Sample Purchase Order

PO No. A5YP-4-0204-01Page 1 of 16

TABLE OF CONTENTS

ArticleDescriptionPage No.

1.0PURCHASE ORDER CONFIRMATION

2.0DEFINITIONS

3.0COMMUNICATIONS

4.0COMMERCIAL NOTES

5.0TERMS OF PAYMENT

6.0INVOICING INFORMATION

7.0TAXES

8.0SCHEDULE & REPORTS

9.0DOCUMENTATION

10.0SELLER’S QUALITY PLAN REQUIREMENTS

11.0TRAFFIC & LOGISTICS

12.0PROJECT MANAGER/EXECUTIVE SPONSOR

13.0FIELD SERVICES

14.0SPARE PARTS REQUIREMENTS

15.0ORIGIN OF MATERIALS

16.0SURPLUS/RESTOCKING

17.0BACKCHARGES AND REWORK

18.0PREVENTATIVE MAINTENANCE/STORAGE

19.0APPLICABLE LAWS, REGULATIONS & STANDARDS

20.0SUB-SUPPLIERS & SUBCONTRACTORS

21.0INFORMATION BROKERING

22.0MODIFICATIONS TO TERMS AND CONDITIONS

23.0ATTACHMENTS

For this project Seller shall supply the materials, labor, or services described under the heading "Description of Purchase", subject to the conditions herein, Terms and Conditions of Purchase and all other attachments hereto (which by this reference are hereby made a part of this Purchase Order).

This Purchase order shall become a binding agreement of Seller and Buyer upon Seller signing and returning an acceptance copy of this Purchase Order without exceptions, or Seller commencing performance of this Purchase Order, whichever occurs first.

ORDER OF PRECEDENCE

In the event of conflict, the order of precedence for the technical and commercial documents will be as follows:

1. Commercial Purchase Order (excluding attachments)

2. Terms and Conditions of Purchase

3. Other commercial attachments referenced above

4. Engineering Notes

5. Fluor Drawings

6. Fluor Data Sheets

7. Fluor Specifications

8. Owner drawings

9. Owner Specifications

10. Industry Code Standards

In case of any conflict between the requirements of the attached documents, the conflicts shall be brought to the attention of Buyer's commercial representative for resolution.

1.0PURCHASE ORDER CONFIRMATION

1.1Confirming Buyer’s written commitment to Seller’s Neil Holmesby Buyer’s Abhinandan Goyal on 09 May 2012.

2.0DEFINITIONS

The word “Owner” or “Customer” wherever used in this Purchase Order shall mean Nexen Inc.

The word “Buyer” wherever used in this Purchase Order shall mean Flour Canada Ltd, acting as Agent to Owner.

The word “Work” wherever used in this Purchase Order will be defined as furnishing Goods or Services under the scope of supply.

The word “Seller” wherever used in this Purchase Order shall mean Foremost Universal L.P.

3.0COMMUNICATIONS

3.3E-mails and other forms of electronic communication. (collectively referred to herein as E-mails)

3.4 Communication between Supplier and Buyer by E-mail is for the expedient transfer of preliminary technical data and non-contractual information only.

3.5Electronic transfer of engineering data is acceptable for the Kinosis SAGD 1A Project via the Projects OnLine website, provided Seller has executed a System Access Security and Connectivity agreement. If this agreement has not been established, Seller shall contact Buyer to arrange for the establishment of an agreement. However, if an agreement has been established, data may be transferred based on the agreement and its procedures for implementation.

3.6Both Buyer and Seller shall transmit all documentation for Buyer approval/review at no extra cost to either party. Use of regular mail services will not be considered as proof of receipt of documentation for Buyer approval/review. No courier or mail deliveries shall be made on a “collect” basis.

3.7Invoices and all supporting documents shall be transmitted via hard copy in original and 2 (two) copies:

Sold to:Nexen Inc.

c/o Fluor Canada Ltd.

