1. Terms and Conditions of Sale. The following terms and conditions concerning the purchase of goods and services become the binding agreement between VLSI Standards Incorporated ("Seller? and Buyer. Seller accepts order and sells items only in accordance with the terms and conditions herein, unless otherwise agreed in writing signed by an authorized officer of Seller. Any document supplied by Buyer containing additional or different terms is considered a proposal to Seller and is hereby objected to and rejected. Specifically, if Buyer uses a purchase order form to place an order for Seller's product or services, such purchase order will be deemed governed by these terms and conditions, and any provision of such purchase order which in any manner differs from or is additional to these terms and conditions will be of no force or effect. Buyer's placement of an order for products or services from Seller constitutes assent to these terms and conditions.

2. Orders. Any person requesting an order and delivery of goods from Seller gives the following declaration, "I, under penalty of default, do hereby state that I am a duly authorized agent and acting as "Buyer" as stated in these terms and conditions and have been granted authority to purchase goods on behalf of my principal? All orders are subject to approval and acceptance by Seller, and Seller shall not be liable to Buyer or any other party by reason of its failure to accept any order. After acceptance of any order by Seller, any order or part thereof may not be terminated by Buyer unless prior, written consent is granted by an authorized agent of Seller.

3. Prices, Charges and Taxes. Buyer shall be charged for items at prices quoted, provided Buyer's order is received during the effective period of a price quotation. If prices have not been specifically quoted, or if Buyer has placed its order after the end of an offer period, Buyer will be charged at the prices in effect on the date of Seller's acceptance of Buyer's order for such items. Seller shall not be responsible for, and Buyer shall pay for, all freight, transportation, insurance, storage, handling, or any similar charges. However, Seller may, at Seller's option, pay any or all such charges on behalf of Buyer and include such amounts in invoices to Buyer. Buyer may be subject to "rush fees" and "re-stocking" fees for special handling or incorrectly ordered parts. Buyer requested order changes require Seller's prior written consent. Buyer is responsible for all taxes. Prices quoted are exclusive of any sales, use, excise, withholding, customs, V.A.T., or other taxes, tariffs or fees assessed or levied upon the sales of products and services to Buyer hereunder. In the event that any tax, fee or duty is payable on orders placed hereunder, Seller may add such amounts to the invoice, and Buyer shall, in all cases, pay these amounts.

4. Payment Terms. Seller's acceptance of any order from Buyer is contingent upon approval by Seller's credit department. Seller's credit department, at its sole discretion, may require special payment terms, such as prepayment, progress payments or C.O.D. terms. Unless otherwise required by Seller's credit department, however, Buyer agrees to make payment in full within 30 days from date of Seller's invoice (which date will never be before shipment date).

5. Cancelation. Due to the customized nature of VLSI Products, orders are non-cancelable five (5) days after order acceptance by VLSI. Orders cancelled by written notice to VLSI within five (5) days of VLSI's acceptance are subject to a thirty-five percent (35%) cancellation/restocking charge. No returns will be accepted other than in accordance with the terms of the limited warranty as set forth below.

6. Delivery. Seller shall use reasonable efforts to satisfy delivery dates specified by Buyer. Delivery of all items shall be made from Seller's domestic shipping point or EXW Works, Factory. Title and risk of loss or damage shall, in all cases, pass to Buyer upon Seller's delivery to a common carrier or any other delivery agency for shipment to Buyer, and it is the responsibility of Buyer to file any claims for damage occurring to goods while in transit with said carrier.

7. Seller's Limited Warranty. Seller warrants that the products delivered hereunder will be substantially free from defects in material and workmanship under normal conditions of use, storage and environmental control, and will meet Seller's standard specifications for products as described in Seller's documentation for the product (or such other specifications, if any, that may have been expressly agreed upon in writing signed by an authorized representative of Seller) for a period of (90) days from the date of delivery to Buyer. Seller also certifies that products delivered were produced in compliance with all applicable requirements of the Fair Labor Standards Act, and or regulations and orders of the United States Department of Labor.

8. Warranty Exclusions and Disclaimer of Warranty. Seller's obligations under Section 6 shall not apply to items sold to Buyer which have been: altered by Buyer in any respect; subjected to unusual physical or electrical stress or to accident, or are otherwise misused, abused; or used in an unauthorized manner; or purchased within the United States and exported outside the United States without the prior written authorization of Seller.


