable specifications; (c) be merchantable, of good material and workmanship, and free from defects; (d) be fit for the disclosed or reasonably foreseeable purpose; (e) be free of liens; (f) be produced and provided in compliance with applicable law; and (g) not infringe third-party intellectual property rights. Services will be performed by qualified personnel in a professional and workmanlike manner consistent with applicable industry standards.

Unless the PO or a longer manufacturer warranty states otherwise, the warranty period is the later of eighteen (18) months after delivery or twelve (12) months after the Goods are placed in service or the Services are accepted. Repaired, replaced, or reperformed items are warranted for the longer of the remaining original period or twelve (12) months after correction. These warranties are cumulative and extend to HTS, its customers, and their permitted successors and users.

2.6 Remedies and Supplier Responsibility for Costs

HTS's remedies are cumulative and in addition to rights available under the PO, the Illinois Uniform Commercial Code, and other applicable law. To the extent caused by Supplier's breach, negligence, nonconformance, delay, or CFSI, Supplier is responsible for HTS's reasonable documented costs of inspection, containment, segregation, testing, rework, replacement, cover, expedited freight, field correction, recall, investigation, customer response, and regulatory response.

No disclaimer, exclusion of incidental or consequential damages, exclusive remedy, or liability cap appearing in Supplier's documents applies unless it is expressly stated in an authorized written PO amendment.

2.7 Compliance with Laws Ethics and Accurate Information

Supplier shall comply with all laws, regulations, permits, orders, and binding industry requirements applicable to the PO, including those relating to labor and employment, workplace safety, environmental protection, product safety, transportation, anti-bribery, sanctions, import/export controls, and forced or trafficked labor. Supplier shall obtain all required licenses and authorizations.

Supplier shall not use, and shall ensure that no person in its supply chain uses, slave labor, forced labor, bonded labor, indentured labor, involuntary prison labor, trafficked labor, or unlawful child labor in producing or supplying Goods or Services. Supplier shall not furnish any Good mined, produced, or manufactured wholly or in part with forced labor or in violation of Section 307 of the Tariff Act of 1930, the Uyghur Forced Labor Prevention Act, applicable anti-trafficking laws, or substantially equivalent laws in any jurisdiction. Supplier shall maintain risk-based supply-chain due diligence, source and labor records, and effective controls sufficient to demonstrate compliance; flow equivalent requirements to applicable sub-tier suppliers; and promptly notify HTS of any credible allegation, investigation, detention, withholding-release order, finding, or violation affecting the PO. On request, Supplier shall provide supporting records, certifications, traceability, and remediation plans and shall cooperate with HTS audits or customer inquiries. HTS may suspend receipt, reject affected Goods, require alternate sourcing or corrective action, or terminate affected work for noncompliance.

Supplier shall establish and maintain a responsible-minerals sourcing program for tin, tantalum, tungsten, gold, and any other mineral designated under applicable law or identified in the PO. "Conflict Minerals" means columbite-tantalite (coltan), cassiterite, gold, wolframite, their derivatives tin, tantalum, and tungsten, and any other mineral or derivative designated by applicable law. On request, Supplier shall provide complete and accurate country-of-origin, smelter or refiner, chain-of-custody, and due-diligence information using the then-current Responsible Minerals Initiative Conflict Minerals Reporting Template or an equivalent form requested by HTS. Supplier shall conduct a good-faith reasonable country-of-origin inquiry and risk-based due diligence, retain supporting records, and flow equivalent requirements to applicable sub-tier suppliers. Supplier shall not knowingly provide Goods containing Conflict Minerals that directly or indirectly finance or benefit armed groups or are sourced contrary to applicable sanctions or law. Supplier shall promptly disclose any sourcing gap, uncertainty, material change, or nonconformance and shall cooperate with HTS and its customers in meeting applicable obligations under Section 1502 of the Dodd-Frank Act, SEC Rule 13p-1, Form SD, or substantially equivalent requirements.

