General Terms and Conditions

General Terms and Conditions of Business
(Version 01st March 2004)


§ 1 SCOPE

Our terms and conditions of sale and service apply to all current and future orders submitted by our home and foreign customers, i.e., to all supplies and other services even in the event of contrary terms and conditions unless we have acknowledged variations both expressly and in writing. These terms and conditions shall be deemed to be accepted with award of the order. Any terms and conditions of purchase stipulated by our customers shall be binding on us only subject to our express and written acknowledgement. In respect of outline agreements concluded prior to 01.05.2003 these terms and conditions shall only apply with effect from 01.01.2007 and up to that point in time the previous terms and conditions shall continue to apply.

§ 2 CONCLUSION OF THE CONTRACT

(1) Our tenders are subject to confirmation. The customer's order shall constitute a binding offer which we may accept within three weeks upon despatch of a confirmation of order. In respect of the nature and scope of supply our written confirmation of order shall be definitive. Supplementary agreements, subsequent amendments and verbal consent on the part of our representatives including any auxiliary persons require written confirmation by us.

(2) The quality of the subject of goods and services is conclusively laid down in accordance with agreed service features (e.g. stipulations, designations, clearances, specification paperwork and other information). In respect of invoicing basically the Contract and ordering documentation shall be definitive. Qualities of the object of goods and services shall only be assured to the extent that we have expressly and in writing declared them to be so. Any guarantee in respect of a specified purpose of use or any specified suitability shall only be assumed to the extent that the latter is agreed as such expressly and in writing and in other respects the suitability and application risk is the sole responsibility of the Customer. No performance features or other qualities of the goods or services other than those expressly agreed in the contract of sale are due. We reserve the right to implement commercial or technically unavoidable variations in respect of physical and chemical factors including colours, formulations, procedures and the introduction of raw materials including purchase order quantities unless it is unreasonable to require this of the Customer. Information regarding the object of supply or services (e.g. in catalogues, in product information sheets, electronic media or labelling) is based on our general experience and knowledge and merely constitutes guide values or markers. Neither this product information nor expressly agreed performance features and purposes of use absolve the Customer from testing suitability for the intended purpose of use. Information regarding the nature and possible uses of our product contain no guarantees, in particular not as defined in §§ 443, 444, 639 BGB (Civil Code), unless the latter are indicated as such expressly and in writing.

§ 3 INTELLECTUAL PROPERTY RIGHTS

(1) We reserve our title, intellectual property and any other copyrights to all illustrations, calculations, designs, drawings and other documentation. The Customer may only use the aforementioned documentation including design services and proposals provided by us for the advantageous design and manufacture of goods for the purpose envisaged only and may neither use them in his company nor make them accessible to third parties nor make them the subject of publications irrespective of whether we have designated the latter confidential or not. The latter aforementioned documentation is to be returned to us on request postage paid at any time and is to be so returned in any event if we are not awarded the order.

(2) If we have supplied items in accordance with drawings, patterns, samples and other documentation supplied by the Customer the latter undertakes to ensure that the intellectual property rights of third parties are not infringed. Should third parties prohibit us through recourse to intellectual property rights in particular from manufacture and supply of items of this nature we are entitled, without testing the legal situation, to cease any related activity and - authorized by the Customer - to demand damages. The Customer undertakes to immediately inform us regarding any possible or alleged intellectual property rights infringements which become known to him and to immediately indemnify us from all third party claims associated with the documentation passed to us.

§ 4 PRICING

(1) Our prices are calculated ex works. They are stated plus the rate of statutory value added tax prevailing at the date of invoicing.

(2) If a separate acceptance procedure is desired the scope and terms are to be determined prior to conclusion of the Contract. The acceptance procedure shall be at the Customer's expense following readiness to accept at the factory of delivery. If acceptance is not prompt or complete we are entitled to warehouse the goods at the Customer's expense and risk. Following the lapse of two weeks acceptance is considered implemented.

(3) If at the point of provision the price has increased through a change in the market price or as the result of an increase in remuneration required by third parties involved in the provision the higher price shall apply. Customer's advance payments or down payments do not effect any change in this. If the price is 10% or more above the agreed price the Customer has the right to withdraw from the Contract. This right must be exercised immediately following notification of the price increase.

