This Acknowledgement of Purchase Order (“Acknowledgement”) is made a part of each purchase order (“Purchase Order”) to be fulfilled by Hongfa America, Inc., a California corporation (“Hongfa America”) for any buyer (each such person, a “Buyer”).


The sale of the products (the “Products”) set forth on the Purchase Order shall be governed by this Acknowledgement, and Hongfa America shall not be deemed in any way to have accepted any other written or verbal order delivered by the Buyer. Buyer’s receipt and acceptance of the Products shall be deemed Buyer’s acceptance of and agreement to bound by the terms, conditions, covenants and releases of this Acknowledgement. Acceptance of the Purchase Order shall be limited to the terms of this Acknowledgement. Except as explicitly provided for herein, any other additional or different terms and conditions are expressly excluded and shall not form part of the Purchase Order. Hongfa America shall use commercially reasonable efforts to deliver the Products on or prior to any agreed upon delivery date; provided, however, Hongfa America shall not be liable to Buyer for any damages caused by delivery delays pursuant to the provisions of Section 14 below. If the Purchase Order contains terms and conditions which are in addition to or are inconsistent with this Acknowledgement, the Purchase Order shall be considered a counteroffer and will not be binding unless agreed to in writing by Hongfa America. Payment or acceptance of the Products by Buyer in the absence of Hongfa America’s acceptance of a counteroffer will constitute Buyer’s acceptance of this Acknowledgement. All supplements, sheets, specifications, schedules, exhibits, riders or other attachments annexed hereto or referenced herein are made part of the Purchase Order and Buyer agrees to them by failure to object to this Acknowledgement.


The Purchase Order shall be filled at the prices set by Hongfa America, unless Hongfa America subsequently authorizes a different price in writing. The Buyer may not setoff or withhold any amounts owed to Hongfa America without Hongfa America’s prior written consent. The amount of any present or future sales, use, excise, import duty, Value Added Tax, or other tax applicable to the manufacture and sale or lease of the Products will be added to the purchase price and shall be paid by Buyer, unless the Buyer provides Hongfa America with a tax exemption certificate acceptable to the applicable taxing authority. Hongfa America reserves the right, by giving notice to the Buyer prior to the delivery date, to make changes to the Products to reflect increases in costs to Hongfa America due to factors beyond Hongfa America’s control, such as, but not limited to, fluctuations in currency exchange rates and regulations, changes in duties and taxes, labor cost increases, changes in materials and manufacturing costs, and any change to, lack of, or incorrect information provided to Hongfa America by Buyer.


Unless otherwise provided for in writing, Hongfa America shall provide commercial packing, packaging, and its usual tests at the quoted prices in the Purchase Order. Any additional or special requirements, including, without limitation, Buyer’s source inspections, are at Buyer’s expense.


Hongfa America shall procure all equipment and tooling in accordance with Buyer’s specifications under the Purchase Order. Hongfa America shall invoice Buyer only for the actual and verifiable costs of tooling. Unless otherwise provided in writing, Buyer shall own all right, title and interest in and to tooling.


Credit terms, shipments, deliveries, and performance are at all times subject to the approval of Hongfa America’s credit department. Hongfa America may at any time decline to make any shipment or delivery or perform any work except upon receipt of payment or satisfactory credit term and security. In the event of Buyer’s bankruptcy or insolvency, Hongfa America shall be entitled to terminate any order then outstanding and to receive reimbursement for all Damages (as defined below) under this Acknowledgement.


Buyer shall make payments pursuant to the terms set forth on the invoice delivered by Hongfa America to Buyer. If Buyer fails to pay by the due date indicated on the invoice, Hongfa America shall be entitled to suspend deliveries until payment is made, cancel the Purchase Order and/or charge the Buyer interest on all late payments at the lesser of 2% per month or the maximum interest rate then allowed under applicable law. Buyer shall reimburse Hongfa America for all costs and Damages incurred in collecting any late payments. Each shipment of Products is a separate and independent transaction and payment must be made accordingly. If Buyer delays a shipment, payment shall be due on the date Hongfa America is prepared to make the shipment. If Buyer delays the work covered by the Purchase Order, Hongfa America shall be entitled to payment based on a calculation of the purchase price and the percentage of completion.


