Acceptance of Order.  Seller is Neuro Logic Systems, Inc.  These Terms and Conditions shall be binding for any order (“Order”) placed by Buyer.  If Buyer objects to one or more of the terms herein, such objection must be in writing and received by and accepted by Seller in writing prior to the commencement of performance by Seller.  Any of Buyer’s conditions which are contrary to these Terms and Conditions must be accepted in advance in writing by Seller.  If any terms on the face of Seller’s Invoice or Order Confirmation differ from or add to these printed terms, the face terms on such Seller’s Invoice or Order Confirmation shall take precedence over these printed Terms and Conditions.  Any purchase order or other written form of Buyer shall be construed as an offer and shall not become an effective binding part of these Terms and Conditions, unless signed in advance by an authorized officer of Seller, together with a written agreement that it is incorporated into these Terms and Conditions.  Any alteration, variance, or waiver of these Terms and Conditions requires the written approval of an authorized officer of Seller.

Price.  Prices quoted by Seller are valid for thirty (30) days from date of quotation or as otherwise extended in writing by Seller, and must be accepted in writing within this time. After expiration of this period, Seller may, at its discretion, extend time of quotation or make a revised quotation.  Seller reserves the right to correct clerical or typographical errors at any time, even after acceptance.  Unless otherwise specified in writing, all prices are in United States dollars (“USD”) and do not include any applicable Federal, State and local taxes, customs and duties. 

Shipment and Delivery.  FOB.  Seller shall arrange delivery with a common carrier (“Shipper”) but Buyer shall be solely responsible for all costs and expenses of delivery from Seller’s shipping point and Seller shall invoice Buyer for all shipping expenses.  “F.O.B.” means that title and right of possession passes upon delivery to Shipper or payment in full to Seller, whichever occurs last.  Shipping dates and/or delivery dates are quoted based on conditions prevailing on the date of the quotations and are subject to rescheduling.  All orders, including custom product orders, are subject to reasonable rescheduling of the delivery date and failure of Seller to deliver by the original delivery date shall not be deemed a breach of this Agreement.  The time of delivery shall be deemed to have been complied with when the product has been shipped or delivered into the custody of the Shipper at the designated site before expiration of the time of delivery indicated on the Seller’s Order Confirmation.    Seller need not ship or deliver as quoted if Buyer has not met its payment or other contractual obligations.

Seller shall not be liable for delays due to performance under any DX rated order for any governmental division, department, agency or otherwise, or due to any causes beyond its reasonable control or due to acts of Buyer, acts of God, changes in local, State or Federal laws or regulations, fires, strikes, floods, epidemics, quarantine restrictions, terrorism, riot or other civil unrest, war, acts of violence, freight embargoes, delays in transportation, etc. (collectively, “Force Majeure Events”).

In no event shall Buyer be entitled to any damages as a result of delays in delivery or late delivery.

Buyer shall have up to ten (10) days after receipt to inspect the product.  Unless Seller is notified in writing to the contrary during this period, delivered items shall be presumed to be accepted.  Claims for shipment defects, damages or shortages shall be waived unless made within ten (10) days of receipt of the product by Buyer.

If delivery is delayed by Buyer, product held for Buyer may be subject to storage charges and shall be at the sole risk and expense of Buyer.

Payments.  Unless otherwise specified in writing, Seller’s standard payment terms are pre-payment in full for all new customers and net thirty (30) from receipt upon approved credit with payment due thirty (30) days from date of receipt of the product by Buyer.  If the product is not paid for in full, Seller retains a security interest in the product and shall have all rights of a secured party thereon pursuant to the provisions of the California Commercial Code (the “Code”).  Buyer shall, upon request of Seller, execute any Security Agreement, Financing Statement or other document required by the Code, and Seller shall have the right to require receipt of such executed documents prior to shipment of product.  In furtherance of the foregoing, an irrevocable power, coupled with an interest, is hereby granted and reserved unto Seller to execute such Security Agreement, Financing Statement or other document on Buyer’s behalf and stead.  Invoices will normally be submitted at time of shipment.  In the case of partial shipments, payment shall be made prorata based upon each shipment.  Payment shall be made if unimportant parts are missing, which do not prevent the product from being used, or if subsequent work on the product is found to be necessary.  If Buyer does not make payments when due, it shall without formal notice be liable to pay interest on overdue amounts from the due date, at a rate of one and one-half percent (1.5%) per month or the maximum amount allowable by law, whichever is less.  Payment of such interest does not release Buyer from its obligation to make payments on the agreed dates.
Buyer shall not, at any time, be entitled to set off any amount owed by Seller to Buyer against any amount payable by Buyer to Seller.

