Variosystems North America: General Conditions of Sale

1. General

1.1. The below terms and conditions (“GSC”) shall apply to sales and deliveries executed by Variosystems, Inc, a Texas corporation (“Variosystems”, “Supplier”, “we” or “our”) and shall govern the transactions by and between Variosystems and an individual or entity seeking to purchase products and product related services (“Products”) from Variosystems, the Customer (“Customer”). All conditions contrary thereto shall be excluded. Variosystems’ failure to object to Customer’s terms and conditions shall not cause Variosystem’s consent thereto and/or acceptance thereof. Further, to the extent the GSCs conflict with any term or condition presented by customer, whether incorporated by reference or set forth in a purchase order, these GSCs control, unless specifically modified in writing by Variosystems.

1.2. All amendments and side agreements shall be unenforceable unless confirmed by Variosystems in writing.

2. Quotations, Services, and Specifications

2.1. All quotations and offers made by Variosystems shall be non-binding. Likewise, related documents, such as illustrations, drawings, weights and measurements, information stated on the Variosystems website or in brochures or other written materials, shall be approximate only, unless being defined binding expressly by Variosystems.

2.2. Neither Party is obligated with respect to any particular transaction for the purchase and sale of Products unless and until Customer issues a purchase document to Variosystems outlining proposed quantity, pricing, specifications, and delivery date (“Purchase Order”), which is confirmed by Variosystems in writing and signed, whether in writing or electronically (“Agreement”). Once said Agreement has been confirmed by Variosystems, the GSCs shall then govern the relationship between the parties and be incorporated in full into such Agreement.

2.3. Engineering Changes. Either party may request that Variosystems incorporate engineering changes into the Product or Specifications by providing a written description of the proposed engineering change sufficient to permit the parties to evaluate the feasibility and cost of the proposed change. Variosystems shall proceed with engineering changes when the parties have agreed upon the changes to the Specifications, delivery schedule and fees, and Customer has agreed to reimburse Variosystems the implementation costs and adjust pricing, as applicable.

2.4. Customer shall pay Variosystems for incurred NonRecurring Engineering (NRE) charges for preparing the production and testing environment for series production of the Products. Applicable launch and ramp expenses shall be identified by Variosystems and included within pricing quotations, fee schedule, or other documentation acknowledged by the parties.

2.5. All drawings, tools, jigs, dies, fixtures, products, and other items supplied or paid for by Customer shall be and remain the property of Customer (“Customer Property”). Customer Property shall be used by Supplier to deliver the agreed Products and Services. Supplier shall be entitled to charge annual service and maintenance fees necessary to maintain Customer Property in good working condition and to a reasonable standard of care. Replacement and/or repair of major parts and/or components is excluded and Customer agrees to be responsible for any loss or damage related thereto, except in the case of negligence on the part of Supplier.

2.6 All offers and quotations as well as drawings or other offer documents shall remain and be considered the intellectual property of Variosystems. All copyrights and proprietary exploitation rights therein shall exclusively be with Variosystems. Any reproduction and disclosure thereof shall be subject to our consent. Said documents shall, upon our first request, be returned to Variosystems.

2.7. Variosystems shall be entitled to use third parties to fulfill part or all its obligations hereunder. Variosystems shall only disclose Customer’s business and trade secrets, which it has come to know of, if and to the extent said third parties need to know them to fulfill Variosystems obligations hereunder on its behalf.

3. Forecasts, Orders, Fees, and Payments

3.1 Customer shall provide to Supplier once every twelve (12) weeks with a twelve (12) month rolling forecast indicating Customer’s Product and Services requirements (“Forecast”). Unless otherwise confirmed in writing by Variosystems, Customer shall provide Supplier once every four (4) weeks with three (3) months of Purchase Orders for delivery of Products and Services. Purchase Orders shall be fully binding, enforceable and noncancellable. The terms and conditions contained in these GSCs prevail over any terms and conditions of any such Purchase Order, acknowledgment form or other form instrument exchanged by the parties. In the event of a conflict between the terms of these GSCs and any exhibit to these GSCs, the order of precedence will be these GSCs, then the exhibits.

