General Terms and Conditions
for Contract Manufacturing

1. DEFINITIONS

All definitions below apply to the interpretation of capitalized terms used in these terms and in other documentation entered into or created by the Parties with reference to these terms.

1.1 Design
The technical and production specification of the Product that the Customer wishes to have manufactured, to the extent necessary to commence Contract Manufacturing. The Design typically includes, in particular:

(i) circuit design and manufacturing process;

(ii) component layout (placement data and placement plan) and printed circuit board design (Gerber data);

(iii) specifications of the components and materials used, including the specific component manufacturer and type to avoid any substitution;

(iv) a description of the Product Test Scenario and its expected outputs to be monitored and verified;

(v) the specific version of firmware or other Product-supporting software with which the Product is to be tested, and, where applicable, the procedure, scope, and degree of completion/assembly in cases where Y Soft is also to assemble or finish the Product to a specified extent.

1.2 Unused Components
Components otherwise used in Contract Manufacturing under the Design that remain after the Customer, for any reason, fails to take delivery of the entire ordered quantity of Products within the agreed period.

1.3 Customer
The company that seeks Contract Manufacturing of Products by Y Soft.

1.4 Order
The contract for manufacture concluded in accordance with these terms.

1.5 Business Day
Any day from Monday to Friday in a given week of the year, excluding Czech public holidays.

1.6 Business Hours
8:00 to 17:00 on Business Days.

1.7 Approved Design
A Design whose content, completeness, and form have been mutually confirmed by the Parties in accordance with Article 2 of these terms.

1.8 Contract Manufacturing
Manufacture whereby Y Soft’s task is to produce Products in the quantity and according to the specification and Approved Design.

1.9 Party
Depending on the context, either Y Soft (or a Y Soft group company providing the Contract Manufacturing) or the Customer; the term “Parties” includes both.

1.10 Test Scenario
A mandatory part of the Design describing the procedure, test conditions, test environment, and the expected behavior of the Product. If, under the specified test conditions, the expected behavior is achieved, the Product is deemed defect-free.

1.11 Defect
Only a situation where, during the Test Scenario, the Product does not behave as the Test Scenario requires, provided the conditions described therein are met. For the avoidance of doubt, other deviations of the Product from properties expected by the Customer are not considered Defects if the Product conforms to the Design and successfully passes the Test Scenario. Likewise, a deviation in the Product’s behavior during the Test Scenario caused by an error in the Design or by the use of components or processes approved by the Customer is not a Defect.

1.12 Batch
A set of Products that are manufactured and delivered to the Customer as part of a single delivery.

1.13 Product
An electronic component, part, module, or other element manufactured by agreement of the Parties according to the Approved Design.

1.14 Force Majeure
Circumstances preventing either Party from fulfilling its obligations under these terms or an Order, where such circumstances were not caused by that Party, are beyond its reasonable control, were not reasonably foreseeable, and could not have been prevented with due care. Such circumstances include, in particular (but are not limited to), natural disasters, wars, vandalism, large-scale unrest, terrorism, strikes, third-party attacks on a Party’s premises, material or human resources, or electronic equipment and connectivity, as well as actions by governmental or supranational authorities, etc.

2. PROCEDURE PRIOR TO PLACING A CONTRACT MANUFACTURING ORDER

2.1 Contract Manufacturing may begin and an Order may be placed only on the basis of an Approved Design.

2.2 Based on the parameters and required offtake requested by the Customer, Y Soft will prepare and submit a Design for the Customer’s approval.

2.3 The Customer will approve the Design or request necessary adjustments or specify the requested quantity. Y Soft will incorporate any requested adjustments into the Design, taking into account, in particular, manufacturing capabilities and the availability of required components.

