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Sales Terms & Conditions

1. Agreement and Precedence of Terms. These sale terms and conditions ("Sale Terms") apply to the sale, delivery or transfer of all semiconductor devices, hardware and other goods ("Goods") listed on the accompanying sales order form ("Sales Order"), as well as any related ancillary services provided by MathStar, Inc. as seller ("Seller") to the purchaser identified in the Sales Order ("Purchaser").
Purchaser will be deemed to have accepted the Sales Order and these Sales Terms after receiving them in any form or format (mail, fax, electronic) by taking any of the following actions: (a) responding with an express written acceptance or confirmation of the Sales Order, (b) by any action that constitutes implied acceptance under the applicable contract law, (c) by issuing a purchase order to Seller referencing the Goods, or (d) accepting delivery of the Goods or provision of the services whether or not Purchaser has confirmed or acknowledged the Sales Order or taken any other actions with respect to the Sales Order or the Goods.
The Sales Order and these Sales Terms together constitute one sales contract ("Sales Contract") and the entire agreement between the parties with respect to the Goods and ancillary services. This Sales Contract supersedes all previous offers and agreements, whether oral or written, including any request for quotation or purchase order. Seller will not be bound by any terms of Purchaser's purchase order that are inconsistent with the terms herein. No addition to, or other modification of, this Sales Contract shall be binding on Seller unless it is in writing and executed by a duly authorized representative of Seller. In the event of a conflict between any of the terms contained in the Sales Order and the Sales Terms, the Sales Order shall control.

2. Price and Taxes. The price of all Goods unless otherwise specifically stated in this Sales Contract is F.C.A. (Incoterms 2000) Seller's place of manufacture or warehouse location, exclusive of insurance cost. Accordingly, Purchaser may designate the carrier and pay the cost of transportation, insurance and related shipping costs. The cost of packaging for normal domestic shipment (within the USA) is included in the invoiced price. Where special domestic or export packaging is appropriate but involves greater expense, Seller may add a commercially reasonable charge to the price to cover such extra expense.
Purchaser shall pay all charges for special packing and crating requested by Purchaser or deemed appropriate under the circumstances, freight, insurance, import and export duties, licenses, fees, bonds, sales and excise taxes, and all other direct costs that may be incurred in delivering the Goods or providing the ancillary services. Purchaser shall pay, and indemnify Seller against, all other taxes, assessments and charges (including, but not limited to withholding taxes, sales and use taxes, inventory taxes, business transfer taxes and value added taxes) on the sale of the Seller's Goods. In the event that the Purchaser is required to withhold any such amount from amounts payable to Seller, Purchaser will pay Seller an additional amount such that Seller shall receive the full amount payable hereunder. In the event of such withholding, Purchaser shall provide Seller with proof of payment of the amount withheld. If any sales, use or value-added taxes are imposed by any governmental authority, Seller shall be allowed to add such amount to the price of the Goods. The only taxes payable by Seller with respect to the sale of the Goods are taxes based on Seller's income. If Purchaser claims any exemption from sales or other taxes, Purchaser must provide Seller with a proper tax exemption certificate.

3. Payment Terms. Unless otherwise specified in the Sales Order, Seller's payment terms are net thirty (30) days from date of invoice. Seller reserves the right to require alternative payment terms, including, without limitation, sight draft, letter of credit or payment in advance. All payments shall be made to Seller at its office in Hillsboro, Oregon, or such other office as may be from time to time designated. Any amounts owed by Purchaser to Seller and not paid when due shall bear interest at the rate of one and one half percent (1½%) per month, but not more than the amount allowed by law, on the unpaid balance from the original due date of the invoice until paid. Purchaser shall also be liable to Seller for Seller's reasonable costs of collection incurred in collecting any amounts owed by Purchaser under this Sales Order, including reasonable attorneys' fees.
At any time, Seller may request commercially reasonable assurance of payment and performance from Purchaser. If Seller does not receive such assurance, Seller may require Purchaser to pay all or any part of the purchase price in advance of delivery or to make shipment C.O.D. If Purchaser fails to make advance payment when requested by Seller, or in any event, if the Purchaser is or becomes delinquent in the payment of any sum due Seller (whether or not arising out of this Sales Contract) or refuses to accept C.O.D. shipment, then Seller shall have the right, in addition to any other remedy to which it may be entitled in law or equity, to cancel the Sales Order, refuse to make further deliveries, and declare immediately due and payable all unpaid amounts for Goods previously delivered to Purchaser. Each partial shipment made under any Sales Order shall be treated as a separate transaction and payment thereof shall be made accordingly.

