STANDARD SALES TERMS AND CONDITIONS

1.SUBJECT MATTER. These Terms and Conditions, together with additional terms and conditions set forth in any quotation form(s) delivered by IDENTIFY SYSTEMS, LLC (IDENTIFY SYSTEMS) to Customer (collectively, the “Agreement”), govern the sale by IDENTIFY SYSTEMS of the IDENTIFY SYSTEMS products listed on the front page of an invoice or order acknowledgment (the “Products”). These Terms and Conditions, together with such additional terms and conditions, take precedence over any of Customer’s additional or different terms and conditions, to which notice of objection is hereby given. The acceptance of any or all of the Customer’s purchase orders has been and is conditional on Customer’s assent to the terms and conditions out here and in all such IDENTIFY SYSTEMS quotation form(s) in lieu of those in Customer’s purchase order. Neither IDENTIFY SYSTEMS’ commencement of performance nor delivery shall be deemed or constitute an acceptance of Customer’s additional or different terms and conditions.

2. PRICES. The prices of the Products are those specified on the front page of an invoice or order acknowledgment. Unless otherwise agreed to in writing by IDENTIFY SYSTEMS or specified in an invoice or order acknowledgment, all prices on an invoice or order acknowledgment are exclusive of transportation and insurance costs, and all taxes including federal, state and local use, sales, property (ad valorem) and similar taxes. Customer agrees to pay such taxes (except taxes upon IDENTIFY SYSTEMS net income) unless Customer has provided IDENTIFY SYSTEMS with a valid resale certificate in the appropriate form for the jurisdiction of Customer’s place of business and any jurisdiction to which any Product is to be directly shipped hereunder or unless such sale is otherwise exempt from such taxes. Customer agrees to indemnify and hold harmless IDENTIFY SYSTEMS for any liability for such tax, as well as the collection or withholding thereof, including penalties and interest thereon. When applicable, such taxes, transportation and insurance costs shall appear as separate items on IDENTIFY SYSTEMS’ invoice.

3. PAYMENT.
(a) Payment terms shall be as stated on the front page of an invoice or order acknowledgment. Customer acknowledges that IDENTIFY SYSTEMS may invoice each shipment of Products separately and each such shipment shall be considered a separate and individual contract.
(b) Every late payment shall be charged interest computed on a daily basis from the due date until it is paid in full, at the rate of one and one-half percent (1-1/2%) per month or the maximum rate permitted by law, whichever is less.
(c) Shipment costs within the United States will be paid initially by IDENTIFY SYSTEMS but billed separately to Customer as shown on an invoice. Shipments outside the United States shall be freight collect. In the absence of specific instructions by Customer, the carrier will be selected by IDENTIFY SYSTEMS. In no event shall IDENTIFY SYSTEMS be liable for any delay in delivery, or assume any liability in connection with shipment, nor shall the carrier be deemed an agent of IDENTIFY SYSTEMS.
(d) IDENTIFY SYSTEMS reserves the right to establish and/or change payment terms extended to Customer when, in IDENTIFY SYSTEMS’ sole opinion, Customer’s financial condition or previous payment record warrants such action. Further, on delinquent accounts, IDENTIFY SYSTEMS shall not be obligated to continue performance under any agreement with Customer. Customer warrants to IDENTIFY SYSTEMS that, upon each date on which Customer placed an order covered by an invoice, order acknowledgment or agreement, Customer was financially solvent within the Arizona Uniform Commercial Code.
(e) IDENTIFY SYSTEMS reserves a purchase money security interest in all Products delivered to Customer, and in their accessories, replacements, accessions, proceeds and products, including accounts receivable (collectively, the “Collateral”), to secure payment of all amounts due under this Agreement. If Customer fails to pay any amount when due, IDENTIFY SYSTEMS shall have the right to repossess and remove all or any part of the Collateral from Customer, but not from Customer’s customers. Any repossession or removal shall be without prejudice to any other remedy of IDENTIFY SYSTEMS hereunder, at law or in equity. Customer agrees to take any and all acts and execute and deliver any and all documents (including, without limitation, financing statements) reasonably requested by IDENTIFY SYSTEMS to transfer, create, perfect, preserve, protect and enforce this security interest.