Attn:Accounts Payable

55 Sunpark Plaza SE

Calgary, Alberta, CanadaT2X 3R4

Project No.: A5YP

Project Name: Nexen Inc. Kinosis SAGD 1A

Purchase Order No.: A5YP-4-0204-01

3.8Seller’s Contacts are to be completed by Seller and Fluor expeditor at time of Purchase Order Acknowledgement:

Project Manager (name/phone/ e-mail):

Shop Order No.:

Shop Contact (name/phone):

4.0COMMERCIAL NOTES

4.1Status of Buyer and Owner.

This Purchase Order is executed by Owner acting through Agent for such purpose. Seller understands and agrees that although Agent may make disbursement of payments for and on behalf of Owner, Agent shall have no liability for payment of any amounts due to Seller under this Purchase Order, unless and until Owner has provided such amounts to Agent for Seller’s account

4.2Pricing Notes

Prices detailed in this Purchase Order are fixed, firm and free of escalation or any currency rate fluctuation through to completion of the Purchase Order unless agreed and shown otherwise in this Purchase Order.

The cost of all drawings, documentation, installation manuals, shop inspection, shop testing, NDE reports, test certificates and code data books as specified herein is included in the prices detailed in this Purchase Order.

Pricing Details as follows:

4.3Material Substitutions

Seller shall make no material substitutions without prior written authorization of Buyer.

5.0TERMS OF PAYMENT

5.1Payment will be made 100% Net 30 Days from receipt of a correctly rendered invoice following satisfactory completion of payment milestones as detailed below:

Seller agrees that changes to the scope, that have a commercial impact, will not revise the agreed progress payment amounts as detailed above.

If the change value is large and Seller requires timely compensation, Buyer agrees to issue change order/s at a lump sum amount, in order that Seller may invoice for the completed additional work.

If the change value is small to medium for the additional work and Seller does not require timely compensation, Seller agrees to issue an invoice for the completed additional work as a lump sum amount, at the end of the contract.

6.0INVOICING INFORMATION

6.1In order to process Seller’s invoices for payment, Buyer or Buyer’s Agent must be in receipt of the signed Seller’s unconditional acceptance of this Purchase Order and/or Change Order(s).

6.2Seller is to provide the following information at time of Purchase Order Acknowledgement so payment can be made by electronic funds transfer.

Bank Name

Bank address

ABA Number (9 digit #)

Bank Name

Bank address

Swift Code

6.3Any of the following conditions will be considered just cause for withholding payment and/or returning invoices to Seller without loss of applicable discount privileges:

a)The specified number of copies of the Seller’s invoice has not been received.

b)The invoice, packing list and/or Purchase Order do not agree in all respects.

c)Errors or omissions have been made in the Seller's invoice.

d)Wire transfer instructions are not included on the invoice.

e)Buyer not in receipt of signed Seller’s acceptance of this Purchase Order.

f)Buyer not in receipt of Seller data required in this Purchase Order.

g)Buyer does not possess “Proof of Material Receipt” confirmation.

h)Seller’s GST Registration number not shown on the Invoice.

6.4Invoices must include the following information:

a)Buyer's Purchase Order number.

b)Purchase Order item numbers for each item on the invoice.

c)Quantity for each item.

d)Material description.

e)Material tag number (if applicable).

f)Net price per item.

g)Extended total value for the quantity invoiced.

h)Payment terms.

i)Signed bill of lading for shipped goods.

j)Packing list

k)Progress payments – Description of Milestone payment and documented proof milestone has been met.

l)Assigned Tax Exemption Certificate Number.

m)Federal Tax Identification Number.

6.5Combining two or more of Buyer's Purchase Orders on one invoice is not acceptable.

6.6The payment period will begin on the date that the Buyer’s office making the payment receives an acceptable invoice from Seller (at the address specified above) in proper order with all supporting documents.

6.7A signed Bill of Lading or Forwarders Certificate of Receipt must accompany the invoice as proof of shipment.

6.8Buyer reserves the right to refuse payment, without loss of cash discount, on invoices for changes not previously authorized in writing by Buyer.

