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TERMS AND CONDITIONS FOR CUSTOM ENGINEERED HARDWARE AND SOFTWARE SERVICES
Attachment A to Proposal
DCN 02-0020A

These Terms and Conditions for Custom Engineered Hardware and Software Services (defined below) shall govern all orders for Custom Engineered Hardware and Software Services designed, developed and sold by VI Technology, Inc., a Texas corporation (“VI Technology”). VI Technology and the purchaser (the “Customer” of VI Technology’s Custom Engineered Hardware and Software Services as identified in VI Technology’s Proposal agree that the following terms and conditions (these “VI Terms”) shall govern all dealings between the parties. These VI Terms shall be incorporated by reference into the Proposal (defined below) between VI Technology and Customer and shall govern the conduct of the parties with respect to the subject matter of the Proposal.

These VI Terms supersede any conflicting terms and conditions contained in a purchase order or other document submitted by the Customer. VI Technology rejects any terms in addition to or in conflict with these VI Terms.

1. Attachment and Definitions

A. Attachment

These VI Terms shall be considered as Attachment A to VI Technology’s Proposal.

B. Definitions

(1)	“Custom Engineered Hardware and Software Services” means the hardware and/or software designed, developed, integrated and delivered under these VI Terms in accordance with Customer’s Technical Specifications set forth in the Proposal. The term “Custom Engineered Hardware and Software Services” shall include all hardware and software documentation, manuals, certifications, support equipment, drawings, diagrams, schematics, spare parts and/or software source code, programs, flow charts, or pseudo code as identified in the Proposal.
(2)	“including” means including without limitation.
(3)	“Milestone” means the various tasks to be accomplished by VI Technology as set forth in the Proposal.
(4)	“Hardware and Software Intellectual Property” means and includes all rights in and to all patents, copyrights, trade secrets, mask works, moral rights, and other proprietary or intellectual property rights on a worldwide basis in, to and with respect to all works of authorship, maskworks, and patentable and unpatentable inventions, discoveries, developments, designs, formulas, procedures, methods, apparatus, ideas, materials, processes, techniques, data, know-how, show how, algorithms, programs, creations and improvements conceived, developed or first reduced to practice by or on behalf of VI Technology with respect to the Custom Engineered Hardware and Software Services, its use, or the manufacture thereof.
(5)	“Payments” means the fees payable by Customer to VI Technology for the Custom Engineered Hardware and Software Services as set forth in the payment schedule in the Proposal.
(6)	“Project Schedule” means the schedule contained in the Proposal, that lists the planned dates in which various Milestones will be accomplished by VI Technology.
(7)	“Proposal” means the statements contained in the agreement between VI Technology and Customer that memorializes the specific terms and conditions relating to the Custom Engineered Hardware and Software Services.
(8)	“Technical Specifications” means the functional requirements and technical specifications of the Custom Engineered Hardware and Software Services as described in the Proposal.
(9)	“Technology” means all materials, software, databases, inventions, discoveries, and improvements previously created by VI Technology, or which VI Technology creates outside the scope of the Proposal.

2. Scope of Services

VI Technology will perform each of the obligations and tasks as set out in the Proposal in accordance with the applicable Milestones and design and develop Custom Engineered Hardware and Software Services that conforms to Customer’s specifications as outlined in the Proposal.

3. Intellectual Property Rights

A. Ownership of Intellectual Property

(1)	VI Technology shall own and retain all right, title and interest in and to all Hardware and Software Service Intellectual Property, including, without limitation, all the source code making up or otherwise included in the Custom Engineered Hardware and Software, including all modifications and customizations or enhancements made by Customer to Custom Engineered Hardware and Software.
(2)	VI Technology shall own all of the Technology, including all intellectual property rights therein.

