Research Electro-Optics, Inc. TERMS AND CONDITIONS OF SALE Rev. A dated 2-11-09

• Terms and Conditions Controlling. The Terms and Conditions as set forth herein as well as any additional terms and conditions that may appear on any purchase order acknowledgment or invoice shall constitute the entire agreement between Research Electro-Optics, Inc. (“Seller”) and Buyer.THESE TERMS AND CONDITIONS SHALL TAKE PRECEDENCE OVER ANY TERMS AND CONDITIONS WHICH APPEAR IN BUYER’S ORDER OR IN ANY DOCUMENTS INCORPORATED BY REFERENCE IN BUYER’S ORDER AND SELLER SHALL NOT BE BOUND BY ANY SUCH TERMS AND CONDITIONS. Any of the following shall constitute acceptance by Buyer of these Terms and Conditions: (a) written acceptance; (b) receipt by Buyer of delivery of any products set forth on the relevant purchase order (the “Products”) which are not returned by Buyer within five (5) days following such delivery; (c) acceptance of performance of services by Seller (the “Services”); (d) or payment by Buyer of any invoice rendered hereunder. Seller’s failure to object to any provision contained in any communication from Buyer shall not be construed as a waiver of these Terms and Conditions, nor as an acceptance of any such provision in such communication. These Terms and Conditions may not be modified except in writing, signed by the parties hereto.
• Products. Unless otherwise provided on a purchase order acknowledgment or invoice, the Products furnished hereunder shall be newly manufactured products but may contain components which have been previously used in other product units. Any such previously used components have been disassembled, reprocessed and reassembled, as appropriate, and meet or exceed the Seller’s specification for newly manufactured components. Prices quoted are for the Products and Services described on the related purchase order acknowledgment or invoice and do not include technical data, propriety rights of any kind, patents rights, qualification, environmental or other than Seller’s standard tests unless expressly agreed to in writing by Seller.
• Prices and Taxes. Unless otherwise agreed to by Seller in writing, the price of all Products is F.O.B. carrier, at the place of manufacture or warehouse location, exclusive of insurance costs. The cost of packaging for normal domestic shipment is included in the invoice price. Where special domestic or export packaging is required, a charge will be applied to the order to cover any additional costs associated with such packaging. Prices and orders do not include federal, state or local taxes, including without limitation sales, use or excise taxes now or hereafter enacted, applicable to the Products or Services sold or provided to Buyer, which taxes shall be added by Seller to the sales price or billed separately, at Seller’s discretion, and which taxes shall be paid by Buyer unless Buyer provides Seller with the necessary tax exemption certificate. Unless otherwise stated by Seller in writing, all quotations are firm for, and expire, sixty (60) days after the date of the quotation and constitute offers.
• Payment Terms. Each shipment shall be a separate transaction and Buyer will be invoiced on the date of shipment. Unless otherwise stated on the invoice, terms of payment shall be net thirty (30) days from the date of invoice. Seller reserves the right to require alternative payment terms, including, without limitation, sight draft, letter of credit or payment in advance. If Buyer fails to make advanced payment as requested by Seller, or if Buyer is or becomes delinquent in the payment of any sum due Seller or refuses to accept C.O.D. shipments, then in addition to any other rights Seller may have in law or equity, Seller may cancel the order or any part thereof and receive reasonable cancellation fees or may refuse to make future shipments and declare immediately due and payable all unpaid amounts due. If Buyer fails to pay any payment due hereunder when due, Seller may recover, in addition to the payment, interest thereon at the lesser of the rate of 1 1/2% per month or the maximum lawful monthly interest rate from the due date until paid in full, and reasonable attorney’s fees.
• Security Interest. Buyer hereby grants to Seller a security interest in all of the Products sold to Buyer as security for the due and punctual performance by Buyer of all of its obligations hereunder. Buyer agrees to execute such documents to evidence and perfect said security interest as Seller may require, including without limitation, financing statements on Form UCC-1.