3.2. Customer’s accepted Purchase Orders and each Forecast constitute authorization for Variosystems to procure: (a) materials to manufacture the Products covered by such Purchase Orders and Forecast based on the applicable Lead Times; and (b) minimum order inventory reasonably required to support Customer’s Purchase Orders and Forecast

3.3. Variosystems may reject any Purchase Order in instances where: (a) there is a change in previously ordered quantities not approved in advance by Variosystems; (b) there are inconsistencies in the fees reflected in the Purchase Order and those agreed to within the GSCs; (c) there is a significant deviation from the Forecast for the same period, unless such deviation is approved in advance by Variosystems; (d) there is a change in specifications or design not approved in advance by Variosystems; or (e) there is a significant change in the financial exposure required of Variosystems. Variosystems shall notify Customer of rejection of any Purchase Order within five (5) business days of receipt of such Purchase Order. Variosystems reserves the right to review and adjust fees on a quarterly basis to include additional costs due to: (a)changes in the Specifications, labor rates, material costs and supply chain disruptions, production volumes, minimum run rates, inventory turns, or to any changes in the assumptions set forth in Variosystems quotation; (b)Governmental Change; (c) failure of Customer or its subcontractor to timely provide sufficient quantities or a reasonable quality level of Customer controlled materials where applicable to sustain the production schedule; and (d) any pre-approved expediting charges reasonably necessary due to changes in Customer’s requirements. All fees are exclusive of Taxes, applicable export licensing and payment of brokerage fees, duties, tariffs or similar charges.

3.4 All invoices shall be paid within net 30 days as from the invoice date. In the event Customer is in default with payments to be made to Variosystems or any of its affiliates or if Variosystems has reasonable doubt (within Variosystems’ sole discretion) regarding Customer’s willingness or ability to pay, Variosystems shall be entitled to demand cash on delivery. Moreover, Variosystems shall be entitled to withhold further service provision or deliveries covered by the present or other Agreements if Customer is in default.

3.5 Any overdue payment shall be assessed a late fee equal to a monthly interest rate of 1.5%. In addition to the foregoing, if Customer fails to make the required payment pursuant to a Purchase Order, Variosystems shall be relieved of its obligations to fulfill any pending or future Purchase Orders or prepare additional Products for shipment until the required payment is made. Variosystems may also terminate this Agreement as provided in Section 9 and pursue any legal remedies available to it at law or equity, including the assessment of liquidated damages as provided hereunder.

3.6. Customer shall provide all reasonable financial information as requested by Variosystems to support an evaluation of Customer’s creditworthiness. This evaluation will determine the requirement for, and amount of any advance prepayment required by Customer payable to Variosystems to cover the value of raw materials and components required for the Products (based on pricing as set forth in the Agreement), “Inventory”. Variosystems will conduct periodic reviews analyzing the Inventory and in no case shall it be greater than 25% of the value of Customer’s twelve (12) month rolling forecast (Forecast). If the value of Inventory is more than 25% of the Forecast, Customer shall make an additional prepayment to Variosystems to cover the difference. The draw-down procedures for any prepayments shall be determined solely by Variosystems and credited back to Customer on future invoices on a percentage basis of sale.

4. Delivery and Transfer of Risk

4.1. Variosystems shall (a) deliver all Products pursuant to the terms of this Agreement suitably packed for shipment in accordance with the Specifications and marked for shipment to Customer’s destination specified in the applicable Purchase Order, and (b) make such deliveries as EXW (Ex works, Incoterms 2020) Variosystems manufacturing facility. All freight, insurance and other shipping expenses, as well as any special packing expenses not expressly included in the original quotation for the Products, shall be paid by Customer.

4.2. Variosystems shall be entitled to partial deliveries and partial services. Furthermore, Variosystems shall be entitled to rescind from the Agreement in the event we are not correctly and/or duly supplied by our own or Customer specified suppliers. However, we shall promptly inform Customer thereof. Customer shall not reject any partial deliveries.

4.3. Customer shall be obliged to accept all confirmed Purchase Orders when such order is made available for delivery to carrier or pickup by customer.

4.4. Unless explicitly agreed otherwise, the goods shall be deemed delivered by being made available at Variosystems’ place of business at which point risk of loss and title shall pass to Customer. Variosystems shall not be liable for any loss or damage in transit.

