TERMS AND CONDITIONS OF SALE

All quotations and sales by Channel Products Inc. ("Seller") are subject to the following Terms and Conditions. These Terms and Conditions take precedence over any conflicting Terms and Conditions of the Buyer. Acceptance of an order and commencement of work on this order by the Seller shall be assumed as an acceptance of these terms and conditions on the part of the Buyer. No alterations to these terms and conditions are acceptable unless made in writing and signed by an authorized representative of the Seller.

1. CONFIDENTIALITY. Both parties shall consider all information provided by the either party for the fulfillment of any order to be confidential, and shall not disclose said information, unless required to fulfill the contract. In any case, written permission to disclose confidential information must be obtained from both parties. This information shall include drawings, specifications, proprietary information, or other documentation provided by either party in connection with this order.

2. PATENTS. Orders built to the Buyer's drawings or specifications are executed solely on the understanding that the Buyer will indemnify Seller against any claims for loss resulting from an action for patent infringement.

3. CANCELLATION. In the event that the Buyer wishes to cancel any purchase order, or part thereof, the Buyer will be responsible to pay for all completed goods, percentage of work in process, and raw materials purchased for the order in question. An order cancellation fee of 20% of the original order will be invoiced to the Buyer.

4. PRICE. Prices shown on all orders are based on the quantities shown, and the delivery schedule described. In the event that the Buyer makes changes to the order, prices will be adjusted to conform to the pricing applicable to the order changes. Such adjustments will apply to both goods previously shipped under this order, and the goods scheduled for future delivery. Seller reserves the right to change pricing to reflect changes in raw material costs.

5. DELIVERY. All shipments are made FOB shipping point, unless an agreement exists between the Buyer and Seller stating otherwise. Buyer is responsible for the selection of the carrier. If none is specified, Seller will choose carrier, but in that case will not be responsible for any freight charges or other fees resulting from the selection of that carrier. Furthermore, Seller shall only be responsible for the delivery of goods to the carrier. Seller will not be liable for any delays in transportation, or any loss of, or damage to, any goods during transit.

6. QUANTITY. Due to variability in the manufacture of custom products, Seller reserves the right to over- or under- ship by five percent (5%) of the quantity ordered.

7. DISCREPANCIES. Buyer must notify Seller within fifteen (15) days of shipment if there are any discrepancies in shipment, otherwise no adjustments to the invoice will be permitted.

8. RETURNS. Should Buyer wish to return any parts to the Seller as a result of any defect in accordance with the limited warranty below, or for any discrepancies in shipment within fifteen (15) days, Buyer must contact Seller to obtain a Return Merchandise Authorization (RMA). Any parts returned by the Buyer without an RMA number, may, at Seller's discretion, be returned to the Buyer at Buyer's expense.

9. FORCE MAJEURE. Neither party shall be liable to the other for any cost or damages due to a delay in performance based on causes beyond its control, including, but not limited to natural disasters, acts of terrorism, acts of government, fire, flood, acts of God, labor disputes, or delays in transportation.

10. TOOLING. All tooling shall remain the sole property of the Seller, unless otherwise agreed to in writing.

11. BLANKET ORDERS. For blanket sales orders placed by the Buyer, all terms of and conditions of the Channel Products Customer Blanket Order Terms and Conditions shall apply.

12. TERMS. Unless otherwise agreed to in writing, terms of payment are Net 30 days from the invoice date. Prices do not include any taxes, freight charges, handling fees, duties, or other similar charges, which will be the sole responsibility of the Buyer.

13. LIMITATION OF LIABILITY. Other than the limited warranty below, neither Seller nor its suppliers shall have any liability or obligation to the Buyer or any other person for any claim, loss or damage caused directly or indirectly by the inadequacy, deficiency, or defect in any part. Seller will have no liability for any special, direct, indirect, incidental, consequential or punitive damages resulting from the performance of any products, however caused, including and without limitation personal injury, loss of business or loss of profit, whether or not Seller was notified of the possibility of any such damages.

14. ENTIRE AGREEMENT. This order shall constitute the entire agreement between the Buyer and the Seller. These terms and conditionals shall supersede any previous conditions, terms, commitments, or representations, oral or written, unless specifically negotiated by the parties.

LIMITED WARRANTY

Channel Products Inc. ("Seller") warrants that all products manufactured by it are free from any defect in material and/or workmanship, and will remain so for a period of one (1) year from the date of shipment by the Seller. Defects arising from damage in shipment, installation into an inappropriate application, misuse or negligence of the Buyer are not covered in this warranty.

Should any failure to conform to this warranty arise within a one (1) year period, the Seller shall, upon notification within this time period, correct such nonconformity, at the Seller's option by repairing any defective item(s), or by replacing those items.

This warranty is in lieu of all warranties of merchantability, fitness of purpose, or implied or expressed warranties, except of title and against patent infringement. Correction of non-conformity, in the manner and time frame provided above, shall constitute the fulfillment of all liabilities of the Seller to the Buyer.