9. Warranty Return Procedure. Buyer is responsible for inspecting products promptly in an appropriate environment deemed to be satisfactory to Seller's recommendation or printed notice. Any claim against product due to defects shall be made in accordance with the following warranty return procedure:

1. Obtain Return Material Authorization (RMA) number from Seller's agents or representatives and complete the necessary return forms.

2. Return rejected parts to: VLSI Standards, Inc. 5 Technology Drive, Milpitas, CA 95035-7916 95134-2006 95134-2006

3. Freight must be prepaid and all accompanied documentation must reference the RMA number.


Seller shall have the right to stop work at any time and withhold any portion of a delivery of any items ordered if payment due to Seller from Buyer is not paid in full when due. If Seller invokes the aforementioned right, the full purchase price of all items completed becomes due immediately, and any reasonable charges for any work in process will be charged to, and paid by, Buyer.

10. Seller's Indemnification. Seller agrees to indemnify and hold harmless Buyer, its officers, directors, employees and agents against any claims, actions or demands that the sale or use of Seller's product purchased under this agreement infringes any U.S. copyrights, U.S. patents, U.S. mask works, trade secrets or other proprietary rights of any third party arising under United States law which exist on or prior to delivery date of Seller's product, unless such claims, actions or demands result from:

(a) Buyer's use of the product in a combination which violates the rights of third parties or in a combination with materials or products not supplied by Seller;
(b) The modification or attempted modification of Seller's product by parties other than Seller or the use or distribution of such modified product; or
(c) The use or sale of Seller's product which was designed in accordance with Buyer's specifications.

This indemnification obligation is contingent upon (1) Buyer giving written notice within 15 days to Seller of any such claim, action or demand, (2) Buyer allowing Seller to control any defense and related settlement negotiations with counsel of its choice, and (3) Buyer fully assisting, at Seller's expense, in any defense.

To terminate this indemnification obligation, Seller may, at its option, (1) modify or replace the product with one which is functionally equivalent, (2) obtain a license for the Buyer to continue to use the product, (3) accept the return of the product held by Buyer and return the purchase price of product to Buyer.


11. Buyer's Indemnification. Buyer agrees to indemnify and hold harmless Seller, its officers, employees and agents against any claims, actions or demands alleging that Seller is liable for infringement of U.S. patents, U.S. copyrights, U.S. mask works, trade secrets or other proprietary rights of any third party arising under United States law due to the actions of Buyer including but not limited to:

(a) Buyer's use of Seller's product in a combination which violates the right of third parties or in a combination with materials or products not supplied by Seller;
(b) The modification or attempted modification of Seller's product by parties other than Seller or the use or distribution of such modified product; or
(c) The use or sale of the product which was designed in accordance with Buyer's specifications.

This indemnification obligation extends to liability arising under any theory. This indemnification obligation is contingent upon (1) Seller giving prompt written notice to Buyer of any such claim, action or demand, (2) Seller allowing Buyer to control any defense and related settlement negotiations and (3) Seller fully assisting, at Buyer's expense, in any defense.

12. Default. In the event of (1) breach by Buyer of any agreement, term or condition set forth herein; (2) breach by Buyer of any representation or warranty made by Buyer in connection with this transaction; or (3) default by Buyer in the payment of any indebtedness due thereunder, Seller may unilaterally decline to make further shipments without in any way affecting its rights and may exercise all rights and remedies available to it at law or in equity.

13. Export. Export or re-export of Seller's Products and technical data is controlled by and is subject to prior approval by the United States Department of Commerce and/or the Department of State. It is the responsibility of the exporter or re-exporter to obtain appropriate export licenses or authorizations before exporting to any country. Order acceptance and delivery are contingent upon export license screening and/or receipt of validated license. Buyer agrees to assist Seller in the screening process and/or obtaining said license by providing at the time of order complete End-Use Information.

14. Force Majeure. Seller shall not be liable for delays or failures in performance of any obligation hereunder by reason acts of God, fires, floods, wars, embargoes, labor disputes, acts of sabotage, riots, accidents, delays of carriers, subcontractors or suppliers, voluntary or mandatory compliance with any governmental act, regulation or request, shortage of labor, materials or manufacturing facilities, delays or unavailability of transport or any other cause or causes beyond Seller's reasonable control. If by reason of any of these things, Seller's supplies of Seller's products covered hereby are limited, Seller shall have the right to prorate the available supply in such a manner as it, in the sole discretion, determines. Deliveries suspended or not made by reason of this Section shall be canceled without liability; provided however, that payment obligations for Seller's products already delivered or for services rendered shall otherwise remain unaffected.