All sales by Hongfa America are on Free Carrier (FCA) terms of delivery, as defined by the International Chamber of Commerce Incoterms 2020. Hongfa America shall deliver the Products to Buyer FCA at Hongfa America’s warehouse and, regardless of the final destination of the delivery of the Products, risk of loss and transfer of title for the Product shall pass to Buyer at Hongfa America’s warehouse. If for any reason Buyer fails to accept delivery of any Products at Hongfa America’s warehouse, or such other final destination set forth on the Purchase Order, on the delivery date the Purchase Order (or such later date as subsequently provided by Hongfa America to Buyer), then (a) the Products shall be deemed to have been delivered; and (b) Hongfa America, at its option, may store the Products until Buyer picks up the Products, whereupon Buyer shall be liable for all related costs and expenses (including without limitation, storage and insurance costs). If any shipment of the Products is delayed at the request of the Buyer, such Products shall be stored by Hongfa America at the Buyer’s sole cost and expense and risk. Such delay shall not delay the Buyer’s obligation to pay the invoice with respect to the Purchase Order. Unless otherwise specifically set forth on the Purchase Order, in the event the final destination of the delivery of the Products is a location other than Hongfa America’s warehouse, Hongfa America shall invoice Buyer for any freight, shipping or handling costs incurred by Hongfa America in order to deliver the Products to such final destination (provided that Hongfa America may elect to bundle such expenses within the total purchase price).


Notwithstanding any other provision in this Acknowledgement, title to the Products shall not pass to the Buyer until Hongfa America has received payment in full of the price of the Products for which payment is then due. Until title to the Products passes to the Buyer, Buyer shall hold the Products as Hongfa America’s fiduciary agent and bailee, and shall keep the Products separate from those of the Buyer and third parties and shall properly store, protect and insure the Products and identify them as Hongfa America’s property; provided, however, that Buyer shall be entitled to resell or use the Products in the ordinary course of Buyer’s business. Until title to the Products passes to the Buyer (and provided that the Products are still in existence and have not been resold), Hongfa America shall be entitled to enter the premises of the Buyer or any third party where the Products are stored and repossess the Products.


Buyer may, at any time prior to acceptance of the Purchase Order by Hongfa America, change the specifications for the Products and delivery thereof. Buyer shall inform Hongfa America in advance of any material change, intentional or otherwise, including, without limitation, changes in the quantities, drawings, design, specifications, delivery schedule, method of shipment or packaging of the Products. Upon Buyer’s delivery of notice of any change, Hongfa America may cancel the Purchase Order under the terms set forth in Section 15. Any revisions to the Purchase Order, price or otherwise, must be mutually approved by Hongfa America and Buyer in writing. If any change to the Purchase Order causes an increase or decrease in the cost of the Products, or in the time required for performance of the Purchase Order, an equitable adjustment will be made in the Purchase Order’s price terms and delivery schedule.


Following delivery of the Products at the final destination, Buyer shall have ten (10) days to inspect the Products. During such 10-day inspection period, Buyer shall inspect the Products and notify Hongfa America of any Product that contains a clearly identifiable defect or fails to meet Hongfa America’s standard specifications for such Products (or such other mutually agreed specification) (collectively, a “Defect”). Such notification by Buyer shall include reasonably sufficient details of the Defect for Hongfa America to determine whether such reason for rejection is valid. Products subject to any claims must be stored free of charged for Hongfa America ’s inspection. If Hongfa America reasonably determines that such Defect constitutes a valid rejection of the Product (a “Nonconforming Product”), Buyer’s sole and exclusive remedy with respect to such Nonconforming Product is for Hongfa America to, in its sole discretion, either i) repair or replace the Nonconforming Product, or ii) credit or refund the purchase price of such Nonconforming Product. Buyer will return Nonconforming Products, transportation and insurance prepaid, in accordance with the instructions issued by Hongfa America. Buyer shall not have the right to reject the entire shipment of Products in the event a portion of shipment of Products delivered is deemed to contain a Defect. If Buyer does not provide notice to Hongfa America during such 10-day inspection period, then it shall be deemed that Buyer has accepted the Products and all such Products shall be deemed to be in conformity with the Purchase Order. If upon evaluation Hongfa America determines that the Products are not covered by warranty (e.g. damage to the Products after delivery), Buyer shall pay Hongfa America an evaluation fee prior to Hongfa America taking any further action. If the evaluation fee is not promptly paid, Hongfa America reserves the right to dispose of the Products.