(4) In the case of delivery on call we are to be notified by call - in the absence of agreement to the contrary - of binding quantities at least three months prior to date of delivery. In the event of partial deliveries each delivery may be separately invoiced. Additional costs which are the result of belated call or subsequent alteration to the call in respect of time or quantity on the part of our Customer are charged to the latter. With on-call contracts we are entitled to procure materials for the entire order and manufacture the quantity ordered immediately. Any desired changes on the part of the Customer may accordingly no longer be considered following award of the order. Not, that is, unless there has been express agreement to this effect.

(5) We reserve the right to invoice costs for samples and test parts and for such tools as are necessary for the latter's manufacture. We shall invoice manufacturing costs in respect of tools necessary for series production unless there is agreement to the contrary. We shall retain title to all tools in any event even if costs of manufacture are assumed by the Customer either wholly or in part. Should the Customer suspend cooperation or terminate it during the period of sample production or workshop facilities all expenses incurred up to that point shall be charged to his account. We shall retain in safekeeping such workshop facilities free of charge for a period of three years from the date of the last delivery to our Customer. Our duty of safekeeping shall end if within six weeks thereafter no statement is made or if no new order is received. Customer-related workshop facilities may be used by us for the purpose of supplies to third parties only with the prior written consent of our Customer.

§ 5 DELIVERY TERMS

(1) Delivery terms or periods not bindingly agreed in writing are solely for information purposes and are non-binding. The order shall not be accepted by us until all technical questions and implementation details have been clarified and when stipulations made by the Customer are available. The delivery period commences at that point. The date of delivery is that date on which the Customer is notified that the goods are ready for despatch.

(2) A confirmed date and time of delivery is subject to the proviso of correct, complete and punctual collection. Should we foresee that the goods cannot be supplied within the delivery period we shall immediately inform the Customer to that effect stating the reasons therefor and where possible nominate the anticipated alternative point in time of supply. The Customer is only entitled to withdraw from the Contract if non-compliance with the delivery term is due to circumstances for which we are answerable and if he has set an appropriate period of grace without success.

Force majeure and other unforeseeable, inescapable and grave events shall release the parties to the Contract for the duration of the disturbance and in the scope of their effect from duties of performance or at our discretion withdrawal from the Contract either wholly or in part, the Customer deriving thereby no claim against us for damages. Constituting force majeure in particular shall be obstructions arising from official or regulatory measures, operational disruptions, civil unrest, industrial disputes and delays in delivery of accessory components, raw materials and supplies.

(3) If the underlying contract of sale constitutes a transaction for delivery on a fixed date as defined in § 286 Paragraph 2 No 4 BGB (Civil Code) or § 376 HGB (Commercial Code) we shall be liable in accordance with statutory provisions. Our liability is however limited if the delay in delivery does not rest on any intentional breach of the Contract for circumstances for which we are not responsible and that to foreseeable and typical loss which might occur subject however to a maximum of a lump-sum delay compensation of 0.5% per week of delay, the latter not to exceed 5% of the total value of goods supplied.

(4) If despatch or performance of any other service is delayed at the request of or by virtue of the behaviour of the Customer we are entitled to enforce a claim for the loss we incur thereby (e.g. lost production time, warehousing costs). For warehousing at our factory we are entitled to invoice up to 5% of the invoice amount for each month. Should the Customer be in default of acceptance we are entitled to demand compensation in respect of the ensuing loss plus any additional expenses incurred.

§ 6 TERMS OF PAYMENT

(1) The agreed purchase price or the amount invoiced in the case of paid work is due with no deduction within 14 days of the date of invoice. Payment is only deemed to have been made at that point in time where monies are credited to our account. In the case of payment by cheque payment shall be deemed to have taken place when the cheque has cleared. Instalment payments are not accepted.

(2) Offset is only possible in respect of claims which are established as res judicata, undisputed or acknowledged by us. In the event of arrears we are entitled to invoice arrears interest at the rate which the bank charges us on overdraft subject to a minimum however of statutory arrears interest as established in §288 BGB. In the event of payment arrears we are entitled - following written notification of the Customer - to exercise our right of retention option.

(3) We do not pay interest on advance payments or payments on account. Should we have supplied indisputably defective goods our Customer however undertakes to pay for that proportion which is free of defect unless partial delivery is of no use to him.

(4) Bills of exchange and cheques are only accepted subject to agreement including for reasons of performance and on precondition of their discountability. Discount charges are calculated with effect from the due date of the sum invoiced. Any guarantee in respect of punctual presentation of bills of exchange and cheques or for lodging bill protest is excluded.