2.4 The purpose of the procedure under Sections 2.1–2.3 is the mutual approval and confirmation of the Design, including the proposed bill of materials (Bill of Materials – BOM). If no other parts of the Design need to be changed, it is sufficient for the Customer, in response to Y Soft’s pricing reflecting the change in requested quantity, to confirm the newly proposed BOM and the price calculation. For the avoidance of doubt, regardless of any recommendations or the Design preparation process, responsibility for the content of the Design, the Product’s construction and design, including the choice of components, rests with the Customer at all times.

2.5 Once both Parties confirm the completeness and final form of the Design, the Approved Design becomes part of the Contract Manufacturing Order.

3. ORDER AND PRODUCTION LAUNCH

3.1 After the Design is approved pursuant to Section 2.5, Y Soft will provide the Customer, with reference to the Approved Design, a calculation of the unit price of the Products specifying:

(i) the quantity of Products requested by the Customer;

(ii) at the Customer’s discretion, possible delivery dates of individual Batches and their size (volume), or the period for offtake under an agreed production framework; and

(iii) the due date and amount of payment for the Products and any advance payments (especially for deliveries with a total value over CZK 500,000). By agreement, the calculation may assume:

3.1.1 Fixed Order – deliveries of a specific quantity of Products on specific dates; or

3.1.2 Framework Order – a binding commitment to take a certain quantity of Products during a given period (unless agreed otherwise, six months from the Order date), with the specific delivery dates later determined by the Customer;

**3.1.3 Another agreement between the Parties on the distribution of Product deliveries, provided the calculation includes a method for determining the delivery framework within a certain period.

3.2 When the Customer confirms the calculation under Section 3.1, a binding Contract Manufacturing Order (i.e., a contract for work) arises between the Parties, and these terms form its integral part.

3.3 Based on the Order, Y Soft undertakes to manufacture and deliver Products in the quantity and time specified in the confirmed Order, in the Batches stated in the Order, or in quantities according to partial orders during the stipulated period under a framework order.

3.4 Delivery periods are extended by the time during which the Customer is in default with payment of advances or with providing cooperation, materials, or other inputs necessary to start or complete Contract Manufacturing.

3.5 Based on the Order, the Customer undertakes to:

3.5.1 take delivery of the Products on the dates and in the quantities specified in the confirmed Order;

3.5.2 where the Order is a framework order for a certain number of Products within a set period under Section 3.1.2 or similarly under Section 3.1.3 above, take delivery of the Products within the agreed framework no later than by the end of the agreed period;

3.5.3 pay the price for the Products in the scope of the agreed production volume or framework under the Order, subject to adjustment to reflect the actual production scope under Section 4.9, by the due dates set out in these terms; and

3.5.4 pay Y Soft for the work necessary to carry out the procedure under Article 2 above, according to Y Soft’s price list in force at the time.

4. DELIVERY AND PAYMENT TERMS

4.1 If the delivery period for an individual Batch specified in the Order is exceeded by more than 14 days, Y Soft undertakes, upon the Customer’s request, to pay a contractual penalty of 0.05% of the agreed price of the undelivered Products for each day of such delay, up to a maximum of 10% of the price of those Products. This contractual penalty constitutes a lump-sum compensation for all costs and losses incurred due to the delay, and the Customer is not entitled to any other compensation, damages, or lost profits arising from the delay.

4.2 Unless otherwise agreed between the Customer and Y Soft, Y Soft invoices the Products in the quantity specified in the Order before shipment of the Order, with a 14-day due date.

4.3 If the Order stipulates payments per Batch, or in the case of deliveries made under partial orders placed pursuant to a framework Order under Sections 3.1.2 or 3.1.3, those will be invoiced with a 14-day due date, with invoices issued upon shipment of the relevant Batch or partial order.