Passage of Title.  The title and right of possession to the product remains with Seller until the full contract price (including, if any, deferred payments and any interest charges) has been paid to Seller.  Buyer agrees to perform all acts necessary to protect and maintain this title and right. Passage or non-passage of title shall not affect risk of loss.

Risk of Loss.  Seller bears the risk of loss or damage to the product from the time that Seller delivers to Shipper and during all transportation and delivery of the product to the site designated by Buyer, except if Buyer designates a Shipper other than a nationally recognized shipper such as FedEx or UPS, Buyer shall bear all risk of loss or damage from Seller’s delivery to Shipper and during all transportation and delivery.

Warranty And Damages Limitation.  Seller warrants that the product delivered and related services rendered pursuant to this Order will be free from defects in material and workmanship, and if the product is designed by Seller, free from defects in design, for a period of twenty-four (24) months from the date of receipt. In the case of spare or replacement parts manufactured by Seller, the warranty period shall be for a period of six (6) months from shipment.  Repairs outside the warranty period shall be at standard Seller rates and shall be warranted for twelve (12) months from the date of repair or, if the repair is performed under this warranty, for the remainder of the original warranty period. Seller shall provide repair service for an additional three (3) years beyond the original warranty period at standard Seller rates.  Buyer shall report any claimed defect in writing to Seller upon discovery and in any event, within the warranty period.  Seller, at its sole discretion, shall promptly repair or replace the product at Seller’s designated repair facility.  Buyer shall be solely responsible for all shipping costs and expenses to ship the product to the repair facility.  Seller shall be responsible for all shipping costs and expenses to return the product to Buyer up to the amount for standard delivery of the product to the original point of delivery designated on Seller’s Order Confirmation, and Buyer shall be charged for any excess shipping expenses above that amount.  If Buyer repairs or replaces product without Seller’s prior written approval, Seller is relieved of obligation to Buyer under this section with respect to such product.  The product shall not be deemed defective by reason of normal wear and tear and this limited warranty shall not apply to (i) product (or the services applicable to such product) where the product has been subjected to mishandling, misuse, abuse, alteration, damage, neglect or improper or inadequate storage, maintenance, repair or installation,  (ii)  product (or the services applicable to such product) that has been subjected to unauthorized or  improper repair, installation,  assembly,  processing  or otherwise that alters physical or electrical properties, (iii) damage due to operation of the product other than as per the specifications or use with other components, materials or equipment,  (iv) any defect, malfunction or failure caused by accidents, misuse, abuse, unauthorized repair, improper installation or removal of component parts, or use of the product with components or equipment for which it is not intended or (iv) any act of God (such as floods, hurricanes, earthquakes or fires).  No other express warranty is given and no affirmation of Seller, by words or action, will constitute a warranty.  The foregoing warranty is in lieu of all other warranties either express or implied, including, but not limited to, the implied warranties of non-infringement, merchantability and fitness or suitability for a particular purpose which are hereby expressly waived to the fullest extent permitted by law.  There are no warranties which extend beyond the description on the face hereof.

Limitation Of All Remedies.  In no event will Seller be liable for any special, incidental, punitive, indirect or consequential damages based on breach of warranty, breach of contract, negligence, strict liability, tort, product liability, or any other legal theory to the fullest extent permitted by law, even if Seller has been advised of the possibility of such damages.  Buyer expressly agrees that Seller’s sole maximum liability for damages for any cause whatsoever shall be limited to the total price received by Seller for the product and when Buyer accepts the product, Buyer is precluded from seeking any other damages against Seller. 

Allocation of Risks.  This agreement allocates the risks of product failure between Seller and Buyer.  This allocation is recognized by both parties and is reflected in the price of the product.  Buyer acknowledges that it has read this agreement, understands it and is bound by its terms.

Termination for Convenience.  Upon thirty (30) days advanced written notice to Seller, Buyer may cancel all or any separable part of this Order.  In such event, unless either party shall have defaulted or been in default of performance hereof, either party shall have all rights and obligations accruing to it both at law or in equity, including Buyer’s right to title and possession of product paid for.  Seller shall be reimbursed for actual and reasonable cost, plus a reasonable profit for work performed to date of termination, as mutually agreed upon by the parties in good faith.

Termination for Default.  Either party may terminate this Order or work under this Order in whole or in part (i) immediately by written notice if the other party commits a material breach of any one or more of its terms and fails to cure such default within thirty (30) days after the non-breaching party gives written notice of such breach, or (ii) upon five (5) days advance written notice if either party becomes insolvent, enters voluntary or involuntary bankruptcy or receivership proceedings or makes an assignment for the benefit of creditors. 