4. DELIVERY. Delivery will be deemed complete and risk of loss or damage to the Products will pass to Customer upon delivery to the carrier.

5. ACCEPTANCE. The Products shall be deemed accepted by Customer upon delivery of the Products to the carrier for shipment. In the event of discovery of a defective Product at that time, Customer’s sole remedy shall be to exchange such Product for a new one of the same type.

6. WARRANTIES.
(a) IDENTIFY SYSTEMS warrants that all Products delivered hereunder will be free from defects in materials and workmanship for a period ending on twelve (12) months after shipment to Customer (the “Warranty Period”). In the event that any Product shall prove to be defective in materials or workmanship, Customer’s remedy shall be to return the Product to IDENTIFY SYSTEMS during the Warranty Period, transportation prepaid, for repair, replacement or refund of the purchase price, at IDENTIFY SYSTEMS’ option, without charge to Customer and, so long as IDENTIFY SYSTEMS makes one of the foregoing remedies, this warranty will be deemed not to have failed in its essential purpose.
(b) The above warranty shall not apply to any Product which has been (i) altered, except by IDENTIFY SYSTEMS or with IDENTIFY SYSTEMS’ written consent, or (ii) subjected to physical or electric stress, misuse, abuse, negligence or accident.
(c) EXCEPT FOR THE ABOVE EXPRESS LIMITED WARRANTY, IDENTIFY SYSTEMS MAKES AND CUSTOMER RECEIVES NO WARRANTIES OR CONDITIONS ON THE PRODUCTS, EXPRESS, IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR COMMUNICATION WITH CUSTOMER, AND IDENTIFY SYSTEMS SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
(d)Customer acknowledges and agrees that the purchase price for the Products to be sold hereunder reflects the allocation of risks and the limitations of IDENTIFY SYSTEMS’ liability hereunder.
(e) THE REMEDIES SET FORTH ABOVE ARE CUSTOMER’S SOLE AND EXCLUSIVE REMEDIES FOR BREACH OF WARRANTY AND ARE IN LIEU OF ALL OBLIGATIONS OR LIABILITIES ON THE PART OF IDENTIFY SYSTEMS FOR DAMAGES, INCLUDING, BUT NOT LIMITED TO SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE USE OR PERFORMANCE OF THE PRODUCTS. IDENTIFY SYSTEMS’ LIABILITY FOR DAMAGES TO CUSTOMER OR OTHERS RESULTING FROM THE USE OF ANY PRODUCT FURNISHED HEREUNDER SHALL IN NO EVENT EXCEED THE PURCHASE PRICE OF SAID PRODUCT. IN NO EVENT SHALL IDENTIFY SYSTEMS BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES DUE TO FAILURE TO PERFORM ITS OBLIGATIONS HEREUNDER.
(f) Customer shall send Products with defects covered by the foregoing warranty to IDENTIFY SYSTEMS’ address set forth on the front page of an invoice or order acknowledgment or such other address provided by IDENTIFY SYSTEMS from time to time. Customer shall request authorization from IDENTIFY SYSTEMS prior to the return of each defective Product for repair or replacement by IDENTIFY SYSTEMS. Upon such request, IDENTIFY SYSTEMS shall provide Customer with a Return Material Authorization (“RMA”) number. Within five (5) working days of receipt of the RMA number, Customer shall return the Product with the RMA number prominently displayed on the shipping container of the defective Product. Customer shall ship such Product to IDENTIFY SYSTEMS, freight prepaid, pursuant to the shipping and other requirements specified by IDENTIFY SYSTEMS in its RMA. IDENTIFY SYSTEMS shall, at its sole option and expense, repair or replace such Product, employing at its option, new or used parts or Products to make such repair or replacement, and shall ship the repaired or replaced Product to Customer, freight prepaid. The foregoing states the sole liability and obligation of IDENTIFY SYSTEMS, and Customer’s exclusive remedy, arising out of this warranty.

