Standard Terms and Conditions of Sale

FORMATION OF CONTRACT: The Terms and Conditions (“Terms”) contained herein shall apply to all quotations and offers made by and purchase orders accepted by Seller. These Terms apply to all sales made by Seller except to the extent the Terms conflict with a Sales Agreement signed by Seller and Buyer.

These Terms apply in lieu of any course of dealing between the parties or usage of trade in the industry. These Terms may in some instances conflict with some of the terms and conditions affixed to the purchase order or other procurement document issued by the Buyer.

In such case, the Terms contained herein shall govern, and acceptance of Buyer’s order is conditioned upon Buyer’s acceptance of the terms and conditions herein, irrespective of whether the Buyer accepts these conditions by a written acknowledgement, by implication, or acceptance and payment of products ordered hereunder. Seller’s failure to object to provisions contained in any communication from Buyer shall not be deemed a waiver of the provisions herein. Any changes in the Terms contained herein must specifically be agreed to in writing signed by an officer of Seller before becoming binding on either party.

PRICES: Any order that can be cancelled and rescheduled pursuant to paragraph 12(a) is subject to a price change immediately. All prices are exclusive of any present or future sales, revenue or excise tax, value added tax, turnover tax, import duty (including brokerage fees) or other tax applicable to the manufacture or sale of any product. Such taxes, when applicable, shall be paid by Buyer unless Buyer provides a proper tax exemption certificate. Unless otherwise agreed to in writing by the parties, prices quoted by Seller are those current at the date of quotation and shall be subject to variation by Seller.

PAYMENT TERMS: Unless otherwise agreed in writing, Payment terms shall be net thirty (30) days from the date of invoice. Buyer agrees to pay interest on any unpaid balance at a rate of five percentage points above the annual Federal Funds rate as specified in the Wall Street Journal on the day the balance becomes due. Unless otherwise agreed in writing, all payments are to be in United States dollars. In the event that SELLER is required to bring legal action to collect delinquent accounts, Buyer agrees to pay reasonable attorneys fees and costs of suit.

RISK OF LOSS AND DELIVERY TITLE: Unless otherwise agreed in writing, sales are FCA San Diego, CA (Incoterms 2000). Seller may deliver products in one or more consignment and invoice each consignment separately. Seller reserves the right to ship product that is not subject to cancellation in advance of the agreed shipping date. Unless otherwise agreed in writing, delivery time is not of the essence. Except as specified in 12(b), Seller does not accept liability for any loss arising from delay in delivery of products.

CONTINGENCIES: Seller shall not be liable for any delay in performance or for non-performance, in whole or in part caused by the occurrence of any contingency beyond the control either of Seller or Seller’s suppliers, including but not limited to, war (whether an actual declaration thereof is made or not), sabotage, insurrection, riot, or other act of civil disobedience, act of a public enemy, failure or delay in transportation, act of any government or any agency or subdivision thereof affecting the terms of this contract or otherwise judicial action, labor dispute, accident, fire, explosion, flood, storm or other Act of God, shortage of labor, fuel, raw materials, tools, dies or equipment or technical or yield failure. Any such delays shall excuse Seller from performance, and Seller’s time for performance shall be extended for the period of the delays and for a reasonable period thereafter. If any contingency occurs, Seller may allocate production and deliveries among any or all of Seller’s customers as Seller may determine, including without limitation, regular customers not then under contract and Seller’s own requirements for further manufacture of other use.

SUBSTITUTION AND MODIFCATION OF GOODS: Seller has the right to modify the specifications of goods designed by Seller and substitute substantially equivalent goods manufactured to such modified specifications.

WARRANTIES: Except as specified below, products sold hereunder shall be free from defects in materials and workmanship and shall conform to Seller’s published specifications or other specifications accepted in writing by Seller. The foregoing warranty does not apply to any products which have been subject to misuse, neglect, accident or modification or which have been soldered or altered such that they are not capable of being tested under normal test conditions. Seller shall make the final determination as to whether its products are defective. Seller’s sole obligation for products failing to comply with this warranty shall be, at its option, to either repair, replace or issue credit for the nonconforming product where, (i) Seller has received written notice of any nonconformity; (ii) after Seller’s written authorization, Buyer has returned the nonconforming product to Seller; and (iii) Seller has determined that the product is nonconforming and that such nonconformity is not the result of improper installation, repair or other misuse. THE FOREGOING WARRANTY AND REMEDIES ARE EXCLUSIVE AND MADE EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED, IMPLIED OR OTHERWISE, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. SELLER DOES NOT ASSUME OR AUTHORIZE ANY OTHER PERSON TO ASSUME FOR IT ANY OTHER LIABILITY IN CONNECTION WITH ITS PRODUCTS. Buyer shall not pass this warranty to any other person or entity. Seller’s warranties as herein above set forth, shall not be enlarged, diminished, or affected by, and no obligation or liability shall arise or grow out of, Seller’s rendering of technical advice or service in connection with Buyer’s order of the goods furnished hereunder.