4. Open Order Pricing. If Purchaser is buying the Goods pursuant to an open order with Seller, Purchaser understands and agrees that the price of the Goods is subject to change upon written notice sent to the billing address of Purchaser or the notice address set forth herein at least seven (7) days in advance of its effectiveness.

5. Order Cancellation; End of Life. Purchaser may cancel any or all of a Sales Order by notifying Seller at the notice address herein at least thirty-one (31) days in advance of the delivery date set forth in the Sales Order. Purchaser shall be liable to Seller for all direct costs incurred by Seller as of the notice date and a cancellation fee as follows: if notice is received by Seller (a) more than ninety (90) days prior to a scheduled delivery date: no fee; (b) sixty-one (61) to ninety (90) days, inclusive: 25% of the Sales Order price; (c) thirty-one (31) to sixty (60) days, inclusive: 50% of the Sales Order price; (d) thirty (30) days or less: no cancellation.
Seller may cancel any outstanding portion of a Sales Order without penalty in the event Purchaser fails to comply with any of the terms and conditions of a Sales Order. Seller may also cancel any outstanding portion of a Sales Order in the event Purchaser becomes insolvent, is subject to a bankruptcy proceeding, makes an assignment for the benefit of creditors, or ceases or suspends its normal business operations. Any cancellation by Seller shall be without prejudice to any other rights which Seller may have against Purchaser under the Sales Order or otherwise. Furthermore, Seller reserves the right to discontinue the manufacture or distribution of any or all of Seller's Goods at any time, and to cancel any unfilled orders with delivery dates at least six (6) months in advance for such discontinued Goods without liability of any kind to Purchaser or to any other person. No such cancellation, refusal or delay will be deemed a termination (unless Seller so advises Purchaser) or breach of this Sales Contract by Seller.

6. Deliveries and Scheduling. Unless otherwise specified in the Sales Order, deliveries may be made by Seller, in whole or in part, before the scheduled delivery date without penalty. Seller may make partial shipments of Purchaser's Goods, to be separately invoiced and paid for when due. Delay in delivery of any installment shall not relieve Purchaser of its obligation to accept the remaining deliveries. Accelerated deliveries at the request of Purchaser may be subject to an additional expediting charge.
Seller will attempt to meet shipment schedules. However, any shipment quotation or forecast on an order acknowledgment is only an estimate of the time required to make shipment and Seller will not assume liability, consequential or otherwise, because of any delay or failure to deliver all or any part of any order for any reason, including its active or passive negligence. Should orders for Seller's Goods exceed Seller's available inventory, Seller will allocate its available inventory and make deliveries on a basis Seller deems equitable, in its sole discretion, and without liability to Purchaser on account of the method of allocation chosen or its implementation
Should this Sales Order represent a partial fulfillment of a larger order or if Seller is shipping in installments upon request of Purchaser, the complete and final order and all Goods thereunder must be fulfilled within one (1) year after the first partial order is shipped, unless a longer time period is expressly specified on the face of this Sales Order. Seller reserves the right to ship all remaining Goods identified in a Sales Order without a longer time period specified within such one-year time period, regardless of whether Purchaser places orders for the remaining Goods or not.

