Terms & Conditions

I. General Terms and Conditions

A. Terms of Agreement: The sale, delivery, and performance by Metamagnetics Inc. (hereinafter “Seller”) for the goods or products (hereinafter “Goods”) covered hereunder will be subject only to and governed exclusively by the terms and conditions set forth herein.

B. Proposals and Acceptance: All proposals made by Seller are in response to Buyer’s request for a future contract. In response to any proposal from Seller, Buyer may submit a purchase or change order (as the case may be) to Seller. All such orders are subject to acceptance by Seller at Seller’s Home Office. No proposals will be binding unless accompanied by a purchase or change order and unless executed by Seller. Seller’s acknowledgment letter or acceptance is conditioned upon Buyer’s assent and acceptance of these Terms and Conditions as being the exclusive terms. At the time of Seller’s signature this agreement will be binding on Seller and its respective successors, assigns, and legal representatives. The contract will be subject to and governed by these Terms and Conditions, which are incorporated therein. Notwithstanding any of the Buyer’s proposed terms or conditions to the contrary, to induce Metamagnetics to extend credit and not require payment in full in advance before manufacturing the Buyer’s Goods, the Buyer unconditionally and irrevocably accepts these Terms and Conditions and if these Terms and Conditions conflict with the Buyer’s proposed terms and conditions, these Terms and Conditions shall control unless the Buyer objects in writing to the same within five (5) business days of Metamagnetics’s acknowledgment.

C. Confirmation of Order: Within fourteen (14) days of Seller’s acceptance of the order, Seller will provide written confirmation of said contract to Buyer. Order acceptance is subject to export approval. Thereafter, Seller will provide Buyer, if required, documentation of the Goods which are the subject of the order. It will be Buyer’s responsibility to check all documentation and specifications and other documents immediately upon receipt. Failure by Buyer to notify Seller in writing of any objection or change to the documentation and specifications within five (5) business days of the receipt of the same may cause a delay in delivery.

D. Shipment Terms: All shipments of merchandise which are the subject of this agreement will be F.O.B. Origin, Marlborough, Massachusetts 01752, unless otherwise negotiated. Buyer assumes freight costs and liability for any loss or damage to Goods once they have left Seller’s premises. Buyer should include with its order the specific method of shipment; in the absence of shipping directions Seller will use its discretion in forwarding the shipments(s) by air, truck, or parcel post. Shipping costs are added to the invoice.

E. Change Orders: Buyer may request changes within the general scope of the contract. Upon receipt by Seller of the requested change, Seller will provide Buyer with a written proposal reflecting the requested change, as well as any increase or decrease to the overall costs of the order to Buyer. In response to any such proposal, Buyer may submit a change order to Seller which will become effective and part of the contract between Buyer and Seller upon acceptance by Seller in accordance with Section I.B. above. Notwithstanding any provision contained herein, the failure by either Buyer or Seller to execute a written change order will not bar a claim for quantum meruit or unjust enrichment for an increase or decrease in the contract price based upon changes to the original contract.

F. Cancellation: Should Buyer cancel any purchase order which has been accepted by Seller, Buyer’s cancellation will only apply to unfinished Goods, raw materials and work in progress. Finished Goods cannot be cancelled. If Buyer cancels an order, Buyer is liable and shall pay to Seller all costs and expenses incurred by Seller as of the date of the termination as well as all of Seller’s damages which result, including (but not limited to) engineering, labor, allowable overhead, and material costs incurred or committed by Seller, as well as any costs which Seller reasonably incurs in order to mitigate its damages. Buyer shall also be liable for lost profit in an additional amount equal to ten percent (10%) of the amount of the purchase order or change order.

II. Prices and Payments

A. Prices. Unless otherwise agreed to in writing, all pricing for the Goods which are the subject matter of this contract will be as stated by Seller in its acknowledgment, and no change thereto will occur unless such change is agreed to by both parties in writing. All prices are in U.S. Dollars.

B. Payment and Credit. Unless otherwise agreed to in writing, payment will be as follows: Net 30 Days from date of invoice. A 3.0 percent fee will be added for all credit card orders. Title to the Goods which are the subject of this contract shall transfer to Buyer upon completion and upon Buyer being notified the Goods are ready for shipment. Accounts

C. Taxes. Taxes imposed by any present or future law (or by federal, state, county, or municipal authority) on the manufacture, sale, or use of the Goods purchased hereunder and required to be paid by Seller will be added to the amount to be paid by Buyer. Buyer will furnish evidence to Seller in writing of any applicable exemption(s). Buyer shall bear all applicable taxes and pay directly to tax agency whenever possible.

D. Export. All export costs and license, if any, to be the responsibility of Buyer.

III. Deliveries

A. Liability. Seller assumes no responsibility for damage due to default or delay in production or delivery of all or any portion of any order for any reason, including (without limitation) default or delay resulting directly or indirectly from (1) accident to or breakdown of Seller’s plant machinery or equipment, or that of Seller’s suppliers; (2) labor disputes, embargoes, fires, riots, national emergencies, delays of suppliers or carriers, governmental restrictions, prohibitions or allocations; (3) acts of God; or (4) any causes beyond the control of Seller. In no event will Seller be liable for any consequential, special, or contingent damages arising out of Seller’s default or delay in filling this contract. Notwithstanding anything to the contrary, Metamagnetics’s maximum and exposure and maximum liability for any loss or damages shall be Fifty Thousand Dollars ($50,000.00).

