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December 2011

  1. Purpose. This document sets forth the sole basis upon which PNI Sensor Corporation ("PNI") is willing to and, if agreed to by you, the purchaser ("Customer"), does hereby contract with Customer regarding the purchase and resale of PNI Products (as defined herein). Further, this document defines the scope of those rights licensed to Customer by PNI, unless both parties have signed a separate agreement, in which case the separate agreement shall govern. No order for PNI Products shall be deemed accepted by PNI unless the terms of this document are agreed to by Customer. By accepting delivery of PNI Products, Customer agrees to be bound by and accepts these terms and conditions.
  2. Definitions. "PNI Products" shall mean those compassing and tilt compensation modules; sensors and associated ASIC's; and single chip sensors offered for sale by PNI that make use of any or all of the PNI Technology. "PNI Technology" shall mean the inventions disclosed by US patents 4,851,775 and 5,239,264, as well as US Patent 5,381,603.
  3. Prices. Prices for PNI Products are set forth in the attached quote or proposal. If no price is stated, the price is that specified in the then current applicable PNI Price List at the time of order acceptance. If Customer does not purchase the quantity upon which these quoted prices are based, Customer will pay the price stated in the Price List for the quantity actually acquired. Prices quoted exclude taxes. Unless Customer provides PNI with a valid and correct tax exemption certificate applicable to the ship-to location designated by Customer prior to PNI's acceptance of the order, Customer will pay any tax, (and any related interest or penalty) however designated or imposed with respect to the Product sold, except for PNI's franchise taxes and taxes on PNI's net income.
  4. Terms of Payment and Security Interest.
    1. Terms of payment are prepaid; however, PNI may extend net thirty (30) days from date of invoice on approved credit. All sales are subject to the prior approval of PNI. PNI may require a Letter of Credit in a form and by a bank acceptable to PNI.
    2. If at any time the financial condition of Customer so warrants, or if Customer fails to make payment(s) when due, or defaults in any way, PNI may either alter terms of payment, suspend credit and delay shipment or pursue any remedies available at law or under this Agreement. In such event, PNI will be entitled to reimbursement from Customer for its reasonable expenses, including attorney's fees. PNI may charge the lesser of 1 1/2% per month or the highest lawful monthly contract rate on overdue accounts.
    3. Customer hereby grants PNI a security interest in the Product and in any proceeds (including accounts receivable) as security for its obligations hereunder until the entire amount due has been paid and will execute any document to perfect this security interest that PNI requests.
  5. Title and Delivery.
    1. All shipments by PNI are Ex Works PNI Factory. Title to PNI Products and risk of loss or damage pass to Customer upon delivery to carrier at shipping point. Customer will pay all transportation, duties, and insurance charges. PNI will use the carrier chosen by Customer as instructed to PNI in writing. In the absence of written instructions to the contrary, PNI, on behalf of Customer, will select the carrier but will not be deemed thereby to assume any liability in connection with the shipment nor will the carrier be construed as an agent of PNI. Claims for loss or damage must be made to carrier within ten (10) days after arrival at destination. Customer may make a claim for shortage of product delivered to carrier directly to PNI within seven (7) days.
    2. Delivery dates set forth in PNI's order acknowledgement are estimates only. PNI will make reasonable efforts to deliver in accordance with these dates; however, PNI will not be liable for a reasonable delay of the estimated delivery date.
    3. In the event of Product shortages, for any reason whatsoever, PNI may allocate Product among its Customers at its discretion.
  6. Orders, Forecast, Cancellation, Rescheduling. For any order for PNI Products, PNI may require minimum and/or round lot sizes. For all orders, Customer shall supply PNI with a confirmed shipment schedule. If Customer (i) cancels all or part of any order, (ii) fails to meet any obligation hereunder, causing cancellation or rescheduling of any order or portion thereof, or (iii) requests a rescheduling of scheduled Product and the request is accepted by PNI, Customer agrees as follows:
    1. Cancellation:
      Customer may not cancel any order or portion thereof within thirty (30) days of the date scheduled for shipment. Upon written notice to PNI, Customer may cancel any order for PNI Products scheduled for shipment beyond sixty (60) days after PNI receives Customer's cancellation notice. Customer will pay as a cancellation charge, ten percent (10%) of the purchase price for each cancelled PNI Product scheduled for shipment between thirty-one (31) and ninety (90) days from date of receipt by PNI of Customer's cancellation notice. Customer will be liable for any quantity price adjustment resulting from such cancellation. Cancellations by Customer will not be accepted by PNI for any nonstandard PNI Products. Orders are non-cancelable after Product shipment.
    2. Rescheduling:
      Customer may reschedule PNI Products scheduled for shipment beyond thirty (30) days after PNI receives Customer's request for reschedule. Product may only be rescheduled once and no reschedules will exceed sixty (60) days from the originally scheduled ship date. Once an order has been rescheduled it is noncancelable.