• Transportation and Risk of Loss. Delivery of the Products sold by the Seller to Buyer hereunder is F.O.B. at the place of manufacture or warehouse location and may be shipped in several lots. Unless otherwise agreed to in writing by Seller, all transportation shall be at the expense of Buyer, Seller reserving the right to ship the Products freight collect and to select the means of transportation and routing. Unless otherwise advised by Buyer in writing, Seller may insure up to the full value of the Products or declare the full value thereof to the transportation company at the time of delivery and all such freight and insurance costs shall be for Buyer’s account. Title and risk of loss or damage to all Products sold hereunder shall pass from Seller to Buyer upon delivery by Seller to the possession of the carrier, whether or not installation is provided by or under the supervision of Seller. Any claims for loss, damage or mis-delivery thereafter shall be filed with the carrier. Seller may at its option obtain insurance for the Products covering their delivery to Buyer and Buyer agrees to reimburse Seller for the cost of providing such insurance. If Buyer notifies Seller of insurance coverage and provides evidence of its own insurance for such shipment, Seller will waive its insurance charge. Confiscation or destruction of, or damage to Products shall not release, reduce or in any way affect the liability of Buyer therefor. Notwithstanding any defect of nonconformity or any other matter, such risk of loss shall remain in Buyer until the Products are returned at Buyer’s expense to such place as Seller may designate in writing. Buyer at its expense shall maintain full insurance on the Products against all loss or damage until Seller has been paid in full therefor, or the Products have been returned to Seller.
• Shipment Schedule. Seller will attempt to meet shipment schedules. However, any shipment quotation or forecast on an order acknowledgment is only an estimate of the time required to make shipment and Seller will not assume liability, consequential or otherwise, because of any delay or failure to deliver all or any part of any order for any reason, including its active or passive negligence. Seller reserves the right to allocate inventories and current production in any way it deems desirable. The Seller’s policy is that any delivery date that is scheduled inside of 60 days from the current date cannot be changed.
• Inspection and Acceptance. Buyer shall have the right to inspect the Products upon tender of delivery. Failure of Buyer to inspect the Products and give written notice to Seller of any alleged defect or nonconformity within thirty (30) days after tender of delivery shall constitute an irrevocable acceptance by Buyer of the Products delivered to it, provided that in the event Seller is responsible for installing the Products, the Products shall be deemed accepted by Buyer upon completion by Seller of its applicable acceptance tests or execution of Seller’s acceptance form by Buyer. Notwithstanding the foregoing, use of the Products by Buyer, its agents, employees or licensees for any purpose after delivery thereof shall constitute acceptance of the Products by Buyer.
• Returns. Products may not be returned to Seller without first obtaining Seller’s consent. The request for return and credit must be filed with Seller through the customers purchasing department and shall include purchase order number, approximate date shipped and any and all other indentifying numbers (such as invoice number, part number, date of invoice, and customer NCR # if available). Each request for return of Products for credit should state the type and quantity of the Products, the part numbers and the reasons for the return. If return authorization is granted, the Product shall be returned to REO in clean and appropriate packaging within 30 days of issuance of return authorization (RMA). If parts are not returned within 30 days, REO reserves the right to cancel the RMA and any related corrective actions. No credit allowance on defective Products will be made and no replacement for defective Products will be shipped in any event, unless the alleged defective Products are, among other things, established as defective to Seller’s satisfaction after suitable testing and inspection by Seller. If the return is approved, a restocking charge of 25% of the total price paid will be assessed. Buyer is responsible for payment of insurance and shipping costs, including applicable duties, taxes, etc., on return Products and is responsible for Products lost or damaged in transit. Nonstandard Products may not be returned unless defective.
