General terms and conditions of sale and delivery

Art. 1 General information/scope

1. Our deliveries and services take place exclusively in accordance with the conditions below. Any conflicting or deviating conditions of the buyer will not be recognised by us unless we have expressly agreed to their validity.
2. Our terms and conditions of sale and delivery also apply to all future transactions with the buyer.

Art. 2 Quotations/prices/conditions of payment

1. Our quotations are non-binding. We can accept purchase orders from the buyer within two weeks. Orders shall become binding only upon our written acceptance or confirmation of the order or once we have signed a written contractual document.
2. Unless stated otherwise in the order confirmation, our prices are “ex works” excluding packaging. Statutory value added tax is not included in our prices; it will be listed separately on the invoice at the statutory rate on the day of invoicing.
3. Unless stated otherwise in the order confirmation, the purchase price shall be payable net (without deduction) within 10 days of the invoicing date. Legal provisions relating to the consequences of late payment shall apply.
4. If, as a result of subsequently occurring circumstances which cause a significant deterioration in assets, our claim for payment becomes at risk, we are entitled to insist that it be paid immediately –irrespective of the term of bills of exchange accepted on account of payment. Should the buyer fall into arrears, we are entitled to prohibit the further processing of delivered goods or, for the purpose of security, to demand the return of the goods delivered by us. The imposition of this protection measure shall not be considered to be a withdrawal from the contract. The buyer can stave off the aforementioned legal consequences by providing security to the value of the endangered payment claim.
5. The buyer is not entitled to offset our claims or to assert right of retention against counter-claims which have not been expressly recognised by us unless a legal ruling in the favour of the buyer has been made.

Art. 3 Scope of delivery

1. Dimension and quality deviations are permitted as long as they remain within the DIN specifications or if they have been specially agreed; in the case of weight deviations, deviations in the customary ranges are permitted (+/- 10%).
2. Weights shall be measured on our calibrated scales and shall be decisive with regard to invoicing. Weight shall be demonstrated through the presentation of the weighing report.
3. All technical information, illustrations, drawings, dimensions and weights provided on the Internet, in brochures, in quotations and in any other printed material are provided solely in order to describe the product and shall be considered non-binding average values. They shall not be considered as any indication of quality nor shall they constitute any guarantee of condition or durability unless they are expressly marked as such.
4. We are entitled to make reasonable partial deliveries.

Art. 4 Delivery periods, delivery dates, consequences of delayed delivery

1. Delivery periods shall start on the date of our order confirmation but not until all order details have been fully clarified; the same applies to the calculation of delivery dates.
2. Should the buyer fail to meet contractual obligations in a timely manner – including the duty to cooperate and any secondary obligations – such as opening a letter of credit, presenting national or international certificates, making an advance payment or similar, we are entitled to postpone our delivery periods and dates in accordance with the requirements of our procurement process without prejudice to our rights arising from this delay on the part of the buyer.
3. With regard to compliance with delivery periods and dates, the time of dispatch from the warehouse shall be decisive. If the goods cannot be shipped on time and we are not responsible for this, the delivery periods and dates shall be considered to have been complied with as soon as we notify the buyer that the goods are ready for shipment.
4. In cases of force majeure, the contractual obligations of the two parties shall be suspended and the periods and deadlines for the fulfilment of contractual obligations shall be postponed accordingly; force majeure also includes industrial action at our own plants and at the plants of suppliers, transport delays, machine breakages, official measures and any other circumstances which are outside the control of the two parties. The occurrence of force majeure must be communicated to the other contract party without delay. Both contract parties are entitled to withdraw from the contract no earlier than six weeks following receipt of this notification.
5. If delivery periods are not upheld, the buyer shall be entitled to the rights arising from Art. 281 and 323 of the German Civil Code (BGB) only after having set us a reasonable time for delivery which – by deviation from Art. 281 and 323 BGB – is associated with the declaration that the buyer shall not accept the delivery following the expiry of this period. Once this period has expired without success, a claim to fulfilment is excluded. As a general rule, the right of the buyer to withdraw from the contract shall apply only to the part of the contract which has not yet been fulfilled. However, if partial deliveries which have already been made are useless to the buyer without the remaining delivery, the buyer is entitled to withdraw from the entire contract.
6. Should the buyer be in default of acceptance or should any other of the buyer’s obligations to cooperate not be met, we are entitled to demand compensation for the damages caused to us, including any additional expenses. The statutory provisions shall apply in the case of default of acceptance.