4.4 If, under a framework Order agreed pursuant to Section 3.1.2 or 3.1.3, the Customer fails to take delivery of Products covering the entire agreed framework by the end of the period specified in the Order, and unless the Parties agree otherwise, Y Soft will invoice the Products for the entire framework quantity not taken by the Customer in a manner similar to Section 4.2, with the invoice issued on the day following expiry of the specified period. If Y Soft is able, in such a case, to commercially utilize the Unused Components or any remaining Products already manufactured (or part thereof) otherwise, the invoiced amount under this section will be reduced to the extent Y Soft commercially utilized the remaining Products or Unused Components. The Customer must pay such invoice by its due date regardless of whether the Customer actually took delivery of the Products in that quantity. If Y Soft does not receive a request to deliver the remaining Products within one month after invoicing those remaining Products, it will be deemed that the Customer has no interest in them, and they shall be destroyed and disposed of as unused, without compensation.

4.5 In accordance with FCA Incoterms 2010, the Products will be handed over at the time of performance to the carrier designated and arranged by the Customer at the place of manufacture, i.e., Brno, Czech Republic. If a different delivery method is agreed, such agreement must also include payment of transport costs in addition to the Product price.

4.6 The Customer must raise any claims or objections regarding incorrect quantity, incorrect specification, incorrect billing, or damage to the Products without delay after taking delivery.

4.7 Y Soft may suspend production or deliveries at any time the Customer is in default on payment of the Company’s due receivables (in particular the Product price or advances). In such a case, Y Soft will notify the Customer without undue delay after taking this step.

4.8 The Customer agrees that Y Soft may at any time set off any amounts owed by the Customer to Y Soft against any amounts payable by Y Soft.

4.9 Given the nature of manufacture and the ordering process for the Products, the Parties expressly agree that Y Soft’s obligation to deliver the Products is duly and fully performed even if the quantity delivered differs immaterially from the quantity stated in the Order (i.e., 95–105% of the originally ordered quantity). If a quantity other than the original order is delivered in this way, the total price for the Products will be proportionally adjusted, and any discount or shortfall will be settled between the Parties based on an invoice–tax document or a credit note issued by Y Soft.

5. INTELLECTUAL PROPERTY AND CONFIDENTIALITY

5.1 The Customer undertakes to enable Y Soft to use, without disturbance, all Customer or third-party intellectual property that relates to or covers any elements or parts of the Design or the Products, to the extent necessary for discussions about the Design, testing the Product (including prototypes), optimizing Product manufacture, launching and carrying out Contract Manufacturing, and delivering the Products to the Customer or a person designated by the Customer in accordance with the Order.

5.2 The Customer represents and undertakes to ensure that it is fully entitled to use, to the extent necessary for Contract Manufacturing and cooperation under these terms and under the Order, all elements of the Design covered by the Customer’s or third parties’ intellectual property rights, and undertakes to enable Y Soft to use them for the purposes and to the extent contemplated by these terms and in accordance with the purpose of the Parties’ cooperation hereunder.

5.3 The Customer undertakes to indemnify and hold Y Soft harmless from all costs or other harm incurred by Y Soft as a result of the assertion of intellectual property or similar rights by third parties arising from or in connection with Contract Manufacturing prepared or started at the Customer’s request or with delivery of the Products.

5.4 Y Soft undertakes to inform the Customer without delay if any third party asserts such rights or related claims against Y Soft. In such a case, Y Soft may, at its discretion, suspend Contract Manufacturing or its preparation until the situation is resolved or an agreement with the Customer is reached. Y Soft is entitled to reimbursement of costs reasonably incurred up to that time, in particular for preparing Contract Manufacturing, securing component supplies, as well as costs of any necessary defense against claims raised by third parties, etc.

6. WARRANTY AND LIABILITY FOR DEFECTS

6.1 Y Soft is liable solely for defects caused by the process of manufacturing and assembly of the Products. Y Soft is not liable for the Product’s construction, circuitry, or design, for the suitability of the Products ordered by the Customer for their purpose, or for the selection or defects of their components and elements.