  7. License Grant. Except as set forth herein in the license grant exclusions, PNI hereby grants to Customer a non-exclusive, world-wide, royalty-free, non-transferable right and license under the PNI Technology to make, use and sell products that incorporate PNI Products as an operating portion thereof.
  8. Warranty. PNI warrants that each PNI Product to be delivered hereunder, if properly used, will be free from defects in material and workmanship and will operate in accordance with PNI's published specifications and documentation for the Product in effect at time of order acceptance (Subject to Paragraph 12 hereof), if operated as directed by them for ninety (90) days following the date of shipment unless a different warranty time period for such Product is specified: (i) in PNI's Price List in effect at time of order acceptance; or (ii) on PNI's web site (http://www.pnicorp.com) at time of order acceptance. This warranty will be void if the products, serial number or other identification marks have been defaced, damaged or removed. This warranty does not cover wear and tear due to normal use, or damage to the product as the result of improper usage, neglect of care, alteration, accident or unauthorized repair
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  10. THE ABOVE WARRANTY IS IN LIEU OF ANY OTHER WARRANTY, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, OR ANY WARRANTY OTHERWISE ARISING OUT OF ANY PROPOSAL, SPECIFICATION OR SAMPLE. PNI NEITHER ASSUMES NOR AUTHORIZES ANY PERSON TO ASSUME FOR IT ANY OTHER LIABILITY.

    If any PNI Product furnished hereunder fails to conform to the above warranty, Customer's sole and exclusive remedy and PNI's sole and exclusive liability will be, at PNI's option, to repair, replace or credit Customer's account with an amount equal to the price paid for any such Product which fails during the applicable warranty period provided that: (i)Customer promptly notifies PNI in writing that such Product is defective and furnishes an explanation of the deficiency; (ii) such Product is returned to PNI's service facility at Customer's risk and expense; and (iii) PNI is satisfied that claimed deficiencies exist and were not caused by accident, misuse, neglect, alteration, repair, improper installation or improper testing. The warranty excludes all cost of shipping, customs clearance and other related charges. PNI will have a reasonable time to make repairs or to replace Product or to credit Customer's account. PNI warrants any such repaired or replacement product to be free from defects in material and workmanship on the same terms as the product originally purchased.
  11. Limitation Of Liability. IN NO EVENT WILL PNI BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF USE, INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES, IRRESPECTIVE OF WHETHER PNI HAD ADVANCE NOTICE OF THE POSSIBILITY OF SUCH DAMAGES, NOR WILL PNI'S TOTAL LIABILITY TO CUSTOMER EXCEED THE SUM PAID TO PNI BY CUSTOMER FOR THE PRODUCT SOLD HEREUNDER.
  12. Use In Critical Systems Prohibited. PNI PRODUCTS ARE NOT DESIGNED, INTENDED OR AUTHORIZED FOR USE IN LIFE SUPPORT, LIFE SUSTAINING, NUCLEAR, OR OTHER APPLICATIONS IN WHICH THE FAILURE OF SUCH PRODUCTS COULD REASONABLY BE EXPECTED TO RESULT IN PERSONAL INJURY, LOSS OF LIFE OR CATASTROPHIC PROPERTY DAMAGE. IF CUSTOMER USES OR SELLS THE PRODUCTS FOR USE IN ANY SUCH APPLICATIONS: (1) CUSTOMER ACKNOWLEDGES THAT SUCH USE OR SALE IS AT CUSTOMER'S SOLE RISK; (2) CUSTOMER AGREES THAT PNI IS NOT LIABLE, IN WHOLE OR IN PART, FOR ANY CLAIM OR DAMAGE ARISING FROM SUCH USE; AND (3) CUSTOMER AGREES TO INDEMNIFY, DEFEND AND HOLD PNI HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, COSTS, EXPENSES AND LIABILITIES ARISING OUT OF OR IN CONNECTION WITH SUCH USE OR SALE.
  13. Product Changes. PNI will make no changes to the specifications or manufacturing processes that affect form, fit, or function of the product without written notice to the Customer. Customer shall be solely responsible for passing on any such notice to its customers and end users of the product. PNI may at any time, without notice, make minor changes to specifications or manufacturing processes that do not affect the form, fit, or function of the product.
