STANDARD TERMS AND CONDITIONS

Acceptance - This purchase order represents the entire agreement between buyer and seller and becomes a contract upon the terms and conditions set forth herein by acknowledgment of the commencement of performance by mutual agreement between buyer and seller.

Acceptance of any order by KGS Electronics from any Customer is made conditional on the Customer's acceptance of the terms and conditions set forth herein.

Assignment - Neither this order nor any interest under it shall be assignable nor any duties delegable by buyer, voluntarily or involuntarily without the express written consent of seller.

Shipments - All shipments will be made F.O.B. seller's facility with transportation charges on a collect basis unless prior contractual arrangements have been made between buyer and seller. All charges which include but are not limited to consumption, use, excise or similar taxes, duties, tariffs, customs fees, storage, dues, and other charges of any kind which may be imposed after the F.O.B. point are the responsibility of the buyer.

Buyer may request in writing a preferred method of shipment/delivery subject to approval by seller.

Title - Title of goods covered by any order shall vest in buyer upon delivery thereof by carrier to buyer's facility or consignee. It is the responsibility of the buyer or consignee to recover from the Transportation Company in case of any loss or damage during shipment.

Delivery - Failure to meet shipments per schedule because of delays resulting from causes beyond seller's reasonable control shall not be considered reason for cancellation of an order. In no event shall the seller be held liable for consequential loss or damage on account of shipping schedule delays. Any schedule changes initiated by the buyer will require a minimum 30-day advance notice and will be limited to 20% of the original scheduled quantity.

Changes - The buyer may, in writing, request changes within the scope of this order in product drawings, designs, and specifications, delivery schedules, methods of shipment or packaging and place of delivery. The seller must approve all such requests, and, if any such changes cause additional cost, delays or damage to the seller, an equitable adjustment in contract price shall be made.

Payment - Invoices will be paid according to discount terms or if no discount is offered, within thirty days after receipt and acceptance of goods or completion and acceptance of services.

Delinquency - Late payments are subject to a 1.5% per month finance charge. Buyer agrees to pay any and all collection costs, including attorney fees, in the event legal action is required to enforce the terms of this agreement.

Merchandise Returns - In general, any return of products will be subject to a 25% restocking fee or $50.00 minimum charge whichever is greater.

Custom built or special design products are considered non-returnable/non-refundable, and no credit will be allowed on the return of such products.

Legal Construction and Interpretation - This contract shall be governed by the laws of the State of California.

Indemnification - Buyer shall indemnify and hold seller harmless from and against any suits, liabilities, damages, claims, actions or causes of action, and expense (including attorney's fees) arising out of or connected with seller's products and or services.

Compliance With Laws - Buyer shall comply with all applicable Country, Federal, State, City and Local laws, Government orders and regulations in the performance of this contract. Buyer covenants to save and hold seller harmless from, and to reimburse for, any and all costs, damages and expenses (including attorney's fees) suffered by it directly or indirectly through any failure of buyer to comply with any such law, regulation or order

Inspection - The buyer shall inspect and accept any products delivered pursuant to this order within a reasonable time after receipt of such products. In the event that such products are deemed non-conforming with respect to design or specifications, the buyer shall notify the seller immediately of such condition and allow the seller reasonable time to correct the non-compliance. The buyer shall be deemed to have accepted any such products delivered hereunder if no such notification of non-compliance, either written or verbal, is given the seller within fifteen days (15) after receipt of the products by the buyer.

Patent, Trademark and Copyright Indemnity - To the extent the items covered by this contract are manufactured pursuant to designs not originated by buyer, seller shall indemnify and save buyer, its agents and customers harmless from any expense, cost, loss, damage or liability for infringement or alleged infringement of any patent, trademark or copyright with respect to such products and their process of manufacture. Buyer offers seller full and exclusive control of the defense of such any such action arising out of alleged infringement and the right to participate in the defense of such suit with respect to the manufacture, sale or use of such products delivered hereunder.

Seller's liability for damages hereunder is limited to those computed solely on the value of any product sold to buyer and seller's indemnity as to use shall not apply to any infringement arising out of use in combination with other items where such infringement would not have occurred in the normal, recommended use for which the article was designed.

Suspension of Work - Buyer may order seller in writing to suspend, delay or interrupt all or any part of the work for a period not to exceed ninety consecutive days. An adjustment shall be made for any increase in the cost of performance of this contract and delivery or performance dates necessarily caused thereby.

Liens - All items delivered by seller and all property to be returned by buyer shall be free and clear of any and all encumbrances whatsoever.

Taxes - Unless otherwise specified in the contract, the prices quoted herein do not include sums to cover any taxes or duties including but not limited to Federal, State, Municipal, Local and City sales or use taxes or import duties. Any taxes or duties that are due and owing as a result of this contract shall be paid by the buyer.

Termination - Buyer may terminate all or any part of this contract at any time upon submission of written request by buyer and approval by seller of such action. Buyer assumes all responsibility for any and all such charges incurred on behalf of the seller in the performance of the contract. These charges may include but are not limited to cancellation fees, contract penalties, material purchases, labor costs, administrative cost, delivery fees, interest charges, etc.

Drawings, Specifications and Technical Data - Drawings, data, designs, inventions and other technical information supplied by seller shall remain seller's proprietary information and shall not be copied, reproduced, sold, modified, revised, etc. without the express written consent of the seller. Any and all drawings, data, designs, inventions which may be disclosed to buyer with respect to the design, manufacture, sales or use of the items covered by this contract shall be deemed to have not been disclosed as part of the consideration for this purchase order and buyer shall not assert any claim to such data for any purpose whatsoever.

Drawings, data, designs, inventions and other technical information supplied by buyer shall remain buyer's property and shall be held in confidence by seller. Such information shall not be reproduced, used or disclosed to others by seller without buyer's prior written consent, and shall be returned to buyer upon completion of contract if so requested.

Insolvency - Seller may cancel the whole or any part of this contract in the event of the suspension, insolvency, bankruptcy, re-organization, liquidation, condemnation, repossession, receivership, or impounding of the buyer's business or any other event which may affect the credit worthiness of the buyer.

Special Tooling and Data - Title to dies, tools, jigs, fixtures, patterns or any other type of special tooling and data processes shall remain vested in the seller, whether or not paid for or amortized over the products manufactured for the buyer. Buyer shall have no right to title, possession or custody of such items unless specifically agreed to in writing on the contract.

Nonwaiver - No waiver of any provision or failure to perform any provision of this contract shall be effective unless consented to by seller in writing nor shall any such waiver constitute a waiver of any other provision or failure to perform.

Severability - If any provision of this contract is in violation of any governing laws (Country, Federal, State or local) or any regulations, or is illegal for any reason, said provision and its contents shall be considered waived for this contract.