B. License Grant

Upon receipt of all Payments, VI Technology grants to Customer, for Customer's internal business purposes only, a non-exclusive, world-wide, perpetual, irrevocable, fully paid-up and royalty-free license to make, use, reproduce, copy, display, perform, make derivative works, or maintain any and all Hardware and Software Intellectual Property Additionally, VI Technology grants to Customer the right to make modifications and enhancements to the Custom Engineered Hardware and Software Services for Customer’s internal business purposes only. The license rights granted Customer hereunder are restricted exclusive to Customer and may not be assigned, sub-leased, sub-licensed, sold or otherwise transferred.

C. Exclusivity

It is understood that the Custom Engineered Hardware and Software Services is for the sole and exclusive benefit and use of Customer. VI Technology agrees that the Custom Engineered Hardware and Software Services shall not be sold to, manufactured for, caused to be manufactured by or for, or otherwise made available by VI Technology to any third party without Customer’s prior written consent. Customer, however, understands that products utilizing portions of the Hardware Intellectual Property which may be similar to the Custom Engineered Hardware and Software Services but not identical, may be marketed, commercialized and sold by VI Technology to third parties without the prior written consent of Customer.

VI Technology recognizes and understands that Customer’s Technical Specifications for the Custom Engineered Hardware and Software Services are proprietary and that VI Technology shall not divulge, disclose or communicate such Technical Specifications or the terms and conditions of these VI Terms to any person, firm, corporation or other entity without Customer’s prior written consent.

4. Delivery, Testing and Acceptance.

A. Delivery

VI Technology shall use its reasonable best efforts to deliver the Custom Engineered Hardware and Software Services according to the dates specified in the Project Schedule contained in the Proposal. However, Customer understands and agrees that, from time to time, some alterations to the Project Schedule may need to be made, including delivery of the Custom Engineered Hardware and Software Services. Customer and VI Technology shall work to revise the Project Schedule should an adjustment to the Project Schedule be necessary.

B. Testing

With the assistance of VI Technology, Customer, at Customer's option, shall, have the opportunity to test the Custom Engineered Hardware and Software.

C. Acceptance

If after fifteen (15) calendar days from the date that Customer completes its testing of the Custom Engineered Hardware and Software, VI Technology has not received notification of any type of problem with the Custom Engineered Hardware and Software from Customer, then the Custom Engineered Hardware and Software Services shall be deemed accepted by Customer.

5. Payments and Payment Terms

A. Payments

In consideration of VI Technology's obligations pursuant to these VI Terms, Customer shall make the Payments described in the Proposal, on the dates specified therein.

B. Payment Terms

Any payments due hereunder shall be made in U.S. currency. Any VI Technology invoice shall be paid in the amount invoiced without deduction of any kind. Any amounts not paid when due shall be considered past due.

C. Method of Payment

All payments by Customer to VI Technology pursuant to these VI Terms shall be made by check or wire transfer. If payment is made by check, then payment shall be delivered to VI Technology’s address as specified in Section 13.F of these VI Terms. If payment by Customer is made by wire transfer, then Customer shall contact VI Technology at the address specified in Section 13.F to obtain wire transfer instructions.

D. Late Payment

If any payment or any other sum due from Customer under these VI Terms should become past due, VI Technology may, without declaring Customer to be in default, charge Customer a late payment charge of up to one and one-half percent (1.5%) per month on the past due balance, not to exceed the legal maximum. Customer also agrees to pay VI Technology all reasonable costs and expenses for collecting any amounts that are past due, including, but not limited to, reasonable attorney's fees.

E. Taxes, Duties, Import/Export and Other Fees

All fees charged by VI Technology hereunder are exclusive of taxes, duties, import/export fees and any other fees. Customer shall pay all taxes whether currently or hereafter applicable to, assessed upon or arising out of the transactions and relationships contemplated by these VI Terms, including without limitation occupation, property, excise, withholding, sales, ad valorem, use or VAT taxes imposed upon Customer. In addition, Customer shall pay all duties and import/export and other fees applicable to, assessed upon or arising out of the transactions and relationships contemplated by these VI Terms.