5. Schedule Change, Cancellations and Carrying Charges

5.1. Quantity Increases and Shipment Schedule Changes.

(a) Customer agrees that in no case shall changes to an accepted Purchase Order be allowed within a twelve (12) week period (“Fixed Period”). For any Forecast or accepted Purchase Order, Customer may request an increase in the quantity of Products ordered or forecast. All Product quantity increases require Variosystems approval, which, in its sole discretion, may or may not be granted. Variosystems shall use reasonable commercial efforts to meet any allowed Product quantity increases, which are subject to materials and capacity availability. If Variosystems agrees to such increase in the quantity, and if there are extra costs to meet such increase, then Customer shall be liable for such extra costs. Any Customer request for a decrease in quantity is considered a cancellation, unless the decreased quantity is outside of the Fixed Period and rescheduled for delivery at a future date as agreed to in advance by Variosystems. If Variosystems agrees to such decrease in the quantity, then Customer shall be liable for any applicable extra costs.
(b) For any accepted Purchase Order, Customer may request a reschedule of the expected delivery date not to exceed 90 days beyond the original delivery date subject to Variosystems approval, which, in its sole discretion, may or may not be granted. If Variosystems agrees to accept a reschedule of any length of time, and if there are extra costs to meet such reschedule, then Customer shall be liable for such extra costs. Any part of a Purchase Order quantity that is rescheduled pursuant to this section may not be subsequently rescheduled. In no case shall changes to the delivery dates of an accepted Purchase Order be allowed within the Fixed Period.
(c) Products that have been ordered by Customer and that have not been picked up in accordance with the agreed upon shipment dates shall be considered cancelled and Customer shall be responsible for such Products in the same manner as set forth in this section. Customer agrees that Variosystems shall have the right to invoice it for all cancelled Products and any additional costs that may be incurred.

5.2. Customer may not cancel all or any portion of Product quantity of an accepted Purchase Order without Variosystems prior written approval, which, in its sole discretion, may or may not be granted. If Customer does not request prior approval or if Customer and Variosystems do not agree in writing to specific terms with respect to any approved cancellation, then Customer shall be liable to pay Variosystems for Product (or partially completed Product). Customer shall have liability for any remaining excess material inventory procured by Variosystems to support the original delivery schedule. Customer shall reimburse Variosystems for these materials at material costs plus factory overhead and administration fees of 12%.

5.3. Variosystems shall provide Customer with quarterly reporting on any excess, aged, and obsolete Inventory. Inventory reports will be deemed agreed to by Customer unless Customer provides a written objection within 10 business days. Customer shall be liable to purchase any excess, aged, and/or obsolete inventory at material cost plus factory overhead and administration fees of 12%. Prior to invoicing Customer for the amounts due pursuant to this section, Variosystems shall use commercially reasonable efforts to return for refund, to cancel any pending orders, and to mitigate the amounts due and payable by Customer for any excess, aged, and obsolete materials. Customer shall submit payment for the amounts identified and invoiced pursuant to the payment terms within this Agreement. In the event Customer does not pay in accordance with the payment terms set forth above, then, in addition to any late payment charges that Variosystems is due from Customer, Variosystems shall be entitled to a carrying cost fee equal to the value of the inventory multiplied by a monthly interest rate of 1.5%. Variosystems shall also be entitled to dispose of such excess, obsolete, and aged Inventory in a commercially reasonable manner and credit to Customer any monies received from third parties.

6. Product Acceptance and Limited Warranty

6.1. Product Acceptance. The Products delivered by Variosystems shall be inspected and tested as required by Customer within ten (10) business days of receipt. If Products are found to be non-conforming or defective (meaning, not in compliance with the specifications provided by Customer), Variosystems shall be immediately notified in writing (notice of defect). Products not rejected during said period shall be deemed accepted. Customer may return defective Products in accordance with the procedures set forth below. Customer shall bear all the risk of loss, and all costs and expenses, associated with Products that have been returned to Variosystems for which there is no defect found or where the warranty period has expired.

6.2. Variosystems warrants that the Products shall be manufactured in accordance with the applicable Specifications and shall be free from defects in workmanship for a period of twelve (12) months from the date of shipment. Variosystems makes no representations or warranties whatsoever with respect to any equipment or services provided by third party vendors, defects resulting from adherence to the Specifications, or any instructions provided by or on behalf of Customer; the design of the Products; Product that has been abused, damaged, altered or misused or mishandled (including improper storage or installation or improper handling in accordance with static sensitive electronic device handling requirements) by any person or entity after title passes to Customer; first articles, prototypes, pre-production units, test units or other similar units; defects resulting from tooling, designs or instructions produced or supplied by Customer, including any defective test equipment or test software provided by Customer; or the compliance of materials or Products with any safety or Environmental Regulations or other laws. Customer shall be liable for costs or expenses incurred by Variosystems arising out of or related to the foregoing exclusions to Variosystems express limited warranty. Upon any failure of a Product to comply with this express limited warranty, Variosystems’ sole obligation, and Customer’s sole remedy, is for Variosystems (at its’ sole discretion), to promptly repair or replace such unit and return it to Customer, freight prepaid. If such unit cannot be repaired or replaced using commercially reasonable efforts, Variosystems shall refund the price paid by the Customer to Variosystems for such unit. Customer shall return Products covered by this warranty freight prepaid after completing a failure report and obtaining a return material authorization number from Variosystems to be displayed on the shipping container. Customer shall provide all warranties directly to any of its end users or other third parties, and Customer shall not pass through to end users or other third parties the warranties made by Variosystems under this Agreement. Furthermore, Customer shall not make any representations to end users or other third parties on behalf of Variosystems, and Customer shall expressly indicate that the end users and third parties must look solely to Customer in connection with any problems, warranty claim or other matters concerning the Product.

