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EMCS Industries Ltd. (“EMCS”)

Terms and Conditions of Sale

1. Price Quotes and Formation of Purchase Contract:
A price quoted by EMCS to a customer (“Purchaser”) is valid only if the quote is in writing and includes detailed specifications for the work to be undertaken. A written quote is valid and may be approved by Purchaser for thirty (30) days after the date the quote is issued unless otherwise withdrawn in writing prior to acceptance. If a price quote is approved by Purchaser, the formation of a binding purchase contract between EMCS and Purchaser is subject to (i) Purchaser delivering to EMCS a written purchase order, and (ii) EMCS delivering to Purchaser a written acceptance of the purchase order (the purchase order, together with and as supplemented the written acceptance are referred to herein as a “Purchase Contract”). Purchase order delivery and acceptance may be by any reasonable written communication, including by email or fax. When delivered and accepted as contemplated in this Paragraph 1, the Purchase Contract becomes a binding contract on the terms and conditions set forth therein and herein.

2. Modifications to Purchase Contract and Conflicting Terms:
The price, delivery, specifications, and other terms in a Purchase Contract may be changed only with the written agreement of EMCS and Purchaser. If the purchase order as issued by Purchaser and accepted by EMCS stipulates terms and conditions of sale, those terms and conditions of sale will prevail in the event of a conflict with the terms and conditions set out herein, but only to the extent required to resolve the conflict. Purchaser acknowledges that EMCS may engage sub-contractors to perform engineering and design services. Any Purchase Order not signed and accepted by EMCS is considered VOID.

3. Payment Terms:
Product will be invoiced on readiness to ship.  Unless specified otherwise in the applicable Purchase Contract, invoiced payments are due within thirty (30) days of the date of invoice based on the incoterms EXW for product and FCA or DDP for services. In the case of a product order, a “Readiness To Ship” notification will be sent to the Purchaser, or the Purchaser’s representative, to advise that the goods are ready for pick up, or if previously agreed, delivery will be made to Purchaser as per the EMCS accepted Purchase Order. EMCS may charge 2% interest per month on all late payments, from and after the due date (an effective annual rate of 26.82%). For greater certainty, interest will compound monthly. If Purchaser defaults in payment, Purchaser shall indemnify and save EMCS harmless against any and all costs of collection, including reasonable legal fees, in addition to being liable for damages suffered by EMCS.  EMCS may stop work on any and all Purchase Contracts, withhold delivery of, or repossess the goods until all overdue payments and interest are paid in full.

4. Delivery of Goods:
EMCS will use commercially reasonable efforts to deliver goods under a Purchase Contract by the delivery date(s) specified therein. Each delivery of goods shall be advised by a READINESS TO SHIP (RTS) notification, the RTS serves as the Proof of Delivery (POD) regardless of the INCOTERMS under the Purchase Order. The RTS notification provides an option for requesting storage facilities. Every RTS notification shall be accompanied by the invoice, the commercial invoice, a packing slip specifying the exact quantity and description of the delivery, and the applicable Purchase Contract number. Unless otherwise specified in the Purchase Contract, all shipments shall be based on Incoterms Ex Works (EXW) EMCS’s facility in North Saanich, BC. Transfer of risk will be at Purchasers disposal. EMCS will take all reasonable care to package goods for delivery under each Purchase Contract in order to prevent damage. If the goods are defined as a service, supervision, or commissioning the delivery is based on Incoterms Free Carrier (FCA) or Delivery Duty Paid (DDP) as defined by the EMCS accepted Purchase Order.

5. Limited Warranties:
EMCS’s sole warranty is that as and when shipped, all goods delivered under each Purchase Contract will meet the specifications expressly noted in the applicable Purchase Contract. EMCS MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, AND SPECIFICALLY DISCLAIMS ALL OTHER WARRANTIES, INCLUDING WITHOUT LIMITATION WARRANTIES AS TO QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR TO PERFORM A PARTICULAR FUNCTION AND NON-INFRINGEMENT.