7. Transportation; Risk of Loss. Unless otherwise specified in the Sales Order, all deliveries are F.C.A (IncoTerms 2000) Seller's place of manufacture or warehouse. All risk of loss of, or damage to the Goods will pass to Purchaser upon delivery by Seller to the carrier, freight forwarder or Purchaser, whichever first occurs. Purchaser will bear the-risk of loss or damage in transit. Unless otherwise agreed in writing, title shall pass from Seller to Purchaser at the location Goods are delivered to the carrier. Nonetheless, until the purchase price and all other applicable costs and expenses are paid in full, Seller reserves a purchase money security interest in the Goods and the proceeds therefrom, and Seller thereby possesses the rights of a secured party under the Uniform Commercial Code
Unless otherwise agreed to in writing by Seller, all shipping shall be at the expense of Purchaser. Accordingly, Purchaser will be responsible for selecting the mode of shipment and the carrier. Purchaser will be responsible for and pay all packing, shipping, freight and insurance charges, which charges Seller may require Distributor to pay in advance. If Purchaser does not select mode of shipment and carrier, Seller reserves the right to ship Goods freight collect and to select the means of shipping and routing. Unless otherwise advised, Seller may insure to full value of the Goods or declare full value thereof to the transportation company at the time of delivery and all such freight and insurance costs shall be for Purchaser's account. Seller may at its option obtain insurance for its Goods covering their delivery to Purchaser and Purchaser agrees to reimburse Seller for the cost of providing such insurance.

8. Inspection and Acceptance. The Purchaser shall have the right to inspect the Goods upon delivery. If an immediate visual inspection reveals damage to the Goods, Purchaser may refuse acceptance from the carrier at the time of delivery. After delivery, the Goods shall be deemed accepted by Purchaser unless Purchaser provides Seller with written notice of its rejection of all or part of the Goods, such notice specifying the defect underlying the rejection, within five (5) business days after initial receipt of the Goods. If the Purchaser rejects the Goods for cause, Seller has the right either to replace the Goods or cancel the Sales Order at its discretion. If Purchaser, its agents, employees or licensees, use the Goods after delivery for any reason other than for inspection thereof, such use shall constitute acceptance of the Goods by Purchaser.

9. Returns Procedure. After delivery, if Purchaser refuses acceptance or later determines to make any warranty claim or seek repair of the Goods, Purchaser may not return the Goods to Seller without first obtaining Seller's consent. All returns must be accompanied by a valid Return Material Authorization ("RMA") issued by Seller according to Seller's then-current returns policy. No credit allowance on defective Goods will be made and no replacement for defective Goods will be shipped, unless the alleged defect claimed is established to Seller's satisfaction after suitable testing and inspection by Seller. If it is found that any Good has been returned without cause and is still serviceable, Purchaser will be notified and the Good returned to Purchaser at Purchaser's expense. In addition, a charge for testing and examination may, in Seller's sole discretion, be made on Goods so returned.

10. Limited Warranty. The selection of the Goods ordered, or design of any custom Goods, shall be Purchaser's sole and ultimate responsibility, and Seller shall have no liability whatsoever for the suitability of any Goods selected by Purchaser or any design defects of custom Goods, or in the event the Goods ordered are unsuitable for Purchaser's intended use. Unless otherwise specified in this Sales Order, Seller warrants this product according the terms of the applicable MathStar Limited Warranty for the Goods. Any ancillary services provided under this Sales Contract are provided AS IS. Seller manufactures Goods from new or serviceable used parts. Exchanged parts become the property of Seller. This warranty will not include credit, repair, or replacement of a Good which has a defect due to Purchaser's, or another's, actions or omissions. THE FOREGOING WARRANTY REPLACES ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, TITLE AND NONINFRINGEMENT.

