DIFFRACTION INTERNATIONAL
STANDARD TERMS AND CONDITIONS OF PURCHASE

1. DEFINITIONS: In the terms and conditions below, the company supplying goods and services to Diffraction International (the "Buyer") under the applicable purchase order (the “Purchase Order”) shall be referred to as “Seller” and the goods and services described in and provided pursuant to this Purchase Order are referred to as “Goods” or “Services”, as the case may be. "Contract" shall mean the Purchase Order, these Terms and Conditions, and any special conditions appended hereto or documents incorporated herein. If a formal written agreement exists between Diffraction International and the Seller, then the terms of such written agreement shall supersede any contrary terms contained herein.
2. ACKNOWLEDGEMENT AND ACCEPTANCE: Acceptance of this Order by Seller constitutes acceptance of all terms and conditions stated herein. Any terms or conditions stated by the Seller in any prior, concurrent or subsequent proposal, offer, quotation, acknowledgement or other documents, are deemed by Diffraction International to be a material alteration of this Purchase Order and are hereby rejected and inapplicable unless specifically agreed to by Diffraction International in writing. Seller's signed acknowledgement of the Purchase Order, or Seller's shipment of, or acceptance of payment for, Products or Services shall conclusively affirm Seller's assent to these terms and conditions. If the Purchase Order is not acknowledged by Seller, either by email, fax or mail, within 10 days from the date hereof, Diffraction International, at its option, may cancel the Purchase Order.
3. PRICES: Unless otherwise specified, the prices established by this Contract are firm, fixed prices. Seller warrants that any unit prices charged herein do not exceed the unit prices charged by Seller to other customers in substantially similar transactions.
4. SCHEDULE AND DELIVERY: Seller shall strictly adhere to all Purchase Order schedules. Seller shall notify Diffraction International of any actual or potential delay to the performance of this Contract. Such notice shall include a revised schedule and shall not constitute a waiver to Diffraction International's rights and remedies hereunder. Early deliveries are always accepted.
5. PACKAGING AND SHIPPING: Seller shall prepare and package the goods to prevent damage or deterioration and shall use best commercial practice for packing and packaging of items to be delivered under this Contract, unless otherwise specified in the Purchase Order. An itemized packing list shall accompany each shipment.
6. INSPECTION AND ACCEPTANCE: Seller shall tender to Diffraction International for acceptance only such Goods as have been inspected in accordance with such inspection system and that have been determined by Seller to conform with the Purchase Order requirements. Diffraction International’s final acceptance of Goods or Services is subject to Diffraction International’s final inspection within 10 days after receipt at Diffraction International’s facility or such other place as may be designated by Diffraction International, notwithstanding any payment or prior test of inspection. The foregoing shall not relieve Seller of its obligation to make full and adequate test and inspection of the Goods.
7. REJECTION: All Goods supplied under this Purchase Order that do not meet with the approval of Diffraction International's Quality Assurance, or that are in excess of the quantities ordered under this Purchase Order, will be returned to Seller or held pending a mutual agreement between Diffraction International and Seller regarding their disposition, subject to Seller's risk of loss and sole expense.
8. INVOICES: Invoices may be mailed when goods are shipped. Taxes, freight and similar charges shall be shown separately on invoices. Diffraction International shall make payment of Seller invoices 30 days after receipt thereof, subject to adjustment for errors, shortages, rejections and other justifiable causes.
9. CHANGES: Except as otherwise provided herein, this Purchase Order may not be amended, modified, supplemented, cancelled or discharged, except in writing signed by Diffraction International and Seller.
10. TERMINATION: Diffraction International may terminate this Purchase Order, in whole or in part, for any reason, and at any time, by written notice to Seller. Any claim by Seller related to such termination shall not exceed the actual, documented and reasonable costs incurred by Seller in performance of the acceptably completed portion of the Purchase Order. Notwithstanding the foregoing, in no event shall Diffraction International’s payment for terminated Goods exceed the aggregate price payable by Diffraction International for finished Goods under the Purchase Order.
11. CONFIDENTIAL INFORMATION: Seller agrees to take adequate precautions to secure information provided and stamped or marked "Proprietary" in order to prevent improper disclosure.
12. WARRANTY: Seller warrants all materials and services delivered hereunder to be free from defect of material or workmanship and to conform strictly to the specifications and/or drawings specified or furnished for a period of one year following delivery. This warranty shall survive any inspection, delivery, acceptance, or payment by Diffraction International of the materials or services.
13. GOVERNING LAW AND DISPUTES: This Purchase Order and the acceptance of it shall be a contract made in the State of Minnesota and governed by the laws thereof, without giving effect to conflicts of law principles, and expressly excluding the application of the United Nations Convention on Contracts for the International Sale of Goods.

Supplemental Terms, apply when cited on a Purchase Order

1. QUALITY RECORDS: Seller shall maintain adequate inspection and quality records in accordance with generally accepted practices covering inspection of Goods provided under this Purchase Order. Such records shall be retained for a minimum period of 7 yrs.
2. RIGHT OF ACCESS: Buyer and Buyer's customer shall have the right of access, to the extent practicable, to any place necessary to determine and verify the quality of contracted work, records and material. Seller shall, as applicable, flow down these requirements to its supply chain.
3. BUYER'S MATERIAL: All Goods provided by Diffraction International to Seller for processing shall be returned to Diffraction International, regardless of conformance, with any non-conforming Goods clearly declared and identified.
4. DPAS RATING: Purchase Orders that include a DPAS rating are certified for national defense use and Seller is required to follow all the provisions of the Defense Priorities and Allocations System (DPAS 15 CFR 700). DPAS regulations require written acceptance/rejection of a DPAS rated order within 5 working days after receipt.

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