6.3. There are no representations, warranties or covenants, express or implied, other than those set forth in this section, including, but not limited to, any implied representations/warranties/covenants of merchantability of fitness for purpose, with respect to the Products or any services provided under this Agreement, or any transactions contemplated herein.

7. Reservation of Title

7.1. Until all disputed and undisputed claims arising from the business relationship hereunder – irrespective of their legal base (and including default interest and legal costs) – have been settled, all products delivered shall remain the property of Variosystems. The aforesaid also applies if Customer illegitimately alienates its rights in respective products to third parties.

7.2. Customer hereby declares its express consent to the respective entry of the delivered goods in the retention of title register of the competent debt enforcement office.

8. Liability

8.1. Under no circumstances shall Variosystems be liable for damage suffered by Customer or third parties resulting from the negligent use of goods delivered by Variosystems.

8.2. Variosystems’s liability shall – irrespective of the legal grounds it is based upon – exclusively apply to events of intent and gross negligence and be limited to the amount covered by insurance.

8.3. Claims arising from product liability remain unaffected.

8.4. Any liability for consequential damage of whatsoever kind (like e.g. lost turnover, profits, data, production downtimes, etc.) shall generally be excluded.

8.5. Any modifications made by Customer or third parties to software and/or hardware delivered shall cause any warranty claims to be forfeited.

8.6. Each Party agrees to indemnify and hold harmless the other Party and its directors, officers, employees, and agents (“Indemnified Parties“) from any and all direct losses, damages, fines, penalties, costs and expenses (including reasonable attorneys’ fees and expenses, excluding internal administration efforts) (collectively and individually, the “Losses”) caused by a breach by the other Party of any of its obligations under this Agreement, including without limitation (i) any actual failure of the Products to comply with applicable warranties; (ii) any actual violation of applicable production regulations, the adherence to which Variosystems has confirmed in this Agreement; and (iii) any grossly negligent acts or omissions, or willful misconduct of the other Party or its employees, agents, representatives, or subcontractors.

8.7. Infringement Indemnity. Customer will indemnify, defend and hold harmless Variosystems and the Variosystems Indemnified Parties from and against any and all Losses arising out of or relating to any actual violation or infringement, as determined by a court of competent jurisdiction, by Customer or by any Product(s) (or related descriptions, designs, photographs, drawings,specifications or technical designations provided or produced directly by Customer) of a patent, trademark, or copyright, or any actual misappropriation by Customer of any trade secret or other proprietary or intellectual property right, of any third party. (“Third Party Proprietary Information”).

8.8 Procedures. The claiming Party shall promptly notify the infringing Party of any Losses subject to indemnification hereunder (a “Claim Notice”). The infringing Party may elect to assume, at its sole cost, control the defense, appeal or settlement of any third-party claim that is reasonably likely to give rise to an indemnification claim under this section (“Indemnified Claim”). If the infringing Party elects to assume control, then the infringing Party shall provide the other Party with written notice not more than five (5) days after the date the other Party sent the Claim Notice. If the infringing Party elects to assume control, then the other Party shall cooperate, but it and any Indemnified Party may employ, at its own cost, separate counsel. The infringing Party may not settle or compromise any Indemnified Claim or consent to the entry of any judgment unless such settlement, compromise or consent: (i) includes an unconditional release of the other Party and the Indemnified Parties from all liability arising out of such Indemnified Claim; (ii) does not contain any admission or statement suggesting any wrongdoing or liability on behalf of the other Party or any of the Indemnified Parties; and (iii) does not contain any equitable order, judgment or term (other than payment) that in any manner affects, restrains or interferes with the business of the other Party.