7. TITLE TO INTELLECTUAL PROPERTY; SOFTWARE LICENSE.
(a) It is expressly agreed that the ownership and all right, title and interest in and to any invention, trademark, service mark, mask work, trade secret, trade name, design, copyright or patent relating to the Products is and shall remain vested solely to the manufacturer (“Manufacturer”). Customer shall continually use its best efforts to protect Manufacturer’s inventions, trademarks, service marks, mask works, trade secrets, trade names, designs, copyrights or patents.
(b) Customer acquires no rights to any, inventions, trademarks, service marks, mask works, trade secrets, trade names, designs, copyrights, patents, or software or hardware designs
embodied or used in the Products. Any technology or software and associated documentation provided with the Products, shall be subject to the Manufacturer’s license as included with the software, and Customer agrees to the terms of the Manufacturer’s license.

8. EXPORT CONTROL.
(a) Customer understands and acknowledges that IDENTIFY SYSTEMS is subject to regulation by agencies of the US government, including the US Department of Commerce, which prohibit export or diversion of certain products and technology to certain countries. Any and all obligations of IDENTIFY SYSTEMS to provide products as well as any technical assistance shall be subject in all respects to such United States laws and regulations as shall from time to time govern the license and delivery of technology and products abroad by persons subject to the jurisdiction of the United States, including the Export Administration Act of 1979, as amended, any successor legislation, and the Export Administration Regulations issued by the Department of Commerce, International Trade Administration, Bureau of Export Administration. Customer agrees to cooperate with IDENTIFY SYSTEMS, including, without limitation, providing required documentation, in order to obtain export licenses or exemptions there from. Customer warrants that it will comply with the Export Administration Regulations and other United States laws and regulations in effect from time to time.
(b) Without in any way limiting the provisions of this Agreement, Customer agrees that unless exempted or prior written authorization is obtained from the Bureau of Export Administration or the Export Administration Regulations explicitly permitting the re-export, it will not export, re-export, or transship, directly or indirectly, to country groups Q, S, W, Y, or Z any Product or any of the technical data or software disclosed or provided to Customer or the direct product of such technical data or software. IDENTIFY SYSTEMS can withdraw from this Agreement if export control violations are reported.

9. DEFERMENT AND CANCELLATION CHARGES.
(a) Neither all nor any portion of a request for shipment release of any standard Product may be deferred or canceled less than thirty (30) days prior to the scheduled shipment date. In the event Customer defers or cancels all or any portion of a request for shipment release, Customer agrees to pay charges in accordance with the following schedule:

(b) Neither all nor any portion of a request for shipment release of any custom Product which is designed in accordance with Customer’s specification may be deferred or canceled.
(c) The notice period computation for the cancellation charge shall be based on the originally scheduled shipment date in the event that a Product previously rescheduled is subsequently canceled.
(d) Customer understands and agrees that the above charges are reasonable in light of the anticipated or actual harm, the difficulties of proof or loss, and the inconvenience of otherwise obtaining a judgment arising out of cancellation of any request for shipment release.

10. DAMAGES WAIVER. IN NO EVENT WILL IDENTIFY SYSTEMS BE LIABLE FOR ANY LOSS OF USE, INTERRUPTION OF BUSINESS OR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND (INCLUDING LOST PROFITS) ARISING OUT OF THE USE OF THE PRODUCTS, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT PRODUCT LIABILITY OR OTHERWISE, EVEN IF IDENTIFY SYSTEMS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

11. LIMITATIONS OF LIABILITY. The liability of IDENTIFY SYSTEMS hereunder for all claims shall not exceed the sum of Customer’s payments for the Products, which are the subject of the dispute.

12. AMENDMENT. This Agreement may be amended, supplemented or superseded only by a writing that refers explicitly to this Agreement and that is signed by authorized representatives of both parties.

13. WAIVER. No term or provision of this Agreement will be considered waived by either party, and no breach excused by either party, unless such waiver or consent is in writing signed on behalf of the party against whom the waiver is asserted. No consent by either party to, or waiver of, a breach by either party, whether express or implied, will constitute consent to, waiver of, or excuse of any other, different, or subsequent breach by either party.