(5) If subsequent to conclusion of the Contract it becomes evident that our payment claim is jeopardized as a consequence of lack of ability to pay on the part of the Customer we may exercise our right of retention option and set the Customer an appropriate period in which he shall make incremental payment against delivery of the goods or furnish collateral. In the event of refusal on the part of the Customer or upon expiry of the period set to no effect we are entitled to withdraw from the Contract and to demand damages compensation.

§ 7 RESERVATION OF TITLE

(1) We retain title to the goods supplied up to the point of settlement of all claims including all current account balances due to us from the Customer at present or in future.

(2) If the object of supply is mixed, associated, finished or processed together with other items the Customer hereby surrenders his rights of title or joint title to the mixed, associated, new item or item gained as a consequence of finishing or processing. Pledging or assignments by way of collateral in respect of items to which we hold title are forbidden the Customer. If items to which we hold title become the substantial part of a landed property we have a claim to provision of an alternative type of collateral of our choice. If the Customer sells the item to which we hold title in the normal course of business he similarly undertakes to reserve title vis-à-vis the purchasing third party; the Customer moreover assigns to us at that point in time and up until repayment of all accounts due to us all claims accruing to him from the sale plus reservation of title against his purchaser including all subsidiary rights. We are entitled to notify this assignment to the purchasing third party at any time. The third party purchaser's payment may only be accepted by the Customer in a trustee capacity and he undertakes to immediately pay over to us any sums received.

(3) We are to be immediately informed by the Customer in respect of compulsory enforcement measures by third parties or any other endangerment of our rights by surrender of any documentation necessary for intervention. Intervention costs in any event are debited to the Customer unless the third party is not in a position to reimburse the latter. Any application for initiation of insolvency proceedings, provision of an affirmation in lieu of oath or incipient payment difficulties entitle us to withdraw from the Contract or to immediately refuse supplies and fulfilment of current contracts unless the Customer provides the consideration due or alternatively appropriate securities as we request.

(4) The Customer shall handle the goods subject to reservation of title with care and adequately insure them for new value at his own expense against fire, water, explosion, theft and other loss. Any maintenance and inspection work which becomes necessary shall be carried out by the Customer punctually and at his own expense. We are to be immediately informed regarding any damage which occurs. For the duration of the period of reservation of title the Customer hereby assigns to us his claims vis-à-vis the insurance providers. If payments have been made to the Customer as a consequence of insurance incidents the latter are to be transferred to us immediately.

(5) We are entitled to repossess the item supplied under reservation of title if the Customer is in arrears with the contractual obligations incumbent upon him, if there is justifiable doubt regarding his creditworthiness or similarly in cases of positive breach of contract by the Customer, stoppage of payments, petition for composition or bankruptcy proceedings. Return carriage costs shall be borne by the Customer. Repossessed items may be freely disposed of by us and the Customer shall be liable for our loss claim. Repossession does not constitute withdrawal from the Contract.

(6) We undertake, at the Customer's request, to release the securities due to us when the realizable value of our securities exceeds the secured sums due by more than 10% whilst retaining the right of choice of securities to be released.

§ 8 DEFECT LIABILITY

(1) The Customer only has a right to claims in respect of defect if the Customer has properly complied with his duties of inspection and notification of defect pursuant to § 377 HGB. Defects not apparent must be notified within one week following discovery at the latest however 3 months following receipt of delivery or completion of any other service provision. Within this period the Customer undertakes to carry out a functional test.
Following confirmed acceptance complaints in respect of defects which could have been ascertained during the acceptance procedure are excluded.

(2) Since product mode of operation, testing and assembly are beyond our sphere of control we can accept no responsibility for design choices or the assurance of characteristics in the installed state. Definitive in respect of assessment of freedom from defect is the contractually agreed condition of the goods at the point of transfer of risk.

(3) If there is a defect in the goods for which we are responsible to the exclusion of the Customer's right of withdrawal from the Contract or to a purchase price reduction (abatement) or to damages, we are entitled to several opportunities to subsequently rectify the defect. To this end the Customer shall accord us an appropriate period of grace. Remedy may at our discretion be by subsequent improvement or by the supply of new goods. Parts replaced become our property.

(4) Should we not meet our guarantee obligations or not in accordance with the Contract the Customer may at his own discretion require a purchase price reduction or damages compensation.