Supplier shall not offer or provide anything of value to improperly influence HTS, its customers, or a public official. All certifications, test results, invoices, origin statements, representations, and other information furnished to HTS must be complete, accurate, legible, authentic, and not misleading. Supplier shall promptly disclose any actual or suspected falsification, deliberate misconduct, conflict of interest, or legal violation affecting the PO.

2.8 Confidentiality and Publicity

Supplier shall protect nonpublic technical, commercial, customer, security, and business information received from HTS; use it only to perform the PO; disclose it only to personnel and approved sub-tier suppliers with a need to know and equivalent obligations; and return or destroy it at HTS's direction, subject to required record retention. These obligations continue for five (5) years after completion, except trade secrets remain protected while they qualify as trade secrets.

Supplier shall not use HTS's or its customer's name, trademarks, photographs, specifications, or the existence of the relationship in advertising, publicity, case studies, or announcements without prior written consent. Legally compelled disclosure is permitted only after prompt notice to HTS where legally allowed and reasonable cooperation to seek protective treatment.

2.9 Buyer Property and Intellectual Property

All tooling, equipment, materials, drawings, specifications, software, data, and other property furnished or paid for by HTS remain HTS property unless the PO states otherwise. Supplier shall identify, segregate, protect, maintain, and use Buyer property only for the PO; shall not permit liens; and shall return it promptly on request. Supplier bears risk of loss except for ordinary wear or loss caused solely by HTS.

Deliverables created specifically for and funded by HTS under the PO are works made for hire to the extent permitted by law and otherwise are assigned to HTS upon creation. Supplier retains ownership of its pre-existing intellectual property but grants HTS, its customers, and their users a perpetual, worldwide, paid-up license to use, reproduce, maintain, repair, and modify that pre-existing intellectual property as embedded in or necessary to use the deliverables. Supplier shall identify pre-existing intellectual property before performance.

2.10 Indemnification

Supplier shall defend, indemnify, and hold harmless HTS, its affiliates, customers, and their respective directors, officers, employees, and agents from third-party claims, losses, damages, penalties, recalls, costs, and reasonable attorneys' fees arising from or relating to: (a) bodily injury, death, or property damage caused by Supplier or the Goods or Services; (b) Supplier's breach, negligence, willful misconduct, or violation of law; (c) actual or alleged infringement by the Goods, Services, or deliverables; or (d) nonconforming, counterfeit, fraudulent, substituted, or suspect items or records furnished by Supplier or its sub-tier suppliers. Supplier's obligation is reduced only to the extent a final determination attributes the loss to the gross negligence or willful misconduct of an indemnified party.

HTS shall provide reasonable notice of a covered claim. Supplier may control the defense with counsel reasonably acceptable to HTS, but may not settle a claim in a manner that admits fault by, imposes obligations on, or fails to fully release an indemnified party without that party's written consent.

2.11 Insurance

Supplier shall maintain insurance with reputable carriers appropriate to its risks and, unless the PO states different limits, at least: commercial general liability of $1,000,000 per occurrence and $2,000,000 aggregate; automobile liability of $1,000,000 combined single limit when vehicles are used; workers' compensation as required by law and employers' liability of $1,000,000; and professional/errors and omissions liability of $1,000,000 when Supplier provides design, engineering, testing, consulting, or other professional services.

On request, Supplier shall provide certificates of insurance. Where commercially available, HTS shall be an additional insured on commercial general and automobile liability coverage for Supplier's operations, and such coverage shall be primary and noncontributory. Insurance does not limit Supplier's obligations or liability.

2.12 Suspension and Termination

HTS may suspend all or part of the PO by written notice. HTS may terminate for cause if Supplier breaches the PO and fails to cure within ten (10) days after notice, or immediately if the breach is not curable, involves actual or suspected CFSI or falsification, threatens safety or regulatory compliance, or Supplier becomes insolvent, ceases business, or makes an unauthorized assignment.