6.9Receipt of major materials by Seller, as required by the progress payments schedule, shall be physically validated by Owner’s SQS representative. Where validation is required, seller shall provide Owner’s SQS representative with Bill of Lading for materials as well as the associated Certified Material Test Reports (CMTR'S) or Certificates of Compliance (C of C).

6.10 Where inspection is required all final invoices shall be supported by a Surveillance Release.

6.11Final payment may be held pending resolution of backcharges. Costs accumulated due to backcharges will be unilaterally deducted from any amounts owed Seller.

6.12Order Completion Retention Provision.

Seller’s performance of its obligations hereunder will not be considered complete until Buyer is in receipt, in proper form, of all engineering data requirements as specified in this Purchase Order. If the required data is not received by Buyer or Buyer’s Agent by the date of receipt of Seller’s invoice, Buyer or Buyer’s Agent will withhold payment of five (5) percent of the total Purchase Order value or percent agreed in the progress payments , pending Buyer’s receipt of all data and documents.

Seller warrants that all documents including invoices, vouchers, financial settlements, billings, and reports submitted by Seller to Buyer in support of costs and/or fee shall truly reflect the facts about the activities and transactions to which they pertain, and Seller represents that in any further recording or reporting made by Buyer or Owner for whatever purpose, Buyer or Owner may rely upon all such documents and the data therein as being complete and accurate. Seller further agrees to promptly notify Buyer upon discovery of any instance where Seller has failed to comply with the provisions of this paragraph. Reimbursement to Seller by Buyer or Owner shall be limited to Buyer’s contractual obligations to pay for items covered by the aforesaid documents.

Seller shall keep in accordance with generally-accepted accounting practices, books, records, and accounts pertaining to performance of work, including Seller’s and sub-supplier and/or sub-contractor’s personnel records, correspondence, instructions, plans, drawings, receipts, vouchers, memoranda, data stored in computer libraries and such other documentation and related systems and controls necessary for an accurate audit and verification of costs. Seller shall preserve, and shall cause its sub-suppliers and/or sub-contractors to preserve said documents during the performance of work and for a period of three (3) years after termination of work or completion of the work.

Seller shall permit, at reasonable times during the performance of work and for a period of three (3) years after termination of work or completion, authorized representatives of Buyer or Owner to interview Seller’s personnel, review Seller’s and sub-suppliers and/or sub-contractor’s accounting and cost controls systems and inspect books, records, accounts, and other documents set forth above, and make copies thereof, as necessary to audit and verify the completeness and accuracy of reimbursable costs contained in invoices submitted by Seller, or for any other reasonable purpose.

7.0TAXES

7.1Taxable Purchase

The goods provided to Buyer pursuant to this Purchase Order are subject to Federal Goods and Service tax currently imposed at the combined rate of 5% . Seller shall segregate and identify such tax and tax rate separately on each invoice. If Seller is authorized to collect such taxes, Seller must invoice Buyer for such taxes with each invoice to Buyer. If seller is not licensed to collect such tax, Buyer will accrue and pay applicable tax directly to the appropriate taxing authorities. Seller shall not be entitled to reimbursement by Buyer for such taxes in the event Seller fails to invoice Buyer for such taxes applicable to each invoice.

8.0SCHEDULE & REPORTS

8.1Deliverables

Documentation: Seller’s promised delivery date for P&IDs, GA drawing as detailed in Seller Drawing and

Data Commitment (SDDC) form, will be eight (8) weeks after receipt of order (ARO), forecasted to be 20 July, 2012. Balance of documentation listed in SDDC form is as per dates stated.

Goods: Seller’s itemized promised ship date, after receipt of approved drawings (ARAD) is as follows:

8.2Shipment/Delivery

Seller shall take all necessary steps to ensure that the materials detailed in the Bill of Materials of this Purchase Order are delivered or shipped by the date (s) stated herein. Seller shall notify Buyer’s Expeditor ten (10) working days prior to shipment. Unless prior authorization is granted to Buyer, Buyer will not be responsible for any shipping costs incurred by the use of other carriers.