B. Installation, Optional Goods and Services. The purchase price of Goods hereunder does not include optional installation, service, or equipment, including (without limitation) optional service kits or other additional Goods.

C. Proprietary Information. Buyer agrees that the composition and elements of the Goods are confidential and not generally known and such information will be protected as confidential information. Buyer further agree that: (a) the documentation, software and machine readable information, and other written and/or graphic materials that are specifically unique to the design and manufacture of Goods (“Related Materials”) and are supplied to Buyer by Metamagnetics in connection herewith, belong to Metamagnetics, and Buyer shall have an obligation to Metamagnetics to retain in confidence such Related Materials or to return same to Metamagnetics. Buyer hereby agrees to hold in confidence any and all confidential or proprietary information disclosed to it pursuant to or in connection with this Agreement, which is identified in writing as confidential or proprietary. Buyer agrees not to reverse engineer the Goods or attempt to do so or to permit others to do so. No rights or licenses are granted to Buyer with respect to the Goods or Related Materials, by implication or otherwise, except as expressly set forth in this Agreement. Buyer will maintain adequate records to be able to control and document its use of the Related Materials according to the provisions of this Agreement and these records will be available for inspection by Metamagnetics at reasonable times. Metamagnetics shall be granted reasonable access, at reasonable times, to Buyer’s premises as necessary to audit compliance with this Agreement.

IV. Limited Warranty

A. Terms of Limited Warranty. Except as provided for in paragraph IV.B below, Seller warrants on a limited warranty basis that the Goods sold hereunder will perform according to Seller’s specifications for a period of (6) months for all standard Metamagnetics catalog Goods and (3) months for all non-standard Metamagnetics custom Goods due to defects in material or workmanship if the Goods fail to function under normal wear and proper use, with the exception of component parts not of Metamagnetics’s manufacture (i.e. motors and gear reducers) which will be repaired or replaced at the option of the manufacturer. The delivered Goods must be examined by Buyer immediately upon receipt, and any alleged defects in the delivered Goods or performance thereof must be reported to Seller within the Warranty Period. Provided that Buyer has properly maintained the Goods, Seller will (at its sole option) either repair or replace such products determined by Seller to be defective in workmanship or material. Seller will have the option to inspect the Goods on Buyer’s premises or to authorize the return of those Goods for inspection by Seller at its own premises. No Goods are to be returned to Seller without Seller’s written consent, nor will Seller be liable for any expenses incurred by Buyer in order to remedy defects in the Goods. Products manufactured third parties but distributed or furnished by Seller are subject solely to the original manufacturer’s warranty, if any, and Seller will not be liable under any circumstances for a defect in such products. Any controversy or claim arising out of or related to this agreement or the breach thereof must be commenced within one (1) year after the expiration of the Warranty Period of there are forever barred and waived. Such repair or replacement by Seller will constitute the sole exclusive remedy available to Buyer in connection with any claim for breach of warranty relating to the Goods. Notwithstanding the foregoing, the Limited Warranty provided herein is null and void if the Buyer fails to pay Seller as agreed.

B. Exceptions to Limited Warranty. The limited warranty herein made by Seller will, in no event, extend to the

following:

1) damages to the Goods resulting from fire, flood, storms, electrical malfunctions, malfunction of Buyer’s

equipment, accident, acts of God, or from alterations, misuse, or abuse of the good by any person whatsoever;

2) damages resulting from Buyer’s failure to observe any installation, operating, or service instructions furnished

by Seller;

3) personal injury and/or property damage to the Goods, if said Goods (or any part thereof) have been: (a)

connected or used with any machinery equipment or altered without written approval from an authorized officer

at Seller’s Home Office, (b) repaired or altered in any way so as to effect their stability or reliability, (c) subject to

misuse, negligence, or accident, (d) operated not in accordance with Seller’s instructions or beyond the factory-

rated capacity of the Goods; or

4) improper installation, maintenance, or service of the Goods by the Buyer, and any damages resulting

therefrom.