HTS may terminate all or part of the PO for convenience by written notice. Supplier shall stop as directed, protect work, cancel avoidable commitments, and deliver completed and authorized work. HTS will pay for conforming Goods and Services accepted before termination and reasonable, documented, unavoidable costs for authorized work in process, less prior payments and amounts recoverable by HTS. Supplier is not entitled to anticipated profit, consequential damages, or payment for work performed after the effective termination date without authorization.

2.13 Force Majeure

A party is excused from delay only to the extent caused by an event beyond its reasonable control that could not have been prevented or mitigated through commercially reasonable continuity planning. The affected party shall notify the other in writing within two (2) business days after learning of the event, describe the impact and recovery plan, and diligently mitigate and resume performance.

Force majeure does not include increased costs, changes in market conditions, inability to pay, ordinary labor or material shortages, or a sub-tier failure unless the sub-tier failure independently meets this clause and no reasonable alternate source is available. It does not excuse Supplier's confidentiality, data protection, CFSI notification, preservation, or record obligations. HTS may obtain substitute supply during the delay and may terminate affected work without liability if the delay materially threatens HTS or customer requirements or continues more than fifteen (15) days.

2.14 Assignment and Subcontracting

Supplier shall not assign the PO, delegate performance, subcontract a material portion of the work, or change an approved sub-tier supplier without HTS's prior written consent. Consent does not relieve Supplier of responsibility for sub-tier performance. HTS may assign the PO to an affiliate, customer, or successor in connection with a reorganization, sale, or transfer of the relevant business or program.

2.15 Governing Law Venue and Continued Performance

The PO and these Terms are governed by the laws of the State of Illinois, without regard to conflict-of-law rules. The United Nations Convention on Contracts for the International Sale of Goods does not apply. The exclusive forum for every action arising out of or relating to the PO is the Illinois state court located in Madison County, Illinois, or, if federal subject-matter jurisdiction exists, the United States District Court for the Southern District of Illinois. Supplier irrevocably submits to those courts and waives objections based on personal jurisdiction, venue, or inconvenient forum.

EACH PARTY KNOWINGLY, VOLUNTARILY, IRREVOCABLY, AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN EVERY ACTION, CLAIM, COUNTERCLAIM, OR PROCEEDING ARISING OUT OF OR RELATING TO THE PO, THESE TERMS, OR THE PARTIES' RELATIONSHIP. EACH PARTY ACKNOWLEDGES THAT IT HAS HAD THE OPPORTUNITY TO CONSULT COUNSEL CONCERNING THIS WAIVER.

Unless HTS directs otherwise, Supplier shall continue performing undisputed obligations while a dispute is pending. Before filing suit, the parties shall attempt in good faith to resolve the dispute through authorized management representatives, but this requirement does not prevent urgent injunctive relief or preserve an expiring limitations period.

2.16 General Provisions

Supplier is an independent contractor and has no authority to bind HTS. Failure or delay in exercising a right is not a waiver. If a provision is unenforceable, it will be enforced to the maximum lawful extent and the remaining provisions remain effective. Headings aid reference only. Any amendment or waiver must be in a writing signed by an authorized HTS representative. Electronic signatures and records are effective to the extent permitted by law.

Notices concerning termination, indemnity claims, or disputes shall be sent to the addresses stated in the PO, with a copy to HTS Purchasing, and are effective on documented receipt. Provisions that by their nature should survive completion or termination survive, including warranties, remedies, confidentiality, intellectual property, indemnity, record retention, audit/access, CFSI, governing law, and accrued rights.

Section 3.0 Supplier Quality Requirements

3.1 Quality Management System and Responsibility

Supplier shall maintain a documented quality management system appropriate to the nature, complexity, and risk of the Goods and Services. If the PO requires a particular standard, accreditation, customer approval, or quality program, Supplier shall maintain it for the duration of performance and provide objective evidence on request. HTS approval, surveillance, or inspection does not relieve Supplier of responsibility for conformity.