Patents, Copyrights, Trademarks and Trade Secrets.  Seller represents and warrants that, to Seller’s actual knowledge, the product and the sale and use thereof do not infringe any valid patent, copyright, trade secret, proprietary right or trademark of any third parties.  Seller agrees, at its cost and expense, to indemnify and hold Buyer free and harmless as set forth in Section 13 below.

Indemnification.  Seller hereby agrees to indemnify and hold harmless Buyer, its officers, directors, and agents from and against any and all liabilities, damages and expenses (including reasonable attorneys’ fees) actually incurred by a third party (a) from a claim that the product provided under this Order infringes, violates or misappropriates a valid patent, copyright, trademark, trade secret or other intellectual property or proprietary right, but only to the extent that Seller had actual knowledge of such infringement and failed to disclose it to Buyer and take reasonable steps to avoid or mitigate the claim and excluding any claim as a result, either directly or indirectly, of Seller’s incorporation of any of Buyer’s drawings, designs, schematics, information, data, software or other items; and (b) for any claim for personal injury or property damage from the proper use of the product provided under this Order that is a result of a breach of the Warranty in Section 7, with such indemnification under this Section 13 limited to an amount not to exceed the extent of Seller’s insurance coverage actually provided by the insurer; provided, however, that this indemnification shall not apply to any liabilities, damages, expenses, or claims incurred as a result, either directly or indirectly, of any negligence, fraud, or acts or omissions of Buyer or any of its officers, directors, affiliates, shareholders, employees, representatives and agents.

Changes.  Buyer may make reasonable changes in the character or quantity of the product, or in the manner or time of performance of this Order if  communicated to Seller in a writing signed by a duly authorized representative of Buyer and accepted in writing by a duly authorized representative of Seller.  An equitable adjustment in the price and time for performance will be mutually agreed to by the parties in writing, acting in good faith, if such changes result in a decrease or increase in the Seller’s cost or time of performance.  Notwithstanding the above, Seller may, without Buyer’s approval, make revisions to the product that do not affect form, fit or function.

Arbitration.  Any controversy or claim arising out of or relating to these Terms and Conditions, other than a suit by Seller to collect payment, shall be submitted to final and binding arbitration before the American Arbitration Association (“AAA”) in accordance with the AAA’s Commercial Arbitration Rules.  The arbitration is to be conducted in Ventura County, California, by a single arbitrator who is a retired judge.  The decision rendered by the arbitrator shall be final and binding upon the parties.  The award rendered by the arbitrator shall be final, and judgment thereon may be entered in any court having jurisdiction thereof.  Either party may pursue injunctive or other equitable relief without first submitting the claim or controversy to arbitration.  The costs of the arbitration shall be paid equally by the parties and the prevailing party, as determined by the arbitrator, shall be entitled to reasonable attorney’s fees as provided in Section 22.

Confidentiality; Proprietary Information. Unless otherwise expressly agreed in a contemporaneous or subsequent writing to the contrary, all drawings, designs, specifications, information, data, prototypes, samples, software and other items supplied by one party to the other party in performance of this Order shall remain the confidential and proprietary information of the disclosing party. The non-disclosing party shall hold all such information in confidence and use it solely as strictly necessary to utilize the product (if the non-disclosing party is Buyer) or as necessary to provide the product and any related services (if the non-disclosing party is Seller) and the non-disclosing party shall use for no other purpose, and shall not reproduce, distribute or disclose such confidential information to any third party without the disclosing party’s prior written consent, and shall only disclose such confidential information to employees and independent contractors who may require use of such confidential information in the performance of their duties but only if such employees and independent contractors agree to keep such information confidential and are bound by confidentiality obligations at least as strict as set forth in this paragraph.

Any non-disclosure agreement signed by the parties is hereby incorporated by reference and made a part of these Terms and Conditions.
Each party shall own, retain and control all rights, title and interest to its Background Intellectual Property.  Background Intellectual Property means all Intellectual Property that is owned, licensed to, or controlled by a party and (i) exists or was developed by such party prior to the date of this Order or (ii) was developed independently of performance under this Order.  Intellectual Property means all service marks, trademarks, trade dress, trade secrets, copyrights, copyright applications, patents, patent applications, ideas, know-how, processes, methods, inventions, and other intellectual properties and proprietary rights, in whatever form, including, without limitation, drawings, designs, specifications, information, data, prototypes, samples, software, documents and other items.  All Intellectual Property that is first made or conceived by Seller solely in the performance of this Order shall be referred to as “New Intellectual Property.” All New Intellectual Property shall be the confidential and proprietary information of Seller, and Buyer shall execute any such documents necessary to perfect Seller’s title thereto.  Seller hereby grants to Buyer and Buyer’s customers a perpetual, fully paid up, royalty-free, non-assignable or non-transferable (except as provided below in this Section), and non-exclusive right to use Seller’s Background Intellectual Property that is incorporated into the product and Seller’s New Intellectual Property that is incorporated into the product, solely to the extent necessary to utilize the product.