14. FORCE MAJEURE. Except for the payment of money, neither party will be liable for any failure or delay in performance under this Agreement which might be due, in whole or in part, directly or indirectly, to any contingency, delay, failure, or cause of, any nature beyond the reasonable control of such party, including, without in any way limiting the generality of the foregoing, fire, explosion, earthquake, storm, flood or other weather, unavailability of necessary utilities or raw materials, strike, lockout, unavailability of components, activities of a combination of workmen or other labor difficulties, war, insurrection, riot, act of God or the public enemy, law, act, order, export control regulation, proclamation, decree, regulation, ordinance, or instructions of government or other public authorities, or judgment or decree of a court of competent jurisdiction (not arising out of breach by such party of this Agreement). In the event of the happening of such a cause, the party whose performance is so affected will give prompt, written notice to the other party, stating the period of time the same is expected to continue. Such delay will not be excused under this Section for more than one hundred eighty (180) days. If IDENTIFYSYSTEMS’S inventory is curtailed for any of the reasons set forth in this Section, IDENTIFY SYSTEMS may allocate its inventory among its customers in a manner IDENTIFY SYSTEMS deems, in its sole discretion, to be fair and reasonable.

15. SEVERABILITY. If any part of this Agreement is found invalid or unenforceable, that part will be amended to achieve as nearly as possible the same economic effect as the original provision and the remainder of this Agreement will remain in full force.

16. NOTICES. All notices, reports, requests, approvals and other communications required or permitted under this Agreement must be in writing. They will be deemed given when (i) delivered personally, (ii) sent by confirmed telex or facsimile, (iii) sent by commercial overnight courier with written verification of receipt, or (iv) sent by registered or certified mail, return receipt requested, postage prepaid. All communications must be sent to the receiving party’s initial address on the front of this form, or to such other address that the receiving party may have provided for purpose of notice by notice as provided in this Section.

17. ASSIGNMENT. Except as provided herein, neither party may assign, voluntarily, by operation of law, or otherwise, any rights or delegate any duties under this Agreement (other than the right to receive payments) without the other party’s prior written consent, and any attempt to do so without that consent will be void. This Agreement will bind and inure to the benefit of the parties and their respective successors and permitted assigns.

18. ENTIRE AGREEMENT. These Terms and Conditions, together with additional terms and conditions from any quotation form(s) previously delivered by IDENTIFY SYSTEMS to Customer, represent the entire agreement between the parties relating to their subject matter and supersede all prior representations, discussions, negotiations and agreements, whether written or oral.

19. CHOICE OF LAW. This Agreement will be governed by and construed in accordance with the laws of the United States and the State of Arizona as applied to agreements entered into and to be performed entirely within Arizona between Arizona residents. The parties agree that the United Nations Convention on Contracts for the International Sale of Goods is specifically excluded from application to this Agreement.

20. ARBITRATION. Any claim, dispute or controversy arising out of or in connection with or relating to this Agreement or the breach or alleged breach thereof shall be submitted by the parties to arbitration by the American Arbitration Association in the City of Phoenix, State of Arizona, United States of America, under the commercial rules then in effect for that Association, except as provided herein. All proceedings shall be held in English and a transcribed record prepared in English. Each party shall choose one arbitrator within thirty (30) days of receipt of notice of the intent to arbitrate. Within sixty (60) days of receipt of the notice of the intent to arbitrate the two arbitrators shall choose a neutral third arbitrator who shall act as chairman. If no arbitrator is appointed within the times herein provided or any extension of time which is mutually agreed upon, the Association shall make such appointment within thirty (30) days of such failure. The award rendered by the arbitrators shall include costs of arbitration, reasonable attorneys’ fees and reasonable costs for expert and other witnesses, and judgment on such award may be entered in any court having jurisdiction thereof. Nothing in this Agreement shall be deemed to prevent either party from seeking relief from the courts as necessary to protect either party’s name, proprietary information, and trade secrets or know how.

21. CHOICE OF FORUM. The parties hereby submit to the jurisdiction of, and waive any venue objections against, the United States District of Arizona, Phoenix Branch, and the Superior and Municipal Courts of the State of Arizona, Maricopa County, in any litigation arising out of this Agreement or otherwise relating to the Products.