Supplier shall use qualified personnel and controlled procedures, processes, equipment, and inspection/test methods. When specified by the PO, Supplier shall obtain HTS approval of products, materials, designs, procedures, special processes, equipment, test methods, and personnel qualifications before use.

3.2 Technical Requirements and Document Control

Supplier shall comply with the drawing, specification, standard, process requirement, inspection instruction, and revision level identified on the PO. Supplier shall not substitute a later, earlier, or alternate revision without prior written approval. Supplier shall ensure applicable documents are reviewed for adequacy, approved before use, available where work is performed, and protected from unintended use of obsolete versions.

Supplier shall maintain configuration and revision traceability sufficient to demonstrate which requirements governed each lot, batch, item, or service. Supplier shall notify HTS before proceeding if a referenced document is unavailable, illegible, conflicting, or unsuitable for the intended work.

3.3 Product Process Source and Organizational Changes

Supplier shall notify HTS in writing before implementing a change that may affect conformity, traceability, qualification, safety function, customer approval, or regulatory status. Notification shall be early enough for HTS and its customer to evaluate the change and shall include the reason, affected items and POs, technical impact, validation, and proposed effective date.

• product design, material, grade, formulation, composition, dimensions, or performance;
• raw-material source, actual manufacturer, distributor, manufacturing method, process parameters, or special process;
• manufacturing, processing, inspection, test, laboratory, or storage location;
• inspection, acceptance, sampling, statistical, or test methods and equipment;
• approved sub-tier suppliers or outsourced operations;
• quality management system, certification, accreditation, regulatory status, or approved-supplier status; and
• ownership, legal name, facility closure, key quality organization, or other condition that may disrupt traceability or control.

For Nuclear/Customer-Controlled POs, Supplier shall not implement a listed change without prior written HTS approval when the change could affect the PO or applicable customer requirements. At minimum, changes to the actual powder manufacturer, manufacturing site, material formulation/composition, raw-material source, or certification/test laboratory require prior written approval when used for nuclear or customer-controlled work.

3.4 Certifications Inspection Reports and Traceability

Supplier shall provide all material certifications, Certificates of Conformance, inspection reports, test reports, safety data, and other quality records required by the PO with each shipment. Required documentation is a condition of delivery and payment. A Certificate of Conformance shall be signed or otherwise authenticated by an authorized Supplier representative and state that the Goods or Services conform to the PO and incorporated requirements.

Records shall identify, as applicable, the actual manufacturer; Supplier and HTS PO/line; part number or material description; specified drawing, standard, material specification, and revision; quantity; heat, melt, lot, batch, serial, or other unique identifier; manufacturing or test location; country of origin when required; inspection/test method; acceptance criteria; actual results; and authorized approval. Traceability shall be maintained from received materials through manufacture, inspection, packaging, and shipment and shall link each delivered unit or lot to its supporting records.

For powders and other lot-controlled materials, certifications shall identify the actual powder manufacturer, product designation and material/chemical specification, manufacturing lot or batch, quantity, and the chemistry, composition, particle-size distribution, or other test results required by the PO. Distributor-issued documents shall preserve traceability to the original manufacturer's unaltered records.

Supplier shall not alter, obscure, recreate, or misrepresent a certification or test report. A necessary correction must preserve the original entry, identify the change, reason, date, and authorized person, and remain traceable to the original record. Whiteout, undocumented overwriting, and substitution of generic or unrelated reports are prohibited.

3.5 Inspection Testing Critical Characteristics and Calibration

Supplier shall plan and perform inspections, examinations, tests, and acceptance activities necessary to verify conformity. For critical items or key characteristics identified by the PO, Supplier shall implement the specified design verification, validation, inspection, testing, statistical, and acceptance controls and provide objective evidence. Sampling or statistical methods may be used only when authorized by the PO or an approved procedure and must be appropriate to the risk and lot.