8.9 Exclusion of Indirect Damages: Any and all claims by Customer and/or its Affiliates and/or any Indemnified Party against Variosystems and/or its Affiliates and/or its employees, agents, representatives, or subcontractors for indirect Losses, including, but not limited to, consequential losses, loss of production, loss of profit, loss of goodwill, special damages, incidental damages and any other indirect losses, under any term of this Agreement or relating anyhow to the Products are hereby expressly excluded.

8.10 General Limitation of Liability: Variosystems and its Affiliates, employees, agents, representatives, and subcontractors aggregate annual liability under this Agreement shall not exceed One Million ($1,000,000) US Dollars. However, such limitation of liability shall not apply to any damages or costs due to: (i) willful misconduct or gross negligence and (ii) bodily injury or death.

9. Term and Termination

9.1. Subject to termination as expressly set forth in this Agreement, (a) the term of this Agreement shall commence on the Effective Date and shall continue for one year thereafter, and (b) after the expiration of the initial term hereunder, this Agreement shall be automatically renewed for separate but successive oneyear terms unless either party provides written notice to the other party that it does not intend to renew this Agreement ninety (90) days or more prior to the end of any term.

9.2. Termination Without Cause. This Agreement may be terminated by either party for convenience upon ninety (90) days written notice to the other party. Upon termination of this Agreement under this provision, all accepted Purchase Orders confirmed by Variosystems prior to the receipt of the notice of termination shall be completed and paid, any additional claim of Variosystems shall be settled on the basis of reasonable costs incurred by it (not to exceed the price of the Product) in the performance of the order for materials and work in progress which are not usable by Variosystems for other goods it manufactures or are deemed to be Non-Cancellable and/or Non-Returnable (NCNR). Reimbursement of materials will be determined by cost of goods, plus factory overhead and administration fee of 12%. Materials for which Variosystems is reimbursed may become property of Customer and delivered to it at its cost upon request.

9.3. Termination With Cause. Variosystems may terminate this Agreement immediately upon giving written notice after the occurrence of any of the following events: (i) the Customer materially breaches any of its obligations under this Agreement (including failure to pay any amount as and when due under this Agreement) and Customer does not cure the breach (or remit payment) within thirty (30) days after receipt of the written notice describing the breach; or (ii) Customer becomes insolvent, makes a general assignment for the benefit of its creditors, a receiver is appointed for its business, declares bankruptcy or becomes subject to any proceeding under bankruptcy laws or any other statute or laws relating to the insolvency or protection of the rights of creditors is made by or against the other Party. Upon termination of this Agreement under this provision, to the extent Variosystems has incurred any cost in preparation for performance hereunder, any claim of Variosystems shall be settled on the basis of reasonable costs incurred by it (not to exceed the price of the Product) in the performance of the order for materials and work in progress which are not usable by Variosystems for other goods it manufactures or are deemed to be Non-Cancellable and/or Non-Returnable (NCNR). Reimbursement of materials will be determined by cost of goods, plus factory overhead and administration fee of 12%. Materials for which Variosystems is reimbursed may become property of Customer and delivered to it at its cost upon request.

10. Confidentiality and Non-Solicitation

10.1. Customer agrees not to directly or indirectly induce or attempt to induce any employee of Variosystems to leave employment with Variosystems, or otherwise interfere with such relationship, during the term of the Agreement and for one (1) year thereafter.