TOOLING: Unless otherwise expressly provided, Seller will retain title to, possession of, and the right to exclusive use of all jigs, die, fixtures, molds, patterns, gauges, taps, equipment, manufacturing aids and similar devices, made or obtained for the performance of this contract without regard to whether a separate charge is made for the same.

PATENT INDEMNITY: Subject to the limitations herein, SELLER will defend any suit or proceeding brought against Buyer if it is based on a claim that any product furnished hereunder constitutes an infringement of any United States intellectual property rights. SELLER must be notified promptly in writing and given full and complete authority, information and assistance (at SELLER’s expense) for defense of the suit. SELLER will pay damages and costs therein awarded against Buyer but shall not be responsible for any compromise made without its consent. In no event shall SELLER’s liability for such damages and costs (including legal costs) exceed the contractual value of the products or services that are the subject of the lawsuit. In providing such defense, or in the event that such product is held to constitute infringement and the use of the product is enjoined, SELLER, in its discretion, shall procure the right to continue using such product, or modify it so that it becomes noninfringing, or remove it and grant Buyer a credit for the depreciated value thereof. SELLER’s indemnity does not extend to claims of infringement arising from SELLER’s compliance with Buyer’s design, specifications and/or instructions, or use of any product in combination with other products or in connection with a manufacturing or other process. The foregoing remedy is exclusive and constitutes SELLER’s sole obligation for any claim of intellectual property infringement and SELLER makes no warranty that products sold hereunder will not infringe any intellectual property rights.

INTELLECTUAL PROPERTY: SELLER retains its Intellectual Property: The sale of any products hereunder does not convey any license by implication, estoppel or otherwise covering combinations of the products with other equipment data or programs. The company retains the copyright in all documents, catalogs and plans supplied to Buyer pursuant to or ancillary to the contract. Unless otherwise agreed in writing, Buyer shall obtain no interest in any mask or other tooling used in the production of any SELLER product.

TERMINATION: Except as specifically provided for herein, this contract shall not be terminated or amended by Buyer without Seller’s prior written consent. If Seller so consents to such termination or amendment, Buyer, at Seller’s discretion, shall be liable for all charges, including, without limitation, a price adjustment based on the quantity of goods actually delivered, and all costs, direct or indirect, incurred and committed for this contract, together with reasonable allowance for prorated expenses and anticipated profits.