Each of these licenses shall be non-assignable and non-transferable, except to the extent the United States government, or any subdivision thereof, has the rights to use such license by applicable law and except that Buyer may assign or transfer such license to any affiliate or successor in interest to at least 50% of the ownership of Buyer, by way of merger, consolidation, corporation reorganization or sale of all or substantially all of the assets of Buyer provided such transferee is not a competitor of Seller.  Buyer shall not reverse engineer, disassemble or decompile the product or any part thereof, or any prototypes, software, other product, or other tangible objects which embody Seller’s confidential or proprietary information (or both).  Buyer agrees not to create, sell or license any derivative works or modifications of the product or any part thereof, and also agrees not to create, sell or license any derivative work, or modifications to, any prototypes, software, other product, or other tangible objects which embody Seller’s confidential or proprietary information (or both).   

Federal Acquisition Regulations & Flow Down Clauses / Export Control.  If this is a government related Order and Buyer has specifically noted Federal Acquisition Regulation (FAR) clauses in (or as an attachment to) Buyer’s  Order, such FAR clauses are incorporated by this reference as if set out fully herein, except the word “Buyer” shall be substituted for the words “Contracting Officer” and the term “Seller” shall be substituted for “Contractor” wherever such words appear.  Notwithstanding the above, no other provisions of Buyer’s purchase order shall be applicable and any of Buyer’s terms or conditions which are contrary to these Terms and Conditions shall only be valid when accepted in advance in writing by Seller.  Seller and Buyer shall not disclose or otherwise transfer, directly or indirectly, any equipment, hardware, software, defense service, information or technical data to any foreign individual or company except in material compliance with the applicable licensing, approval and all other requirements of the US export control laws, regulations and directives, including but not limited to the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR).

Relationship of Parties.  Seller and Buyer are independent contracting parties and nothing in these Terms and Conditions shall make either party the agent, joint venturer or legal representative of the other for any purpose whatsoever, nor does it grant either party any authority to assume or to create any obligation on behalf of or in the name of the other.

No Implied Waiver.  The failure of either party at any time to require performance by the other party or make any election under any provision of these Terms and Conditions shall in no way affect the party’s right to require such performance or make such election at any time thereafter, nor shall the waiver of either party of a breach of any provision of these Terms and Conditions constitute a waiver of any succeeding breach of the same or any other provision.

Entire Agreement.  These Terms and Conditions and the Seller’s Order Confirmation, Invoice or other order confirmations of Seller under which they have been deemed applicable supersede all prior and contemporaneous communications, understandings and agreements of Buyer and Seller (either verbal or written).

Modification/Severability/Further Assurances.  These Terms and Conditions may not be modified or amended in any way unless such modification or amendment is in writing and signed by an authorized officer of each Seller and Buyer.  If any provision of these Terms and Conditions is determined by a court of competent jurisdiction to be invalid under any applicable law, the portion deemed to be invalid will be deemed omitted, and the remainder of these Terms and Conditions shall remain enforceable.  The parties agree to execute any further documents and provide any requested assurance reasonably necessary for the parties to effectuate the purpose of these Terms and Conditions.

Attorneys’ Fees.  In the event of a claim, suit or controversy, including without limitation, a suit to collect payment or an action for declaratory relief, the prevailing party in such action or proceeding shall be entitled to recover its court costs and reasonable out-of-pocket expenses not limited to taxable costs, including, but not limited to, phone calls, photocopies, expert witness, travel, etc., and reasonable attorneys’ fees to be fixed by the court.  The court or arbitrator shall determine the party that is the “prevailing party,” whether or not the dispute or controversy proceeds to final judgment.  Such recovery shall include court costs, out-of-pocket expenses and attorneys’ fees on appeal, if any.  In an action for arbitration, the prevailing party as determined by the arbitrator shall be entitled to reasonable attorneys’ fees.

Governing Law; Jurisdiction; Venue; Compliance with Law.  This agreement is entered into in Ventura County, California and shall in all respects be construed and governed by the laws of the State of California.  Buyer and Seller agree and accept that any legal action or proceeding with respect to this agreement shall be brought in the Federal or state courts for the State of California, County of Ventura, and the parties expressly waive any objection to personal jurisdiction, venue or forum non conveniens.  Both Buyer and Seller agree to materially comply with the applicable provisions of all federal, state, and local laws and ordinances and all lawful orders, rules, and regulations thereunder.

Rev. 11-1-09