6. Limitation of Liability:
EMCS IS NOT RESPONSIBLE TO PURCHASER OR ANY OTHER PARTY IN TORT OR CONTRACT OR UNDER ANY OTHER THEORY OF LIABILITY FOR SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL LOSSES OR DAMAGES (INCLUDING WITHOUT LIMITATION, LOST PROFITS AND LOSS OF USE, PRODUCTS OR REVENUES), EVEN IF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES IS OR SHOULD HAVE BEEN KNOWN. EMCS’S SOLE AND EXCLUSIVE LIABILITY TO PURCHASER, AND PURCHASER’S SOLE AND EXCLUSIVE REMEDY AGAINST EMCS, ARISING IN CONNECTION WITH ANY SERVICES RENDERED OR GOODS DELIVERED TO PURCHASER IS LIMITED TO THE AMOUNTS PAID BY PURCHASER WITH RESPECT TO THE PURCHASE CONTRACT AT ISSUE. Except as expressly provided in these Terms and Conditions of Sale, neither party will be liable to the other in contract, tort, or negligence, for any economic loss or any loss incurred or suffered by the other party of an indirect or consequential nature arising out of or in connection with a Purchase Contract, including loss of turnover, revenue, profits, business or goodwill.

7. Raw Materials Availability:
The obligations of EMCS under any Purchase Contract are entirely contingent upon the availability of raw materials (including purchased components) required for the manufacture of the goods ordered. EMCS is not responsible and will not be in breach of a Purchase Contract for any delay in manufacturing or delivery that is attributable to the unavailability of, or delays in procuring raw materials. In the event of unavailability of raw materials, EMCS may, at its option, cancel the affected Purchase Contract by written notice to Purchaser and deliver to and charge Purchaser for any partially manufactured goods.

8. Special Tooling, Techniques, and Know-How owned by EMCS:
Unless otherwise specifically provided in the applicable Purchase Contract, special tooling, manufacturing techniques, and know-how developed by EMCS in connection with undertaking work under any Purchase Contract, together with any and all related intellectual property rights, shall be the exclusive property of EMCS and Purchaser will take all steps and sign all transfers, releases and other documents reasonably requested by EMCS in order to establish, perfect, maintain and defend EMCS’s ownership of such special tooling, techniques, know-how, and intellectual property.

9. Charges for Down Time:
Purchaser accepts responsibility for any loss of EMCS production time when a machine is on hold pending a response from Purchaser to an issue related to specifications provided by Purchaser (such as a drawing or specification error, a document that is unclear, or a drawing change). The cost of the downtime payable by Purchaser is calculated by reference to the number of hours the machine is down multiplied by EMCS’s then current shop rate for that machine. EMCS will use reasonable efforts to minimize the cost of downtime. If the response from Purchaser will take more than one day, EMCS reserves the right to remove Purchaser’s job and replace it with another job, with the Purchaser’s replaced job being re-scheduled based on the availability of needed machines.

10. Cancellation by Purchaser:
In the event Purchaser cancels a Purchase Contract, it must do so in writing and Purchaser will pay EMCS the greater of: (a) 10.0% of the total Purchase Contract amount, and (b) 100% EMCS’s expenditures for raw material, tooling, labor incurred, handling and overhead, and for all materials ordered and work completed to the date of cancellation, plus a cancellation charge of 10% of the total of such expenditures. This is without prejudice to such other and additional rights as are available to EMCS at law. If the goods are complete at the time of Purchaser delivering notice of cancellation, Purchaser is responsible to pay EMCS the full amount of the Purchase Contract.

11. Incidental Charges:
Any special packaging requirements, source inspection by or on behalf of Purchaser on the premises of EMCS, or other requirements not expressly provided in the Purchase Contract are subject to additional reasonable charges by EMCS.