11. Indemnification Obligations. Purchaser shall indemnify, hold harmless, and defend Seller, and its directors, officers, employees, agents, and affiliates from and against any and all costs, claims, actions, demands, suits, liabilities, settlements, damages, and expenses of any kind whatsoever (including, but not limited to, court costs and reasonable attorney and accounting fees), not covered by Seller's indemnity and resulting from or alleged to result from Purchaser's use of any Good, including products liability arising from Purchaser's products, misuse or alteration of the Goods, or design of Goods selected by Purchaser or of custom Goods specified by Purchaser.
Seller shall indemnify, hold harmless, and defend Purchaser, and its directors, officers, employees, agents, and affiliates from and against any and all costs, claims, actions, demands, suits, liabilities, settlements, damages, and expenses of any kind whatsoever (including, but not limited to, court costs and reasonable attorney and accounting fees), resulting from or alleged to result from a Good's infringement of a third party's patent, copyright or trade secret right. Notwithstanding the foregoing, Seller has no obligation regarding any claim based on any of the following: (i) modification of a Good by Purchaser or at Purchaser's direction or its use in other than its specified operating environment; (iii) the combination, operation, or use of a Good with any product, data, or apparatus that Seller did not provide; or (iii) infringement by a non-Seller good alone.
In all events, the indemnified party must: (a) promptly notify the indemnifying party in writing of the claim; and (b) allow the indemnifying party to control, and cooperate in the defense and any related settlement negotiations. In any event, if such a claim is made or appears likely to be made, about a Good in Purchaser's inventory, Purchaser agrees to permit

Seller to either license rights to enable Purchaser to continue to market and use the Good, or to modify or replace it. If Seller determines that none of these alternatives is reasonably available, Purchaser will return the Goods to Seller upon written request for a prorated credit or refund as Seller determines in Seller's sole discretion, provided that the purchase price and all charges for the returned Goods have been fully paid. THE FOREGOING PROVISIONS STATE THE ENTIRE LIABILITY AND OBLIGATION OF SELLER, AND THE EXCLUSIVE REMEDY OF PURCHASER AND ITS CUSTOMERS WITH RESPECT TO THE ALLEGED INFRINGEMENT OF PATENT, COPYRIGHT, TRADE SECRET OR OTHER INTELLECTUAL PROPERTY OF A THIRD PARTY BY ANY AND ALL GOODS SOLD TO PURCHASER.

12. Disclaimer; Limitation of Liability. Seller's liability for warranty claims will be limited to repair or replacement of any defective Goods or a refund of the purchase price of the Goods, at Seller's sole option, as set forth in paragraph 11 above. In no event will Seller be liable for costs of procurement of substituted Goods by Purchaser.

AS BETWEEN SELLER AND PURCHASER GENERALLY, IT IS THE INTENT OF SELLER TO LIMIT ITS LIABILITY TO PURCHASER TO DIRECT CONTRACT DAMAGES TO THE FULLEST EXTENT OF THE LAW. SELLER SHALL NOT BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR OTHER DAMAGES, LOSS, EXPENSES, OR PERSONAL INJURY DIRECTLY OR INDIRECTLY ARISING FROM THE USE OF SELLER'S GOODS SEPARATELY OR IN COMBINATION WITH ANY OTHER EQUIPMENT OR MATERIALS, INCLUDING WITHOUT LIMITATION LOSS OF PROFIT, WHETHER OR NOT SELLER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS HOWEVER CAUSED, WHETHER FOR BREACH OR REPUDIATION OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE OR OTHERWISE.

AS BETWEEN PURCHASER AND SELLER FOR BREACHES OF ANY PART OF THIS SALES CONTRACT OTHER THAN SELLER'S INDEMNITY FOR INFRINGEMENT, SELLER'S AGGREGATE LIABILITY TO PURCHASER HEREUNDER SHALL BE LIMITED TO THE AGGREGATE PRICE PAID BY PURCHASER TO THE DATE OF THE CLAIM HEREUNDER. IN NO EVENT WILL THE DAMAGE LIABILITY OF SELLER FOR SUCH BREACHES EXCEED IN THE AGGREGATE THE AMOUNTS PAID HEREUNDER. THE AGGREGATE LIABILITY LIMITATIONS OF THIS SECTION SHALL APPLY TO ALL CAUSES OF ACTION (INCLUDING WITHOUT LIMITATION TORT, CONTRACT AND ADMINISTRATIVE ACTIONS OR CLAIMS) AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.

AS TO THIRD-PARTY INDEMNIFICATION OBLIGATIONS BY SELLER UNDER SECTION 11 HEREOF, SELLER'S LIABILITY TO PURCHASER SHALL NOT EXCEED $100,000 IN THE AGGREGATE FOR INFRINGEMENT OF GOODS DELIVERED UNDER THIS SALES CONTRACT.