All Products returned to Hongfa America must be clearly identified with a return authorization (RMA) number, which Hongfa America will assign in writing once it determines that the Products should be returned for evaluation or repair. The RMA number must appear on the shipping label and all paperwork associated with the return. Hongfa America will reject any Products without the correct RMA number clearly marked on the exterior of the shipping container. A return authorization does not guarantee that a credit will be approved or that the evaluation or repair will take place without charge to the Buyer.


Hongfa America warrants that all Products delivered will be free from Defects in materials and workmanship for a period of twelve (12) months from the date of delivery. The warranties in this Acknowledgement do not apply to Defects in the Products arising from any drawing, design or specification supplied by the Buyer. Except as expressly provided for in this Acknowledgement and otherwise explicitly agreed to in writing or on the warranty certificate applicable to the Product, Hongfa America makes no warranty whatsoever with respect to the Products, whether express or implied, in fact or by operation of law, course of dealing, trade or otherwise, including without limitation any warranty of merchantability or fitness for a particular purpose. Hongfa America makes no representations or warranties that its packaging, components and/or Products supplied by Hongfa America comply with applicable rules, laws or regulations or that such items do not contain hazardous substances under any environmental, product composition and/or materials declaration laws, rules, orders, directives, or regulations of any state, federal, local, or foreign authority or agency thereof, including international laws and treaties; and any regulations, interpretive guidance or enforcement policies, including without limitation: Directive 2011/65/EU of the European Parliament and of the Council of 8 June 2011 on the restriction of the use of certain hazardous substances in electrical and electronic equipment OJ L 174 of 1 July 2011 (RoHS); Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 concerning the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH); the European Union Directive 2012/19/EU on Waste and Electronic Equipment (WEEE); and California’s Electronic Waste Recycling Act of 2003 (SB 20), all as amended at the time of this Acknowledgement. At Buyer’s expense, Buyer may test any of Hongfa America’s Products or materials in an independent lab for substances regulated thereof. Upon request, Hongfa America shall provide Buyer the technical specifications and a list of the component natural resources for any Product.


In no event shall Hongfa America be liable for any consequential, indirect, incidental, special, exemplary, or punitive damages, lost profits or revenues or diminution in value, arising out of or relating to any breach of the Purchase Order (including this Acknowledgement), whether or not the possibility of such damages has been disclosed in advance by Buyer or could have been reasonably foreseen by Buyer or Hongfa America, and whether such claim is based on breach of warranty, contract, tort or otherwise. In no event shall Hongfa America’s aggregate liability arising out of or related to the Purchase Order exceed the amounts paid to Hongfa America for the Products sold pursuant to the Purchase Order. Any claims with respect to any Product must be brought within one (1) year following the delivery of such Product. In addition to the foregoing, Hongfa’s liability to Buyer will be limited to, and shall in no case exceed, the amounts Hongfa America receives from Buyer pursuant to the Purchase Order.


Hongfa America shall not be liable for any damages, re-procurement costs or delay in delivery arising out of causes beyond its control and without its fault or negligence, including but not limited to acts of God, or of the public enemy, acts of government, acts of third-parties, pandemic events, civil unrest, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes and unusually severe weather. If the delay is caused by a subcontractor at any tier and without fault or negligence of the subcontractor, Hongfa America shall not be liable to Buyer in damages unless the supplies to be furnished by the subcontractor (at any tier) were obtainable from other sources in sufficient time for Hongfa America to meet the required delivery schedule. Hongfa America will notify Buyer in writing within ten (10) days after the beginning of any such cause. In the event production of the Products is curtailed for any of the foregoing reasons and prevents Hongfa America from delivering the full amount of the Products set forth in the Purchase Order, Hongfa America is entitled to allocate production deliveries among its customers then under contract for similar Products. The allocation will be made in a commercially fair and reasonable manner.