15. Confidential Information. Buyer shall not disclose confidential proprietary information to Seller except in accordance with these provisions. All information claimed to be confidential or proprietary shall be reduced to writing and appropriately marked to so identify it. Seller agrees to hold such information in confidence for Buyer and not use it, except as authorized by Buyer, for a period of two (2) years from the date of the disclosure. In protecting the confidentiality of such information, Seller shall be held to the obligation of confidentiality or non-use: information which was or becomes known to Seller from sources other than Buyer; information which is independently developed by Seller, or by its consultants, without breach of these terms; information which is or becomes part of the public domain without breach of these terms; information which is disclosed to third parties or to the U.S. Government without restriction or breach of these terms.

16. Governing Law; Jurisdiction. This agreement shall be governed by and construed in accordance with the laws of the State of California, excluding choice of law rules. Any patent disputes that arise under this agreement shall be heard and decided by a United States District Court for the Northern District of California, and the parties hereby submit to the jurisdiction of, and waive any venue objection against such court. Any dispute, other than relating to patents, which arises under this Contract and which is not resolved by the parties within 90 days after original written notices of dispute, shall thereafter be referred to the American Arbitration Association for adjudication in San Jose, California in accordance with its rules then existing. The decision of a single arbitrator shall be binding upon the parties provided that the parties shall be entitled to discovery as provided in Sections 1283.05 and 1283.1 of the Code of Civil Procedure of the State of California, whether the California Arbitration Act is deemed to apply. Each party shall bear its own costs and expenses in any such arbitration proceeding. The parties expressly exclude the application of the United Nations Convention on Contracts for the International Sale of Goods in its entirety to the Contract. No action by Buyer may be brought at any time more than 12 months after the facts occurred upon which the cause of action arose.

17. License Grants. Seller grants to Buyer a nontransferable, non-exclusive license to use the intellectual property incorporated into the product, (collectively referred to herein as "IP") and to any written materials (the sublicense all or any portion of the IP or the product. Buyer agrees not (1) to copy, distribute, rent lease or sublicense all or any portion of the IP or the product, (2) modify or prepare derivative works of the IP or the product, or (3) reverse engineer, decompile or disassemble the IP or the product. Notwithstanding the foregoing, Buyer shall be permitted to produce, for internal use only, working reference materials which incorporate the calibrated value (but not the uncertainty) of its standards. Buyer agrees to keep confidential and use its best efforts to prevent and protect the IP and the contents of the product. The term of this license will be for the duration of Buyer's ownership of the Seller's product. Buyer acknowledges that no title to the IP is tranferred to Buyer. The term IP also refers to all releases, versions, enhancements, upgrades, updates and other modifications to such IP. The IP is licensed to Buyer for Buyer's internal use solely in the ordinary course of its business for activities relating to Buyer's manufacture, inspection and/or testing of semiconductor wafers.

18. Miscellaneous. All communications required or permitted under this agreement must be in writing and will be deemed given when (a) delivered personally, (b) sent by confirmed telex or facsimile, (c) sent by commercial overnight courier with written verification of receipt, or (d) sent by registered mail, return receipt requested, postage prepaid. All notices to Seller must be sent to attention of the President at the address first written above, address, or to such other address that Seller may have provided for purpose of notification as provided herein. This agreement may not be amended except by a written instrument signed by appropriate officers of each party. Any attempted assignment of this agreement or of any rights arising hereunder by the Buyer without the prior written consent of the Seller shall be void and of no effect. No term or provision hereof shall be waived or deemed waived by either party, and no breach excused by or implied, will constitute a consent to, waiver of, or excuse of any other, different, or subsequent breach by either party. If any provision of this agreement is held to be ineffective, unenforceable or illegal for any reason, such decision shall not effect the validity or enforcement of any or all of the remaining portions thereof. Except as otherwise specifically stated herein, this agreement represents the entire agreement between the parties relating to its subject matter and supersedes all prior representations, discussions, negotiations and agreements, whether written or oral.

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