(5) Only in urgent cases involving industrial plant safety and in order to prevent disproportionately greater damage - in which case we are to be informed immediately - or if we are in arrears with defect rectification has the Customer the right, following written consent from us, to rectify the fault himself or have it rectified by third parties and to demand reimbursement of the necessary costs. In the event of unjustified complaints we reserve the right to charge the Customer transport costs and the costs of inspection. Return of fault-free goods sold is excluded in principle.

(6) Claims arising from defect are not valid if the fault is attributable to non-adherence to servicing and maintenance, operating and installation instructions, inappropriate or improper use or storage, faulty or negligent treatment or assembly, natural wear and tear or unauthorized interference with the object of supply by the Customer or by third parties. This also applies in the case of defects which only insignificantly reduce the value or fitness for purpose of the goods. Similarly, the Customer is not entitled to the aforementioned claims In respect of products which we do not supply as new under the terms of the Contract. We may refuse rectification of defects if the Customer has not met his due contractual obligations arising from this or other orders. In respect of spare components and repair we provide a guarantee similar to that for the main item of supply. Our guarantee period for defects is always one year. The period of limitations in the event of supply damages as defined in §§ 478 and 479 BGB remains unaffected. The latter does not apply if this is a case of damage compensation claims as a result of defects. In that case § 10 of our General Terms and Conditions of Business applies. The Customer does not receive from us guarantees in the legal sense.

§ 9 DAMAGE LIABILITY

(1) Our liability including the liability of our vicarious agents or legal representatives in respect of breaches of contract, tortious act or under product liability statute is limited to intent and gross negligence including compensation in respect of typical and average instances of damage. This does not apply in the case of breach of major obligations and to that extent we are liable for each degree of blame, limited however to reparation in respect of a typical and average instance of damage.

(2) We are not liable for damage which does not result from the process of manufacture, which is the result of inappropriate or improper use, faulty assembly or operation by the Customer or by third parties, natural attrition, faulty or negligent treatment, excessive operational demands, inappropriate operational facilities, substitute working materials, faulty alternative spares or force majeure unless such fault is attributable to blame on our part. Nor are we liable for damages if the Customer or third parties undertake modifications or overhaul work without our prior written consent or if the Customer does not allow us the time or opportunity required at our discretion for repairs which appear necessary or for replacement supplies or for damages which have not arisen on the goods supplied themselves. In general we are not liable for lost profit or other Customer asset loss. If our liability is excluded or limited this applies equally to the personal liability of our employees, legal representatives and vicarious agents. Statutory provisions regarding the burden of proof remain hereby unaffected.

(3) The Customer bears responsibility for proper construction in compliance with any safety regulations, choice of construction materials, correctness and completeness of technical supporting documentation and drawings including design and construction of the manufacturing installations provided in order to assure the purpose of use; this also applies if modifications are proposed by us and which meet his approval. If we carry out only some limited work processes on parts supplied by the Customer on a paid labour basis we are then only liable to the extent of the paid labour contract value. If proceedings are initiated against us by any third party in respect of damage compensation whose cause is in the Customer's sphere of responsibility the Customer shall indemnify us from all such claims.

(4) In respect of intellectual property infringements we are liable to the extent that such intellectual property rights as are valid in the Federal Republic of Germany and which are published at the point in time where delivery is made are infringed by contractual use of our goods. We are not liable however if we have manufactured the items of supply on the basis of drawings, models or other descriptions or Customer specifications and are not aware or cannot be aware in connection with the products developed by us that intellectual property rights are infringed. In this event the Customer is liable for intellectual property infringements already occurred or yet to occur.

(5) In the event of breach of obligation on the part of the Customer we may demand an appropriate percentage of the value of the order as compensation. If the Customer cancels a confirmed order we may demand a minimum of 10% of the purchase price in respect of the costs incurred in processing the order.

(6) If any liability in respect of damages not based on physical injury or injury to life or health of the Customer and for which slight negligence is not excluded such claims are time-barred within one year commencing from the date of the claim being raised.

§ 10 LEGAL VENUE / JURISDICTION

(1) If the Customer is a business person, public law juristic person or public law separate estate the place of fulfilment and exclusive legal venue in respect of all disputes arising from the contractual relationship is Vetschau.

We are also entitled to proceed against the Customer at the latter's own exclusive legal venue. The laws of the Federal Republic of Germany only are applicable to the contractual relationship even if the Customer has his registered place of business abroad and/or if it is a matter of an export transaction. Application of the UN Contract for the International Sale of Goods (C.I.S.G.) convention is excluded.