6. Termination

A. Customer

Customer may terminate the Custom Engineered Hardware and Software Services for its convenience in whole or in part, at any time by written or electronic notice. Upon such termination, VI Technology shall, to the extent practicable and at the time specified by Customer, stop work and terminate outstanding orders under the agreement, protect all property in which Customer has or may acquire an interest, and transfer title and make delivery to Customer of all items, materials or other property held or acquired by VI Technology in connection with the terminated portion of this agreement. Customer’s liability for items related to such termination shall be a pro-rata amount of the total agreement price, less other payments already made based upon the price for items delivered or Custom Engineered Hardware and Software Services completed prior to termination, and the actual costs (including reasonable profit) for work in process incurred by VI Technology which are allocable to the terminated portion of this agreement.

B. VI Technology

VI Technology may terminate this Custom Engineered Hardware and Software Services in whole or in part if Customer does not make payment on invoices as described in Section 5 and 5(D), Payment and Payment Terms, Late Payments. VI Technology shall make this declaration by written or electronic means. Upon such termination, VI Technology shall, to the extent practicable, stop work and terminate outstanding orders under the agreement, protect all property in which Customer has or may acquire an interest, and transfer title and make delivery to Customer of all items, materials or other property held or acquired by VI Technology in connection with the termination. Customer’s liability for items related to such termination shall be a pro-rata amount of the total agreement price, less other payments already made based upon the price for items delivered or Custom Engineered Hardware and Software Services completed prior to termination, and the actual costs (including reasonable profit) for work in process incurred by VI Technology which are allocable to the terminated portion of this agreement. This termination does not release Customer of any past or present payment due.

7. Confidentiality and Non-Disclosure

During the parties’ course of dealings under these VI Terms, each party may obtain information relating to information of a confidential and proprietary nature relating to the other party and certain steps must be taken to ensure its protection. The term “Proprietary Information” means all information of a confidential and proprietary nature except information which:

(1)	is previously rightfully known by the receiving party without restriction on disclosure;
(2)	is or becomes, from no act or failure to act on the receiving party's part, generally known in the relevant industry;
(3)	is disclosed to the receiving party by a third party as a matter of right and without restriction on disclosure; or
(4)	is independently developed by the receiving party.

Each party shall at all times during and after the expiration of these VI Terms, keep in confidence and trust all such Proprietary Information, and shall not use such Proprietary Information other than in the course of its duties under these VI Terms, nor disclose any of such Proprietary Information without the prior written consent of the disclosing party.

8. Term and Survival

A. Term

Unless terminated earlier as provided herein below, these VI Terms shall terminate upon completion of the work, including all Milestones and delivery of the Custom Engineered Hardware and Software Services, by VI Technology and acceptance of the Custom Engineered Hardware and Software Services by Customer.

B. Survival

Notwithstanding any termination of all or part of these VI Terms, the following provisions shall survive: Section 3 (Intellectual Property Rights); Section 7 (Confidentiality and Non-Disclosure); Section 9 (Warranty); Section 10 (Indemnification); Section 11 (Limitation of Liability); and Section 13 (General). The obligations of confidentiality and Non-Disclosure contained in Section 7 shall only survive for a period of five (5) years commencing from the date of termination of these VI Terms.

9. Warranty

A. No Other Warranties

REGARDLESS OF ANY COURSE OF DEALING, PROMOTIONAL LITERATURE OR OTHER ACTIONS APPARENTLY CREATING A WARRANTY, VI TECHNOLGY MAKES NO WARRANTIES, EXPRESS OR IMPLIED, EXCEPT AS DETAILED IN THIS SECTION 9 OF THESE VI TERMS RESPECTING THE FUNCTIONAL CHARACTERISTICS OR PERFORMANCE OF THE CUSTOM ENGINEERED HARDWARE.

B. Performance

VI Technology warrants that the Custom Engineered Hardware and Software Services under these VI Terms, standing alone without use in combination or conjunction with any third party software or apparatus, will perform substantially in accordance with the Technical Specifications for a period of thirty (30) days following the date the Customer accepts the Custom Engineered Hardware and Software. Customer shall render this warranty null and void if the failure of the Custom Engineered Hardware and Software Services has resulted from accident, abuse, or misapplication.