REMEDIES AND DAMAGES: (a) Where Buyer rightfully and timely rejects or justifiably revokes acceptance of items, or where Buyer has accepted nonconforming items and has timely notified Seller of breach of warranty, Seller’s sole and exclusive liability will be (at Seller’s option) to repair, replace or credit Buyer’s account with respect to any nonconforming goods returned to Seller during the applicable warranty period, and with respect to any nonconforming services, on condition that (I) Seller is, promptly upon Buyer’s discovery of the nonconformity, notified in writing with a detailed explanation, (II) the nonconforming goods are returned to Seller FCA Seller’s facility from which the goods were shipped, and (III) Seller’s examination discloses that such items are nonconforming. WHERE SELLER FAILS TO MAKE DELIVERY OR REPUDIATES OR BREACHES ANY OTHER PROVISION OF THIS CONTRACT (OTHER THAN THE WARRANTY AGAINST PATENT INFRINGEMENT), INCLUDING, WITH LIMITATION, SELLER’S OBLIGATION WITH RESPECT TO NONCONFORMING ITEMS, BUYER SHALL PROMPTLY GIVE WRITTEN NOTICE TO SELLER, IN THE EVENT THAT SELLER DOES NOT CURE ANY SUCH FAILURE TO DELIVER, REPUDIATION, OR BREACH WITHIN (30) DAYS AFTER RECEIPT OF SUCH NOTICE, THEN BUYER SHALL HAVE THE RIGHT AT ITS OPTION, TO CANCEL THE SPECIFIC QUANTITY OF PRODUCTS AS TO WHICH SUCH REPUDIATION OR BREACH RELATED, AND THE SHALL BE BUYER’S SOLE AND EXCLUSIVE REMEDY IF BUYER DESIRES TO EXERCISE SUCH RIGHT OF TERMINATION, IT SHALL GIVE WRITTEN NOTICE TO SELLER. EXCEPT AS SET FORTH ABOVE, IN NO EVENT WILL SELLER BE LIABLE TO ANYONE FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES FOR BREACH OF ANY OF THE PROVISIONS OF THIS CONTRACT INCLUDING, BUT NOT LIMITED TO, PROVISIONS REGARDING WARRANTIES, INDEMNITIES, AND PATENT INFRINGEMENT, SUCH EXCLUDED DAMAGES TO INCLUDE, WITHOUT LIMITATION, COSTS OF REMOVAL AND REINSTALLATION OF TIEMS, LOSS OF GOODWILL, LOSS OF PROFITS OR LOSS OF USE. (b) Seller has the right to cancel this contract if in the Seller’s sole judgment, Buyer’s financial condition, does not justify the terms of payment applicable from time to time, and upon demand, therefore, Buyer shall not immediately comply with any modification of payment terms required by Seller in accordance with paragraph 3 above. If Seller exercises such right to cancel, Buyer shall be liable for the charges set forth above in addition to any other remedies Seller may have hereunder or at law.

WAIVER: Failure by SELLER to exercise or enforce any rights hereunder shall not be deemed to be a waiver of any such right nor operate so as to bar the exercise or enforcement thereof at any time or times thereafter.

APPLICABLE LAW: Unless otherwise agreed in writing, the terms and conditions contained herein shall be governed by and construed under the laws of the State of California, USA.

ASSIGNMENT AND SUBCONTRACTING: SELLER shall be entitled at all times to assign its rights under the contract (in whole or in part) or to subcontract any part of the work or services to be provided under the contract as it deems necessary or desirable.

SEVERABILITY: If any of these Terms of Sale is declared invalid by a court, agency, commission or other tribunal or entity having jurisdiction thereof, the application of such provisions to parties or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby, and each term not so declared invalid or unenforceable shall be valid and be enforced to the fullest extent permitted by law and the rights and obligations of the parties shall be construed and enforced as though a valid commercially reasonable term consistent with the undertakings of the parties under the order had been substituted in place of the invalid provision.

SET-OFF: Buyer may not set-off any amount owing from Seller to Buyer against any amount payable by Buyer to Seller whether or not related to this contract. TAXES: In the event any sales tax, manufacturer’s tax, occupational tax or other tax is applicable to any shipment made to you on your order, such tax shall be added to the selling price and shall be paid by Buyer.

LIMITED LIABILITY : Neither SELLER nor Buyer shall be liable for incidental or consequential damages, including but not limited to, the cost of labor, requalification, rework charges, delay, lost profits, or loss of goodwill arising out of the sale, installation or use of any SELLER product. If SELLER has any liability for breach of contract, breach of any implied condition, warranty or representation, the aggregate liability of SELLER to Buyer shall be limited in respect of any occurrence or series of occurrences to the contractual value of the products or services that are the subject of the contract.

FORCE MAJEURE: SELLER shall not be liable for any damage or penalty for delay in delivery or for failure to give notice of delay when such delay is due to the elements, acts of god, acts of the Buyer, act of civil or military authority, war, riots, concerted labor action, shortages of materials, or any other causes beyond the reasonable control of SELLER. The anticipated delivery date shall be deemed extended for a period of time equal to the time lost due to any delay excusable under this provision.

NOTICES: Any notice hereunder shall be deemed to have been given if sent by prepaid first class mail to the party concerned at its last known address. Notice to SELLER shall be to ROYNE INDUSTRIES LLC dba NASCOM, 7514 GIRARD AVE #1-742, LA JOLLA, CA 92037.

DEFINITIONS: The term “Buyer” as used herein shall mean the Customer indicated on the face of the quote or sales order acknowledgement attached hereto and incorporated herein. The term “Seller” as used herein shall mean ROYNE INDUSTRIES LLC, dba NASCOM.