• Terminations. Any order for a standard Product with a published price accepted by Seller may be terminated or rescheduled by Buyer only upon written consent of Seller (which consent Seller may withhold for any reason). An order for a standard Product terminated by Buyer within thirty (30) days before shipment shall be assessed a termination charge of not less than twenty-five percent (25%) of the total order value to cover costs of processing and order handlings. An order for a standard Product terminated by Buyer more than thirty (30) days before shipment shall be subject to a termination charge of not less than ten percent (10%) of the total order value. Buyer may not terminate any order (a) for standard Products less than thirty (30) days in advance shipment; or (b) for nonstandard Products or Products without a published price at all; except by mutual written agreement. Terminations by mutual agreement are subject to the following conditions:
  • Buyer will pay, at applicable contract prices, for all Products which are completely manufactured and allocable to Buyer at the time of Seller’s receipt of notice of termination;
  • Buyer will pay all costs, direct and indirect, which have been incurred by Seller with regard to the Products which have not been completely manufactured at the time of Seller’s receipt of notice of termination, plus a pro rata portion of the normal profit on the order;
  • Buyer will pay a termination charge on all other Products affected by the termination. Seller’s normal accounting practices shall be used to determine costs and other charges. To reduce termination charges, Seller will divert completed parts, material or work-in-progress from terminated contracts to other customers whenever, in the Seller’s sole discretion, it is practicable to do so. In the event of a termination, Buyer will have no rights in partially completed goods.
• Contingencies. Seller shall not be liable for any loss, damages or penalty resulting from for any delay in delivery or for non-delivery, in whole or in part, caused by the occurrence of any contingency beyond the control of Seller, including, by way of illustration but not limitation, supplier delay, 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, judicial action, labor unrest, accident, fire, explosion, floods, storm, earthquake and severe snowstorms or other act of God, shortage of labor, fuel, raw material or machinery or technical failure where Seller has exercised ordinary care in the prevention thereof. In any such event, the delivery date will be deemed extended for a period equal to the delay and Seller may allocate production and deliveries among Seller’s customers.
• Intellectual Property Rights.
  • The sale of the Products hereunder to Buyer shall in no way be deemed to confer upon Buyer any right, interest or license in any patents, patent applications, design copyrights, trademarks, trade secrets or any other intellectual property contained in or supplied by Seller for use with the Products. Seller shall at all times have and retain sole title and full ownership of all such proprietary rights, including rights in and to all designs, engineering details, data and materials pertaining to any Products or Services supplied by Seller and to all discoveries, inventions, patents and other proprietary rights arising out of the work done by Seller in connection with the Products and Services or with any and all Products developed by Seller as a result thereof, including the sole right to manufacture any and all such Products (collectively, “IP Rights”). Buyer warrants and agrees that it will not modify or reverse engineer Products, nor manufacture or engage to have manufactured any Products. Buyer agrees that it will not divulge, disclose or in any way distribute Seller’s IP Rights. Nothing in these Terms and Conditions or any purchaser order will be deemed to grant, by implication, estoppel or otherwise, any interest in or license of any of Seller’s IP Rights or other proprietary rights set forth herein.
  • Seller will defend Buyer at its own expense against any claim that the design or manufacture of any standard Product furnished hereunder constitutes an infringement of any United State patent or other intellectual property rights. Buyer shall notify Seller promptly in writing of any such claim of infringement and shall give Seller full authority, information and assistance in settling or defending such claim. Seller shall have sole control of the defense and of the negotiations for settlement, if any, of such claim and Seller shall have no liability whatsoever with respect to any claims settled by Buyer without Sellers’ prior written consent. Seller shall not have any liability to Buyer under any provision of this Section 12(b) if any patent infringement or claim thereof is based upon use of the Products as modified by any person other than Seller or in combination with equipment or devices not made by Seller, or in a manner for which the Products were not designed.