  14. Patent, Copyright and Proprietary Rights Indemnity. The following shall be PNI's sole liability and Customer's sole remedy regarding any claim of infringement or misappropriation of third party intellectual property or proprietary rights:
    1. PNI shall, at its expense, defend and indemnify Customer and hold Customer' s officers, directors, agents and employees harmless for damages and reasonable expenses (including attorneys' fees) related to any suits or claims by a third party brought against Customer alleging that the PNI Products sold and licensed pursuant to this Agreement infringe any patent, copyright, trademark, trade secret or similar right provided that PNI is promptly notified, rendered reasonable assistance by Customer as required, and permitted to direct the defense or settlement negotiations. The foregoing obligation of PNI does not apply with respect to any PNI Product or portions or components thereof which is or was (i) modified, other than with PNI's prior written consent, to operate outside of its specifications by any party (including Customer and any end user) if the alleged infringement relates to such modification, (ii) combined with other products, processes or materials where the alleged infringement relates to such combination, provided that the alleged infringement claim could not be made but for such combination, (iii) where Customer continues allegedly infringing activity after being notified in writing by PNI thereof or after receiving a modification delivered at PNI's expense that would have avoided the alleged infringement, or (iv) where Customer's use or sale of the PNI Product is not in accordance with this document or any applicable documentation. Customer will indemnify and hold PNI and its officers, directors, agents and employees harmless from all damages, settlements, attorneys' fees and expenses related to a claim of infringement or misappropriation which is determined by a ruling of any court of competent jurisdiction or by a mutually-agreed arbitrator, or by mutual agreement of Customer and PNI, to have been principally caused by Customer's conduct. PNI shall have no liability for any infringing combinations arising from the integration of PNI Products together with other products provided by Customer or any third party, provided that the alleged infringement claim could not be made but for such combination.
    2. Should the use or sale of any PNI Product by Customer be enjoined, or in the event PNI wishes to minimize its potential liability hereunder, PNI may, at its option, either: (i) substitute a fully functionally equivalent non-infringing unit of the PNI Product; (ii) modify the infringing item so that it no longer infringes but remains fully functionally equivalent; (iii) obtain for Customer, at PNI's expense, the right to continue use of such item; or (iv) if none of the foregoing is feasible, PNI may take back such infringing item or items and refund to Customer the purchase price paid therefore, less amortized depreciation on a five (5) year straight line basis.
  15. Force Majeure. PNI will not be liable for any failure to perform due to unforeseen circumstances or causes beyond PNI's reasonable control, including, but not limited to, acts of God, war, terrorism, riot, embargoes, acts of civil military authorities, delay in delivery or inability to deliver by PNI's vendors due to vendor force majeure, fire, flood, accident, strikes, or inability to secure transportation, fuel, or energy. In the event of force majeure, PNI's time for delivery or other performance will be extended for a period equal to the duration of the delay caused thereby.
  16. Export Restrictions and Controls. Customer shall obtain all licenses, permits and approvals required by any government and shall comply with all applicable laws, rules, policies and procedures of the applicable government and other competent authorities. Customer will indemnify and hold PNI harmless for any violation or alleged violation by Customer of such laws, rules, policies and procedures. Customer shall not transmit, export or re-export, directly or indirectly, separately or as part of any system, the Products or any technical data (including processes and services) received from PNI, without first obtaining any license required by the applicable government, including without limitation, the United States Government and/or any other applicable competent authority. Customer also certifies that none of the products or technical data supplied by PNI will be sold or otherwise transferred to, or made available for use by or for, any entity that is engaged in the design, development, production or use of nuclear, biological or chemical weapons or missile technology. PNI shall not be liable for anything arising from non-compliance, compliance, or efforts to comply, with export control laws in any jurisdiction.
  17. Assignment. Customer may not assign any rights or delegate any duties hereunder without the prior written approval of PNI and any attempt to assign any rights, duties or obligations hereunder without PNI's written consent will be void. PNI may assign all or any part of its rights to payment without Customer's consent and may assign all its rights and delegate all its duties in connection with the transfer of all or substantially all its assets or business.
  18. Entire Agreement. These terms and conditions of this document and those referenced herein constitute the entire agreement between the parties and it supersedes and merges all prior discussions between the parties relating to the subject matter hereof.
  19. Other Documents. The terms and conditions of this document may NOT be altered, supplemented, or amended by the preprinted terms of any purchase order or other Customer document. Any such attempt to alter, supplement or amend this document will be null and void. PNI's failure to object to any specific provision inserted in a document or communication from Customer shall not be deemed an acceptance of such provision or a waiver of the terms and conditions of this document. Should Customer object to or wish to add to any of the terms or conditions of this document, Customer must specifically make such objection or addition in a writing addressed to PNI promptly following receipt of this document. Unless such objection or addition is specifically agreed to in writing by PNI prior to the delivery to Customer of any PNI Products, it shall be deemed waived and not binding on PNI.
  20. Governing law, jurisdiction. This document and any purchases of PNI Products covered by it shall be governed by the laws of the state of California, U.S.A., without regard to conflicts of laws rules. Any legal action related to this document and any purchases of PNI Products covered by it shall be brought in the courts of the state of California or in the U.S. District Court situated there.