C. Infringement

VI Technology shall defend or settle at its option any action against Customer to the extent arising from a claim that the Custom Engineered Hardware and Software Services, standing alone without use in combination or conjunction with any third party software or apparatus, infringes any U.S. patent, trademark, copyright or other intellectual property right of a third party; provided that VI Technology has the right to control such defense or settlement and Customer gives VI Technology written notice of any such claim within ten (10) days after Customer's notice thereof and provides reasonable assistance in its defense. In the event of such a claim of infringement, VI Technology, at its option, may provide Customer with substitute hardware reasonably satisfactory to Customer to replace the relevant Custom Engineered Hardware and Software Services. VI Technology shall not be liable under this Section if the infringement arises out of Customer's activities after VI Technology has notified Customer that VI Technology believes in good faith that Customer's activities will result in such infringement. The foregoing states the entire liability of VI Technology with respect to infringement of patents, copyrights, trademarks or other intellectual property rights. VI TECHNOLOGY MAKES NO REPRESENTATION OF NON-INFRINGEMENT CONCERNING ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER INTELLECTUAL PROPERTY RIGHTS OUTSIDE THE UNITED STATES.

D. Remedies

VI Technology's entire liability and Customer's exclusive remedy under any express warranty contained herein is, at VI Technology's option, either (i) return of the Payments made; or (ii) repair or replacement of the Custom Engineered Hardware and Software Services which does not meet the warranties contained in this Section 8 and which are returned to VI Technology with a copy of these VI Terms. Any replacement of the Custom Engineered Hardware and Software Services shall be warranted for the remainder of the original warranty period or thirty (30) days, whichever is longer.

E. Disclaimer

Custom Engineered Hardware and Software Services sold by VI Technology is not fault tolerant and is not designed, manufactured or intended for use in online control equipment in hazardous environments requiring fail-safe communication systems, nuclear applications, air traffic control, direct life support systems or weapons systems, in which the failure of the Custom Engineered Hardware and Software Services could lead to environmental damage, death, personal injury or severe physical damage. Customers using Custom Engineered Hardware and Software Services for use in any of the above stated manners do so at their own risk and shall not hold VI Technology and its third party manufacturers of integral products liable, in whole or in part, for any claim or damage arising from such use, and agree to fully indemnify, defend and hold harmless VI Technology and its third party manufacturers from and against any and all claims, damages, loss, cost, expense or liability arising out of or in connection with such use.

10. Indemnification

Customer shall indemnify, defend and hold harmless VI Technology from any claims relating to any damages, injury or death caused by negligence, recklessness, willful actions or omissions or other faults of Customer.

11. Limitation of Liability

VI Technology shall NOT be liable, under any circumstances, to Customer or any other person for lost profits or special, incidental or consequential damages associated with the Custom Engineered Hardware. Customer acknowledges that no promises, representations, warranties, or undertakings have been made or given by VI Technology to Customer or any of their agents in relation to the profitability of or any other consequence or benefits to be obtained by the use of the Custom Engineered Hardware. Customer acknowledges that it has relied on its own skill and judgment in deciding to acquire the Custom Engineered Hardware and Software Services for its own use. vi technology shall not be liable for any loss or damage which may arise in connection with the furnishing or use of the Custom Engineered Hardware.

The remedies stated in these VI Terms are the sole and exclusive remedies of Customer for any breach of VI Technology's obligations. In no event will VI Technology be liable to Customer or any other party for monetary damages in excess of the fees paid for the Custom Engineered Hardware and Software Services.