UNDER NO CIRCUMSTANCES IS SELLER LIABLE FOR ANY OF THE FOLLOWING: A) THIRD-PARTY CLAIMS AGAINST PURCHASER FOR LOSSES OR DAMAGES OTHER THAN THOSE IN SET FORTH HEREIN; B) LOSS OF, OR DAMAGE TO PURCHASER'S OR ANOTHER'S RECORDS OR DATA; (C) PERSONAL INJURY OR DEATH RESULTING FROM SELLER'S PRODUCTS, (D) USE OF A GOOD FOR PURPOSES EXPRESSLY EXCLUDED BY SELLER, OR (E) ECONOMIC CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS OR SAVINGS) OR INCIDENTAL DAMAGES, EVEN IF SELLER IS INFORMED OF THEIR POSSIBILITY.

13. Notice Procedure and Address. Any notice, request, demand or other communication required or permitted hereunder shall be deemed sufficiently given and effective when sent if set forth in writing and sent by e-mail transmission and an email reply or acknowledgement (automated or otherwise) is returned from the addressee, a nationally recognized overnight courier, registered mail or certified mail with return receipt requested, provided that postage shall be prepaid, or facsimile transmission, if evidence of the receipt of such facsimile transmission by the addressee is received by the sender, addressed as follows: The address for notices required hereunder shall be, in the case of Purchaser, the "ship to" address or "billing" address on the Sales Order and in the case of Purchaser, the Purchaser's address specified in the Sales Order or the following address: MathStar, Inc., Attn. CFO, 19075 NW Tanasbourne Drive, Suite 200, Hillsboro, OR 97124,

14. Cross-Defaults. Any material breach by Purchaser under this or any other order, purchase order, quotation or other agreement existing between Seller and Purchaser during the term of this Sales Order (including, but not limited to, the non-payment of any amounts owed to Seller by Purchaser), shall entitle Seller to seek reasonable assurance of performance from Purchaser, impose alternative payment terms as set forth in Section 3 above or to terminate or suspend this Sales Order or other orders between Seller and Purchaser for similar goods and demand immediate payment of any outstanding amounts owed to it in addition to any other right or remedy Seller might have at law or in equity.

15. Force Majeure. Seller shall not be responsible for delays in producing, procuring, or delivering the Goods caused by: acts of God, fires, war, terrorism, riot or insurrection, strikes or differences with or among workmen, government interference, inability to secure transportation, weather conditions, timing of deliveries from Seller's vendors or suppliers, or other contingencies beyond Seller's control. Should any of the foregoing conditions continue for a period of thirty (30) days after its first occurrence, Seller may cancel the Sales Order without incurring any liability to Purchaser.

16. Assignment and Right To Subcontract. Purchaser shall not assign any of its rights, or delegate any of its duties, under this Sales Contract without the prior written consent of Seller, and any attempt to do so shall be void. Seller may subcontract any portion of the work on any item subject to this Sales Contract, but Seller's obligations and rights hereunder shall not be limited or affected thereby.

17. Remedies and Waiver. All rights and remedies of Seller under this Sales Contract shall be cumulative and in addition to any other rights and remedies available to Seller under any other valid agreement with Purchaser or any applicable law. Any concession or indulgence made by the Seller or Seller's failure to insist on performance of any of the terms and conditions hereto shall not be considered a waiver of any other term, whether the same or similar. No waiver by Seller of any default or provision hereof shall be deemed a waiver of any subsequent default or provision. No waiver or any breach of any of the provisions of this Sales Contract shall be deemed a waiver of any other sales order, contract or further breach of this Sales Contract

18. Severability. If any provision of this Sales Contract shall be found invalid, illegal, or unenforceable to any extent, the remainder of this Sales Contract and its application shall not be affected, and shall remain enforceable to the fullest extent permitted by law.