Hongfa America may terminate or reschedule the Purchase Order by notice to Buyer upon the occurrence of the following events:

(a) For damages or delay in delivery arising out of causes beyond its control and without its fault or negligence, including but not limited to acts of God, or of the public enemy, pandemic events, civil unrest, acts of thirdparties, acts of government, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes and unusually severe weather;

(b) Buyer becomes insolvent, is adjudicated bankrupt, files a voluntary petition in bankruptcy, makes an assignment for the benefit of creditors, or seeks protection from creditors under any applicable laws;

(c) The determination by Hongfa America, in its sole judgment, that Buyer’s financial condition is such as to endanger its performance hereunder;

(d) The dissolution of Buyer; the sale, transfer or disposition by Buyer of all or substantially all of its assets (either in one transaction or through a series of transactions); or any merger, consolidation, reorganization, sale or other transfer of stock or other equity or other event that results in more than fifty percent (50%) of the equity ownership of Buyer being owned by a person(s) who is not currently an equity owner of Buyer;

(e) Buyer fails to strictly comply with any of the provisions, terms, conditions or obligations of the Purchase Order and this Acknowledgement (including, without limitation, its failure to make timely payments as specified thereunder); or

(f) Buyer fails to comply with any other obligation owed by Buyer to Hongfa America, including, without limitation, pursuant to other contracts between Buyer and Hongfa America.

Buyer may terminate the Purchase Order by notice to Hongfa America within ninety (90) days of a scheduled shipment. Upon receipt of Buyer’s notice of termination, Hongfa America shall immediately stop performance and cause all subcontractors to stop performance hereunder. If applicable, and upon Buyer’s request, Hongfa America shall ship to Buyer, at Buyer’s expense, all Products or materials held for use hereunder. Buyer will be liable for terminating the Purchase Order as follows: Date of Scheduled Shipment Cancellation Fee

7 days 100% of Purchase Order value

8 - 15 days 75% of Purchase Order value

15 - 30 days 50% of Purchase Order value

30 - 90 days 25% of Purchase Order value

91+ days 0% of Purchase Order value


Any notice to Hongfa America shall be in writing and will be deemed received as of the date of actual receipt of written notice. Notices, demands, and communications to Hongfa America shall, unless another address is specified in writing, be sent to the address or email address indicated below:
Hongfa America, Inc.
20381 Hermana Circle
Lake Forest, CA 92630 USA
Attention: Joseph Lyu, President Telephone: (714) 669-2888


Buyer shall indemnify, defend and hold harmless Hongfa America and its respective officers, directors, employees, agents and assigns (“Indemnitees”) from and against all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, charges, and expenses, including fees and all expenses of legal counsel and expert witnesses (collectively “Damages”) which may be imposed upon or incurred by or asserted against the Indemnitees or any of them, arising from: (a) any act or omission, including, without limitation, any breach or default hereunder, by Buyer, its agents, employees or subcontractors, or (b) through a third party against an Indemnitee because of Buyer’s negligence or willful misconduct. Buyer shall maintain insurance coverage sufficient to satisfy its indemnification obligations hereunder and provide evidence thereof to Hongfa America upon request.


Patent rights to all Products embodied in designs, tools, patterns, drawings, information and equipment supplied by Hongfa America under the Purchase Order and the exclusive rights for the use and reproduction thereof are reserved by Hongfa America.


Buyer shall not assign the Purchase Order without the prior written consent of Hongfa America, which consent may be withheld in Hongfa America’s sole discretion.


Buyer shall not use Hongfa America’s name, logo, trademark or any other proprietary information for any purpose whatsoever, including but not limited to any advertising and press releases, without the prior written consent of Hongfa America.