12. Project Contact

Customer shall, bearing all costs therefore, at all times (a) provide a reliable electronic mail address, phone and fax number to VI Technology, and (b) provide one primary contact as an overall project contact (“Project Contact”). The Project Contact shall assist VI Technology in acquiring necessary relevant information relating to the Custom Engineered Hardware and Software Services in order to facilitate VI Technology’s performance of its obligations under these VI Terms. VI Technology shall, in turn, provide the Project Contact with periodic updates relating the design and development of the Custom Engineered Hardware and Software Services and the overall status of the project. The initial Project Contact shall be the individual as designated in the Proposal. Customer may substitute Project Contacts upon five (5) day advance written notice to VI Technology.

13. General

A. Assignment

Customer may not assign its rights or obligations under these VI Terms without the prior written consent of VI Technology and any proposed assignment without such consent shall have no force or effect. Subject to the foregoing, these VI Terms shall bind and inure to the benefit of the respective parties hereto and their successors and assigns.

B. Independent Contractor

Neither party is authorized to act for or on the behalf of the other party. Without limiting the generality of the foregoing, each party is an independent contractor and no joint venture, partnership, agency or other similar relationship shall be created or implied by virtue of these VI Terms. Neither party, nor any employee thereof, shall be considered an employee or agent of the other party for any purpose. Each party assumes full responsibility for its actions and the actions of its personnel in rendering performance pursuant to these VI Terms, and each party shall have the sole responsibility for the supervision, daily direction and control, payment of salary (including withholding of income taxes and social security), worker’s compensation, disability benefits and the like of its personnel.

C. No Waiver

No failure or delay by either party to enforce or take advantage of any provision or right under these VI Terms shall constitute a subsequent waiver of that provision or right, nor shall it be deemed to be a waiver of that provision or right, nor shall it be deemed to be a waiver of any of the other terms and conditions contained herein.

D. Compliance with U.S. laws

Both parties shall comply with all applicable laws and regulations of the U.S. as they relate to these VI Terms. Customer shall, at their cost and expense, obtain and arrange for the maintenance in full force and effect of all governmental approvals, filings and registrations as may be necessary or advisable for the performance of its obligations under these VI Terms. VI Technology expressly conditions VI Technology's obligations on the permissibility of performance under the applicable laws of the United States.

E. Choice of Law and Forum

Choice of Law and Forum. These VI Terms shall be construed in accordance with the substantive laws of the State of Texas, without regard to the conflicts of law provisions thereof. The parties shall submit to the exclusive jurisdiction of the state and federal courts in and for Travis County, Texas.

F. Notices

Any notice or other communication pursuant to these VI Terms shall be in writing and shall be deemed received when actually received. Any notice or other communication pursuant to these VI Terms shall be delivered to VI Technology at the following address:

3700 W. Parmer Lane
Suite 200
Austin, TX 78727
Attn: Accounts Receivable

G. Severability

If any term, clause, or provision of these VI Terms shall be deemed by a court of competent jurisdiction to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the remaining terms, clauses, and provisions hereof, and in such event these VI Terms shall be construed as if such unenforceable provision had not been contained herein.

H. Headings

The enumerations and headings contained in these VI Terms are for convenience of reference only and are not intended to have any substantive significance in interpreting these VI Terms.

I. Amendment

No alteration, modification, amendment, or other change of these VI Terms shall be binding on the parties unless made in writing, approved and executed by authorized representatives of both parties.

J. Entire Agreement

These VI Terms, the Proposal and all attachments, constitute the entire terms and conditions between the parties as to the subject matter hereof, and supersede and replace all prior or contemporaneous agreements, written or oral, regarding such subject matter.

K. Export and Other Restrictions

Customer agrees to comply with all export and re-export restrictions and regulations imposed by the government of the United States and will not commit any act or omission, which will result in a breach of such export and/or re-export restrictions.

L. Force Majeure.

Neither party shall be held liable for failure to fulfill its obligations other than payment obligations under these VI Terms, if the failure is caused by flood, extreme weather, fire, or other natural calamity, acts of a governmental agency, strikes or labor disputes, failure of suppliers to timely deliver materials and component products or similar causes beyond the control of such party, whereupon the term for performance shall be increased to a reasonable period of time.

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