Art. 5 Dispatch, packaging, transfer of risks

1. The determination of routes and means of transport as well as the choice of freight forwarder/carrier shall be made by us in the absence of any special instructions.
2. Should the loading or transport of the goods be delayed for a reason for which the buyer is responsible, we are entitled to place the goods into storage at the cost and risk of the buyer at our reasonable discretion and to take all measures considered necessary to preserve the goods. We shall also be entitled to invoice the goods as if they had been delivered. This shall also apply if goods which have been declared ready for shipping are not retrieved within four days. If the goods or parts thereof are ready for shipping and acceptance/shipping is delayed for reasons for which we are not responsible, the risk shall be transferred to the ordering party upon receipt of the notification that the goods are ready for shipment. Statutory provisions regarding default of acceptance shall remain unaffected by this.
3. The goods shall be shipped in commercially available packaging which is suitable for the product unless the buyer provides special instructions to the contrary.
4. If transport damage occurs, the buyer must initiate the assessment of the facts without delay upon receipt of the goods and must notify the seller of the damage within three days.
5. If the buyer so wishes, deliveries will be protected by transport insurance. The buyer shall bear any costs incurred for this.
6. In the event of the collection of any goods not intended for the territory of the Federal Republic of Germany by the buyer or a representative of the buyer, the buyer must present us with any export documents which may be required.
7. The risk shall pass to the buyer when the goods are handed over to the freight forwarder/carrier and no later than when the goods leave the plant or warehouse.

Art. 6 Annual orders, call-off orders

1. In the case of annual orders and call-off orders, the buyer is obliged to accept the total quantity to which the annual/call-off order applies.
2. If no specific call dates are defined in an annual/call-off order, the entire quantity must be called off in six partial lots, each at an interval of two months.
3. If the buyer fails to comply with the call-off dates, we shall be entitled to deliver and invoice the entire quantity in full four weeks after having given written notice with reference to the consequences of failure to call off the goods. This shall not affect our rights relating to default on the part of the buyer.

Art. 7 Warranty, claims for defects

1. The goods shall be considered to conform to the contract if, at the time of the transfer of risk, they do not deviate or do not significantly deviate from the agreed specification. The conformity and faultlessness of our goods shall be determined exclusively on the basis of express agreements on the quality and quantity of the ordered goods. Liability for a specific purpose or suitability for use shall be assumed only if this has been expressly agreed; otherwise, the suitability and usage risk shall be borne solely by the buyer. We are not liable for the deterioration, loss or improper handling of the goods following the transfer of risk.
2. The contents of the agreed specification and any explicitly agreed purpose shall not constitute a guarantee; the granting of a guarantee requires a written agreement.
3. The buyer must inspect received goods immediately upon receipt. Claims for defects shall be valid only if the said defects are reported immediately and no later than on the 6th day following discovery. Once an agreed acceptance has been performed, any complaint relating to defects that could be identified during this acceptance shall be excluded.
4. In the event of complaints, the buyer must immediately give us the opportunity to inspect the faulty goods; upon request, we shall be provided with the faulty goods or with a sample thereof at our expense. If a complaint proves to be unjustified, we reserve the right to charge the buyer for freight and handling costs and for the costs of performing the inspection.
5. In the case of goods sold as downgraded material, the buyer is not entitled to any claims for defects with regard to the specified defects and any defects which would normally be expected.
6. If a material defect is found, we shall at our discretion – taking into account the interests of the buyer – render supplementary performance through a replacement delivery or by rectifying the defect. If this supplementary performance is not successfully carried out by us within a reasonable period of time, the buyer is entitled to set us a reasonable deadline for the supplementary performance. Should this period expire without success, the buyer is entitled to reduce the purchase price or to withdraw from the contract; no further claims shall exist. Art. 8 is unaffected by this.
7. In the case of a legal defect, we shall be entitled to render supplementary performance to rectify this legal defect within two weeks of receipt of the goods. Otherwise, Para. 6 Clause 2 shall apply accordingly.
8. The limitation period in the case of a defective delivery shall end – other than in the case of intent – upon the expiry of one year following delivery. This shall not affect the statutory limitation periods for goods which have been used for a construction in accordance with their normal use and which have caused the defectiveness of the construction. Any rework or replacement deliveries shall not cause the limitation period to start anew.
9. Rights of recourse against us on the part of the buyer in accordance with Art. 478 of the German Civil Code (BGB) shall be restricted to the legal scope of any claims for defects asserted against the buyer by third parties and shall require that the buyer has complied with their obligation towards us to give notice of defects in accordance with Art. 377 of the German Commercial Code (HGB).

Art. 8 Liability for defects and total liability

a) Liability for defects

1. We shall be liable in accordance with statutory provisions if the buyer asserts claims for compensation based on intent or gross negligence, including intent or gross negligence on the part of our representatives or agents. As long as we are not accused of an intentional breach of contract, our liability for damages shall be limited to typical foreseeable damages.
2. We shall also be liable in accordance with statutory provisions if we culpably violate a fundamental contractual obligation. However, in this case our liability for damages shall be limited to typical foreseeable damages.
3. Unless otherwise specified above, liability is excluded.
4. The limitation period for claims for defects shall be 12 months from the transfer of risk. The statutory limitation period in the case of a delivery recourse in accordance with Art. 478 and 479 of the German Civil Code (BGB) is unaffected by this.

b) Total liability

1. Any further liability for damages beyond that provided for in Para. a) above shall be excluded regardless of the legal nature of the asserted claim. In particular, this shall apply to claims for compensation arising from fault at the time of conclusion of the contract, other breaches of duty and tortious claims for compensation for material damage in accordance with Art. 823 of the German Civil Code (BGB).
2. The limitation in accordance with Para. b (1) shall also apply if the buyer demands compensation for useless expenditures rather than a claim for compensation for damages in place of performance.
3. If our liability for damages is excluded or limited, personal liability for damages on the part of our salaried employees, workers, staff members, representatives and agents shall also be excluded or limited accordingly.