Buyer or any of its employees, agents or representatives are prohibited from providing or attempting to provide, or offering to provide, any money, fee, commission, credit, gift, gratuity, thing of value or compensation of any kind to Hongfa America or any of its employees, agents, or representatives, for purpose of improperly obtaining the Purchase Order from Hongfa America, or for rewarding favorable treatment in connection with the Purchase Order between Hongfa America and Buyer.


The parties hereto agree that the Purchase Order and this Acknowledgement shall be a contract made in the State of California and governed by the laws thereof without giving effect to the choice or conflicts of law provisions. For the avoidance of doubt, this Acknowledgement shall not be governed by the United Nations Convention on Contracts for the International Sale of Goods. Any dispute or controversy arising under or in connection with the Purchase Order or this Acknowledgement, or the purchase of the Products shall be addressed exclusively by arbitration in Los Angeles, California by an arbitrator in accordance with the rules of Judicial Arbitration & Mediation Service, Inc. (“JAMS”) in effect at the time of submission to arbitration. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The arbitration shall be conducted in a procedurally fair manner by a mutually agreed upon neutral arbitrator selected in accordance with the applicable JAMS rules (“Rules”) or if none can be mutually agreed upon, then by one arbitrator appointed pursuant to the Rules; the arbitration shall be conducted confidentially in accordance with the Rules unless provided otherwise by applicable law; each party shall have the right to conduct reasonable discovery including depositions, requests for production of documents and such other discovery as permitted under the Rules or ordered by the arbitrator; the arbitrator shall have the authority to award any damages authorized by law for the claims presented, including punitive damages, and shall have the authority to award reasonable attorneys’ fees to the prevailing party; the decision of the arbitrator shall be final and binding on all parties and shall be the exclusive remedy of the parties; and the award shall be in writing in accordance with the Rules, and shall be subject to judicial enforcement and review in accordance with California law. Each party consents to the jurisdiction of the federal and state courts located in the County of Los Angeles.


In the event that the terms, conditions, covenants and releases in this Acknowledgement in any way conflict with the terms, conditions, covenants and releases of the Purchase Order or any agreement between the parties, the terms, conditions, covenants and releases of this Acknowledgement shall control.


The Purchase Order (including this Acknowledgement) together with any documents expressly specified herein is a complete and exclusive statement of terms and conditions and supersedes any and all prior agreements, understanding or communications between Buyer and Hongfa America related to the subject matter of the Purchase Order. No amendment or modification of the Purchase Order (including this Acknowledgement) shall be binding upon Hongfa America unless set forth in writing and signed by Hongfa America.


No waiver of any provision of this Acknowledgement shall be effective unless set forth in writing and signed by Hongfa America.


All non-public, confidential, or proprietary information of Hongfa America, including, without limitation, information and materials developed by or concerning the business, ideas, designs, records, plans, drawings, intellectual property, products, processes, systems, documents, writings, manuals, inventions, discoveries, formulae, prices, price lists, inventory lists, practices, object and source code, customer information, financial information, information relating to discussions or negotiations between Hongfa America and third parties, information relating to Hongfa America’s financial condition or business prospects, business processes, business plans, business methods, and other information (including copies, abstracts, and summaries of the foregoing), whether disclosed orally or in written, electronic, or other form or media, and whether or not marked or otherwise designated as “confidential,” in connection with the Purchase Order is confidential, solely for the use of performing the Purchase Order, and may not be disclosed or copied unless authorized by Hongfa America in writing. Upon Hongfa America’s request, Buyer shall promptly return all documents and other materials received from Hongfa America. Hongfa America shall be entitled to injunctive relief for any violation of this paragraph. This paragraph shall not apply to information that is: (a) is reasonably documented to have been known by Buyer prior to the time of disclosure to Buyer; (b) was or becomes available to the public through no act or omission of Buyer or its representatives in violation of this Acknowledgement; (c) becomes available to Buyer from a third party not known to Buyer or its representatives to be under any obligation of confidentiality to Hongfa America with respect thereto or otherwise known to Buyer or its representatives to be prohibited from disclosing such confidential information by any legal, contractual or fiduciary obligation; or (d) is reasonably documented to have been independently developed by Buyer without use of, or reference to, any confidential information disclosed by Hongfa America.