  • In the event a Product sold hereunder is held in and of itself to constitute infringement and its use is enjoined, Seller may, at its sole expense and option, either (i) secure for Buyer the right to continue using such Product; (ii) replace such Product with a suitable noninfringing Product; (iii) suitably modify such Product; or (iv) refund the purchase price of such Product, less depreciation at twenty percent (20%) per year, and accept its return. Seller shall not be liable for any cost or expense incurred without Seller’s written authorization. Seller shall not be obligated to defend or be liable for costs and damages if the infringement arises out of compliance with Buyer's specification or from a combination with or an addition to Products not manufactured or developed by Seller or a modification of Products after delivery or the use of the Products beyond that established by Seller or approved in writing by Seller. THE FOREGOING STATES THE ENTIRE LIABILITY AND OBLIGATION (EXPRESS, STATUTORY, IMPLIED OR OTHERWISE) OF SELLER AND THE EXCLUSIVE REMEDY OF BUYER WITH RESPECT TO INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS BY THE PRODUCTS OR ANY PART THEREOF OR BY THEIR OPERATION.
• Limited Warranty and Remedies.
  • Except as otherwise specified herein, Seller warrants the Products and Services purchased by Buyer from Seller shall (i) be free from defects in material and workmanship; and (ii) perform in the manner and under the conditions specified in the relevant purchase order, for a period of twelve (12) months from date of shipment (the “Warranty Period”) without regard to whether any claimed defects were discoverable or latent on the date of shipment. Major sub-systems manufactured by other companies but integrated into Seller’s Products are covered by the original manufacturer’s warranty and Seller makes no warranty, express or implied, regarding such sub-systems.
  • This warranty is available only if Buyer notifies Seller in writing of any claimed defect in a Product immediately upon discovery, obtains prior authorization for the return (as described above) and returns the defective Product to the original shipping point, transportation charges prepaid, including applicable duties, taxes and insurance, within the Warranty Period; and provided that upon examination Seller determines to its satisfaction that such Product is defective in material or workmanship and the Product has not been (i) subject to accident, misuse or neglect; (ii) repaired, worked on, or altered by persons not authorized by Sellers; or (iii) connected, installed, used or adjusted otherwise than in accordance with the instructions furnished by Seller.
  • Upon receipt of the defective Product, Seller shall, at its option, repair or replace such Product or defective components. Seller shall have reasonable time to make such repairs or to replace such Product. Any repair or replacement of Products under this warranty shall not extend the Warranty Period and are warranted only for the remaining unexpired portion of the original Warranty Period. In the event Seller determines that any Product has been returned without cause and is not defective, Buyer will be notified and the Product shall be returned to Buyer at Buyer’s expense. In addition, Seller may charge Buyer for testing and examination of such Product at its discretion.
  • Seller does not warrant suitability of the Products for Buyer’s use. Buyer shall be responsible for determining that the Products are suitable for Buyer's use and that such use complies with any applicable local, state or federal law.
  • If Buyer shall fail to pay when due any portion of the purchase price or any other payment required from Buyer to Seller under any contract or purchase order or otherwise, all warranties and remedies granted under this Section 13 may, at Seller’s sole discretion, be terminated as to the specific Products not paid for.
• Disclaimer of Warranties. THE EXPRESS WARRANTIES SET FORTH IN SECTION 13 OF THIS CONTRACT ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS, EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCTS AND SERVICES PROVIDED BY SELLER AND ANY DEFECTS THEREIN OF ANY NATURE WHATEVER, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND/OR NONINFRINGEMENT OF THIRD PARTY RIGHTS. NO REPRESENTATIVE OR PERSON IS AUTHORIZED TO BIND SELLER FOR ANY OBLIGATIONS OR LIABILITIES BEYOND THIS WARRANTY IN CONNECTION WITH THE SALE OF THE SUPPLIES AND SERVICES. THIS WARRANTY IS MADE TO BUYER ONLY AT THE ORIGINAL LOCATION AND IS NONTRANSFERABLE.
• Liability for Defective Products. Under no circumstances shall Seller be liable to Buyer under any tort, negligence, strict liability, or product liability claim and Buyer agrees to waive such claims. Seller’s sole and exclusive liability, and Buyer’s sole and exclusive remedy, for any nonconformity or defect in the Products or Services performed by Seller or anything done in connection with any purchase order, in tort (including negligence), contract, or otherwise, shall be limited to repair or replacement of the defective Products or a refund of the purchase price of the Products, at Seller’s sole option. In no event will Seller be liable for costs of procurement of substituted products by Buyer.