Measuring and test equipment used for acceptance shall be calibrated at defined intervals against standards traceable to NIST or another recognized national or international standard when such standards exist. Supplier shall assess and notify HTS of potentially affected product when equipment is found out of tolerance. HTS may require test specimens, witness or hold points, source inspection, first-article data, or independent testing.

3.6 Identification Handling Preservation and Shelf Life

Supplier shall identify and control materials, parts, lots, batches, and inspection status to prevent substitution, commingling, contamination, damage, deterioration, or unintended use. Identification shall remain legible and traceable through processing and delivery. Supplier shall preserve special environmental, cleanliness, electrostatic, hazardous-material, and foreign-material-exclusion controls required by the PO or good industry practice.

Shelf-life-controlled Goods shall show manufacture/cure date, expiration or retest date, storage conditions, and remaining shelf life. Supplier shall not ship expired Goods or Goods below the minimum remaining shelf life stated in the PO without prior written approval.

3.7 Right of Access Source Verification and Audit

Upon reasonable notice, Supplier shall provide HTS, HTS's customer, their authorized representatives, and applicable regulatory authorities access to facilities, work areas, personnel, processes, sub-tier facilities, and records associated with the PO for source inspection, verification, surveillance, investigation, or audit. Access may occur during performance and throughout the required record-retention period, subject to reasonable safety and security controls that do not defeat the access right.

Supplier shall include equivalent access rights in applicable sub-tier orders and shall coordinate access without additional charge. Source verification, audit, or release by HTS or its customer does not constitute final acceptance or relieve Supplier of responsibility.

3.8 Nonconforming Product Deviations and Escapes

Supplier shall identify, document, segregate, and control actual, suspected, or potentially nonconforming Goods or Services to prevent unintended use or shipment. Supplier shall not ship or implement a deviation and shall not repair, rework, substitute, or disposition product as use-as-is without prior written HTS authorization when the action departs from the PO or an approved process. HTS authorization is limited to the specific condition and does not amend future requirements.

If Supplier discovers that nonconforming or suspect Goods, Services, or records were shipped or may affect previously delivered product, Supplier shall notify HTS immediately and no later than one (1) business day after discovery. Notice shall identify affected POs, items, lots/batches/serials, quantities, shipments, the known condition, immediate containment, and safety or customer impact. Supplier shall preserve affected material and records, support extent-of-condition review, and provide updates and disposition information requested by HTS.

3.9 Corrective Action

Supplier shall promptly contain conditions adverse to quality and, when requested, provide a documented corrective-action response addressing the problem statement, immediate correction, root cause, extent of condition, impact on prior deliveries, corrective and preventive actions, responsible owners, completion dates, and effectiveness verification. Supplier shall meet the response date stated by HTS and shall notify HTS promptly if reliable completion is at risk.

HTS may require additional inspection, testing, source surveillance, or independent verification until effectiveness is demonstrated. Supplier shall flow corrective actions to affected sub-tier suppliers and is responsible for recurrence or systemic failures within its supply chain.

Section 4.0 Nuclear CFSI Flow Down and Records

4.1 Counterfeit Fraudulent and Suspect Items CFSI

Supplier shall establish and maintain risk-appropriate controls to prevent, detect, and respond to Counterfeit, Fraudulent, and Suspect Items, including falsified, altered, substituted, misrepresented, or unauthentic materials, products, markings, certifications, inspection records, test reports, and other quality records. A suspect item is any item or record with credible indications that its identity, source, authenticity, condition, or compliance may have been misrepresented.

Supplier shall procure from the original manufacturer, an authorized distributor, or another source approved by HTS when required by the PO or necessary to establish authenticity. Supplier shall maintain objective evidence sufficient to establish identity, actual manufacturer, authorized source, material specification and revision, heat/lot/batch/serial, chain of custody, and applicable certification. Supplier shall not knowingly furnish CFSI or use a source whose authenticity or traceability cannot be reasonably established.