Notwithstanding the above paragraph IV.A, Buyer recognizes certain Goods are prototypes and in development and these Goods are being offered on a best efforts basis with regards to the specifications in any proposal. First article measured data with be supplied with the Goods. The Goods and related documentation provided to Buyer pursuant to this Agreement shall be provided on an “As-Is” basis. METAMAGNETICS EXPRESSLY DISCLAIMS ANY WARRANTIES (INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT), WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO THE GOODS AND RELATED MATERIALS AND THE RESULTS TO BE OBTAINED THEREFROM. BUYER HEREBY AGREES TO ASSUME ALL RISK AND LIABILITY ARISING OUT OF ITS ELECTION TO USE OR RELY ON THE DOCUMENTATION OR THE RESULTS OBTAINED THEREFROM. IN NO EVENT SHALL METAMAGNETICS, ITS AFFILIATES, OR THEIR RESPECTIVE OFFICERS, DIRECTORS AND/OR EMPLOYEES HAVE ANY LIABILITY FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, HOWSOEVER ARISING OUT OF THIS AGREEMENT AND/OR RECIPIENT’S USE OF, OR RELIANCE ON, THE GOODS OR DOCUMENTATION OR THE RESULTS OBTAINED THEREFROM. This Article IV.B is intended to allocate risks resulting from Buyers’s use of, or reliance on, the Goods and documentation and constitutes a material inducement to Metamagnetics to enter into this Agreement. Accordingly, Buyer expressly agrees that Metamagnetics’ liability (howsoever arising whether in contract, tort, strict liability or otherwise) is specifically limited as provided in this Agreement.

V. Miscellaneous

A. Liability. Seller will not be liable for any damages or loss from the sale of these Goods other than the liability contained in this agreement. Seller assumes no liability and is released by Buyer of the following: (i) down-time or damage, whether to equipment or machinery or Buyer; or (ii) recalls of the Buyer’s product and the associated damages therewith; or (iii) any other consequential damages as a result of the installation, service, or performance of the Goods. Because the Goods furnished hereunder are used or combined by Buyer with other equipment or components not furnished hereunder by Seller, Buyer agrees to indemnify Seller for all claims resulting from the use or incorporation of said Goods in Buyer’s machinery or equipment. Buyer hereby agrees any action for breach of this agreement must be commenced one (1) year after the expiration of the Warranty Period or forever be barred and waived.

B. Force Majeure. Except as otherwise expressly provided in this Agreement, neither Metamagnetics nor Buyer shall be deemed in default of its obligations hereunder for a failure to perform due to reasons of force majeure, including, but not limited to, acts of God, acts of public enemy, Acts of the Government of any country, state or political subdivision or regulatory agency thereof or entity created thereby, embargoes, acts of any person engaged in subversive activity or sabotage, fires, floods, explosions, or other catastrophes, epidemics or quarantine restrictions, strikes or other labor stoppages, slowdowns or disputes, or other such cause beyond the commercially reasonable control of a Party, including any delays, impairments, or disruption in the production and/or delivery of Products due to such force majeure events affecting the performance of Metamagnetics’s subcontractors and suppliers. Each Party shall use due diligence and all reasonable efforts to cure any such cause preventing its performance so as to resume performance as soon as reasonably possible.

C. Export Control. Information furnished by Metamagnetics under this agreement may contain technical data as defined in the International Traffic In Arms Regulations (ITAR) at 22 CFR 120.10, or technical data as defined in the Export Administration Regulations (EAR) at 15 CFR 772. Such technical data may not be exported, disclosed, or transferred to any foreign person (in the U.S. or abroad) without first obtaining the proper ITAR or EAR license or other authorization. Further, Buyer represents and warrants that if it engages in the United States in the business of either manufacturing OR exporting defense articles, or furnishing defense services, as defined at 22 CFR 122, ADI is registered with the U.S. State Department. Buyer and Metamagnetics acknowledge that all technical information and Products provided under this agreement may be subject to the export control laws of the United States, whether or not specifically identified or marked as such. (Note: A downloadable copy of the ITAR is accessible at the Directorate of Defense Trade Controls web site at www.pmdtc.org; an EAR downloadable copy is accessible at Bureau of Industry and Security (BIS) web site at www.bis.doc.gov.)

D. Litigation Expenses and Interest Rate. In the event Buyer breaches this agreement and litigation occurs over

nonpayment, partial payment, marshalling liens or collection of account by a third party (including collection of liquidated damages), Buyer shall be responsible for all of Seller’s costs and expenses including (but not limited to) attorney’s fees and/or collection fees incurred in enforcing or defending its rights hereunder. In addition, Buyer shall be responsible to Seller for interest at the rate of 12% per annum from the due date of any payment due under this agreement.

E. Entire Agreement. This agreement contains the entire agreement between Seller and Buyer with respect to the sale of Goods and installation of service to be provided by Seller. No other representations, warranties, inducements, or agreements reported to be made by any of Seller’s representatives (whether oral or written) will be binding on Seller or have any force or effect.

F. Applicable Law. This Agreement shall be deemed to be made and entered into pursuant to, and in the event of any dispute hereunder, this Agreement shall be governed by and construed in accordance with, the laws of the Commonwealth of Massachusetts.

G. Severability. If any provision of this agreement or the application thereof to any person or circumstance is determined to be invalid or unenforceable to any extent, then the remainder of this agreement and the application of such provision to other persons or circumstances will not be affected thereby and will be enforced to the full extent permitted by the Laws of the Commonwealth of Massachusetts.

H. Acknowledgement. By accepting and/or acknowledging a proposal or a purchase order or change order, or other written acceptance, Buyer acknowledges and accepts the provisions appearing on the front and back of these Terms and Conditions including specifically the limited warranty statements contained herein, and Buyer further acknowledges that these Terms and Conditions are an integral part of the Agreement