8.3Progress Reporting

Within 10 daysafter Purchase Order award Seller shall submit a legible reproducible copy of the engineering, material procurement, and fabrication schedule established by this Purchase Order and/or change orders hereto. As a minimum this schedule shall include the following:

1. Engineering schedule containing Seller’s drawing submittal dates and desired return dates.

1. Material procurement schedule containing Seller’s suborder dates, sub-supplier’s name and expected material delivery dates.

1. Fabrication schedule containing:

1. Start of fabrication dates.
2. Starting and completion dates of all major steps during fabrication.
3. Shipping date (s)

Seller shall thereafter submit regular progress reports showing actual progress against planned progress dates and shall detail specific or potential problems of which Buyer should be made aware. The frequency of the report shall be determined by duration and complexity of the Purchase Order but in no case be less frequent than bi-weeklyuntil final delivery of the equipment/material. Once Buyer has accepted the schedule, the dates and milestones reflected therein shall become contractually binding upon Seller. In the event of a schedule change, Seller must immediately advise Buyer by phone, fax, or e-mail to Buyer (and confirm phone conversation by fax or e-mail), stating the reason for the schedule change, and Seller's proposal to redeem the original schedule or minimize any delay. Seller’s proposal shall show applicable item number(s) or identifying marks.

Upon Buyer’s request Seller shall furnish one (1) electronic unpriced copy of each Purchase Order issued to its major sub-suppliers for materials or equipment on this Purchase Order, at the time of sub-order placement.

Buyer reserves the right to contact Seller's Sub-suppliers to determine the status of work being performed by the Sub-supplier.

9.0DOCUMENTATION

9.1Any review or approval of data or documentation submitted by Seller to Buyer shall not relieve Seller of the responsibility for the accuracy of documentation or data, or compliance with all requirements of the Purchase Order.

10.0SELLER’S QUALITY PLAN REQUIREMENTS

Seller’s Quality System Requirements, Criticality Rating 3

10.1Quality System Requirements

Seller shall operate a quality management system which meets the requirements of the applicable international quality system standard appropriate to the contracted scope of work throughout the duration of this Purchase Order.

Seller acknowledges full compliance unless Seller submits details of any proposed alternative quality systems standard at the bid stage or identifies areas of non-compliance with any part of the quality standard selected, and such proposed alternate or areas of non-compliance are accepted and included in this Purchase Order.

Buyer reserves the right to evaluate and audit the implementation of the quality system with the agreement and participation of Seller.

Buyer reserves the right to request Seller to provide formal records or certificates for any activity associated with Seller's quality system.

All documentation shall be in the original source state or a true copy of the original. Copies shall be of reproducible quality or considered unacceptable. Data transposition from the original is not acceptable.

All documentation shall uniquely identify the following on each sheet:

a.The Purchase Order Number, including contract number

b.Tag number or Item Code.

c.Item number.

Seller’s quality system documentation to be supplied is defined on the “Supplier Drawing and Data Commitment” form.

10.2Buyer Surveillance Standard Clause

Material and Equipment on this Purchase Order is subject to surveillance in accordance with Article 10 of the attached Terms and Conditions of Purchase. Seller shall not ship the goods on this Purchase Order without Buyer's surveillance or a written waiver thereof.

10.3Quality Plan Requirements

Seller shall submit a Quality Plan specifically developed to meet the requirements of this Purchase Order within 21 days of Purchase Order award. This plan shall integrate the practices and procedures contained in the Seller's Quality Control System with the Purchase Order requirements.

Seller’s Quality Plan shall be in one of the following formats:

a)Seller’s own Quality Plan or document used as a method of identifying Inspection stages and the controlling criteria used.

b)A written statement describing the elements of Paragraph a).

c)A copy, extract, from a relevant procedure that describes the Inspection stages and/or practices utilized.

A Quality Alignment meeting with Buyer and Seller may be held at the Seller's manufacturing facility prior to start of fabrication. The purpose of the meeting will be to review the Quality Plan, quality requirements, Purchase Order requirements and referenced documents.