6.2 Unless otherwise agreed by the Parties in the Order, all Products are covered by a quality warranty of 30 days from the date the Product is shipped for delivery to the Customer or a person designated by the Customer (i.e., the Customer’s receipt of the Product), and any claims for defects may be asserted no later than within this period. The Customer must assert warranty and defect claims without undue delay after the date the Product is shipped for delivery to the Customer or a person designated by the Customer (i.e., upon receipt).

6.3 The Customer’s remedies under the quality warranty and liability for defects are exclusively:

6.3.1 the right to repair the defective Product;

6.3.2 the right to replace the defective Product with a defect-free Product.

The remedy under Section 6.3.2 applies only if repair would be uneconomical or impracticable, or if Y Soft is unable to carry out the repair within a reasonable time. If the claim is resolved by replacement, Y Soft may supply the replacement Products after the start of the next planned production run of the Product concerned.

Y Soft may also, at its discretion, decide to settle the claim by refunding the unit purchase price for each Defective Product instead of the remedies under Sections 6.3.1 and 6.3.2, particularly if replacement cannot be made due to the non-existence or unavailability of a defect-free Product that could replace the defective Product.

6.4 The Customer must assert warranty and defect claims in the manner designated by Y Soft at the relevant time.

6.5 Unless expressly agreed in writing otherwise, the Customer shall submit claims using the form available for these purposes on Y Soft’s partner portal and in accordance with the procedure designated there at the relevant time.

6.6 The claim will be assessed by Y Soft without delay depending on the possibility of reproducing the error, for which the Customer must provide necessary cooperation. The Customer will be notified by email whether the claim is justified. In the case of a justified claim, Y Soft will repair the Product or replace it with a defect-free Product in accordance with these terms and will send the defect-free Product back to the Customer’s address at the Company’s expense.

6.7 If the claim is not justified (in particular if the Products for which the Customer alleges a Defect successfully pass the Test Scenario, or if it is found that such Products have a defect originating elsewhere than in a manufacturing defect—e.g., in an unsuitable Design, component choice, method of use, or in other cases not constituting a Defect under these terms), the Customer will be charged the costs of transport/shipping/return of the Product and all costs reasonably incurred to determine the causes of the alleged defects, in particular the costs of conducting tests under the Test Scenarios and further diagnostics of the alleged faults.

6.8 The warranty does not apply where:

6.8.1 mechanical damage to Products occurs during operation, transport, installation, handling, or otherwise;

6.8.2 the Product has been modified or otherwise tampered with after manufacture;

6.8.3 deviations from the Test Scenario are caused by using firmware or other cooperating software different from that which was available to Y Soft or specified in the Design when the Design and Order were approved.

6.9 If testing confirms the existence of the alleged Product Defect in a Product or a set of Products, Y Soft undertakes to compensate all proven costs and losses incurred by the Customer due to the occurrence of the Defect up to an amount equal to the aggregate of the unit prices of the Products affected by the Defect.

6.10 For the avoidance of doubt, regardless of whether the alleged Defect is confirmed, the Customer must pay all advances and payments by their due dates in accordance with these terms, and no payment may be withheld due to filing a claim, its acknowledgment, or its rejection.

7. OTHER PROVISIONS AND CONDITIONS

7.1 These terms fully regulate the rights and obligations of the Parties relating to Contract Manufacturing, except for expressly agreed deviations that exclude the application of any article hereof or where the Parties expressly and in writing agree otherwise.

7.2 Neither Party is liable for any breach of these terms or of the agreed Contract Manufacturing conditions if such breach consists solely of delay or non-performance caused exclusively by Force Majeure. Neither Party is entitled to compensation for damage or loss caused by Force Majeure.

7.3 These terms and Contract Manufacturing Orders concluded on their basis are governed by Czech law, and any disputes arising therefrom will be adjudicated by the court of subject-matter jurisdiction locally competent according to Y Soft’s registered office.

Y Soft Corporation, a.s.