• Limitation of Liability. IN NO EVENT, REGARDLESS OF THE FORM OF ACTION, SHALL SELLER BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL LOSSES OR DAMAGES RELATED TO THE PRODUCTS OR SERVICES, INCLUDING, BUT NOT LIMITED TO, LOSSES OR DAMAGES ARISING OUT OF CLAIMS FOR LOSS OF USE, BUSINESS, GOODWILL OR PROFITS, AND CLAIMS ARISING OUT OF THIRD PARTY ACTIONS, WHETHER OR NOT SELLER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES. SELLER’S LIABILITY UNDER, FOR BREACH OF, OR ARISING OUT OF ANY PURCHASE ORDER WILL BE LIMITED TO THE PRICE OF THE GOODS INVOLVED. BUYER SPECIFICALLY ACKNOWLEDGES THAT SELLER’S PRICE FOR THE PRODUCTS IS BASED UPON THE LIMITATIONS OF SELLER’S LIABILITY AS SET FORTH HEREIN.
• Buyer’s Indemnity. Buyer shall indemnify and hold harmless Seller, its officers, directors, shareholders, employees, subsidiaries, parents, affiliates and insurers from and against any and all liabilities, damages, losses, claims, lawsuits, including costs and expenses in connection therewith, for death or injury to any persons or loss of any property whatsoever, caused in any manner by Buyer's possession, use or operation of the Products.
• Confidential Information. Buyer represents that it has adopted reasonable procedures to protect Confidential Information (as hereinafter defined), including binding agreements with employees and consultants to prevent unauthorized publication, disclosure or use of such during or after the term of their employment by or services for Buyer. Buyer shall not use Confidential Information except as required for the use of the Products or Services, shall not disclose Confidential Information to any third party, and shall not transmit any documents or copies thereof containing Confidential Information to any third party, except as may be authorized in writing by Seller. For the purposes of this agreement, “Confidential Information” shall mean information or data of Seller, or a third person to whom Seller owes obligations of confidentiality, and which is furnished or to be furnished to Buyer in written, graphic or machine-readable form and is marked proprietary or confidential. Where copies or alternative forms of information or data are received from Seller, such information or data shall be considered Confidential Information if at least one of such copies or alternative forms is marked proprietary or confidential. Confidential Information shall not include information which Buyer demonstrates was in Buyer’s possession prior to receipt from Seller or information which Buyer demonstrates is or has become available to the public or general knowledge in the industry otherwise than through the fault of Buyer.
• Substitutions and Modifications. Seller shall have the right to make substitutions and modifications of the specification of the Products, provided that such substitutions or modifications will not materially affect overall product performance.
• Bankruptcy or Insolvency of Buyer. If the financial condition of Buyer at any time is such as to give Seller, in its judgment, reasonable grounds for insecurity concerning Buyer’s ability to perform its obligations under any purchase order or other agreement subject to these Terms and Conditions, Seller may (a) by notice in writing to Buyer, cancel any agreement or purchase order, without judicial intervention or declaration of default of Buyer and without prejudice to any right or remedy which may have accrued or may accrue thereafter to Seller; (b) require full or partial payment in advance and suspend any further performance buy Seller until such payment has been received; or (c) make shipments C.O.D.
• Defaults. Seller shall have the right without penalty or payment to suspend its performance or cancel any order accepted (a) upon ten (10) days prior written notice, if Buyer fails to make any payment when due to Seller under any order; (b) upon ten (10) days prior written notice, if any act or omission of Buyer delays Seller’s performance; or (c) upon thirty (30) days prior written notice, if Buyer violates any other term or condition of these Terms and Conditions or any purchase order and Buyer fails to cure such violation within such 30-day period; and in the event of such cancellation Seller shall be entitled to receive reimbursement for its reasonable and proper cancellation charges. Notwithstanding anything to the contrary herein, cancellation of any order will not release either party from any claim, cause of action or from any obligation which matured prior to the effective date of such cancellation or which, in the case of cancellation by Buyer, may continue beyond such cancellation, including but not limited to any minimum purchase commitments.