12. Damaged Goods:
Unless otherwise specifically provided in the applicable Purchase Contract, goods produced by EMCS for delivery under a Purchase Contract will be at the risk of Purchaser from and after shipment (FOB) from EMCS’s warehouse in Victoria, BC, and Purchaser is responsible for ensuring the goods accordingly. Purchaser shall report to EMCS any damage to goods from shipping within five (5) business days of receipt of goods.

13. Nonconforming Goods:
EMCS agrees to repair or replace goods that due to EMCS’s error do not conform with specifications in the applicable Purchase Contract when shipped. Goods shall be deemed to conform to the Purchase Contract and Purchaser shall be deemed to have accepted goods unless Purchaser notifies EMCS in writing of any claim of non- conformance within fifteen (15) business days after delivery to Purchaser, together with a written explanation of the non-conformance. Returned goods must have all transportation charges prepaid and should be addressed to EMCS’s Shipping and Receiving Department. Any returned goods will be subject to quality assurance inspection by EMCS and, if determined to not have met the applicable Purchase Contract specifications when shipped, will be replaced or Purchaser will be credited amounts paid for the goods, with EMCS paying all reasonable shipping charges.

14. Force Majeure:
EMCS will not be liable for any delay or failure in performance or damage to property or injury resulting from the effects of labor disputes, war, riot, insurrection, fire, flood, accident, storm, act of God, or other causes beyond its reasonable control, or from EMCS’s good-faith efforts to comply with any foreign or domestic governmental law, rule, order or regulation, whether or not it later is determined to be not applicable.

15. Confidentiality:
EMCS agrees to hold all non-public information provided by Purchaser, in either written or any electronic format, including but not limited to design information, drawings, specifications, reports, requests for quotation or proposals and customer information in confidence, save and except to the extent disclosure of such information is required under applicable laws or a court order. This paragraph 16 does not limit obligations of EMCS under any non-disclosure agreement in effect between EMCS and Purchaser.

16. Indemnity in favour of EMCS:
Purchaser hereby agrees to and will defend, indemnify and hold harmless EMCS and its directors, officers, representatives, agents and employees, and their successors and assigns, from and against any and all liabilities, demands, claims, actions, damages, losses, costs and expenses whatsoever, including without limitation legal and other costs of litigation, regardless of outcome (“Liabilities”), arising out of any testing or use or other disposition of any goods manufactured by EMCS or the marketing, sale, distribution, testing, manufacture, use or disposition of any of Purchaser’s products which incorporate any of goods manufactured by EMCS, including without limitation any Liabilities due to injuries, illness or death to persons, damage to property or infringement or misappropriation of the intellectual property rights (including patents) of any person or entity.

17. Taxes and Duties are Purchaser’s Responsibility:
Prices and payments set out in any Purchase Contract or otherwise payable to EMCS are subject to all additional sales and other taxes, duties, tariffs and charges levied by any government authority, all of which shall be paid by Purchaser.

18. Entire Agreement:
Unless superseded or supplemented by a written agreement between Purchaser and EMCS, the agreement between Purchaser and EMCS shall consist of the applicable Purchase Contract and these Terms and Conditions of Sale, which shall constitute the entire agreement between Purchaser and EMCS with regards to the subject matter contained herein. All other prior representations, warranties, covenants, or agreements between Purchaser and EMCS with respect to the subject matter are hereby superseded. Neither party may assign, transfer, or subcontract a Purchase Contract or any right or obligation thereunder without the other party’s written consent, which consent will not be unreasonably withheld.

19. Governing Law and Language:
The Purchase Contract, including these Terms and Conditions of Sale, shall be governed and construed in accordance with the laws of British Columbia and the federal laws of Canada applicable therein and shall be treated, in all respects, as a British Columbia contract. The parties submit to the non-exclusive jurisdiction of the Courts of British Columbia. The parties hereby expressly exclude the application of the United Nations Convention on Contracts for the International Sale of Goods. The parties have expressly requested and required that these terms and conditions and all other related documents be drawn up in the English language.

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