19. Proprietary Rights; Limited Software License. The sale of the Goods hereunder to Purchaser shall in no way be deemed to confer upon Purchaser any right, interest or license in any patents or patent applications, copyrights, trade secrets or other intellectual property the Seller may have covering the Goods. Seller retains for itself all proprietary rights in and to all designs, engineering details, and other data and materials pertaining to any Goods supplied by Seller and to all discoveries, inventions, patents and other proprietary rights arising out of the work done by Seller in connection with the Goods or with any and all Goods developed by Seller as a result thereof, including the sole right to manufacture any and all such Goods. Any Goods which are software shall be governed by a separate software license that supersedes these Sales Terms and is provided at the time of installation. If Seller does not provide a license agreement for any software included with the Goods or this Sales Order, the software will be subject to this Sales Contract and all copyright laws. Purchaser obtains no ownership right or interest in the software or any intellectual property rights of Seller other than the implied rights to use the Goods as an article of commerce.

20. Disputes; Governing Law and Venue. This Sales Contract is to be construed and interpreted according to the laws of the State of Oregon, excluding its conflict of laws provisions. The provisions of the United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Sales Contract. The parties agree that the Oregon version of the Uniform Commercial Code, Article 2 - Sales, shall be applicable in resolving any disputes. The parties agree that any claim asserted in any legal proceeding by one party against the other shall be commenced and maintained in any state or federal court located within Washington County, Oregon, having subject matter jurisdiction with respect to the dispute between the parties. Both parties hereby submit to the jurisdiction of such courts over each of them personally in connection with such litigation, and waive any objection to venue in such courts and any claim that such forum is an inconvenient forum. The English language version of this Sales Contract controls when interpreting its terms. . The parties agree that any or all of them may file a copy of this Section with any court as written evidence of the knowing, voluntary, and bargained agreement between the parties to irrevocably waive any objections to venue or to convenience of forum. Process in any proceeding referred to in this Section may be served on any party anywhere in the world. Reasonable attorneys fees and costs will be awarded to the prevailing party in the event of litigation involving the enforcement or interpretation of this Sales Contract.

21. Confidentiality. It may be necessary during the performance of this Sales Contract for the parties to exchange proprietary or confidential information ("Confidential Information"). Each party agrees to use the same degree of care to protect the confidentiality of the Confidential Information and to prevent its unauthorized use or dissemination as it uses to protect its own confidential information of a similar nature, provided that the information is marked in writing as "confidential" or, if disclosed by means other than writing, the information is summarized in writing, marked "confidential", and delivered to the other party within thirty (30) days of the disclosure. Each party agrees to use the Confidential Information only for purposes related to the performance of this Sales Contract. Purchaser agrees that Goods pricing, specifications, and roadmaps are confidential information of Seller, regardless of whether such information is marked or otherwise identified as confidential. All Confidential Information remains the property of the party disclosing the information, and except as otherwise provided herein, no license or other rights to Confidential Information is granted or implied hereby.
Neither party will be liable for disclosure of any information received under this Sales Contract which: (i) is generally known or available by publication, commercial use, or otherwise; (ii) is known by the receiving party through no wrongdoing and is not subject to restriction at the time of disclosure; (iii) is independently developed by the receiving party without the use of Confidential Information; or (iv) is lawfully obtained from a third party without violation of a confidentiality obligation to the disclosing party.
In the event of a conflict between this Section of the Sales Contract and a separate nondisclosure agreement between the parties regarding the same subject, the terms of this Section will prevail unless the other agreement refers expressly to this Sales Contract and supersedes it with such reference.

22. Export Compliance. Purchaser will comply with all relevant United States export control laws, including, but not limited to, the rules and regulations of the Bureau of Industry and Security ("BIS") of the US Department of Commerce and the Office of Foreign Asset Control ("OFAC") of the US Department of the Treasury. Such compliance includes, but is not limited to, Purchaser's provision of all written assurances to Seller required by US law, and Purchaser's refraining from the export, either directly or indirectly, of any Good or system incorporating such Goods without first obtaining any required license or other approval from BIS or from any other agency or department of the United States Government.

23. Counterparts and Facsimile Signatures. This Sales Contract may be executed in counterparts, each of which will be considered an original, but all of which together will constitute the same instrument. Transmission of a signed copy of this Sales Contract by facsimile will have the same effect as delivery of a signed original.

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