The invalidity in whole or in part of any provision of this Acknowledgement shall not affect the validity of other conditions.


Hongfa America and Buyer shall comply with the laws and regulations of the United States (U.S.) relating to exports and foreign transactions including, but not limited to: the International Traffic Arms Regulations (ITAR) (22 C.F.R. Parts 120-130), the Arms Export Control Act (22 U.S.C. 2778), the Export Administration Regulation (EAR) (15 C.F.R. Parts 730-774), the Export Administration Act of 1979, as amended (50 U.S.C. 2401, et seq.), and the Foreign Corrupt Practices Act (15 U.S.C. 73dd-1, et seq.). In particular, Hongfa America and Buyer shall not disclose any technical data, nor deliver, export, re-export or re-transfer any Products out of the USA, or to foreign persons or entities within or outside the USA, without the proper written authorization and/or license, or re-export/re-transfer license from the U.S. Government. Buyer hereby indemnifies and agrees to hold Hongfa America harmless from any costs, damages, penalties attorneys fees and similar expenses of Hongfa America due to Buyer’s breach (or threatened breach) of such obligation. Hongfa America and Buyer shall reasonably cooperate with each other in obtaining all required export and import licenses, approval and/or notifications pursuant to such U.S. laws. GOVERNMENT CONTRACTS. When work, materials or Products covered by the Purchase Order and this Acknowledgement are for use on a U.S. Government contract or subcontract, the following additional provisions are applicable of which Buyer has agreed to by receipt of this Acknowledgement.


The Purchase Order shall be subject to all applicable provisions and will contain all clauses and agreements required by the terms of any government contract under which the Purchase Order with Buyer is issued, by Federal Laws and Regulations and by the applicable sections of the Armed Services Procurement Regulations.


The Comptroller General of the U.S. and the Department or Agency having cognizance over the prime contract referred to on the face of this order and any of their duly authorized representatives shall, until the expiration of three (3) years after final payment under the Purchase Order, have access to and the right to examine any directly pertinent books, documents, papers and records of Buyer involving transactions related to the Purchase Order.


If forbidden by law or regulations, no alien in the employ of Buyer shall be permitted to have access to the plans or specifications of the work hereunder unless the written consent of the U.S. Government has first been obtained.


If payment under the Purchase Order is to be made for experimental, development, or research work as such, Buyer agrees to disclose to the U.S. Government each invention, improvement or discovery conceived or first actually reduced to practice in the performance hereof, and to grant such rights to the U.S. Government and to perform such other acts as are required by the patent provisions of Buyer’s prime contract under which the Purchase Order is issued. Buyer will furnish copies of patent clauses on request of Hongfa America.


The Buyer shall not discriminate against any employee or applicant for employment because of race, religion, color, national origin, ancestry, sex or age. Buyer represents it will comply with Sec. 202, Paragraph 1.7 of Executive Order 11246, which is incorporated herein by reference. Buyer shall include in all subcontracts a provision similar to the foregoing.


The Purchase Order (including this Acknowledgement) is subject to the Renegotiation Act of 1951, as amended (50 U.S.C. App, 1211 et seq.) and shall be deemed to contain all the provisions required by Section 104 thereof, and is subject to any subsequent act of Congress providing for the renegotiation of contracts.


Buyer warrants that it has not employed any person to solicit or secure the Purchase Order upon any agreement for a commission, percentage, brokerage or contingent fees. Breach of this warranty shall give Hongfa America the right to annul the Purchase Order or, in its discretion, to deduct from the agreed price or consideration the amount of such commission, percentage, brokerage or contingent fee. This warranty shall not apply to commissions payable to Buyer upon orders or sales secured or made through bona fide established commercial or selling agencies maintained by the Buyer for the purpose of securing business.


No member of or delegate to Congress or resident commissioner shall be admitted to any share or part of the Purchase Order or to any benefit that may arise therefrom, but this provision shall not be construed to extend to the Purchase Order if made with a corporation for its general benefit.