• Non-Waiver; Remedies. No waiver of any breach of these Terms and Conditions shall constitute a waiver of any prior or subsequent breach of any similar or dissimilar provision or a modification of these Terms and Conditions. All Seller rights and remedies, whether evidenced hereby or by any other contract or document, shall be cumulative and nonexclusive and may be exercised singularly or concurrently.
• Governing Law; Jurisdiction; Venue; Attorneys Fees. The validity, performance and construction of these Terms and Conditions shall be governed by the laws of the State of Colorado, notwithstanding its conflicts of laws principles. If any provision of these Terms and Conditions is held to be unenforceable, such holding shall not affect the enforceability of any other provision. Any legal presumption that the terms of these Terms and Conditions shall be strictly construed against the party who drafted such terms or who benefits from such terms shall not be employed in construing and interpreting these Terms and Conditions. Any action brought by Buyer against Seller arising out of these Terms and Conditions or Buyer's purchase and use of the Products must be commenced within one (1) year after such action accrues and in no event later than two (2) years after date of shipment of such products. In connection with any suit or other action arising between the parties, each of the parties consents and submits to the exclusive jurisdiction of the state and federal courts located in the State of Colorado, and consents and waives any objections to the venue of such action or proceeding in such courts. The prevailing party in any legal action brought by one party against the other will be entitled, in addition to any other rights and remedies it may have, to reimbursement for its expenses incurred thereby, including court costs and reasonable attorneys fees.
• Government Contracts. If the Products to be furnished hereunder are to be used in the performance of a U.S. Government contract or subcontract, the Government contract number and a statement to that effect shall appear on Buyer’s purchase order. If Buyer’s purchase order includes all of such information and if such order is accepted in writing by Seller, then only those clauses of the applicable Government procurement regulations which are required by Federal statute or regulation to be included which apply to Seller shall be incorporated herein by reference. In all other events, such clauses shall not be incorporated herein by reference.
• Export. Regardless of any disclosure made by Buyer to Seller of the ultimate destination of the Products, Buyer shall not export either directly or indirectly any Products either in contravention of statute or regulation of the United States governing exports (“Export Law”) or without first obtaining all required licenses and permits from the United States Department of Commerce, Department of State and any other relevant agencies or departments of the United States government. Buyer shall not directly or indirectly export any Products to any country or individual to which such export or transmission is banned, restricted or prohibited by any agency of the U.S. government. Buyer will timely pay any fine, penalty or charge by any governmental agency charged against Buyer and/or Seller or paid by Seller due to any violation of any Export Law by Buyer, together with Seller’s costs and reasonable attorneys’ fees for responding to or dealing with such violation. In the event that Buyer violates any Export Law, Seller may suspend sales to Buyer until such time as Seller determines that such violation is being remedied, payments made as required above, and steps taken to ensure that Buyer will comply with all Export Laws in the future. Any import or export fees or duties assessed as to the Products will be paid by Buyer.
• Assignment. These Terms and Conditions shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns. These Terms and Conditions and Buyer’s obligations under any purchase order are personal to Buyer, and Buyer may not assign any of its rights or delegate any of its obligations there under, in whole or in part, without the prior written consent of Seller which may be withheld for any reason. Notwithstanding the foregoing, Seller may subcontract any portion of the work on any item subject to these Terms and Conditions; provided that Seller’s obligations and rights hereunder shall not be limited nor affected by such subcontract.
• Complete Agreement; Modifications. These Terms and Conditions and any related purchase order constitutes the entire agreement between the parties relating to the sale of the Products and performance of Services and no addition to or modification of any provision of said agreement shall be binding upon Seller unless agreed in writing by Seller.
• Notices. All notices given hereunder shall be in writing, mailed by first class mail, certified or registered, or delivered by hand to the address of the other party set forth in the quote, purchase order or to such other address as such party may designate from time to time by such notice, and shall take effect when received.