Art. 9 Retention of title

1. We shall retain ownership of the goods until all receivables from the business relationship have been paid in full, including any secondary claims, claims for compensation and cash-ins of cheques and bills of exchange.
2. This retention of title shall remain in effect even if some of our receivables are included in a current account and the balance is drawn and recognised.
3. If goods subject to retention of title are processed by the buyer to create a new movable item, this processing shall be considered to have taken place for us, without any obligation to us. The new item shall become our property. In the case of the processing, mixing or combination of our goods with goods which do not belong to us, we shall acquire joint ownership of the new item in accordance with the ratio between the invoiced values of its goods subject to retention of title and the overall value.
4. The buyer is entitled to further process or install goods subject to retention of title only in accordance with the provisions below and only with the proviso that the receivables as per Art. 6 actually pass to us.
5. The authorisation of the buyer to sell, process or install goods subject to retention of title in the ordinary course of business shall end upon our revocation as a result of the sustained deterioration in the financial situation of the buyer and no later than upon default of payment by the buyer or upon the application for or opening of insolvency proceedings relating to the assets of the buyer.
6. The buyer hereby cedes all receivables with all ancillary rights from the resale of goods subject to retention of title – including any balance claims – to us. If the goods have been processed, mixed or combined and if we have acquired joint ownership in the new item to the extent of our invoiced values, we shall be entitled to a pro rata portion of the sales price in accordance with the value of our rights to the goods. If the buyer should install goods subject to retention of title in a property/building, the buyer hereby cedes the resulting claim to the remuneration or receivable arising from the resale of the property/building to the amount of the invoiced values for the goods subject to retention of title with all ancillary rights including a security mortgage with priority over all other debts. If the buyer has sold the receivables through real factoring, our claim shall become due immediately and the buyer shall assign the receivable which arises in its place against the factor to us and shall pass on the amount realised to us without delay. We shall accept this assignment.
7. The buyer is entitled to collect the assigned receivables as long as they meet their payment obligations. This authorisation to collect receivables shall expire if it is revoked and no later than upon default of payment by the buyer or in the case of a significant deterioration in the financial situation of the buyer. In this case, the buyer hereby authorises us to inform the recipient of the assignment and to collect the receivables ourselves. The buyer is obliged, at our request, to provide us with a precise list of the receivables to which the buyer is entitled, including the name and address of the recipient, amount of individual receivables and invoice date. The buyer is obliged to provide us with all information necessary for us to claim the assigned receivables and to allow the verification of this information.
8. Should the value of securities available to us exceed all receivables by more than 10%, we are obliged – at the request of the buyer or at the request of a third party affected by our excess collateralisation – to release securities of our choice.
9. The pledging or transfer by way of security of the goods subject to retention of title or assigned receivables is not permitted. We must be notified immediately of any garnishment and the corresponding plaintiff creditor.
10. If, on the basis of the retention of title, we take back the deliverable, this shall constitute a withdrawal from the contract only if we expressly declare this to be the case. We are entitled to assuage ourselves by directly selling the goods.
11. The buyer shall store the goods subject to retention of title for us free of charge. The buyer must insure these goods against the usual hazards such as fire, theft and water to the usual extent. The buyer hereby assigns all claims for compensation arising from damages of the aforementioned kind against insurance companies or other parties liable to pay compensation to us to the amount of the invoiced value of the goods. We shall accept this assignment.
12. All receivables and rights arising from the retention of title to all special forms defined in these terms and conditions shall remain valid until the complete release of contingent liabilities which we have entered into in the interests of the buyer.

Art. 10 Place of fulfilment/place of jurisdiction/applicable law/contract language

1. For both parties, the place of fulfilment and place of jurisdiction shall be the registered office of the seller. However, at our discretion we are entitled to choose the registered office of the purchaser as the place of jurisdiction. The provisions above shall also apply to cross-border transactions.
2. The law of the Federal Republic of Germany shall govern all legal relationships between us and the buyer. The validity of the UN Convention on Contracts for the International Sale of Goods is excluded.
3. It is agreed that German shall be the contract language.

Art. 11 Partial ineffectiveness

The legal ineffectiveness of individual provisions in these terms and conditions and other contractual conditions shall not affect the effectiveness of the other conditions.

Date: 7/2006

Faulenbach Schmiedetechnik GmbH