10.2. “Confidential Information” means any information furnished or disclosed, whether before or after the effective date of the Agreement in whatever form or medium, by a Party or any of its Affiliates (the “Disclosing Party”) to the other Party (the “Recipient”) relating to the business of Disclosing Party or any of its Affiliates, and includes, without limitation, business and/or operational information. including, without limitation, any materials, business secrets, trade secrets, know-how, formulas, processes, algorithms, ideas, strategies, discoveries, developments, inventions, data, designs, flow charts, drawings, proprietary information, business and marketing plans, financial and operational information, contracts, compilations, specifications, policies, procedures, reports, licenses, records, projections, techniques, methods, pricing and cost information, deal terms, term sheets, and data files. Confidential Information will not include information that Recipient can demonstrate: (a) was publicly known at the time of disclosure, or later became publicly known through no act or omission of Recipient; (b) was rightfully received by Recipient from a third party without any obligation of confidentiality; or (c) was independently developed by or for Recipient without use of Disclosing Party’s Confidential Information. Recipient shall use Confidential Information only for purposes directly related to the fulfilment of its obligations under this Agreement and shall make no use of Confidential Information for any other purposes. Recipient agrees to keep confidential all Confidential Information and to take all reasonable steps to preserve the confidential and proprietary nature of such Confidential Information. Recipient shall not disclose any Confidential Information; provided, however, that Recipient may disclose Confidential Information (a) only on a need-toknow basis to its employees, officers, and directors directly engaged in the manufacturing of the Products or the delivery of services under this Agreement, provided such personnel be informed of and agree to maintain the confidential nature of the Confidential Information (if not being bound by applicable law); or (b) as required to be disclosed by law or pursuant to the terms of a court order, provided that Recipient has given Disclosing Party at least two-weeks’ notice (if possible) and an opportunity to contest such disclosure (to the extent permitted). The obligations in this section shall survive the termination of this Agreement for five (5) years, except that such obligations shall never expire with respect to Confidential Information that constitutes business or trade secrets. On the expiration or earlier termination of this Agreement and at any time during or after the Term, at the Disclosing Party’s written request, the Recipient shall promptly return or destroy all Confidential Information and any copies of the same that it received under this Agreement, except the Recipient shall not be required to destroy any Confidential Information: (a) required to be retained by applicable law or (b) contained in electronic files created by automatic archiving or back-up procedures on secured servers that cannot reasonably be accessed by the Recipient.

10.3. Both Parties must comply with applicable data protection laws and regulations.

11. Transfer and Place of Performance

11.1. Until all payments have been made in full, Customer’s transferal of its rights and claims hereunder against us to any third party shall be subject to Variosystems’ prior written consent.

11.2. Place of performance for both, Customer and Variosystems, shall be the Tarrant County, state of Texas, USA.

12. Force Majeure

No Party shall be liable or responsible to the other Party, nor be deemed to have defaulted under or breached this Agreement, for any failure or delay in fulfilling or performing any term of this Agreement, when and to the extent such failure or delay is caused by or results from the following force majeure events affecting such Party or its Affiliates, sub-suppliers or production site (“Force Majeure Events”): (a) acts of God; (b) flood, fire, storm, earthquake or explosion; (c) war, military mobilization, invasion, hostilities (whether war is declared or not), terrorist threats or acts, riot or other civil unrest; (d) government or court order or law; (e) actions, strikes, embargoes or blockades in effect on or after the date of this Agreement; (f) action by any governmental authority; (g) epidemics and pandemics, (h) trade route and allocation issues, (i) shortages in raw materials, components or energy/electricity, (j) power shortage/outage, and (k) national or regional emergency to the extent such events are beyond the reasonable control of the Party impacted by the Force Majeure Event (the “Impacted Party”). The Impacted Party shall give notice within twenty-four (24) hours upon becoming aware of the Force Majeure Event to the other Party, stating the period the occurrence is expected to continue (to the extent possible). The Impacted Party shall use diligent efforts to end the failure or delay and ensure the effects of such Force Majeure Event are minimized. The Impacted Party shall resume the performance of its obligations as soon as reasonably practicable after the removal of the cause. If Variosystems is the Impacted Party, and Variosystems’s performance is delayed for more than thirty (30) calendar days or Variosystems fails to provide notice or assurances of performance, Customer or Variosystems may terminate the applicable Purchase Order, or may terminate the Agreement, by giving the other Party written notice.

13. Compliance with Laws

13.1. General Product Compliance. Variosystems shall ensure that the Products, and any related packaging, conform fully to any applicable laws, rules, regulations, directives, ordinances, orders, or statutes (“Laws”) of the country(ies) where the Products are manufactured by Variosystems or delivered by Variosystems to Customer.

13.2. Parties’ Legal Compliance. Each Party shall fully comply with all Laws applicable to it, its operation of its business, and its exercise of its rights and performance of its obligations under this Agreement, including but not limited to, compliance with all applicable environmental requirements, product regulations, fair wages and fair labor standards, anti-corruption and anti-bribery laws, international traffic in arms regulations, sanctions regimes, tariff laws, and government procurement laws. Neither Party shall use any child labor or forced labor in performing this Agreement. Neither Party shall, directly or indirectly, violate any applicable law prohibiting bribery or offer, pay, promise to pay, give, or authorize to pay or give anything of value to any person to influence any act or decision of this person or to secure any other improper advantage to obtain or retain business for the other Party.