If Supplier becomes aware of or has reason to suspect CFSI affecting the PO, Supplier shall:

• immediately stop affected work and segregate and control the affected or suspect material to prevent unintended use or shipment;
• notify HTS in writing immediately and no later than one (1) business day after discovery;
• identify all affected POs, items, descriptions, manufacturers, sources, heat/lot/batch/serial numbers, quantities, records, and shipments;
• preserve affected material, packaging, markings, electronic data, and associated records pending HTS direction and any legally required investigation;
• perform and document an investigation, extent-of-condition review, root-cause analysis, and corrective action appropriate to the risk; and
• provide requested investigation results, supply-chain information, samples, and corrective-action evidence to HTS.

Except as required by law, Supplier shall not destroy, alter, rework, return to the supply chain, transfer, or otherwise disposition suspect material in a manner that could compromise an HTS, customer, or governmental investigation without prior written HTS authorization. If CFSI is attributable to Supplier or its sub-tier supply chain, Supplier shall bear the reasonable costs of containment, investigation, removal, replacement, and corrective action. Supplier shall flow this clause to every applicable sub-tier supplier.

4.2 Nuclear and Customer Specific Requirements and 10 CFR Part 21

For a Nuclear/Customer-Controlled PO, Supplier shall comply with all nuclear quality, customer, regulatory, code, standard, reporting, safety-culture, dedication, inspection, and documentation requirements expressly stated or incorporated in the PO. Supplier shall not infer that a newer revision applies and shall not reduce or reinterpret a requirement without written HTS approval.

If the PO expressly identifies Goods or Services as subject to 10 CFR Part 21, or Supplier is independently subject to Part 21 as a matter of law, Supplier shall maintain and implement all applicable procedures, postings, evaluations, notifications, and records. Supplier shall promptly provide HTS information concerning any deviation, failure to comply, or defect and shall notify HTS within one (1) business day if Supplier determines it lacks the capability to evaluate a condition, regardless of any separate regulatory notification period. Contractual notification to HTS does not replace Supplier's independent legal reporting obligations.

Supplier shall support a positive nuclear safety culture by encouraging a questioning attitude and timely reporting of safety and quality concerns without retaliation. Supplier shall immediately notify HTS of credible allegations or findings of willful misconduct, record falsification, concealment, or deliberate noncompliance affecting the PO.

4.3 Flow Down and Sub Tier Control

Supplier shall flow down all applicable PO, customer, technical, quality, regulatory, nuclear, CFSI, traceability, change-notification, right-of-access, nonconformance, corrective-action, and record-retention requirements to applicable sub-tier suppliers. Supplier shall ensure sub-tier requirements are clear, current, and commensurate with the work performed and shall obtain required approvals before using or changing a controlled sub-tier source.

Supplier remains fully responsible for all sub-tier Goods, Services, records, and compliance. HTS approval or knowledge of a sub-tier supplier does not create privity between HTS and the sub-tier supplier or relieve Supplier of any obligation.

4.4 Quality Records and Retention

Supplier shall create and maintain complete, accurate, legible, authenticated, retrievable, and protected records demonstrating compliance. Records shall be retained for the period stated in the PO, applicable customer requirement, law, code, standard, or regulatory requirement. If no longer period is specified, the minimum retention period is ten (10) years after final delivery or completion of Services.

Records shall be protected against unauthorized alteration, deterioration, loss, and premature disposal and shall remain traceable to the affected item, lot, batch, service, and PO. Electronic records shall remain readable and reproducible for the entire retention period. Supplier shall provide records to HTS, its customer, or authorized regulatory representatives promptly and without additional charge.

Supplier shall give HTS at least ninety (90) days' written notice before destroying, transferring, or becoming unable to maintain required records and shall offer HTS the opportunity to take custody. A litigation, investigation, CFSI, regulatory, customer, or HTS preservation hold suspends routine disposal until HTS gives written release. Part 21 and other legally regulated records shall be retained for the period required by applicable law.

END OF TERMS