13.3. Environmental and Other Product Regulations. Customer shall inform Variosystems about any specific Product regulations that Customer deems to be applicable to the Products or services provided under this Agreement. Variosystems shall provide to Customer all information and documentation, including but not limited to supply chain data, requested by and necessary for Customer to comply with all applicable laws.

13.4. Export/Import Regulations. If and to the extent set forth in the Specifications and approved in writing by Variosystems, Variosystems shall provide all information necessary for Customer to comply with all applicable Laws and any related legal reporting, notification or other types of approval obligations in the country(ies) of origin and, upon request by Customer, delivery by Variosystems, including, without limitation, permits, authorization, licensing, reporting, disclosure or certification information required. Customer is solely responsible for all import documents, declarations and certifications and compliance with applicable import Laws. Variosystems shall provide all documentation and/or electronic transaction records to allow Customer to meet all customs or export-related obligations, any local content/origin requirements, and to obtain all tariff and trade program duty avoidance(s) and/or refund benefits, where applicable.

13.5. No Prohibited Parties. Each Party represents, warrants and covenants that to its knowledge neither it nor any of its owners or customers are on any of the prohibited parties lists or sanctions lists published by the United States government.

14. Ownership of Inventions

14.1. Intellectual Property. For the purposes of this Agreement, “Intellectual Property” means (1) patents and all relevant pending applications; (2) trademarks (whether registered or unregistered and including any goodwill acquired in such trademarks), trade names, logos or other information which may identify business operators; (3) copyrights, including but not limited to, the copyrights of various advertisements, designs, product brochures and product promotion ideas, packaging, labeling and decoration; (4) computer software (including both source code and object code), data and documentation; (5) domain names; (6) confidential information, including but not limited to any knowhow, business operating techniques, processes, research and development information, financial, marketing and business data, pricing and cost information, business and marketing plans, trade and business secrets and customer and supplier lists and information, business records; and (7) other intellectual property as may be protected by applicable laws and regulations. For the purposes of this Agreement, Intellectual Property may also be considered Confidential Information. Unless otherwise licensed or conveyed hereunder, each Party will retain all right, title and interest in and to all Intellectual Property and all other intellectual property and proprietary rights (whether registered or unregistered, and any application for the foregoing), and all other equivalent or similar rights which may subsist anywhere in the world (collectively “Intellectual Property Rights”).

14.2. For purposes of this Agreement, “Work Product” means all designs, discoveries, creations, works, devices, masks, models, work in progress, service deliverables, inventions, products, special tooling, computer programs, procedures, improvements, developments, drawings, notes, documents, business processes, developed by Variosystems for Customer as a specific and explicit development task set forth in this Agreement or established/developed solely for Exclusive Products delivered to Variosystems hereunder. All Work Products shall, upon payment of the purchase price hereunder, be and remain the sole and exclusive property of Customer. Variosystems hereby agrees to irrevocably assign and transfer to Customer and does hereby assign and transfer to Customer all of its Intellectual Property Rights in and to the Work Product. Customer will have the sole right to determine the treatment of any Work Product, including the right to keep it as trade secret, execute and file patent applications on it, to use and disclose it without prior patent application, to file registrations for copyright or trademark in its own name or to follow any other procedure that Customer deems appropriate. Variosystems agrees not to file for any patent concerning the specific properties of the Work Product. Variosystems has, however, the right to use the Work Product royalty-free and in a non-exclusive manner, and Variosystems is permitted to use all ideas, concepts and procedures acquired when executing the Agreement to develop products and provide services of the same or similar type also for other clients. Variosystems agrees: i) to disclose promptly in writing to Customer all Work Products in its possession; ii) to assist Customer in every reasonable way, at Customer’s expense, to secure, perfect, register, apply for, maintain, and defend for Customer’s benefit all copyrights, patent rights, and all other proprietary rights in and to the Work Product in Customer’s name as it deems appropriate; and iii) to otherwise treat all Work Product as Customer Confidential Information as defined herein. These obligations to disclose, assist, execute and keep confidential survive the expiration or termination of this Agreement. Customer will not have rights to any works developed, conceived or reduced to practice by Variosystems which were developed by Variosystems without using Customer Confidential Information or being otherwise no Work Product (as defined herein).

14.3. Tools and Equipment from Customer. All tools and equipment supplied by Customer to Variosystems shall remain the sole property of Customer.

15. Liquidated Damages

In the event that the Customer breaches any material term of this Agreement, Variosystems shall be entitled to liquidated damages as set forth in this provision, without prejudice to any other rights or remedies available to under this Agreement or an applicable law. Liquidated damages shall consist of an amount equal to:

(a) The sales price for any finished but unpaid for goods,
(b)The value of any work in progress that Variosystems has performed at the time of the breach, including but not limited to all direct and indirect costs associated with materials, labor, and overhead related to the unfinished portion of the order; and
(c) An additional sum equal to ten percent (10%) of the total order amount specified in the associated confirmed Purchase Order.

The Parties agree that these liquidated damages are a reasonable estimate of the actual damages that would be suffered by Variosystems in the event of such breach, given the difficulty of accurately determining actual damages under these circumstances. The Customer acknowledges that these liquidated damages provision does not constitute a penalty and is intended solely to compensate Variosystems for its anticipated losses and expenses due to a breach of this Agreement.

16. General Provisions

16.1. Amendments. This Agreement may be modified only in writing and signed by all the Parties and may not be amended orally, by course of performance, or in any other manner.

16.2. Assignment. Customer may not voluntarily or involuntarily assign, delegate, or otherwise transfer in any manner any of its rights, duties, or obligations under this Agreement (in whole or in part) without prior written consent of the other Party, except to Affiliates. Any attempted assignment, delegation, or transfer in violation of this section is null and void. Any assignment by Variosystems, whether voluntary or involuntary, shall not be a violation of this Agreement.

16.3. Conflicts in Documents. In the event of any inconsistency between this Agreement and any documents relating to the provision of services or purchase of Products hereunder, such inconsistency will be resolved by giving precedence in the following order: (i) the terms and conditions of this Agreement; (ii) the terms of any Exhibits (unless such document expressly states that the Exhibit supersedes a specifically-identified Section of this Agreement); (iii) the text appearing on the face of the applicable Purchase Order insofar as it refers to the specific Purchase Order and has been confirmed by Variosystems; and (iv) any other documents, exhibits and attachments that accompany such Purchase Order. No general terms and conditions of either Customer shall apply (even if attached to a Purchase Order).

16.4. Entire Agreement. The Agreement (executed Purchase Order and these Terms and Conditions) together with any Exhibits constitutes the complete understanding of the Parties, and supersedes all prior or contemporaneous agreements, discussions, negotiations, promises, proposals, representations, and understandings (whether written or oral) between the Parties, regarding the subject matter hereof.

16.5. Governing Law; Venue. This Agreement and all matters of dispute between the Parties arising out of or relating to this Agreement including, without limitation, fraud, misrepresentation, negligence, or any other alleged tort or violation of the contract) shall be governed by and construed in accordance the substantive laws of the State of Texas without regard to any conflicts of law principles. Each Party irrevocably submits to the exclusive jurisdiction and venue of the ordinary courts located in the State of Texas, USA in any legal suit, action or proceeding arising out of or based upon this Agreement or the Products and services provided hereunder.

16.6. Language. This Agreement may be written in both a native language and English. In case of any conflict or discrepancy between the contents of the English version and the native language version, the English version will prevail.

16.7. Notices. All notices, requests, demands, and waivers under this Agreement (each a “Notice”) shall be in writing and shall be deemed to have been duly given (i) immediately upon personal delivery (with delivery confirmation), (ii) upon electronic delivery via email to the email address below (with delivery confirmation); (ii) two (2) business days after being sent by nationally recognized overnight courier (with delivery confirmation), (iv) three (3) business days after being mailed by registered or certified mail. Notices must be sent to the respective Parties at the addresses set forth on the signature page (or at such other address for a Party as shall be specified in a Notice given in accordance with this section.

16.8. Severability. In the event that any term or provision of this Agreement is held to be invalid, illegal, or unenforceable in any jurisdiction, then such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction, provided the essential terms of this Agreement for each Party remain legal and enforceable. The same shall apply in case of gaps or loopholes in this Agreement.

16.9. Survival. After expiration or termination, all provisions of this Agreement, which by their terms require or contemplate performance by a Party after the expiration or termination of this Agreement, including, but not limited to, Section 8 (indemnification and insurance); Section 10 (non-solicitation and confidentiality), and Section 14 (ownership of inventions).

16.10. Waiver. No failure or delay by either Party to exercise any right or remedy to which it is entitled shall constitute a waiver or cause a diminution of the obligations or rights provided under this Agreement. Waiver by either Party of any default does not constitute a waiver of any other or subsequent default.

16.11. Counterparts. This Agreement may be executed in multiple counterparts, each of which will be deemed to be an original, and all of which together will constitute one and the same agreement.